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/raid1/www/Hosts/bankrupt/TCR_Public/070926.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, September 26, 2007, Vol. 11, No. 228 Headlines AEGIS ASSET: S&P Puts Default Rating on 2005-4 Class B7 Certs. AEGIS MORTGAGE: Sale of Loan Servicing Platform Assets Okayed AFC ENTERPRISES: Moody's Revises Outlook to Stable from Positive ALASKA AIR: Likely Weak Financial Profile Cues S&P's Neg. Outlook ALERIS INTERNATIONAL: Completes Acquisition of Alumox Holding ALERIS INTERNATIONAL: Sean Stack Succeeds Michael Friday as CFO ALM MEDIA: $630MM Apax Summer Deal Spurs S&P to Withdraw Ratings AMERICAN AXLE: UAW's GM Strike Prompts Fitch's Negative Watch AMERICAN TOWER: Plans to Offer $250 Million of Senior Notes AMERICAN TOWER: Fitch Rates Proposed $250MM Senior Notes at BB+ AMERICAN TOWER: Moody's Rates Proposed $250 Mil. Sr. Notes at Ba1 AMERICAN TOWER: S&P Rates Planned $250 Million Senior Notes at BB+ AMP'D MOBILE: Gets Final OK to Access Kings Road Cash Collateral APARTMENT INVESTMENT: Fitch Holds BB+ Preferred Stock Rating ARLINGTON HOSPITALITY: Disclosure Statement Hearing Set on Oct. 15 ARVINMERITOR INC: UAW's GM Strike Prompts Fitch's Negative Watch ASAT HOLDINGS: Chinese Unit Secures $20 Million Credit Facility ATARI INCORPORATED: Deloitte & Touche Raises Going Concern Doubt BCE INC: S&P Downgrades Corporate Credit Rating to BB- from A- BEAR STEARNS: Bankr. Court Stays Order Denying Ch. 11 Petition CALPINE CORP: Bankruptcy Court Approves Disclosure Statement CAMP AZUSA: Case Summary & Four Largest Unsecured Creditors CDC MORTGAGE: S&P Lowers Ratings on Five Loan Classes CHATHAM SQUARE: Case Summary & 20 Largest Unsecured Creditors CMP KC: S&P Withdraws Ratings at Company's Request COLONIAL PROPERTIES: Moody's Revises Outlook to Negative COLUMBIA AIRCRAFT: Files for Chapter 11 Protection COLUMBIA AIRCRAFT: Case Summary & 19 Largest Unsecured Creditors COUNTRYWIDE FINANCIAL: Completes Loan Changes to Curb Foreclosures DOWNSTREAM DEVELOPMENT: Moody's Rates $197 Mil. Senior Notes at B3 DRINKS AMERICAS: Posts $1.6 Million Net Loss in Qtr. Ended July 31 EDDIE BAUER: Weak Results Cue Moody's to Downgrade Ratings to B3 ENBRIDGE ENERGY: S&P Rates $400 Mil. Jr. Subordinated Notes at BB+ EVRAZ OREGON: Postponed Refinancing Cues S&P to Withdraw Ratings FAIRPOINT COMMS: PAETEC Supports Verizon Wireline Operations Buy FAIRPOINT COMMS: Gets Approval on Verizon Wireline Operations Buy FIDELITY NATIONAL: Completes Property Insight Sale to Affiliate FIDELITY NATIONAL: Moody's Confirms Ba1 Corporate Family Rating FIREPOND INC: Causey Demgen Raises Going Concern Doubt FIRST DATA: Kohlberg Kravis Completes $29 Billion Acquisition FORD MOTOR: Changan Ford Launches $510 Mil. Manufacturing Plant GENERAL MOTORS: Inks $800 Million China Export Deal GENERAL MOTORS: U.S. Strike May Speed Talks, UAW Leader Says GENERAL MOTORS: US Strikes Spur Canada Plant Closures GENERAL MOTORS: UAW's Strike Prompts Fitch's Negative Watch GENERAL MOTORS: Moody's Maintains Ratings after UAW Strike GENESCO INC: Finish Line Denies Stalling Merger Process GREAT ATLANTIC: Inks Notification Pact with FTC over Pathmark Buy GSMPS MORTGAGE: S&P Junks Rating on 2005-LT1 Class B-2 Loans HAYES-LEMMERZ: UAW's GM Strike Prompts Fitch's Negative Watch HOMEBANC CORP: Court Okays Servicing Rights Sale Protocol HOMEBANC CORP: JPMorgan Subservicing Accord Gets Court Approval HOMEBANC CORP: Wants to Implement Category 3 Incentive Plan INNOVATIVE COMM: Judge Places Company in Chapter 11 Bankruptcy INTERFACE INC: Improved Performance Prompts S&P to Lift Rating IRVINGTON SCDO: Notes Redemption Cues S&P to Withdraw Ratings ISONICS CORPORATION: Receives Two Delisting Notices from Nasdaq JOURNAL REGISTER: Scott Wright Promoted to Chief Operating Officer KYPHON INC: Earns $11 Million in Second Quarter Ended June 30 LAILA FEKAY: Case Summary & Nine Largest Unsecured Creditors LANDRY'S RESTAURANTS: Commences $400MM Sr. Notes Exchange Offer LEINER HEALTH: June 30 Balance Sheet Upside-Down by $162.1 Million LEUCADIA NATIONAL: Moody's Rates $500 Million Senior Notes at Ba2 LIFECARE HOLDINGS: Posts $5.2 Mil. Net Loss in Qtr. Ended June 30 LONG BEACH: Monthly Losses Prompt S&P to Lower Ratings MAGNA ENTERTAINMENT: Buys De Francis' MJC Stake for $18.3 Million MASTR ADJUSTABLE: S&P Affirms Ratings on 316 Classes MCLEODUSA INC: Inks Merger Pact with PAETEC and PS Acquisition MISYS HOSPITAL: Moody's Puts Corporate Family Rating at B1 MISYS HOSPITAL: S&P Assigns B+ Corporate Credit Rating MOVIE GALLERY: Mulls Shut Down of 520 Underperforming Stores MULTIPLAN INC: S&P Affirms B+ Counterparty Credit Rating NEWPAGE CORP: S&P Places 'B' Debt Ratings Under Negative Watch NORTHLAND AUTO: Case Summary & Seven Largest Unsecured Creditors OAK HILL: Notes Redemption Prompts S&P to Withdraw Ratings OSHKOSH TRUCK: Promotes Charles L. Szews to President and COO PAETEC HOLDING: Earns $6.0 Million in Second Quarter Ended June 30 PAETEC HOLDING: Signs Agreement to Merge with McLeodUSA PASCACK VALLEY: Voluntary Chapter 11 Case Summary PIERRE FOODS: Possible Default Prompts Moody's to Review Ratings R&G FINANCIAL: Fitch Junks Issuer Default Rating S-TRAN HOLDINGS: Court OKs Lockton as Insurance Litigation Expert S-TRAN HOLDINGS: Wants Exclusive Plan Filing Moved to December 3 SANTA ROSA: Voluntary Chapter 11 Case Summary SERVICE CORP: S&P Holds BB Rating and Revises Outlook to Stable SOLUTIA INC: Opens Saflex Business Facility in Suzhou, China SPX CORPORATION: Moody's Withdraws Ba1 Rating on Credit Facilities STANDARD PACIFIC: Fitch Rates Proposed $100MM Sr. Notes at B STANDARD PACIFIC: Moody's Rates Proposed $100 Million Notes at B2 STAR GAS: S&P Affirms B- Corporate Credit Rating STAR MORTGAGE: Fitch Rates $1.166MM Class B5 Certs. at B STIEFEL LAB: Adds J.R. de Vink and J.S. Thompson to Board STRUCTURED ASSET: S&P Assigns Default Ratings on Two Classes STRUCTURED ASSET: S&P Lowers Ratings on Five Loan Classes SUNCOM WIRELESS: Posts $193 Million Net Loss in Qtr. Ended June 30 TENNECO INC: UAW's GM Strike Prompts Fitch's Negative Watch VENTAS REALTY: Moody's Lifts Senior Debt Ratings to Ba1 VICORP RESTAURANTS: Posts $5.7 Mil. Net Loss in Qtr. Ended July 12 VICORP RESTAURANTS: Low Earnings May Prompt Defaults VISIPHOR CORP: June 30 Balance Sheet Upside-Down by CDN$1.9 Mil. * 55 Winstead Lawyers Named in Texas Super Lawyers List * Chadbourne & Parke Names Hal Stewart as Chief Operating Officer * James Mcdermott Joins Alvarez & Marsal as Managing Director * Upcoming Meetings, Conferences and Seminars ********* AEGIS ASSET: S&P Puts Default Rating on 2005-4 Class B7 Certs. -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class B7 from Aegis Asset Backed Securities Trust Mortgage Pass Through Certificates Series 2005-4 to 'D' from 'CCC'. S&P lowered the rating to 'D' because overcollateralization has been depleted and because the class realized a $99,726 loss during the August 2007 remittance period. To date, the deal has incurred approximately $17.05 million in realized losses and is currently failing its delinquency and loss triggers. The transaction is seasoned 24 months, and serious delinquencies are approximately 19.32% of the current pool balance. The initial deal composition included subprime conventional, first- and second-lien, adjustable- and fixed-rate, fully amortizing and balloon residential mortgage home equity loans. AEGIS MORTGAGE: Sale of Loan Servicing Platform Assets Okayed ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted Aegis Mortgage Corporation and its debtor-affiliates' request to sell their loan servicing platform assets, and assume and assign certain executory contracts and unexpired leases to Selene Ventures LLC, pursuant to the terms of an an asset purchase agreement dated Sept. 7, 2007, as amended. The APA contemplated that, in exchange for a $500,000 consideration, the Debtors will sell assets used in their loan servicing operations to Selene, the designee of Ranieri & Co., Inc., subject to higher and better offers in an auction. The Court held a hearing on September 19 to consider the sale of the Debtors' loan servicing business. The Debtors told the Court that the offer submitted by Selene constituted the highest and otherwise the best offer for the assets. The Court also approved the First Amendment to the Asset Purchase Agreement dated September 12, 2007. Pursuant to the First Amendment, the parties agree that: (1) concurrent with the closing, Aegis Mortgage Corporation will cause the pending Chapter 11 proceedings with respect to Aegis Loan Servicing, L.P., and AMC Insurance Agency of Texas, Inc., to be dismissed expeditiously; and (2) the contracts to be assigned to Selene will not include: -- the agreement between Aegis Mortgage and Ocwen Technology Xchange, Inc. (OXT) for an application service on a residential servicing system platform, and -- the agreement between Aegis MorTgage and Interactive Intelligence Inc. for an I3 Systems (Interactive Intelligence) call center A full-text copy of the APA is available for free at: http://researcharchives.com/t/s?2371 Judge Shannon ruled that all persons and entities holding interests against the Debtors or in the purchased assets are forever barred, estopped and permanently enjoined from asserting against Selene Ventures, its successors or assigns. Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119) Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, Young, Jones and Weintraub, L.L.P., serve as counsel to the Debtors. When the Debtors filed for bankruptcy, they listed assets and debts of more than $100 million. The Debtors' exclusive period to file a plan expires on Dec. 11, 2007. Aegis Bankruptcy News, Issue No. 6, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). AFC ENTERPRISES: Moody's Revises Outlook to Stable from Positive ---------------------------------------------------------------- Moody's Investors Service changed AFC Enterprises, Inc.'s rating outlook to stable from positive. Concurrently, Moody's affirmed all the debt ratings of AFC, including its B1 corporate family rating and probability of default rating at B2, while upgrading the senior secured credit facilities rating to Ba3 from B1. The outlook revision reflects Moody's view that an upgrade of AFC's ratings is now unlikely in the near term given that the positive momentum in performance supporting a positive outlook has recently subsided. Factors indicating this change include: 1) weaker than expected top-line growth, primarily driven by still-negative same store sales growth; this arises from both more intense competition in the chicken quick service restaurant sector as well as lower discretionary income among AFC's customers due to adverse economic factors; 2) slower than expected store unit growth as a result of fewer new store openings and more under-performing restaurants being closed; 3) escalating margin pressure arising from food commodity inflation and labor cost increases. "Although AFC's financial leverage is low for its current B1 rating category, the likelihood of an upgrade is also remote given the uncertainty surrounding the company's future capital structure as the expiration date of the interest swap on its current facilities is approaching within the next twelve months," said Moody's Analyst, John Zhao. "There is little chance of an upgrade until the company settles on its capital structure." The one notch upgrade of the senior secured credit facilities to Ba3 reflects a lower expected loss driven largely by an improved loss-given-default rating as a result of additional term loan prepayment by the company in the past year. The ratings for the senior secured credit facilities reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B2, and a loss given default of LGD 2. The credit facilities were issued by AFC with upstream guarantee from its operating subsidiaries. AFC's B1 CFR reflects the company's relatively low financial leverage, solid coverage ratios, and sound liquidity position driven by steady cash flow generation and voluntary debt prepayment over the past two years. The rating also encompasses AFC's established position within the chicken QSR category (third largest concept in the U.S. by revenues) and the strong name recognition of its Popeyes brand in the U.S. In addition, the rating also incorporates the company's modest scale as compared to its larger QSR competitors, its geographic concentration, and the still sub-par performance of its international operations. These ratings are affected: AFC Enterprises, Inc. * Corporate family rating -- affirmed at B1 * Probability of default rating -- affirmed at B2 * Senior secured credit facilities -- upgraded to Ba3(LGD2, 27%) from B1(LGD3, 31%) * Rating outlook -- changed to stable from positive AFC Enterprises, Inc., headquartered in Atlanta, Georgia, owns, operates and franchises Popeyes Chicken & Biscuits (Popeyes) quick service restaurants. As of July 15, 2007, AFC owned and operated 61 restaurants and franchised 1,817 restaurants in 44 states, the District of Columbia, Puerto Rico, Guam and 23 foreign countries. The Popeyes concept features a New Orleans Cajun-style menu, with regional items such as spicy fried chicken pieces, chicken sandwiches and strips, fried shrimp, jambalaya and red beans & rice. Following the divestiture of Church's Chicken (Church's) in the first quarter of 2005, AFC reported revenues from Popeyes on a standalone basis of approximately $165 million for LTM July 2007. ALASKA AIR: Likely Weak Financial Profile Cues S&P's Neg. Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Alaska Air Group Inc. and its major operating subsidiary, Alaska Airlines Inc., to negative from stable. All ratings, including the 'BB-' long-term corporate credit rating for both entities, have been affirmed. "The outlook revision is based on a potential weakening of the airline's financial profile," said Standard & Poor's credit analyst Betsy Snyder. "We expect the company's earnings and cash flow to be negatively affected by a slowing economy and a declining level of fuel hedges at a time when fuel prices are increasing. However, the effect will be alleviated somewhat by the company's young, cost-efficient fleet; and its relatively strong liquidity." The ratings on Alaska Air Group Inc. and major operating subsidiary Alaska Airlines Inc. reflect a medium-sized route network serving competitive markets and the inherent risk of the airline industry, offset somewhat by its strong position in its major markets and relatively good liquidity for its size. Alaska Air Group is the holding company for Alaska Airlines Inc. and Horizon Air Industries Inc. Alaska Airlines, the eighth- largest U.S. airline, accounts for approximately 81% of consolidated revenues, and operates hubs at Seattle; Portland, Oregon; Anchorage, Alaska; and Los Angeles, California, primarily serving destinations in Alaska from the lower 48 states, as well as destinations along the West Coast of the U.S., Canada, and Mexico. Horizon Air, which accounts for less than 20% of consolidated revenues, is a regional airline that operates out of hubs at Seattle and Portland. Alaska Air Group's financial profile is aggressive but better than those of most other U.S. airlines. The company's earnings have benefited from its fuel hedging program, among the best of the U.S. airlines; with approximately 46% of its fuel needs hedged at approximately $40 per barrel in 2006, and more than 40% of 2007 needs hedged in the high-$50 per barrel area. However, over the near–to-intermediate term, the company has a lower percentage of its fuel needs hedged at substantially higher prices than in the past. S&P expect Alaska Airlines' financial profile to be constrained by a combination of weaker earnings and cash flow as fuel hedges decline and fuel prices increase; the effect of a slowing economy; the use of incremental debt to finance new aircraft; and a $100 million share repurchase program. A material weakening could result in a ratings downgrade. S&P consider an outlook revision to stable unlikely unless fuel prices were to decline significantly. ALERIS INTERNATIONAL: Completes Acquisition of Alumox Holding ------------------------------------------------------------- Aleris International Inc. has completed its acquisition of Alumox Holding AS located in Norway. The Alumox business is expected to be integrated into Aleris' European recycling business. Through its subsidiaries, Alumox AS and Reox AS, Alumox recycles dross and scrap to recover aluminum and processes salt slag to recover aluminum and aluminum oxide. Headquartered in Beachwood, Ohio, Aleris International Inc. (NYSE: ARS) -- http://www.aleris.com/-- manufactures aluminum rolled products and extrusions, aluminum recycling and specification alloy production. The company is also a recycler of zinc and a leading U.S. manufacturer of zinc metal and value-added zinc products that include zinc oxide and zinc dust. The company operates 55 production facilities in North America, Europe, South America and Asia, and employs approximately 9,200 employees. * * * As reported in the Troubled Company Reporter on Sept. 21, 2007, Standard & Poor's Ratings Services revised its outlook on Aleris International Inc. to negative from stable. At the same time S&P affirmed its 'B+' corporate credit rating and the other ratings on the company. Concurrently, S&P assigned a 'B-' rating to the company's recent $105 million 9% senior notes due 2014, which are an add-on to the company's existing $600 million 9% senior notes due 2014. ALERIS INTERNATIONAL: Sean Stack Succeeds Michael Friday as CFO --------------------------------------------------------------- Aleris International Inc.'s board of directors has elected Michael D. Friday as chief administrative officer of the company effective Dec. 1, 2007. The board also elected Sean M. Stack to succeed Mr. Friday as chief financial officer effective Dec. 1, 2007. Mr. Friday, 56, has served as executive vice president and chief financial officer of the company since the company's acquisition of Commonwealth in December 2004. Prior to that time, Mr. Friday served as executive vice president and chief financial officer of Commonwealth. Prior to joining Commonwealth in June 2004, Mr. Friday served as executive vice president and chief financial officer of Noveon Inc. from 2001 to 2004. From 1997 to 2001, Mr. Friday served as vice president-finance, business development and information technology at BFGoodrich Performance Materials. From 1994 to 1997, Mr. Friday was vice president of finance for The Little Tikes Company, a unit of Rubbermaid Inc. Mr. Friday began his career with the General Electric Company in 1974, where he served in a variety of responsible financial management capacities. Upon his appointment as chief administrative officer of the company, Mr. Friday will cease to act as chief financial officer. Mr. Stack, 40, has served as Executive vice president and president, Europe since the acquisition of Corus Aluminum in August 2006. Prior to that time, Mr. Stack was senior vice president, treasurer and corporate development of the company since the company's acquisition of Commonwealth, and prior to that, he was vice president and treasurer of Commonwealth. Prior to joining Commonwealth in June 2004, he had served as vice president and treasurer of Noveon Inc., beginning in March 2001. Prior to joining Noveon, Mr. Stack served as vice president and treasurer for Specialty Foods Corporation from May 1996 to December 2000. Mr. Stack joined Specialty Foods as assistant treasurer in 1996. Prior to that, he was a vice president at ABN AMRO Bank in commercial and investment banking. About Aleris International Inc. Headquartered in Beachwood, Ohio, Aleris International Inc. (NYSE: ARS) -- http://www.aleris.com/-- manufactures aluminum rolled products and extrusions, aluminum recycling and specification alloy production. The company is also a recycler of zinc and a leading U.S. manufacturer of zinc metal and value-added zinc products that include zinc oxide and zinc dust. The company operates 55 production facilities in North America, Europe, South America and Asia, and employs approximately 9,200 employees. * * * As reported in the Troubled Company Reporter on Sept. 21, 2007, Standard & Poor's Ratings Services revised its outlook on Aleris International Inc. to negative from stable. At the same time S&P affirmed its 'B+' corporate credit rating and the other ratings on the company. Concurrently, S&P assigned a 'B-' rating to the company's recent $105 million 9% senior notes due 2014, which are an add-on to the company's existing $600 million 9% senior notes due 2014. ALM MEDIA: $630MM Apax Summer Deal Spurs S&P to Withdraw Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings, including its 'B-' corporate credit rating, on ALM Media Holdings Inc. and its operating subsidiary, ALM Media Inc., which are analyzed on a consolidated basis. The rating withdrawal follows the acquisition of ALM by Apax Summer LLP, the partnership vehicle owning Incisive Media Ltd., a U.K.-based business information provider, for $630 million. AMERICAN AXLE: UAW's GM Strike Prompts Fitch's Negative Watch ------------------------------------------------------------- Following the decision of the United Auto Workers union to go out on strike against General Motors Corp., Fitch Ratings has placed the Issuer Default Ratings and securities ratings of these companies on Rating Watch Negative: General Motors Corp. -- IDR 'B'; -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. American Axle & Manufacturing, Inc. -- IDR 'BB'; -- Senior unsecured bank facility 'BB'; -- Senior unsecured 'BB'. American Axle Manufacturing Holdings Inc. -- IDR 'BB'. ArvinMeritor Inc. -- IDR 'BB'; -- Senior secured 'BB+'; -- Senior unsecured 'BB-'. Tenneco, Inc. -- IDR 'BB-'; -- Senior secured bank facility 'BB+'; -- Senior secured notes 'BB'; -- Subordinated 'B'. Hayes-Lemmerz International, Inc. -- IDR 'B'. Hayes Lemmerz Finance - Luxembourg S.A -- IDR 'B'. -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. HLI Operating Company, Inc. -- IDR 'B'. The UAW strike has the potential for far-reaching, crippling repercussions throughout the industry. Although the strike is expected to be short-lived, due to the potentially devastating consequences to both sides, the onset of a strike could limit the ability of both parties to control the subsequent chain of events. Negative cash flow at GM will accelerate, due to operating losses and working capital reductions. The costs of a strike would also have consequences on GM's restructuring program, extending the timetable and impairing financial resources available, which is occurring during an uncertain economic environment for industry sales. A reduction in cash holdings could also jeopardize the ability of GM to finance any VEBA agreement. Fitch estimates that a VEBA agreement would be in the range of $30-35 billion, and that GM is unlikely to fund the VEBA entirely in cash, as remaining liquidity would fall to uncomfortable levels given economic uncertainties, restructuring costs, and working capital requirements. The issue of job security is not easily resolvable, given the high priority placed on the issue by the UAW and GM. The flexibility to reduce production and costs in the event of an economic downturn or weak product performance will be critical to GM's ability to weather such events. Fitch forecasts that further restructuring actions will be necessary to achieve viable long-term margins. In the event that GM and the UAW reach an agreement following a strike, ratification will be the next hurdle. The financial and operating stresses of suppliers would be exacerbated in the event of a strike, although liquidity among tier-one suppliers remains adequate in the short term. Second- tier and third-tier suppliers are expected to face more difficult challenges, with lower levels of liquidity and less access to capital. Financial distress at this level could quickly spill over to first-tier suppliers and GM, challenging any assumptions that a production re-start can be accomplished smoothly and quickly. The suppliers placed on Rating Watch Negative contain varying combinations of exposure to GM North America and limited or negative free cash flow over the short term. In the event that the strike is settled within a short time frame, each of the suppliers on Rating Watch Negative is expected to return to their previously existing rating and outlook. Fitch anticipates that if the strike extends beyond a very short term, further rating actions would follow, and the ratings and outlook of other OEMs and suppliers could be reviewed. AMERICAN TOWER: Plans to Offer $250 Million of Senior Notes ----------------------------------------------------------- American Tower Corporation intends to offer $250 million aggregate principal amount of 10-year fixed rate senior unsecured notes in an institutional private placement. The closing of the offering is expected to occur in late September, subject to market conditions. The company intends to use the net proceeds from this offering to refinance a portion of indebtedness incurred under the company's new senior unsecured term loan credit facility. American Tower Corporation -- http://www.americantower.com/-- (NYSE: AMT) owns, operates and develops broadcast and wireless communications sites. American Tower owns and operates over 22,000 sites in the United States, Mexico and Brazil. Additionally, American Tower manages approximately 2,000 revenue producing rooftop and tower sites. AMERICAN TOWER: Fitch Rates Proposed $250MM Senior Notes at BB+ --------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to American Tower Corporation's proposed ten-year $250 million senior unsecured notes. Proceeds from the notes offering will be used to refinance existing indebtedness under the term loan facility since the term facility is subject to mandatory prepayment from any capital markets issuance. Fitch has rated AMT's Issuer Default Rating at 'BB+'. The Rating Outlook is Stable. American Tower's ratings reflect the scale in its operations, which has translated into strong operating performance and increased free cash flow. AMT's operating characteristics remain favorable, resulting in some of the highest profitability measures for all of corporate credits and reflective of the lower business risk associated with predictable long-term contracts and growing cash flow stream generated primarily from investment grade national wireless operators. Fitch believes these characteristics more than offset AMT's sizable share repurchase program and the higher financial leverage for its rating category. AMT should continue to meaningfully improve its operating metrics due to scale benefits and the expectations for continued wireless industry demand. On Aug. 30, 2007, AMT had entered into a new $500 million senior unsecured term loan to provide AMT with additional liquidity. AMT had drawn approximately $1 billion of the $1.25 billion on its senior unsecured revolving credit facility maturing in 2012. AMT subsidiaries are not guarantors of the notes and the notes would be structurally subordinated to all existing and future indebtedness of its subsidiaries. Fitch expects any new long-term debt will be issued by AMT. Financial covenants for the new unsecured notes include limitation on subsidiary indebtedness, limitation on liens and merger, consolidation and sale of assets. AMERICAN TOWER: Moody's Rates Proposed $250 Mil. Sr. Notes at Ba1 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to American Tower Corporation's proposed 10 year $250 million senior unsecured notes issue. The net proceeds of the offering will be used to repay existing debt. AMT's corporate family rating is Ba1 with a stable outlook. Assignments: Issuer: American Tower Corporation * Senior Unsecured Regular Bond/Debenture, Ba1, LGD 4, 55% Based in Boston, American Tower Corporation is a wireless tower operator. AMERICAN TOWER: S&P Rates Planned $250 Million Senior Notes at BB+ ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB+' rating to Boston-based American Tower Corp.'s proposed $250 million senior notes due 2017, to be issued under Rule 144A with registration rights. At the same time, S&P affirmed the existing ratings on the company, including the 'BB+' corporate credit rating. The outlook is stable. "Since the new notes will be used to refinance existing debt, specifically a portion of the company's senior unsecured term loan, the company's financial profile is unchanged," said Standard & Poor's credit analyst Catherine Cosentino. About $4 billion of total debt was outstanding as of June 30, 2007. The ratings on American Tower reflect the promising prospects of its wireless tower leasing business, which is expected to generate increasingly stronger levels of net free cash flow after capital expenditures. Despite these very favorable business-risk characteristics, which are indicative of an investment-grade business-risk profile, ratings are constrained by the company's aggressive financial policy. The company completed its $750 million stock repurchase plan in February 2007, and a more recently authorized $1.5 billion share repurchase plan is expected to be carried out through February 2008. Management has also indicated that it is targeting a debt to EBITDA ratio of 4x-6x, or in the mid-5x to 8x area, after adjustment. The cash flows generated by American Tower's business have a high degree of stability, given the long-term nature of the carrier contracts and high contract renewal rates. The high operating leverage of the business also contributes to extremely healthy tower gross profit and overall EBITDA margins, which totaled 76% and 63%, respectively, for the second quarter of 2007, excluding $3.6 million of recurring quarterly interest income from TV Azteca, the Mexican TV broadcast operator with which American Tower has a communications tower venture. These high profit metrics, however, are partially offset by the company's aggressive financial profile, which incorporates anticipated material levels of stock repurchases, and a debt to 2007 second-quarter EBITDA of 5.7x, including interest income from TV Azetec, and adjusted for operating lease adjustments and noncash stock compensation expense. AMP'D MOBILE: Gets Final OK to Access Kings Road Cash Collateral ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted Amp'd Mobile Inc. authority, on a final basis, to use Kings Road Investments Ltd.'s cash collateral, including cash collateral in the possession of Silicon Valley Bank. The Debtor can use the Kings Road cash collateral from and after August 29, 2007, to (i) fund the liquidation of its assets not sold at the auction and the commencement of avoidance actions; and (ii) pay the expenses of the bankruptcy professionals retained by the Debtor and the Official Committee of Unsecured Creditors and the Debtor's employees that will assist in the liquidation, as well as other incidental expenses. The Debtor has sold substantially all of its assets to Prexar Mobile, Inc., and VoodooVox, Inc.. The proceeds of the sale were insufficient to indefeasibly pay in full in cash a $30,000,000 secured loan from Kings Road. Accordingly, at Kings Road's direction, the Debtor commenced a piecemeal liquidation of its assets. The Debtor has since struck an agreement with Great American Group to auction off certain of its remaining assets. The Debtor will grant Kings Road adequate protection liens for the use of the cash collateral and for any diminution in the value of the collateral. The adequate protection liens are subject to a carve-out for court clerk fees, U.S. Trustee fees, and bankruptcy professional fees; the properly perfected liens, if any, of Brightpoint North America L.P., Silicon Valley Bank and Valutech Outsourcing LLC. The Debtor, the Creditors Committee and Kings Road reserve the right to dispute the validity of any asserted lien. The Debtor's legal fees prior to August 1 are capped at $1,450,000. The Committee's legal fees prior to August 1 are capped at $400,000. Incidental expenses are limited to $500,000 in the aggregate. The Amended Final Cash Collateral Order provides that proceeds of the orderly liquidation from and after August 1 will be used to indefeasibly pay in full in cash the Kings Road prepetition loan and the bankruptcy professionals' and the Liquidation Employees' expenses. The Debtor, however, will look into the carve-out and the avoidance action proceeds first. Judge Shannon clarifies that any adequate protection lien granted to Kings Road will not create an interest directly against any lease between the Debtor and Westside Medical Park, LLC, as landlord. Rather, any interest that may be asserted by Kings Road with respect to the Westside lease is limited to any proceeds realized from the disposition of the lease. The Court also notes that Kings Road does not have any lien on any claims, causes of action or recoveries realized pursuant to Chapter 5 of the Bankruptcy Code. The avoidance actions, however, will not include any actions against Brightpoint. Kings Road will be allowed an administrative superpriority expense claim, which will not exceed an amount equal to the difference between Kings Road's prepetition loan that was not paid in full, and $19,075,000 of Kings Road's cash collateral that the Debtor has used since the Petition Date. USAC Objection The Universal Service Administrative Company objected to the Debtor's request to amend the cash collateral budget, citing that the budget is inadequate, and that the budget is unclear regarding the sufficiency of the "reserve" referenced in the Motion and the sufficiency of the phone tax fund purportedly set aside to protect USAC. Representing USAC, Elihu E. Allinson, Esq., at William D. Sullivan, LLC, in Wilmington, Delaware, said it should be clarified whether the Debtor intends to invade the funds set aside to provide for tax administrative claims, including postpetition Universal Service Fees outstanding and owing to USAC. Mr. Allinson pointed out that the Debtor's Cash Collateral Budget through September 25, 2007, that was submitted to the Court for approval is short by $298,700. Mr. Allinson informed the Court that the Debtor has committed to set aside 15% of all gross revenue collected for the phone tax fund. Based on the Debtor's recently submitted Revenue Reports, Mr. Allinson said that Amp'd Mobile has collected about $18,000,000 through July 30,2007. Mr. Allinson asserted that if the 15% is to be computed from the amount reported, the allocated amount for the phone tax fund should be about $2,700,000. However, as of August 24, 2007 the Debtor disclosed that there is only a phone tax balance of approximately $1,669,492. Mr. Allinson said that Debtor may be more significantly insolvent than originally anticipated. The Debtor has provided USAC information about potential claims and claim balances for the month of June 2007. The June information confirms that the phone tax fund is likely significantly under-funded with the June claims to the fund from non-USAC creditors being approximately $970,000, according to Mr. Allinson. He added that the Revenue Reports completed by the Debtor indicate that the Debtor billed its customers $14,177,635 in the postpetition period. Mr. Allinson said that if USAC is to compute from the $14,177,635 Revenue Report to determine its administrative claim from the Debtor's USF obligations, the estimated amount will yield to $1,372,820, which is woefully underfunded. USAC wanted to verify revenue information by reviewing the Debtor's Monthly Operating Reports, however, the Debtors has failed to file any Operating Reports to date, Mr. Allison told the Court. Since the Petition Date, the Debtors has made no payments to USAC, Mr. Allinson said. The Debtor also has failed to respond to USAC's request for a detailed information on how the Debtor intends to reduce the claims in a cost-effective manner. USAC wants the Debtor to immediately pay a reasonable estimate of USF obligations based on available information, in an amount not less than $1,434,776, subject to reconciliation based on the 2008 "true up" 2007 revenue. In the alternative, USAC wants the Debtor's case converted to Chapter 7. The Amended Final Cash Collateral Order is silent on USAC's concerns. Judge Shannon says any objections to the Debtor's request that have not previously been resolved or withdrawn are overruled on their merits. Termination of Cash Collateral Use The Debtor's right to use cash collateral will terminate on the earliest of these events: 1. October 15, 2007, if Kings Road has not been paid in full, unless the parties agree to continue the chapter 11 liquidation efforts; 2. If the Debtors will not have continued to retain at all times during the term of the Amended Final Cash Collateral Order, contingent fee counsel for collection efforts; 3. One business day after the Debtor fails to comply with any terms of the Amended Final Cash Collateral Order; 4. The effective date of any confirmed Chapter 11 plan for the Debtor; 5. Entry of an order, without Kings Road's prior consent, converting the Debtor's case to Chapter 7; dismissing the Chapter 11 case; appointing a Chapter 7 or Chapter 11 trustee; or appointing an examiner with expanded powers; lifting the stay with respect to another creditor holding a claim on a material portion of the Debtor's assets necessary to the operation of its business; 6. The commencement of any proceeding challenging the amount, validity, priority or extent of Kings Road's superpriority claim or replacement liens; 7. The Debtor's obtaining funding that is secured by liens which are senior, pari passu or junior to Kings Road's liens, without Kings Road's prior consent; and 8. Any unauthorized use of the cash collateral, or any fraudulent act by the Debtor. Headquartered in Los Angeles, Calif., Amp'd Mobile Inc. aka Amp'D Mobile LLC -- http://www.ampd.com/-- is a mobile virtual network operator that provides voice, text and entertainment content to subscribers who contract for cellular telephone service. The company filed for chapter 11 protection on June 1, 2007 (Bankr. D. Del. Case No. 07-10739). Steven M. Yoder, Esq., Eric M. Sutty, Esq. and Mary E. Augustine, Esq. at The Bayard Firm represent the Debtor in its restructuring efforts. In its schedules filed with the Court, the Debtor listed total assets of $47,603,629 and total debts of $164, 569,842. The Debtor's exclusive period to file a plan expires on Sept. 29, 2007. (Amp'd Mobile Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Services Inc., http://bankrupt.com/newsstand/or 215/945-7000). APARTMENT INVESTMENT: Fitch Holds BB+ Preferred Stock Rating ------------------------------------------------------------ Fitch Ratings has affirmed these ratings on Apartment Investment & Management Company: AIMCO -- Issuer Default Rating at 'BBB-'; -- $823.5 million preferred stock at 'BB+'. AIMCO Properties L.P. -- $1.125 billion bank credit facility at 'BBB-'. The Rating Outlook is Stable. The ratings reflect AIMCO's large and geographically diverse portfolio of multifamily assets, significantly improved property operations, redevelopment program, and sound multifamily property fundamentals. AIMCO has an adequate Fitch risk adjusted capital ratio for the rating category reflecting its reasonable debt levels, the relatively more stable multifamily sector, and access to additional sources of capital through agency debt. The $12.8 billion (undepreciated book capital) equity REIT is one of the largest owners and managers of multifamily assets with more than 1,200 properties (209,507 units) across 47 States, the District of Columbia and Puerto Rico. This diversity insulates it against a downturn in any one market. The portfolio is also diversified across price points and by its mix of conventional and affordable properties which further protect it against adverse economic or market changes that may target one demographic group of renters or a particular asset class. Over the last 10 quarters the company has demonstrated strong same store net operating income growth. Same store NOI grew 6.3% and 9.5% respectively for full year 2005 and 2006 and a healthy 6% and 4.1% respectively for the first and second quarter of 2007. After a couple of difficult years in 2003 and 2004, management has upgraded/repositioned properties and has built a better operating platform for its large and diversified portfolio. The ratings are further supported by the company's redevelopment program which should benefit the company over the longer term increasing asset values and earnings. Fitch views redevelopment as less risky than ground up development which has a longer time frame and is more susceptible to sudden markets changes. Full leverage, defined as debt plus preferred securities to undepreciated book capital, measures 63% as of June 30, 2007 consistent with AIMCO's historical average and similarly rated multifamily peers. Furthermore, on Sept. 15, 2007 AIMCO expanded its bank credit facility to $1.125 billion from $850 million providing ample short term liquidity. The revolving credit facility increased by $200 million to $650 million, and the term loan increased by $75 million to $475 million. Rating concerns include AIMCO's 100% encumbered portfolio. Nearly all of AIMCO's debt is funded through property mortgages which represents approximately $6.5 billion of the $7.1 billion in total debt as of June 30, 2007. The use of secured debt in the capital structure encumbering substantially all assets has the potential to limit flexibility in a more difficult capital raising environment. Furthermore the company has been increasing its secured debt financing by redeeming high coupon preferred securities and substituting with additional property debt. Total debt to undepreciated book capital has edged higher to 56.1% at mid-year 2007 from 54.9% at year-end 2006 and 52.5% at mid-year 2006. While this lowers the cost of capital, Fitch is concerned by any increase in loan to value ratios on its fully encumbered portfolio. Fitch will look to monitor this greater shift to secured debt especially in view of the pressure it puts on the bank credit facility rating and preferred stock rating which are subordinate to all property debt. Fitch adjusted interest and fixed charge coverage ratios are acceptable for the current rating category and have strengthened to 2.1x and 1.5x respectively for the quarter-ending June 30, 2007 compared to 2x and 1.4x for full year 2006 and 1.9x and 1.3x for full year 2005. Fitch will continue to closely monitor coverage ratios especially as AIMCO moves forward with its redevelopment program and recently board authorized enlarged stock repurchase plan. Apartment Investment and Management Company is a $12.8 billion (undepreciated book capital) equity REIT headquartered in Denver, Colorado, and one of the largest owner/managers of multifamily properties in the United States. As of June 30, 2007, the company owned a controlling equity interest in 156,958 units in 676 properties, owned a non-controlling equity interest in 11,741 units in 101 properties and provided services or managed (for third party owners) 40,808 units in 439 properties. ARLINGTON HOSPITALITY: Disclosure Statement Hearing Set on Oct. 15 ------------------------------------------------------------------ The United States Bankruptcy Court for the Northern District of Illinois will convene a hearing on Oct. 15, 2007, at 10:00 a.m., to consider the adequacy of Arlington Hospitality Inc. and its debtor-affiliates' Disclosure Statement explaining their Joint Chapter 11 Plan of Liquidation. The Plan, the Debtors say, contemplates the orderly liquidation of their properties for distribution to their creditors. The Debtors further say that the Plan will be funded by all property of the Estates, includes, the proceeds received and remaining from the operation of the Debtors' business prior to the sales, the remaining proceeds from the sales and the preference recoveries, if any. Treatment of Claims Under the Plan, Administrative Claims and Priority Tax Claims will be paid in full. Holders of Secured Claims will receive either cash equal to the amount of the unpaid allowed secured claim or relief from the automatic stay arising under Section 362(a) of the Bankruptcy Code in order to collect and liquidate the property securing their claim. The Debtors disclose that they have satisfied all priority claims. On the effective date, each holder of an Insurance Claim will automatically be granted relief from the automatic stay to permit the holder to proceed to prosecute and liquidate its claim against the Debtors. When the claim is liquidated, it will be paid first by the Debtors' insurance carrier to the extent of any insurance coverage. To the extent the Debtors would be required to pay a deductible, premium or retention before the insurance carrier will defend or satisfy the claim, the Debtors or the Plan Administrator, may elect to: (i) pay such deductible, premium or retention, or (ii) have the entire claim treated as an unsecured claim. Holders of Convenience Claims, which the Debtors estimate to be $52,000, will receive cash equal to the lesser of 27% of their claims. General unsecured creditors will receive a pro rata share of the available cash. The Debtors estimate that unsecured claims total between $3.4 million to $5.5 million and holders will receive between 1% to 28% of their claims. Holders of Penalty Claims will also receive a pro rata share of the available cash after all valid claims have been paid. Equity Interests will be cancelled and holders will not receive anything under the Plan. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=070925214444 About Arlington Hospitality Based in Arlington Heights, Illinois, Arlington Hospitality, Inc., dba Amerihost Properties, Inc., and its affiliates develop and construct limited service hotels and own, operate, manage and sell those hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases from PMC Commercial Trust. Arlington Hospitality, Inc., serves as a guarantor under these leases. Arlington Inns Inc., an affiliate, filed for bankruptcy protection on June 22, 2005 (Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin Goldgar presiding. Arlington Hospitality and additional debtor-affiliates filed for chapter 11 protection on Aug. 31, 2005 (Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege, Esq., at Jenner & Block LLP, provides the Debtors with legal advice and Chanin Capital LLC serves as the company's investment banker. David W. Wirt, Esq., at Winston & Strawn, represents the Official Committee of Unsecured Creditors. As of March 31, 2005, Arlington Hospitality reported $99 million in total assets and $94 million in total debts. ARVINMERITOR INC: UAW's GM Strike Prompts Fitch's Negative Watch ---------------------------------------------------------------- Following the decision of the United Auto Workers union to go out on strike against General Motors Corp., Fitch Ratings has placed the Issuer Default Ratings and securities ratings of these companies on Rating Watch Negative: General Motors Corp. -- IDR 'B'; -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. American Axle & Manufacturing, Inc. -- IDR 'BB'; -- Senior unsecured bank facility 'BB'; -- Senior unsecured 'BB'. American Axle Manufacturing Holdings Inc. -- IDR 'BB'. ArvinMeritor Inc. -- IDR 'BB'; -- Senior secured 'BB+'; -- Senior unsecured 'BB-'. Tenneco, Inc. -- IDR 'BB-'; -- Senior secured bank facility 'BB+'; -- Senior secured notes 'BB'; -- Subordinated 'B'. Hayes-Lemmerz International, Inc. -- IDR 'B'. Hayes Lemmerz Finance - Luxembourg S.A -- IDR 'B'. -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. HLI Operating Company, Inc. -- IDR 'B'. The UAW strike has the potential for far-reaching, crippling repercussions throughout the industry. Although the strike is expected to be short-lived, due to the potentially devastating consequences to both sides, the onset of a strike could limit the ability of both parties to control the subsequent chain of events. Negative cash flow at GM will accelerate, due to operating losses and working capital reductions. The costs of a strike would also have consequences on GM's restructuring program, extending the timetable and impairing financial resources available, which is occurring during an uncertain economic environment for industry sales. A reduction in cash holdings could also jeopardize the ability of GM to finance any VEBA agreement. Fitch estimates that a VEBA agreement would be in the range of $30-35 billion, and that GM is unlikely to fund the VEBA entirely in cash, as remaining liquidity would fall to uncomfortable levels given economic uncertainties, restructuring costs, and working capital requirements. The issue of job security is not easily resolvable, given the high priority placed on the issue by the UAW and GM. The flexibility to reduce production and costs in the event of an economic downturn or weak product performance will be critical to GM's ability to weather such events. Fitch forecasts that further restructuring actions will be necessary to achieve viable long-term margins. In the event that GM and the UAW reach an agreement following a strike, ratification will be the next hurdle. The financial and operating stresses of suppliers would be exacerbated in the event of a strike, although liquidity among tier-one suppliers remains adequate in the short term. Second- tier and third-tier suppliers are expected to face more difficult challenges, with lower levels of liquidity and less access to capital. Financial distress at this level could quickly spill over to first-tier suppliers and GM, challenging any assumptions that a production re-start can be accomplished smoothly and quickly. The suppliers placed on Rating Watch Negative contain varying combinations of exposure to GM North America and limited or negative free cash flow over the short term. In the event that the strike is settled within a short time frame, each of the suppliers on Rating Watch Negative is expected to return to their previously existing rating and outlook. Fitch anticipates that if the strike extends beyond a very short term, further rating actions would follow, and the ratings and outlook of other OEMs and suppliers could be reviewed. ASAT HOLDINGS: Chinese Unit Secures $20 Million Credit Facility --------------------------------------------------------------- ASAT Holdings Limited's Chinese subsidiary, ASAT Semiconductor (Dongguan) Limited, has received a commitment for RMB150 million or approximately $20 million of new financing from a Chinese bank in the form of a secured multi-currency revolving credit facility. "As we have discussed, the key near-term objective has been to strengthen our financial position," Kei Hong Chua, chief financial officer of ASAT Holdings Limited, said. "By obtaining the credit facility we have delivered on this important goal and achieved another milestone in the implementation of our financial turnaround plan. The facility supplements our existing cash flow and provides us with resources to expand our business during a period of positive growth for ASAT and our industry." "We believe the overwhelming support we received in our recent consent solicitation and the competitive terms of this financing package demonstrate the fundamental soundness of our business," Mr. Chua said. "In the last 12 months we have undertaken a complete re-engineering of nearly every aspect of how we do business. We have made enormous progress and ASAT is emerging as a strong competitor in the assembly and test market." The multi-currency revolving credit facility has an aggregate commitment of RMB150 million secured by ASDLs trade receivables. Interest on borrowings under the facility will be at the applicable index rate plus 0.80%. About ASAT Holdings Limited Headquartered in Pleasanton, California, ASAT Holdings Limited (Nasdaq: ASTT) -- http://www.asat.com/-- is a provider of semiconductor package design, assembly and test services. With 18 years of experience, the company offers a definitive selection of semiconductor packages and world-class manufacturing lines. ASAT's advanced package portfolio includes standard and high thermal performance ball grid arrays, leadless plastic chip carriers, thin array plastic packages, system-in-package and flip chip. ASAT was the first company to develop moisture sensitive level one capability on standard leaded products. The company has operations in the United States, Hong Kong, China and Germany. At April 30, 2007, ASAT Holdings Limited's consolidated balance sheet showed $135.1 million in total assets, $217.7 million in total liabilities, and $5.7 million in series A redeemable convertible preferred shares, resulting in an $88.3 million total stockholders' deficit. ATARI INCORPORATED: Deloitte & Touche Raises Going Concern Doubt ---------------------------------------------------------------- New York-based Deloitte & Touche LLP expressed substantial doubt about Atari Incorporated's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2007. The auditing firm pointed to the company's significant operating losses. The company posted a $69,711,000 net loss on $122,285,000 of total revenues for the year ended March 31, 2007, as compared with a $68,986,000 net loss on $206,796,000 of total revenue in the prior year. The company also posted an operating loss of $77,644,000 in fiscal 2007 as compared to a $62,977,000 in the prior year. At March 31, 2007, the company's balance sheet showed $42,819,000 in total assets and $39,725,000 in total liabilities, resulting in a $3,094,000 stockholders' equity. During fiscal 2006 and 2007, the company sold a number of intellectual properties and development facilities in order to obtain cash to fund its operations. During 2007, the company raised approximately $35,000,000 through the sale of the rights to its Driver games and certain other intellectual property, and the sale of its Reflections and Shiny studios. By the end of fiscal 2007, the company did not own any development studios. The company said that its ability to deliver products on time depends in good part on developers' ability to meet completion schedules. Further, its expected releases in fiscal 2008 are even fewer than its releases in fiscal 2007. In addition, most of the company's releases for fiscal 2008 are focused on the holiday season. As a result its cash needs have become more seasonal and it faces significant cash requirements to fund the working capital needs during the second quarter of its fiscal year. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?239c About Atari Headquartered in New York, Atari Incorporated, (NASDAQ: ATAR) -- http://www.atari.com-- together with its subsidiaries, publishes, develops, and distributes video game software in North America. It offers games for various platforms. Its portfolio of games includes action, adventure, strategy, role-playing, and racing. Atari distributes its video game software in the United States, Canada, and Mexico through mass merchants, retail outlets, online outlets, specialty retailers, and distributors. The company, founded in 1992, was formerly known as Infogrames Inc. and GT Interactive Software Corp. It changed its name to Atari Incorporated in 2003 and is a subsidiary of Infogrames Entertainment SA. BCE INC: S&P Downgrades Corporate Credit Rating to BB- from A- -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on Montreal, Quebec-based holding company BCE Inc. and wholly owned subsidiary Bell Canada to 'BB-' from 'A-'. The ratings on both companies remain on CreditWatch with negative implications where they were placed April 17, 2007. "The downgrade, an interim step, follows BCE's Sept. 21, 2007, announcement that its shareholders have approved the company's CDN$52 billion leveraged buyout," said Standard & Poor's credit analyst Madhav Hari. "Once we have the opportunity to review the proposed capital structure, and the financial and operating strategies of the new owners, we could affirm or lower the ratings further," Mr. Hari added. The ratings on CDN$2.8 billion in existing senior unsecured debt of BCE (CDN$650 million), Bell Canada (CDN$2 billion), and Bell Mobility Cellular Inc. (CDN$150 million) are unchanged, reflecting the sponsor's stated intention that it anticipates requiring BCE, Bell Canada, and Bell Mobility to redeem redeemable debentures outstanding (maturing up to August 2010), upon close of the leveraged buyout. The ratings on BCE's CDN$2.77 billion preferred shares are also unchanged because S&P expects these to be redeemed as well. Once the tender is completed, S&P will withdraw these ratings. However, the ratings on these securities could be lowered if they are not redeemed as planned. S&P are also withdrawing its 'A-1 (Low)' Canadian scale and 'A-2' global scale CP ratings on both BCE and Bell Canada; the companies have no CP outstanding at this time. In addition, S&P lowered the ratings on about CDN$4.9 billion of Bell Canada senior unsecured debentures outstanding to 'BB+' from 'A-', reflecting what S&P think is the best possible outcome based on publicly available information on the LBO. The structure of the proposed financing suggests that these debentures will gain a first priority lien on the Bell Canada assets. Therefore, the ratings are based on S&P's recovery approach for rating secured debt, which reflects both the probability of default as well as expected recovery at default. Accordingly, the two-notch difference from the 'BB-' corporate credit rating reflects S&P's preliminary expectations of very high recovery of principal in the event of a payment default. S&P lowered the rating on Bell Canada's subordinated debt to 'B' from 'BBB+', reflecting its most junior position in the post- LBO debt capital structure. The multinotch downgrade reflects S&P's view that BCE no longer possesses an investment-grade financial policy given the high degree of certainty that the LBO will be finalized shortly. On a pro forma basis, the company will have a highly leveraged capital structure, weakened credit measures, and significantly reduced cash flow-generating capability owing to its LBO and associated heavy interest burden. Standard & Poor's will aim to resolve the CreditWatch status shortly after the acquisition is completed, following a detailed review of certain critical aspects of business and financial strategy under the new ownership. In particular, S&P will focus on the ultimate capital structure of BCE/Bell Canada; changes to its operating strategy; the sponsor's new financial policy, including its dividend distribution policy and de-leveraging plans; and any potential change to the company's asset base. In resolving the ratings on Bell Canada's CDN$4.9 billion remaining senior unsecured debt, S&P will focus on the overall structure and terms of the LBO financing, details of the security package as it relates to the BCE/Bell Canada senior secured debt, and the terms of the financial covenants. BEAR STEARNS: Bankr. Court Stays Order Denying Ch. 11 Petition -------------------------------------------------------------- The Hon. Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York stayed the enforcement of his prior order denying protection under Chapter 11 of the Bankruptcy Code to Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., and Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund, Ltd., pending the Funds' appeal on that ruling, Bloomberg News reports. The Bankruptcy Court's stay order is contingent on the Bear Stearns Funds' (i) returning U.S. funds that were transferred to the Cayman Islands or (ii) posting an equal amount as bond, Bloomberg says. According to Bloomberg, Judge Lifland required the Hedge Funds to return $8,000,000 in funds. In August 2007, Judge Lifland ruled that the Bear Stearns Funds' center of main interest is in the United States and not in the Cayman Islands. Judge Lifland said the only adhesive connection with the Cayman Islands that the Funds have is the fact that they are registered there. Judge Lifland suggested that the Funds commence a Chapter 11 or Chapter 7 bankruptcy case. Judge Lifland also extended the Preliminary Injunction Order until September 29, 2007, to give parties-in-interest an opportunity to file a Chapter 11 or a Chapter 7 petition in the district where the seat of the Funds' management functions are located. The Injunction Order would automatically dissolve after September 29 if no Chapter 11 or Chapter 7 petition is filed. Simon Lovell Clayton Whicker and Kristen Beighton at KPMG, the Bear Stearns Funds' official liquidators, have asked the U.S. District Court for the Southern District of New York to review Judge Lifland's decision. At the hearing on September 24, Judge Lifland said the decision is significant for other U.S. investment banks and funds based in the Cayman Islands, Tiffany Kary at Bloomberg reports. According to Judge Lifland, no objections were filed because "parties of interest are institutions similarly situated who use offshore vehicles for similar purposes." Decision Makes Chapter 15 Cumbersome Process The Liquidators asked the Bankruptcy Court to maintain the preliminary injunction until the appeal is resolved. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, the Liquidators' U.S. counsel, argued that unless the Bankruptcy Court grants a stay, the appeal will likely be rendered moot, and the opportunity for review will be lost. Mr. Hodara pointed out that the Bankruptcy Court's refusal to recognize the Liquidators' petition for recognition frustrates the U.S. Congress' purpose in enacting Chapter 15. Congress established a simple statutory procedure for recognition and clear guideposts for U.S. courts to follow, Mr. Hodara explained. The guideposts, he said, are based on the Model Law on Cross- Border Insolvency promulgated by the United Nations Commission on International Trade Law, which has been adopted in numerous other countries. "[T]he Decision turns what is intended to be a streamlined legal proceeding into a complex, cumbersome, and time consuming process," according to Mr. Hodara. Clash with SPhinX Ruling Mr. Hodara also argued that Judge Lifland's analysis is at odds with Judge Robert D. Drain's ruling in In re SPhinX, Ltd., 351 B.R. 103 (Bankr. S.D.N.Y. 2006), which was affirmed by the District Court. Judge Drain held that "chapter 15 maintains -- and in some respects enhances -- the 'maximum flexibility' that section 304 provided bankruptcy courts. In SPhinX, Mr. Hodara said, the court denied recognition as a foreign main proceeding because it concluded that "the only reason for the [Foreign Representatives'] request for recognition of the Cayman Islands proceeding" was to frustrate a settlement in which the debtors had an interest. But for this improper purpose, the court stated, it would have recognized the Cayman Islands proceeding as a foreign main proceeding, notwithstanding the presence of a challenger. In Judge Drain's view, Mr. Hodara noted, recognition should be liberally granted in keeping with chapter 15's emphasis on cooperation, comity, and the pragmatic concerns listed in the chapter's statement of purpose, including "greater legal certainty for trade and investment," "fair and efficient administration of cross-border insolvencies that protects the interests of all creditors, and other interested entities, including the debtor," and "protection and maximization of the value of the debtor's assets." Mr. Hodara argued that SPhinX involved a petition brought for an improper purpose, featured an objecting party, and presented facts that -- in contrast to the Bear Stearns Funds' cases -- strongly suggested that the COMI was not in the Cayman Islands, as no board members resided in the Cayman Islands, and "most, if not all" of the creditors and investors were outside the Cayman Islands. Nevertheless, Mr. Hodara maintained, the court in SphinX concluded that some form of recognition was proper. "Because their money is ultimately at stake," Judge Drain ruled, "one generally should defer . . . to the creditors' acquiescence in or support of a proposed COMI." Judge Drain also held that "[i]t is reasonable to assume that the debtor and its creditors . . . can, absent an improper purpose, best determine how to maximize the efficiency of a liquidation or reorganization and ultimately, the value of the debtor, assuming also, of course, that chapter 15 requires the court to protect the legitimate interests of dissenters[.]" Mr. Hodara also pointed out that Professor Jay Westbrook in his article, Multinational Enterprises in General Default: Chapter 15, The ALI Principles, and the EU Insolvency Regulation, 76 Am. Bankr. L.J. 1, 5-24 (2002), stated that chapter 15 was designed to streamline the recognition process, making it "as simple, fast and inexpensive as possible," by reducing it to "a simple documentary process unless challenged." Prof. Westbrook is a law professor at the University of Texas at Austin who helped author the Chapter 15 law, along with Judge Lifland. "Letterbox" Company Mr. Hodara insisted that the Liquidators met the statutory requirements of chapter 15. The Bankruptcy Court's characterization of the Bear Stearns Funds as merely a "letterbox" company is dubious, he said. Mr. Hodara also pointed out that the Bankruptcy Court's Decision suggests that "exempted companies" conducting business in the Cayman Islands may never bring insolvency actions in the Cayman Islands that qualify for recognition under Chapter 15. The Court misconstrues Cayman Islands law, he said. Mr. Hodara explained that the characterization of a company as an exempted company under Cayman Islands' Companies Law is primarily for the purpose of creating a class of companies to which local ownership and control requirements contained in other Cayman Islands statutes, among other matters, do not apply. According to Mr. Hodara, registration of a company as "exempted" is not indicative of the degree to which it has a substantial local establishment in the Cayman Islands nor is it determinative of the permanence of its business or economic activity. An exempted company is not prevented from exercising all the powers necessary in the Cayman Islands to further its business outside of the Cayman Islands. Mr. Hodara added that most, if not all, of the Funds' remaining liquid assets are in bank accounts in the Cayman Islands. To protect the Funds' remaining assets -- as is required under Cayman Islands law -- the Liquidators, Mr. Hodara said, opened accounts in the Cayman Islands in which proceeds of certain receivables that have been collected postpetition have been deposited. These are the funds to which Mr. Whicker referred when he responded to the Bankruptcy Court's inquiry regarding money that was "transferred" to Cayman Islands accounts, Mr. Hodara noted. Mr. Hodara also informed the Court that evidence that came to light following the Court's hearing on the foreign petitions demonstrates that the Funds regularly entered into a substantial number of principal transactions, each of which required prior written approval of one of their two Cayman Islands-based independent directors. The independent directors evidenced their independence in passing judgment on those transactions. "Th[e] Court, however, relies primarily upon facts set forth in pleadings filed at the very outset of these cases, notwithstanding the evolving nature of the [Liquidators'] investigation and the establishment of additional facts during testimony," Mr. Hodara said. During the September 24 hearing, Judge Lifland said Bear Stearns submitted "a pile of papers that suggest there are new facts," giving him only "a few hours to react" before the hearing, Ms. Kary relates. Bankruptcy Not Viable Option Mr. Hodara said in court papers that a chapter 7 or chapter 11 filing are not viable options for the Funds at this time. The potential recoveries for the Funds' creditors, Mr. Hodara explained, are not large -- nearly $50,000,000 in the case of Enhanced Fund and nearly $25,000,000 in the case of High-Grade Fund. Given the Funds' financial situation, the substantial costs associated with a chapter 7 or chapter 11 filing will divert resources from what will already be very limited recoveries to the Funds' creditors, Mr. Hodara said. The costs include, without limitation: (i) the costs associated with the potential appointment of a trustee, examiner, or official committee of unsecured creditors pursuant to Sections 1104(a), 1104(c), and 1102 of the Bankruptcy Code, or the costs associated with the appointment of a chapter 7 trustee, and its retention of attorneys, financial advisors, or other professionals; (ii) the costs associated with the preparation of the pleadings necessary to commence and prosecute the proceedings; and (iii) the costs associated with the coordination of the proceedings with the Cayman Islands Proceedings. Mr. Hodara also noted that the filing of chapter 7 or 11 cases potentially exposes the Funds to other harms. He pointed out that the pendency and prosecution of two primary proceedings in two separate jurisdictions would invest two legal entities with potentially differing obligations pertaining to the same assets and same creditors. The two legal entities would be the Foreign Representatives in the Cayman Islands and a debtor-in-possession, a trustee, or examiner in the United States. The responsibilities of both entities, governed under separate laws, risks conflicts with respect to the entities' fiduciary or other duties and responsibilities, thus, imposing further delays and costs on the Funds' estates to the detriment of creditors, investors, and all parties-in-interest, Mr. Hodara maintained. Further, such concurrent "main" proceedings heightens the risk that the very comity and international cooperation objectives underlying chapter 15 would be thwarted by conflicts of laws issues -- especially when both courts believe the proceedings pending before it to be the "primary insolvency" proceedings, Mr. Hodara said. About Bear Stearns Funds Grand Cayman, Cayman Islands-based Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd. and Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd. are open-ended investment companies, which sought high income and capital appreciation relative to the London Interbank Offered Rate, and designed for long-term investors. On July 30, 2007, the Funds filed winding up petitions under the Companies Law (2007 Revision) of the Cayman Islands. Simon Lovell Clayton Whicker and Kristen Beighton at KPMG were appointed joint provisional liquidators. The joint liquidators filed for Chapter 15 petitions before the U.S. Bankruptcy Court for the Southern District of New York the next day. Fred S. Hodara, Esq., Lisa G. Beckerman, Esq., and David F. Staber, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the liquidators in the United States. The Funds' assets and debts are estimated to be more than $100,000,000 each. (Bear Stearns Funds Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). CALPINE CORP: Bankruptcy Court Approves Disclosure Statement ------------------------------------------------------------ The Honorable Burton R. Lifland of the United States Bankruptcy Court for the Southern District of New York approved Calpine Corporation's Disclosure Statement filed in connection with the company's proposed Plan of Reorganization and authorized Calpine to begin soliciting votes from its creditors and shareholders on its Plan of Reorganization. Calpine's confirmation hearing for the Bankruptcy Court to consider approval of the Plan of Reorganization has been scheduled to commence on Dec. 18, 2007. Calpine will shortly begin the process of soliciting votes for the Plan of Reorganization from eligible claim and interest holders. The Official Committee of Unsecured Creditors in Calpine's Chapter 11 proceedings supported entry of the order approving the Disclosure Statement. Assuming the requisite approvals are received and the Bankruptcy Court confirms the Plan of Reorganization under the company's current timetable, Calpine expects to emerge from Chapter 11 prior to Jan. 31, 2008. "With the Court's authorization, we can now begin the solicitation of stakeholder votes on our Plan of Reorganization, which is a very important step forward in our restructuring process," Robert P. May, Calpine's Chief Executive Officer, said. "We continue to be very proud of what we have accomplished thus far as we work to emerge as a financially stable, stand-alone company with an improved competitive position in the energy industry. On behalf of my entire management team, we remain grateful for our dedicated employees' unwavering support throughout our restructuring process." As reported in the Troubled Company Reporter on Aug. 28, 2007, assuming Calpine's amended Plan of Reorganization is confirmed by Dec. 31, 2007 and subject to the assumptions set forth in the Disclosure Statement, Calpine estimates that the reorganized Calpine will have a midpoint reorganization value of $21.7 billion (reorganization value is equal to total enterprise value plus estimated distributable cash). At emergence, Calpine estimates that its total enterprise value will be between $19.2 billion to $21.3 billion, with a midpoint of $20.3 billion, and estimates that distributable cash will be approximately $1.4 billion Additionally, Calpine received a commitment for an amended and upsized exit facility from Goldman Sachs, Credit Suisse, Deutsche Bank, and Morgan Stanley. Simultaneously with the filing of its original Plan of Reorganization, Calpine filed a motion to enter into a commitment letter, pay associated commitment and other fees, and to amend and upsize the existing debtor in possession financing facility. On July 11, 2007, the Bankruptcy Court approved the upsized exit facility that will provide for up to $8 billion in secured financing, some $3 billion more than the current exit facility, on terms that Calpine views as favorable. The commitment to fund the exit facility expires on Jan. 31, 2008. About Calpine Corporation Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. CAMP AZUSA: Case Summary & Four Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Camp Azusa of the Apostolic Bible Students Association of Indiana, Inc. 3306 Carey Glen Court Westfield, IN 46074 Bankruptcy Case No.: 07-09250 Type of business: The Debtor is a church camp that provides a rural setting for children from low-income families. Chapter 11 Petition Date: September 24, 2007 Court: Southern District of Indiana (Indianapolis) Judge: Frank J. Otte Debtor's Counsel: Eric C. Redman, Esq. Bator, Redman, Bruner, Shive & Ludwig, P.C. 151 North Delaware Street, Suite 1106 Indianapolis, IN 46204 Tel: (317) 685-2426 Total Assets: $2,306,500 Total Debts: $1,070,000 Debtor's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Christ Church Apostolic Loans 2005-2006 $50,000 Church 6601 North Grandview Church Indianapolis, IN 46260 Greater One Way Apostolic Loans 2005-2006 $10,000 Church 5840 East 16th Street Indianapolis, IN 46218 Salem Insurance Insurance $4,000 158 West Market Street Nappanee, IN 46550 Zion Temple Apostolic Church Loans 2005-2006 $3,000 CDC MORTGAGE: S&P Lowers Ratings on Five Loan Classes ----------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on five classes from CDC Mortgage Capital Trust's series 2004-HE1 and 2004-HE3. Concurrently, S&P affirmed the ratings on eight classes from the same two transactions. The downgrades are the result of adverse collateral performance. Overcollateralization is below its target of 5 basis points by 56% for series 2004-HE1 and 44% for series 2004-HE3. The high levels of total and severe delinquencies in both transactions indicate that losses will continue to outpace excess interest and further erode the credit support in both transactions. The collateral consists of subprime fixed- and adjustable-rate conventional, fully amortizing, and balloon mortgage loans secured by first and second liens on one- to four-family residential properties. Ratings Lowered CDC Mortgage Capital Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-HE3 B-3 BB BBB- 2004-HE3 B-4 CCC BB+ 2004-HE1 B-1 BBB BBB+ 2004-HE1 B-2 B BBB 2004-HE1 B-3 CCC BBB- Ratings Affirmed CDC Mortgage Capital Trust Series Class Rating ------ ----- ------ 2004-HE3 M-1 AA 2004-HE3 M-2 A 2004-HE3 M-3 A- 2004-HE3 B-1 BBB+ 2004-HE3 B-2 BBB 2004-HE1 M-1 AA 2004-HE1 M-2 A 2004-HE1 M-3 A CHATHAM SQUARE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Chatham Square Apartments, LLC c/o Joseph A. Cattan, 1121 East 7th Street Brooklyn, NY 11230-4007 Bankruptcy Case No.: 07-45216 Type of Business: The Debtor operates an apartment complex. Chapter 11 Petition Date: September 25, 2007 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: Kevin J. Nash, Esq. Finkel Goldstein Rosenbloom & Nash 26 Broadway, Suite 711 New York, NY 10004 Tel: (212) 344-2929 Fax : (212) 422-6836 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's List of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Natgasco $32,549 532 Freeman Street Orange, NJ 07050 Regional Sewer Service $24,357 P.O. Box 1105 Belmawr, NJ 08099-5105 Central Wholesalers Inc. $13,370 13401 Virginia Manor Road Laurel, MD 20707 The Home Depot $5,843 Law Offices of Thomas F. Bullock $3,660 True Cut Lawncare & Landscaping LLC $3,631 Waste Management of New Jersey, Inc. $3,454 Public Service Mutual Insurance Company $2,520 PSE&G $2,184 Zurich Deductible Recovery Group $2,001 Gloucester Plumbing Supply $1,809 Roto-Rooter $1,584 U.S. Supply $975 Matter Brothers Electrical Contracting $956 Madison Local Construction LLC $950 Anyzek Fuela $878 Western Pest Services $845 LEW Corporation $788 GFR Bathtub Refinishing $785 Day's Inn Brooklawn $777 CMP KC: S&P Withdraws Ratings at Company's Request -------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings, including the 'CCC+' corporate credit rating, on CMP KC LLC at the company's request. COLONIAL PROPERTIES: Moody's Revises Outlook to Negative -------------------------------------------------------- Moody's Investors Service affirmed the ratings of Colonial Realty Limited Partnership (senior debt at Baa3) and revised the outlook to negative, from stable. "Colonial Properties' negative rating outlook reflects its heightened, material development pipeline, growing joint venture business, consistently high leverage and the expectation these levels will remain constant," noted Karen Nickerson, Moody's analyst. In the past, Moody's had indicated that Colonial Properties had little cushion in its Baa3 rating. In specific, development over 20% of gross assets without a decrease in leverage would result in negative rating pressure. At 2Q07, Colonial Properties' development pipeline represented 28% of gross assets, and its effective leverage (debt plus preferred as a percentage of gross assets) was 55%. Moody's expects leverage to remain between 55%- 60% over the intermediate term, which pressures the REIT's financial flexibility, when coupled with its large development pipeline. The Baa3 rating continues to reflect the REIT's large unencumbered asset pool, its good asset quality, its solid liquidity and a laddered debt maturity schedule. Moody's stated that a return to a stable rating outlook would be predicated upon a reduction in leverage closer to 50% should development remain over 20% of gross assets, as well as fixed charge coverage sustained above 2.0x. A rating downgrade would result should leverage be sustained over 55% given the size of Colonial's existing development pipeline, or its joint venture businesses grow beyond 25% of gross assets. These ratings were affirmed with a negative outlook: Colonial Properties Trust -- preferred stock at Ba1; senior unsecured debt shelf at (P)Baa3, subordinated debt shelf at (P)Ba1, and preferred shelf at (P)Ba1 Colonial Realty Limited Partnership -- senior unsecured debt at Baa3, senior unsecured medium term notes at Baa3, senior unsecured debt shelf at (P)Baa3, and subordinated debt shelf at (P)Ba1 Colonial Properties Trust [NYSE: CLP] is a REIT based in Birmingham, Alabama, USA, that focuses on the multifamily property sector, and owns and manages properties located in the Sunbelt states. At June 30, 2007, the REIT had $3.5 billion in book assets and $1.5 billion in book equity. COLUMBIA AIRCRAFT: Files for Chapter 11 Protection -------------------------------------------------- Columbia Aircraft Manufacturing Corporation filed Monday a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The action, according to the company, has resulted from a series of events dating back to 2006 that hampered the company's ability to deliver aircraft and disrupted cash flow. The events, the company says, include an unanticipated and damaging delay in the certification program for the G1000 avionics suite, a freak hail storm that damaged 67 aircraft awaiting certification and finally the recent supply chain disruption for essential avionics equipment. DIP Financing Concurrently, Columbia said it has received a $3 million interim commitment for debtor-in-possession financing from certain of its pre-petition lenders. The company said it will be filing a motion with the Bankruptcy Court seeking approval for this financing on an expedited basis. Columbia Chief Restructuring Officer, Carl Young, emphasized that the bankruptcy filing was required to enable the Company to continue its normal operations and said "It is very gratifying that our pre-petition lenders are willing to support the Company during this difficult time. We believe that, coupled to the other strategic decision announced today, this infusion of liquidity will allow Columbia to manage its present cash flow and liabilities while pursuing a plan that enables us to continue operating normally and maximize value for stakeholders, employees and existing and future customers." Asset Sale Columbia has filed a motion with the Bankruptcy Court seeking approval for a sale of substantially all of its assets to Cessna Aircraft Company, manufacturer of general aviation airplanes, a subsidiary of Textron Inc.(NYSE: TXT). As part of that motion, Columbia is also asking the Bankruptcy Court to establish bidding procedures that will enable other interested bidders to submit offers and bid at an auction currently scheduled to be held in November. About Columbia Headquartered in Bend, Oregon, Columbia Aircraft Manufacturing Corporation manufactures a variety of all-composite aircraft, including the Columbia 400 and employs approximately 440 people. COLUMBIA AIRCRAFT: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Columbia Aircraft Manufacturing Corporation fdba The Lancair Company fdba Pacific Aviation Composites USA, LLC 22550 Nelson Road Bend, OR 97701 Bankruptcy Case No.: 07-33850 Type of Business: The Debtor manufactures light, four-seater aircraft. See http://www.flycolumbia.com/ Chapter 11 Petition Date: September 24, 2007 Court: District of Oregon Judge: Elizabeth L Perris Debtor's Counsel: Albert N. Kennedy, Esq. Tonkon Torp LLP 888 Southwest 5th Avenue, Suite 1600 Portland, OR 97204 Tel: (503) 802-2013 Fax: (503) 972-3713 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's List of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ U.S. Bank Revolving Credit $25,769,112 c/o Bruce England Notes and Credit P.O. Box 790401 Agreements, principal St. Louis, MO 63179-0401 $11MM and $15MM, plus interest Garmin International Inc. Loan & Security $21,855,375 c/o Kevin Rauckman Agreement, $17MM Secured: 1200 East 151st Street and $7MM $2,000,000 Olathe, KS 66062-3426 Senior Lien: $2,000,000 Export-Import Bank of Premium and Recourse $6,183,516 Malaysia Berhad Agreement re $11MM c/o Sharidah Hanafiah term loan, and P.O. Box 13028 Facility Agreement re Level 8, UBN Tower Suite 10 $30MM credit facility Jalan P. Ramlee 50796 Kuala Lumpur Malaysia Gene Wolstenholme Amended & Restated $3,628,615 c/o Robert Wolsterholme Secured Promissory 3075 Advance Lane Note for $5,426,181 Colmar, PA 18915-9420 Teledyne Cont. Motors Aircraft Trade Debt $1,555,934 c/o Bryan Byers P.O. Box 90 Mobile, AL 36601-0090 Ball Janik LLP Professional Services $396,292 c/o Lisa Umscheid 101 Southwest Main Suite 1100 Portland, OR 97204-3219 Kelly Aerospace Thermal Systems Trade Debt $315,624 c/o Robert Simmons 1625 Lost Nation Road Willoughby, OH 44094-8189 Ryan International Trade Debt $195,068 Tensolite High-Performance Trade Debt $189,695 Cable Automotive Paint Specialties Trade Debt $188,621 Composites Universal Group Trade Debt $132,874 Mandala Agency Trade Debt $130,579 Snowline Manufacturing Inc. Trade Debt $125,862 Oregon Aero Trade Debt $96,015 ISCO Trade Debt $85,175 Newport Adhesives and Trade Debt $84,722 Composites Hanard Machine Inc. Trade Debt $78,800 Aviation Specialties Trade Debt $76,760 Unlimited Inc. Quadrant Precision Trade Debt $70,125 Manufacturing Mid-Continent Instruments Trade Debt $69,885 COUNTRYWIDE FINANCIAL: Completes Loan Changes to Curb Foreclosures ------------------------------------------------------------------ Countrywide Financial Corporation has completed more than 17,000 loan modifications and is on target to complete nearly 25,000 in 2007, in its ongoing effort to curb foreclosures. Countrywide is working with borrowers who are experiencing financial challenges. Utilizing various methods to help homeowners, including loan modifications, repayment plans, postponement of payments and refinancing, Countrywide has provided homeownership preservation assistance on approximately 35,000 mortgages so far this year. Loan modifications involve changes in one or more of the loan terms that bring a defaulted loan current and provide sustainable affordability. "Our number one priority is to help borrowers stay in their homes," Steve Bailey, senior managing director of loan administration, said. "Countrywide has the right tools, processes and staff to help homeowners avoid foreclosure." A significant barrier to helping homeowners is getting them connected with a Countrywide representative. Countrywide personnel engaged in telephone outreach contact with delinquent borrowers are trained to assist customers in getting the help they need. Twenty percent of borrowers never make contact with the company during their foreclosure process. In addition to direct outreach, Countrywide's efforts include working with non-profit and community groups across the country to create grassroots efforts to contact and counsel distressed borrowers, particularly in communities that are experiencing unusually high foreclosures. "There is an unprecedented effort among lenders, investors, community groups and the industry to work together to help homeowners," Mr. Bailey said. "No one benefits from foreclosure, and counseling and intermediary support from these groups can be fundamental to the success of our borrowers." These efforts are part of Countrywide's comprehensive homeownership preservation program, which consists of 2,700 highly-trained home retention specialists. Countrywide reaches out to distressed homeowners in their own communities by setting up face-to-face meetings through various means; hosting seminars around the country to help borrowers avoid foreclosure; participating in foreclosure prevention workshops, teaching them about possible foreclosure scams; and offering loan workouts on- site. About Countrywide Financial Corporation Founded in 1969, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services prime and nonprime loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. At July 31, 2007, Countrywide employed 61,586 workers, 34,326 of which originate loans. Bankruptcy Speculation As reported in the Troubled Company Reporter on Aug. 17, 2007, Kenneth Bruce, a Merrill Lynch & Co. analyst in San Francisco, raised the possibility that Countrywide might need to seek protection from creditors under chapter 11 in a research report entitled "Liquidity is the Achilles heel" distributed to Merrill Lynch clients. "If liquidations occur in a weak market, then it is possible for CFC to go bankrupt," Mr. Bruce wrote. With $216 billion in assets and $202 billion in liabilities, Countrywide would be the largest chapter 11 filing in U.S. history by those measures. The company however gave banking customers reassurance that their money was safe. That company cited that it has assets of more than $100 billion; has investment-grade ratings from three major credit rating agencies; and credit woes currently hurting its lending business won't affect federally insured deposits. Countrywide also disclosed that it received a $2 billion strategic equity investment from Bank of America which was completed and funded Aug. 22, 2007. DOWNSTREAM DEVELOPMENT: Moody's Rates $197 Mil. Senior Notes at B3 ------------------------------------------------------------------ Moody's Investors Service assigned a B3 (LGD-4, 50%) rating to Downstream Development Authority's proposed $197 million senior notes due 2015. The $197 million notes replace the previously proposed $235 million senior notes due 2015 that were rated B3 (LGD-4, 58%) on July 13, 2007. The rating on the $235 million senior notes was withdrawn. The company's B3 corporate family rating, B3 probability of default rating and stable rating outlook were affirmed. Proceeds from the senior notes, along with $45 million furniture and equipment financing and $51 million of new subordinated notes (not rated) will be used to fund the design, development, construction, and opening of the Downstream Casino Resort to be located in northeast Oklahoma. The casino will be owned and operated by the Quapaw Tribe of Oklahoma. The B3 corporate family rating reflects the small size and single asset profile of the Authority, competition from neighboring casinos in northeast Oklahoma, and the longer-term uncertainty regarding the approval of gaming in Kansas. Positive ratings consideration is given to the established nature of the proposed casino's primary and secondary market areas, the good risk/reward profile of the development project, and the funded interest reserve which will cover the first three interest payments, the last of which is expected to be paid six months after the scheduled completion date. The stable outlook anticipates that pro-forma leverage will be at or below 5.0 times once the casino begins operating. The Downstream Development Authority is a wholly-owned unincorporated instrumentality of the Quapaw Tribe of Oklahoma, a federally-recognized Indian tribe located in northeast Oklahoma. The Authority was formed in May 2007 to develop and operate the Downstream Casino Resort. DRINKS AMERICAS: Posts $1.6 Million Net Loss in Qtr. Ended July 31 ------------------------------------------------------------------ Drinks Americas Holdings Ltd. reported last week results for the first quarter ended July 31, 2007. Net loss for the first fiscal quarter was $1.6 million, compared with a net loss of $831,012 for the first quarter of fiscal 2007. Revenue for the first quarter fiscal 2008 was $1.3 million, compared with $336,305 for the first quarter of last year. The company attributed the increase in revenue to the ongoing expansion of Trump Super Premium Vodka, sales increases of its overall spirits and wine portfolio, and the expansion of its distribution of Newman's Own Sparkling Fruit Juices nationally. J. Patrick Kenny, president & chief executive officer of Drinks Americas, stated, "We continue to build tremendous momentum in our markets. As a result, we continue to achieve year-over-year record revenue as we drive the value of our premium icon-brands. The launch of Trump Super Premium Vodka has been a dramatic success, as has Newman's Sparkling Fruit Juices and Water as we expand nationally. Our results are beginning to reflect the opportunity we now have to put the capital we raised earlier in the year to work, fueling our growth. "Equally important and growing are Drinks Americas' bourbon, tequila, rum and wine business. All of these products are in a position, with both inventory and promotional support, to contribute to our revenue growth over the coming quarters." Mr. Kenny concluded, "Our entire portfolio of beverages, spirits, wine and non-alcoholic offerings are all growing, as we are managing our expenses and ensuring our margin requirements are met while benefiting from our Iconic marketing model." Mr. Kenny further added, "In our short history we have established three national brands: Trump Super Premium Vodka, Old Whiskey River Bourbon, and Newman's Own Sparkling Fruit Juices & Waters. In this current quarter we are seeing an increase in orders for our Tequila and Rum as well. In the coming year we will continue to scale up by beginning to execute our joint venture plans with Universal Music Group's Interscope, Geffen A&M Records, and taking advantage of the other resources and avenues available to us with our Icon branding model to continue to grow and expand the company." At July 31, 2007, the company's consolidated balance sheet showed $6.5 million in total assets, $4.8 million in total liabilities, and $1.7 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended July 31, 2007, are available for free at http://researcharchives.com/t/s?23b3 Going Concern Doubt As reported in the Troubled Company Reporter on Aug. 13, 2007, New York City-based Bernstein & Pinchuk LLP expressed substantial doubt about Drinks Americas Holdings Ltd.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended April 30, 2007, and 2006. The auditing firm pointed to the company's significant losses from operations since its inception. About Drinks Americas Headquartered in Wilton, Conn., Drinks Americas Holdings Ltd. -- http://www.drinksamericas.com/-- develops, owns, markets, and nationally distributes alcoholic and non-alcoholic premium beverages. Drinks Americas was founded in 2004 by J. Patrick Kenny. EDDIE BAUER: Weak Results Cue Moody's to Downgrade Ratings to B3 ---------------------------------------------------------------- Moody's Investors Service downgraded Eddie Bauer, Inc.'s corporate family rating and senior secured term loan rating to B3. The rating outlook remains negative. The downgrade reflects the company's weak results for the first six months of 2007 which have caused the two credit metrics cited in Moody's press release of March 20, 2007 to fall below a level that would prompt a downgrade; these weakened credit metrics are likely to be sustained over the next twelve months. The downgrade also reflects Moody's opinion that the company is at risk for a possible covenant violation under its term loan agreement at the end of the fourth quarter 2007, making it likely that the company will require an amendment or waiver. These ratings are downgraded: * Corporate Family Rating to B3 from B2; * Probability of Default Rating to B3 from B2; * $225 million senior secured term loan to B3 (LGD4; 53%) from B2 (LGD4; 54%). The B3 corporate family rating balances the company's very weak credit metrics and its current trend of negative EBIT against the sufficient liquidity as provided by the company's $150 million asset based revolving credit facility, which gives the company time to address its current performance issues. However, although the $150 million asset based revolving credit facility only tests its one financial covenant when availability falls below 10% of the maximum revolver availability, it does contain cross default provision to the $225 million term loan. Moody's believes that based upon the current earnings trend that the company is at risk for a possible covenant violation under its term loan agreement at the end of the fourth quarter 2007. In addition, the corporate family rating reflects the company's history of merchandise missteps for the Eddie Bauer brand, its high seasonality with most of its revenue and cash flow from operations being generated during the fourth quarter, and the high fashion risk associated with specialty apparel. Balancing out these weaknesses is the company's well-recognized brand name, its multi-channel distribution and national diversification, and its modest scale with approximately $1.0 billion in annual revenues The negative rating outlook is reflects Moody's expectation that credit metrics will remain very weak over the next twelve to eighteen months as the company is going through a transitional period during a weak apparel cycle and as such there is a high risk that management might not be able to improve Eddie Bauer's operating performance. The negative rating outlook also reflects the risk that the company could potentially violate its fourth quarter financial covenants contained in its term loan agreement. Eddie Bauer Holdings, Inc. is a holding company whose principal operating subsidiary is Eddie Bauer, Inc. Eddie Bauer, Inc. with headquarters in Bellevue, Washington, is a multi-channel specialty retailer that sells casual apparel and accessories. The company offers its products through its 257 retail and 120 outlet stores in the U.S. and Canada along with its catalogs and e-commerce sites. In addition, the company participates in joint venture partnerships in Japan and Germany and has licensing agreements across a variety of product categories. Eddie Bauer, Inc. had revenues of approximately $1.0 billion for the year ended Dec. 30, 2006. ENBRIDGE ENERGY: S&P Rates $400 Mil. Jr. Subordinated Notes at BB+ ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB+' issue credit rating to Enbridge Energy Partners LP's $400 million junior subordinated notes due 2037. Standard & Poor's also affirmed the company's corporate credit rating of 'BBB'. The proceeds of the offering will be used to fund a sizable capital expenditure program related to the expansion of crude pipeline transportation capacity on EEP's Lakehead system and the expansion of the company's East Texas natural gas transportation and gas gathering operations. EEP transports liquid petroleum products and natural gas, and owns natural gas gathering, treatment, and processing operations. The outlook is stable. As of June 30, 2007, Houston, Texas-based EEP had $2.18 billion in debt. The ratings on master limited partnership EEP and its operating limited partnership, Enbridge Energy L.P., reflect a satisfactory business profile that exhibits an average amount of risk among MLP peers. This status, combined with a consolidated financial profile that has struggled to keep pace with increasing business risk, has resulted in the weakening of the partnerships' credit profile. The outlook on EEP is stable. The stable outlook is based on the expectation for growing liquids volumes and growth in fee and demand charge-based transportation contracts expected to mitigate EEP's expansion into less stable natural gas gathering and processing businesses. "Ratings could be lowered or the outlook revised to negative, if construction projects are delayed and prolong the onset of incremental cash flows that will be required to support longer- term credit quality," noted Standard & Poor's credit analyst Michael Messer. As with any MLP, poor discipline in its acquisition activities or failure to support new acquisitions with an appropriate equity amount could hurt credit quality. "Upward ratings momentum is unlikely, as long as stand-alone financial performance lags the ratings targets and the company continues its emphasis on growth," he continued. EVRAZ OREGON: Postponed Refinancing Cues S&P to Withdraw Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings, including its 'B+' corporate credit rating and 'BB-' senior secured debt rating, on Evraz Oregon Steel Mills Inc. "The ratings withdrawal reflects the postponement of the planned refinancing due to market conditions," said Standard & Poor's credit analyst Marie Shmaruk. FAIRPOINT COMMS: PAETEC Supports Verizon Wireline Operations Buy ---------------------------------------------------------------- PAETEC has supported the approval of the proposed acquisition by FairPoint Communications Inc. of Verizon's wireline operations in Maine, New Hampshire and Vermont. PAETEC is a provider of a comprehensive suite of IP, voice, data and Internet services, well as enterprise communications management software, network security solutions, CPE and managed services. PAETEC had petitioned the New Hampshire Public Utilities Commission to intervene in FairPoint and Verizon's joint application seeking approval of the merger between FairPoint and Verizon's operations in Maine, New Hampshire and Vermont. However, PAETEC has now withdrawn as an intervenor and supports approval of the merger transaction. PAETEC has stated that: -- FairPoint has cooperated with PAETEC in resolving the parties' differences; -- PAETEC is satisfied that FairPoint will provide it with wholesale services in New Hampshire on at least as favorable terms to PAETEC as Verizon has been providing prior to the merger; and -- PAETEC supports approval of the merger by the New Hampshire Public Utilities Commission. Further, in stating that its participation in this proceeding is no longer necessary, it requested that all prefiled testimony in New Hampshire be withdrawn. "PAETEC joins a growing list of telecommunications companies that have expressed their support for the acquisition and we will continue to seek settlements with other intervenors," Gene Johnson, chairman and CEO of FairPoint, said. "We remain confident that we will receive all necessary approvals for the transaction." In January FairPoint submitted its applications for approval of the acquisition of Verizon's wireline operations in Maine, New Hampshire and Vermont. The petitions are being reviewed by the Public Utilities Commissions of Maine and New Hampshire, and the Public Service Board of Vermont, well as by the Federal Communications Commission. About FairPoint Communications Inc. Based in Charlotte, North Carolina, FairPoint Communications Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- offers an array of services to residential and business customers including: local voice, long distance and data products. The company operates in 18 states with 311,150 access line equivalents, including voice access lines and high speed data lines, which include digital subscriber lines (wireless broadband and cable modem in service as of Dec. 31, 2006). * * * Moody's Investor Services assigned B1 on FairPoint Communications Inc.'s probability of default and long term corporate family ratings on January 2005. The outlook is stable. The ratings hold to date. FAIRPOINT COMMS: Gets Approval on Verizon Wireline Operations Buy ----------------------------------------------------------------- FairPoint Communications Inc. has received approval from the Virginia State Corporation Commission and the Illinois Commerce Commission for its proposed acquisition of Verizon's wireline operations in Maine, New Hampshire and Vermont. The commissions were required to review the proposed transaction due to FairPoint's presence as a telephone and broadband provider in both states. In its approval, the Virginia commission noted that the transaction would neither impair nor jeopardize the provision of adequate service to the Virginia public at just and reasonable rates. The approval from the Illinois Commerce Commission also found that the transaction would not diminish the ability of FairPoint's existing Illinois operations to provide adequate, reliable, efficient, safe and least-cost public utility service. "We are extremely gratified to learn that both states approved the consummation of our transaction with Verizon," Gene Johnson, chairman and CEO of FairPoint, said. "We continue to believe that a larger organization, with improved economies of scale, will benefit all of our customers and specifically those in northern New England." In January FairPoint submitted its applications for approval of the acquisition of Verizon's wireline operations in Maine, New Hampshire and Vermont. The petitions are being reviewed by the Public Utilities Commissions of Maine and New Hampshire, and the Public Service Board of Vermont, well as by the Federal Communications Commission. About FairPoint Communications Inc. Based in Charlotte, North Carolina, FairPoint Communications Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- offers an array of services to residential and business customers including: local voice, long distance and data products. The company operates in 18 states with 311,150 access line equivalents, including voice access lines and high speed data lines, which include digital subscriber lines (wireless broadband and cable modem in service as of Dec. 31, 2006). * * * Moody's Investor Services assigned B1 on FairPoint Communications Inc.'s probability of default and long term corporate family ratings on January 2005. The outlook is stable. The ratings hold to date. FIDELITY NATIONAL: Completes Property Insight Sale to Affiliate --------------------------------------------------------------- Fidelity National Information Services Inc. disclosed Friday that it has completed the sale of its Property Insight business to its sister company, Fidelity National Financial Inc. The sale was effective Aug. 31, 2007. FIS received about $95 million in cash from the sale transaction, a Business Journal report says. In its Web site, FIS disclosed that the transaction is expected to reduce FIS' third quarter 2007 earnings by about $0.01 per share and fourth quarter 2007 earnings by about $0.02 per share, exclusive of a gain on the sale. FIS further said that Property Insight contributed about $0.09 to the company's earnings per share for full year 2006. About Fidelity National Financial Jacksonville-based Fidelity National Financial Inc. (NYSE: FNF), -- http://www.fntg.com/-- formerly Fidelity National Title Group, Inc., through its subsidiaries, provides title insurance, specialty insurance and claims management services. The company also provides flood insurance, personal lines insurance and home warranty insurance through its specialty insurance subsidiaries. In addition, FNF is a provider of outsourced claims management services to corporate and public sector entities through its minority-owned subsidiary, Sedgwick CMS Holdings, Inc. FNF has two business segments, Fidelity National Title Group and Specialty Insurance. About Fidelity National Information Based in Jacksonville, Florida, Fidelity National Information Services, Inc. -- http://www.fidelityinfoservices.com/-- provides core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage related information products; and outsourcing services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top ten. Nearly 50% of all US residential mortgages are processed using FIS software. FIS maintains a strong global presence, serving over 7,800 financial institutions in more than 60 countries worldwide, including Brazil. FIDELITY NATIONAL: Moody's Confirms Ba1 Corporate Family Rating --------------------------------------------------------------- Moody's Investors Service has confirmed the Ba1 corporate family rating for Fidelity National Information Services, concluding a review for possible downgrade initiated in June 2007. At the same time, Moody's has assigned a Ba1 rating to the company's $900 million first lien senior secured revolving credit facility, $2.1 billion first lien senior secured term loan A, and $1.6 billion first lien senior secured term loan B. In addition, Moody's upgraded Fidelity's notes rating (Certegy notes due September 2008) to Ba1 from Ba2 as the notes will become equally and ratably secured upon issuance of the $1.6 billion term loan. Concurrently, Moody's downgraded the company's speculative grade liquidity rating to SGL-2 from SGL-1, due to reduced free cash flow as a result of the additional debt associated with the current transaction. Nevertheless, Moody's believes FIS maintains sufficient liquidity overall. The rating outlook is stable. The $1.6 billion first lien senior secured term loan funded FIS' acquisition of EFD/eFunds Corporation, a leading provider of electronic funds transfer and prepaid card processing services, an all-cash transaction valued at approximately $1.8 billion. The transaction closed on September 12, 2007. "The eFunds acquisition provides FIS with service line diversity, expanding its electronic funds transfer and risk management businesses", according to John Moore, Vice President/Senior Analyst at Moody's Investors Service. FIS' Ba1 corporate family rating reflects the company's leading market position within the bank and mortgage transaction processing services markets it serves, its diversity of financial institution clients, and its substantial size in terms of pretax income compared to similarly rated peers. At the same time, the rating is constrained by the company's weak leverage and coverage metrics, pro forma for the transaction, and propensity to grow through acquisitions. Pro forma for the transaction, the company's ratio of debt to EBITDA approximates over 3.0x while EBITDA less capital expenditures interest coverage approximates 3.0x. The $900 million revolver, $2.1 billion term loan A and $1.6 billion term loan B are secured on a first lien basis by substantially all stock and assets of the company and its subsidiaries. Upon the issuance of the $1.6 billion secured term loan B, the company's existing 4.75% Certegy notes due September 2008 will remain outstanding and will become equally and ratably secured. The ratings for the secured credit facility and the secured Certegy notes reflect both the overall probability of default of the company, to which Moody's assigns a probability of default rating of Ba1 and a loss given default of LGD 3. The stable rating outlook reflects the company's steady organic growth in its banking and mortgage processing markets. Ratings assigned: * $900 million First Lien Senior Secured Revolving Credit Facility assigned at Ba1 (LGD 3, 48%) * $2.1 billion First Lien Senior Secured Term Loan A assigned at Ba1 (LGD 3, 48%) * $1.6 billion First Lien Senior Secured Term Loan B assigned at Ba1 (LGD 3, 48%) Rating upgraded: * $200 million 4.75% (Certegy) notes due September 2008 upgraded to Ba1 (LGD 3, 48%) from Ba2 (LGD6, 95%) Rating confirmed: * Corporate Family Rating confirmed at Ba1 * Probability of Default Rating confirmed at Ba1 Headquartered in Jacksonville, Florida, Fidelity National Information Services, Inc. provides card issuing, core bank processing, and mortgage loan processing services to financial institutions. FIREPOND INC: Causey Demgen Raises Going Concern Doubt ------------------------------------------------------ Causey Demgen & Moore, Inc. in Denver, Colorado, expressed substantial doubt about Firepond, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended May 31, 2007. The auditing firm noted that the company has suffered significant losses from operations. The company posted a $23,270,137 net loss on $4,624,763 of total revenues for the year ended June 30, 2007, as compared with a $4,783,181 net loss on $3,761,594 of total revenues in the prior year. The company also posted an operating loss of $5,818,162 at June 30, 2007, compared with a $1,454,960 operating loss in the prior year. At June 30, 2007, the company's balance sheet showed $8,719,883 in total assets and $5,871,161 in total liabilities, resulting a $2,848,722 stockholders' equity. The company had a working capital deficit of $1,700,000 at June 30, 2007, compared with a working capital deficit of $6,100,000 at June 30, 2006. The company had cash of about $700,000 and restricted cash of about $1,200,000 as of June 30, 2007. The company's cash flow from operating activities may be insufficient to meet its operating needs and other payment obligations. In the next 12 months at least one of the company's debt facilities will mature, and it has no current commitment to refinance that facility or free cash to repay that debt upon maturity. A full-text copy of the company's 2006 annual report is available for free at http://ResearchArchives.com/t/s?23a1 About Firepond Firepond Inc. -- http://www.firepond.com/company/-- provides multi-tenant, on-demand software that automates and simplifies the process companies use to sell complex products and services. Its Configure, Price, Quote, or CPQ, software-as-a-service automates sales processes, improves order accuracy, and accelerates sales cycles. The company designed its CPQ product to be a low-cost Internet-based software application delivered on a subscription basis. FIRST DATA: Kohlberg Kravis Completes $29 Billion Acquisition ------------------------------------------------------------- First Data Corporation disclosed the completion of its acquisition by affiliates of Kohlberg Kravis Roberts & Co. Under the terms of the merger agreement, the company's stockholders will receive $34 per share in cash. Shareholders approved the transaction at a special meeting on July 31, 2007. As reported in the Troubled Company Reporter on April 4, 2007, First Data entered into $29 billion buyout agreement with KKR, which was unanimously approved by the First Data Board of Directors based upon the recommendation of the Strategic Review Committee comprised of three independent directors. First Data stock ceased to trade on the New York Stock Exchange (NYSE) at market close of Sept. 24, 2007. Under private ownership, First Data's common stock will no longer be listed on the NYSE. With the transaction completed, Michael D. Capellas becomes First Data's new chairman and CEO, replacing Ric Duques. Mr. Duques has served as chairman and CEO since November 2005, and previously served as chairman from 1992 to 2003 and CEO from 1987 to 2003. Mr. Capellas was previously CEO of MCI, President of Hewlett- Packard Company and Chairman and CEO of Compaq Computer Corporation. New Management Team The company also disclosed that all of its operations in the U.S. will be led by Edward Labry and that it will combine the company's Commercial Services and Financial Institution Services segments. Mr. Labry has been serving as president of the company's Commercial Services division. First Data's international operations will be led by David Yates and will continue to be organized regionally with a focus on selling the company's suite of payments services to merchant and financial institution clients outside of the United States. Mr. Yates has been serving as president of the company's Europe, Middle East and Africa region. To further strengthen and support the senior management team, Tom Bell has joined the company as Executive Vice President and Chief Strategy Officer. Mr. Bell will assume primary responsibility for corporate strategy and the company's high growth areas for innovation. Mr. Bell joins First Data after 25 years at Accenture where he served as Managing Director in the Communications & High Tech practice. Grace Chen Trent also has joined First Data as Executive Vice President for Marketing and Communications. Ms. Trent will assume responsibility for the company's integrated marketing, brand and communication programs worldwide. Ms. Trent was most recently Senior Vice President of Communications for MCI. First Data executive officers that will continue in their current roles are: -- Peter Boucher, Executive Vice President, Human Resources; -- David Dibble, Executive Vice President, Chief Technology Officer; -- Dave Money, Executive Vice President, General Counsel; and -- Kim Patmore, Executive Vice President, Chief Financial Officer. "First Data begins a new era as a private company," Mr. Capellas said. "The strength and experience of this new management team combined with our leading market position will serve as a critical foundation for what will be the next generation of First Data. Our new simplified company structure will allow us to be more customer-focused, more innovative and faster to market with new products. Our goal is to transform from being the largest payments processor to a leading-edge technology services provider in the expanding world of electronic and mobile commerce." "First Data is very fortunate to have a solid foundation of strong financial performance, a market leading position and a long list of great clients around the world," KKR Member Scott Nuttall added. "We look forward to supporting Michael and the rest of the management team in the years ahead to extend that leadership position and capitalize on the worldwide trend toward electronic payments." "After 18 years with the company, I am stepping down knowing that First Data's future is in extremely capable hands," Mr. Duques said. "Our new CEO, Michael Capellas, together with the support of KKR, will build upon our existing strengths to deliver the advanced services our clients will require in the years ahead." "Ric Duques has served as the essential architect behind First Data's emergence as the world's leading payments processor for two decades," Mr. Capellas continued. "On behalf of everyone at First Data, I want to thank him for his tremendous leadership and we wish him the very best in his retirement." About First Data Headquartered in Greenwood Village, Colorado, First Data Corp. (NYSE: FDC) -- http://www.firstdata.com/-- provides electronic commerce and payment solutions for businesses worldwide. The company's portfolio of services and solutions includes merchant transaction processing services; credit, debit, private-label, gift, payroll and other prepaid card offerings; fraud protection and authentication solutions; receivables management solutions; electronic check acceptance services through TeleCheck; well as Internet commerce and mobile payment solutions. The company's STAR Network offers PIN-secured debit acceptance at 2 million ATM and retail locations. * * * As reported in the Troubled Company Reporter on Sept. 19, 2007, Moody's Investors Service assigned to First Data Corporation a B2 Corporate Family Rating and Ba3 rating to senior secured credit facilities related to its acquisition by Kohlberg, Kravis, Roberts & Co. The rating outlook for the new ratings is stable. Standard & Poor's Ratings Services lowered its corporate credit rating on Greenwood Village, Colorado-based First Data Corp. to 'B+' from 'BB+' and removed the rating from CreditWatch, where it was placed on April 2, 2007, with negative implications. The outlook is negative. Upon conclusion of its review of First Data Corp.'s new capital structure for the expected close of its leveraged buy-out transaction with Kohlberg Kravis Roberts & Co.'s, Fitch Ratings has taken these rating actions on FDC: Long-term Issuer Default Rating downgraded to 'B+' from 'BBB' and removed from Rating Watch Negative; $2 billion senior secured revolving credit facility due 2013 rated 'BB/RR2'; and $13 billion senior secured term loan B due 2014 rated 'BB/RR2'. The Rating Outlook is Stable. FORD MOTOR: Changan Ford Launches $510 Mil. Manufacturing Plant --------------------------------------------------------------- Ford Motor Company's China joint venture, Changan Ford Mazda Automobile, officially launched operations at its new state-of- the-art manufacturing facility in Nanjing, China, where it will produce the latest small-car models for both the Ford and Mazda brands. The $510 million flexible and scalable facility has an initial capacity of 160,000 vehicles per year, boosting Ford's total annual passenger car capacity in China to more than 410,000 vehicles. During a formal ceremony in Nanjing, Ford Motor Company president & CEO, Alan Mulally, Mazda president & CEO, Hisakazu Imaki and China South Industry Group president Xu Bin joined local Chinese government officials to inaugurate the new plant, and review its highly flexible and automated facilities, and advanced environmentally-friendly processes. "Integrating, leveraging and growing Ford worldwide is one of our top priorities, and our China strategy is certainly a key component to making this happen. This new state-of-the-art facility will significantly increase our capacity in China, and allow us to continue our rapid growth in the market," explained Mulally. "Working together with our JV partners at Changan Ford Mazda Automobile and Changan Ford Mazda Engine, we'll continue to build and introduce the types of vehicle that Chinese customers really want, and are demanding," Mr. Mulally added. CFMA is well known in China for its high quality cars, and after several years of considerable expansion, made its way into China's top 10 passenger-car makers in April. Ford has been one of the fastest growing brands in China, recording a whopping 87% increase in sales between 2005 and 2006, and a further 29% increase through the first eight months of this year, with total retail sales of 114,702 vehicles. With the inauguration of the Nanjing plant, CFMA will be able to offer a more diversified range of products for different market segments, including small cars, mid-sized and full-sized sedans. CFMA's first vehicle assembly plant in Chongqing currently produces the Ford Focus, Ford Mondeo, Ford S-MAX, Volvo S40 and Mazda3, and has an annual capacity of 250,000 vehicles. Automated Production Lines The new Nanjing plant utilizes the latest auto manufacturing technologies and automation equipment. A maximum of eight models with different chassis can be simultaneously produced on the plant's advanced and highly flexible production lines, maximizing production speed and efficiency1. All 45 critical components are manufactured in-house, ensuring high-quality and precision measurements of the car body. The plant also utilizes the most advanced torque monitoring and logistics delivery systems currently available in China, making it one of the country's most modern auto manufacturing facilities. "The new Nanjing facility employs the latest automated technologies to ensure quality, efficiency and environmental protection, demonstrating our commitment to the further development of world-class operations in China," Mei-Wei Cheng, chairman and CEO of Ford China Ltd, said. An advanced 3C1B (3-coat, 1-bake) environmentally-friendly paint process will also be used for the first time in China, which is compliant with European standards and provides a 15 percent reduction in CO2 emissions and 44% reduction in particulate emissions. The process, which can reduce equipment and production cost, is currently the most environmentally-friendly surface-paint coating technique employed in China. It uses internationally advanced processes known as electrophoresis groove and reverse-flow water circulation methods, which can eliminate close to 100% of the particles. About Ford Motor China Ford's wholly owned subsidiaries and JVs in China include Ford Motor (China) Limited, Ford Motor Research & Engineering (Nanjing) Co., Ltd., Ford Automotive Finance (China) Ltd., Changan Ford Mazda Automotive Co., Ltd., Changan Ford Mazda Automotive Co., Ltd., Nanjing Company, Changan Ford Mazda Engine Co., Ltd., and Jiangling Motors Co., Ltd. Ford Motor has introduced a number of models to the Chinese market, including Ford Mondeo, Ford Focus, Ford S-MAX, Ford Transit, Volvo S40, Mazda3, as well as several imported models from Jaguar, Land Rover, Lincoln and Volvo, and service brand, Ford Service. Ford Motor China is actively involved in various programs to support the environment, road safety, health and education. Since 2000, it has organized the Ford Motor Conservation and Environmental Grants, which to date has sponsored 113 groups/individuals with more than 20 million yuan to assist environmental protection efforts in the country. About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on July 30, 2007, Moody's Investors Service said that the performance of Ford Motor Company's global automotive operations for the second quarter of 2007 was significantly stronger than the previous year and better than street expectations. However, Moody's explained that the company continues to face significant competitive and financial challenges, and the rating agency expects that Ford's credit metrics and rate of cash consumption will likely remain consistent with no higher than a B3 corporate family rating level into 2008. According to the rating agency, Ford's corporate family rating is currently a B3 with a negative outlook. The rating is pressured by the shift in consumer preference from high margin trucks and SUVs, and by the need for a new 2007 UAW contract that provides meaningful relief from high health care costs and burdensome work rules, Moody's relates. In June 2007, S&P raised the Issue Rating on Ford's senior secured credit facilities to B+ from B. GENERAL MOTORS: Inks $800 Million China Export Deal --------------------------------------------------- General Motors Corp. and its Shanghai General Motors joint venture signed a multi-year agreement worth more than $800 million to export U.S.-built Buick Enclave premium crossover sport utility vehicles along with other vehicles and components to China beginning in 2008. The agreement was signed in the presence of China's Assistant Vice Minister of Commerce Chen Jian, Chinese Embassy officials, U.S. Assistant Secretary of Commerce Israel Hernandez, GM Vice President of Global Sales, Service and Marketing Operations John Middlebrook, and Shanghai GM Executive Vice President Robert Socia. The all-new Buick Enclave is built at GM's Lansing Delta Township assembly plant in Lansing, Michigan. Enclave is one of GM's most sought-after vehicles in North America because of its stylish, modern design and high level of standard features. Introduced earlier this year, the Enclave has received enthusiastic reviews and has helped lead General Motors' recent sales increase in its home market. According to Shanghai GM President Ding Lei, "Shanghai GM has become a leader in the production and sale of passenger cars in China, driven largely by the success of the Buick brand. These new Buick premium sport utility vehicles will strengthen our lineup and enable us to continue to meet the changing needs of our growing base of customers." The Buick agreement is the second of two China export agreements signed by GM this year. As reported in the Troubled Company Reporter on May 18, 2007, GM signed a deal to export $700 million worth of Cadillacs and automotive components to China from the United States. GM's China operations have already imported about $3.5 billion worth of vehicles, components, equipment, and machinery from North America over the past 10 years. "We appreciate the support that we received from the Chinese and U.S. governments for this program, which will benefit both countries," GM China Group President and Managing Director Kevin Wale said. "It will take the value of GM sourcing contracts from the United States for the China market to more than $1.5 billion this year." "The efforts of General Motors and its Chinese partner, Shanghai Automotive Industry Corp. Group, to promote healthy and stable Sino-U.S. trade relations is very much appreciated," Assistant Vice Minister of Commerce Chen Jian added. "The Chinese government will continue to work with the U.S. government and enterprises to create a better market environment, ensure a smooth channel for U.S. companies' business development and actively promote American exports to China for more balanced trade." Enclave will be imported by Shanghai GM and sold through its network of nearly 400 Buick dealerships across China. The new model will complement the rest of Shanghai GM's popular Buick lineup, which includes the Park Avenue and LaCrosse premium sedans, Regal upper-medium sedan, Excelle family, and GL8 and FirstLand executive wagons. GM operates seven joint ventures and two wholly owned foreign enterprises and has more than 20,000 employees in China. GM, along with its joint ventures, offers the broadest lineup of vehicles and brands among automakers in China. Products are sold under the Buick, Cadillac, Chevrolet, Opel, Saab and Wuling nameplates. In 2006, sales of vehicles by GM and its joint ventures rose 31.8% on an annual basis to a record 876,747 units. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GENERAL MOTORS: U.S. Strike May Speed Talks, UAW Leader Says ------------------------------------------------------------ United Auto Workers president Ron Gettelfinger said that the UAW union strike, which began 11 a.m. Monday, is likely to hasten labor contract negotiations with General Motors Corp., various sources report. Citing people familiar with the talks, the Associated Press relates that one of the issues tackled during the second day of the labor discussions is GM's request for UAW to takeover the retiree healthcare costs. In return, the UAW wants GM to promise future investments and products in U.S. plants. As reported in yesterday's Troubled Company Reporter, UAW President Ron Gettelfinger said that UAW members rallied over job security, economic issues, benefits for active workers and winning investment in future products. GM had disclosed that it was disappointed in the union's decision to call a national strike, insisting that bargaining involves complex, difficult issues that affect the job security of its U.S. work force and the long-term viability of the company. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on May 28, 2007, Standard & Poor's Ratings Services placed General Motors Corp.'s corporate credit rating at B/Negative/B-3. At the same time, Moody's Investors Service affirmed GM's B3 Corporate Family Rating and B3 Probability of Default Rating, and maintained its SGL-3 Speculative Grade Liquidity Rating. The rating outlook remains negative, according to Moody's. GENERAL MOTORS: US Strikes Spur Canada Plant Closures ----------------------------------------------------- General Motors Corp. shut down its Car Plant 1 in Oshawa, Ontario, at 3 a.m. yesterday, Reuters reports citing a statement from GM Canada public relations director Stew Low. The plant employed 3,000 workers. According to Mr. Low, the Reuters adds, the company's Car Plant 2, also located in Oshawa, was up for review by the end of Tuesday's day shift. Car Plant 2 employs 2,500 workers. Car Plant 1 builds the Chevrolet Impala and Monte Carlo while Car Plant 2 builds the Pontiac Grand Prix and the Buick Allure. Both plants, like all GM Canada plants, is integrated with the automakers U.S. operations and is dependent on them for some parts, Reuters relates. GM's Windsor, Ontario-based transmission plant closed on Monday affecting 1,400 staff. The closures were a result of a strike by the United Auto Workers union that began at 11 a.m. Monday. Reuters further reports that the company plans to asses remaining plants in Canada on a day-to-day basis. Aside from the three plants, GM Canada also has: * a truck plant also in Oshawa; * an engine and components plant in St. Catharines, Ontario; * a parts and distribution plant in Woodstock, Ontario; and * a joint venture with Suzuki Motor Corp at Ingersoll, Ontario. Canada Auto Workers Union's Statement Canada Auto Workers President Buzz Hargrove said in a statement Monday that GM workers in Canada will be almost immediately affected by the strike by UAW members against General Motors in the United States. Hargrove said that between 80,000 to 100,000 Canadian workers at General Motors, independent parts suppliers, and service companies will be impacted if the strike lasts until the end of this week. According to Mr. Hargrove, the UAW negotiators have worked extremely hard trying to reach agreement with General Motors, including the UAW's move to extend bargaining almost 10 days. "GM appears intent on making workers and their communities pay for the problems caused by unfair trade and the flood of imports," said Mr. Hargrove. Next year in Canada in bargaining with GM it will probably be the same approach with the CAW, Mr. Hargrove further said. Hargrove said it's unfortunate the UAW was forced to go on strike in the U.S. and stressed that the two unions are not in competition. "In Canada, we share the same troubles as in the U.S. – unfair trade and the loss of market share to producers in Japan, Korea and the European Union," said Mr. Hargrove. "Here this combines with high Canadian dollar and the Conservative government's refusal to deal with it appropriately." He also indicated that CAW workers will not be handling parts from U.S. GM plants now out on strike. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GENERAL MOTORS: UAW's Strike Prompts Fitch's Negative Watch ----------------------------------------------------------- Following the decision of the United Auto Workers union to go out on strike against General Motors Corp., Fitch Ratings has placed the Issuer Default Ratings and securities ratings of these companies on Rating Watch Negative: General Motors Corp. -- IDR 'B'; -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. American Axle & Manufacturing, Inc. -- IDR 'BB'; -- Senior unsecured bank facility 'BB'; -- Senior unsecured 'BB'. American Axle Manufacturing Holdings Inc. -- IDR 'BB'. ArvinMeritor Inc. -- IDR 'BB'; -- Senior secured 'BB+'; -- Senior unsecured 'BB-'. Tenneco, Inc. -- IDR 'BB-'; -- Senior secured bank facility 'BB+'; -- Senior secured notes 'BB'; -- Subordinated 'B'. Hayes-Lemmerz International, Inc. -- IDR 'B'. Hayes Lemmerz Finance - Luxembourg S.A -- IDR 'B'. -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. HLI Operating Company, Inc. -- IDR 'B'. The UAW strike has the potential for far-reaching, crippling repercussions throughout the industry. Although the strike is expected to be short-lived, due to the potentially devastating consequences to both sides, the onset of a strike could limit the ability of both parties to control the subsequent chain of events. Negative cash flow at GM will accelerate, due to operating losses and working capital reductions. The costs of a strike would also have consequences on GM's restructuring program, extending the timetable and impairing financial resources available, which is occurring during an uncertain economic environment for industry sales. A reduction in cash holdings could also jeopardize the ability of GM to finance any VEBA agreement. Fitch estimates that a VEBA agreement would be in the range of $30-35 billion, and that GM is unlikely to fund the VEBA entirely in cash, as remaining liquidity would fall to uncomfortable levels given economic uncertainties, restructuring costs, and working capital requirements. The issue of job security is not easily resolvable, given the high priority placed on the issue by the UAW and GM. The flexibility to reduce production and costs in the event of an economic downturn or weak product performance will be critical to GM's ability to weather such events. Fitch forecasts that further restructuring actions will be necessary to achieve viable long-term margins. In the event that GM and the UAW reach an agreement following a strike, ratification will be the next hurdle. The financial and operating stresses of suppliers would be exacerbated in the event of a strike, although liquidity among tier-one suppliers remains adequate in the short term. Second- tier and third-tier suppliers are expected to face more difficult challenges, with lower levels of liquidity and less access to capital. Financial distress at this level could quickly spill over to first-tier suppliers and GM, challenging any assumptions that a production re-start can be accomplished smoothly and quickly. The suppliers placed on Rating Watch Negative contain varying combinations of exposure to GM North America and limited or negative free cash flow over the short term. In the event that the strike is settled within a short time frame, each of the suppliers on Rating Watch Negative is expected to return to their previously existing rating and outlook. Fitch anticipates that if the strike extends beyond a very short term, further rating actions would follow, and the ratings and outlook of other OEMs and suppliers could be reviewed. GENERAL MOTORS: Moody's Maintains Ratings after UAW Strike ---------------------------------------------------------- Moody's Investors Service is maintaining its current ratings of General Motors Corporation - B3 Corporate Family, Caa1 senior unsecured and Ba3 senior secured, and Negative Outlook following the announcement of a strike against the company by the United Auto Workers Union. Moody's believes that GM should, within the context of the current ratings, be able to adequately fund the cash requirements associated with a US work stoppage approximating 30 days. The company's ability to cover these cash requirements should be supported by its favorable liquidity profile including cash and short-term VEBA balances of approximately $33 billion, its $9 billion in unused committed credit facilities, and its ability to implement various cash-preserving operating initiatives. Despite the maintenance of GM's current ratings, the outlook remains negative. Moreover, Moody's said that the ratings could be placed under review for possible downgrade should circumstances indicate that negotiations are not progressing toward a constructive resolution or that the strike might extend beyond 30 days. General Motors Corporation, headquartered in Detroit, is the world's largest automaker, based on 2006 sales. GENESCO INC: Finish Line Denies Stalling Merger Process ------------------------------------------------------- The Finish Line Inc. responded to Genesco Inc.'s filing of a suit in Chancery Court in Nashville, Tennessee, regarding the Finish Line's proposed acquisition of Genesco. As reported in yesterday's Troubled Company Reporter, Genesco filed suit, seeking an order requiring Finish Line to consummate its merger with Genesco and to enforce Finish Line's rights against UBS under the Commitment Letter for financing the transaction. The Finish Line stated that it has complied with its obligations under the merger agreement, and continues to work on the closing documents by asking Genesco for certain financial and other information well as access to Genesco's chief financial officer and financial staff. However, to date Genesco has not responded to and has refused to comply with these requests. These failures constitute a breach of the merger agreement, and The Finish Line is notifying Genesco of same. The Finish Line regrets that Genesco has chosen to initiate litigation. The Finish Line is reviewing the Genesco lawsuit and will take steps to protect the interests of The Finish Line and its shareholders. About Finish Line Headquartered in Indianapolis, Indiana, The Finish Line Inc. (Nasdaq: FINL) -- http://www.finishline.com/-- is a mall-based specialty retailer operating under the Finish Line, Man Alive and Paiva brand names. The company currently operates 697 Finish Line stores in 47 states and online, 95 Man Alive stores in 19 states and online and 15 Paiva stores in 10 states and online. About Genesco Inc. Based in Nashville, Tennessee, Genesco Inc. (NYSE: GCO) -- http://www.genesco.com/-- is a specialty retailer of footwear, headwear and accessories in more than 1,900 retail stores in the U.S. and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Zone, Cap Factory, Head Quarters and Cap Connection. The company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers. * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services said that its ratings on specialty Genesco Inc. remain on CreditWatch with developing implications, following the announcement that it has rejected Foot Locker Inc.'s conditional bid to acquire Genesco for approximately $1.3 billion ($51.00 per share)in cash. In April 2007, S&P placed its ratings, including the 'BB-' corporate credit rating, on Genesco Inc. on CreditWatch with developing implications after Foot Locker launched its bid for Genesco. The Foot Locker deal also prompted Moody's Investors Service to place the ratings of Genesco on review for possible downgrade. Affected ratings include the company's "Ba3" corporate family rating. GREAT ATLANTIC: Inks Notification Pact with FTC over Pathmark Buy ----------------------------------------------------------------- The Great Atlantic & Pacific Tea Company Inc. and Pathmark Stores Inc. have entered into an agreement with the Federal Trade Commission pursuant to which both companies agree to provide the FTC notice of their intention to consummate Great Atlantic's acquisition of Pathmark at least two weeks prior to closing of the transaction. Great Atlantic and Pathmark further agreed to give the notice to the FTC no sooner than Oct. 5, 2007. As previously disclosed, both Tengelmann, Great Atlantic's majority shareholder, and Pathmark received Second Requests from the FTC on April 18, 2007, and subsequently entered into a timing agreement with the FTC. The issuance of the Second Requests effectively extended the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, during which Great Atlantic and Pathmark may not consummate the proposed acquisition. Under the timing agreement, Great Atlantic and Pathmark agreed, subject to certain conditions, that they would not consummate Great Atlantic's acquisition of Pathmark for at least 60 days following the date that Great Atlantic and Pathmark substantially comply with the Second Requests. Great Atlantic and Pathmark had submitted certificates of substantial compliance to the FTC on July 13, 2007. On August 7, both companies had entered into an agreement with the FTC providing that, subject to certain conditions, Great Atlantic and Pathmark would not consummate Great Atlantic's acquisition of Pathmark prior to Sept. 25, 2007. A&P and Pathmark are continuing to cooperate with the FTC. The Troubled Company Reporter related on March 8, 2007, that Great Atlantic's wholly owned subsidiary, Sand Merger Corp., had entered into an Agreement and Plan of Merger with Pathmark Stores, Inc., dated Mar. 4, 2007, pursuant to which the Great Atlantic, through Sand Merger, would acquire all of the shares of Pathmark for about $1.3 billion in cash, stock and debt assumption or retirement. About Great Atlantic Founded in 1859, The Great Atlantic & Pacific Tea Company, Inc. (NYSE: GAP) -- http://www.aptea.com/-- operates supermarket chains with 337 stores in eight states and the District of Columbia under the following trade names: A&P, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-A- Center and Food Basics. * * * As reported in the Troubled Company Reporter on Sept. 19, 2007, Standard & Poor's Ratings Services revised the CreditWatch implications for both Great Atlantic & Pacific Tea Co. Inc. and Pathmark Stores Inc. to positive from developing. The long-term corporate credit rating on both companies is 'B-'. GSMPS MORTGAGE: S&P Junks Rating on 2005-LT1 Class B-2 Loans ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on classes M-2, B-1, and B-2 from GSMPS Mortgage Loan Trust 2005-LT1. In addition, S&P removed the class B-1 and B-2 ratings from CreditWatch with negative implications, where they were placed on May 25, 2007. Lastly, S&P affirmed its ratings on classes A-1 and M-1. The downgrades reflect adverse collateral performance. The rate of realized losses, after collateral liquidation and insurance claims, has fully depleted the overcollateralization and has caused a principal write-down to class B-3. Based on the delinquency pipeline and the 17.62% pool factor, S&P believe that losses are likely to continue to erode the credit support for the remaining classes in the trust. The collateral consists of nonperforming mortgage loans insured by the FHA or partially guaranteed by the VA or Rural Housing Service. As applicable, the rights to payment from the FHA, VA, or RHS in connection with claims that have been filed or will be filed with respect to liquidated loans are also included in the trust. Ratings Lowered and Removed from Creditwatch Negative GSMPS Mortgage Loan Trust 2005-LT1 Rating ------ Series Class To From ------ ----- -- ---- 2005-LT1 B-1 B BB/Watch Neg 2005-LT1 B-2 CCC B/Watch Neg Rating Lowered GSMPS Mortgage Loan Trust 2005-LT1 Rating ------ Series Class To From ------ ----- -- ---- 2005-LT1 M-2 BBB A Ratings Affirmed GSMPS Mortgage Loan Trust 2005-LT1 Series Class Rating ------ ----- ------ 2005-LT1 A-1 AAA 2005-LT1 M-1 AA HAYES-LEMMERZ: UAW's GM Strike Prompts Fitch's Negative Watch ------------------------------------------------------------- Following the decision of the United Auto Workers union to go out on strike against General Motors Corp., Fitch Ratings has placed the Issuer Default Ratings and securities ratings of these companies on Rating Watch Negative: General Motors Corp. -- IDR 'B'; -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. American Axle & Manufacturing, Inc. -- IDR 'BB'; -- Senior unsecured bank facility 'BB'; -- Senior unsecured 'BB'. American Axle Manufacturing Holdings Inc. -- IDR 'BB'. ArvinMeritor Inc. -- IDR 'BB'; -- Senior secured 'BB+'; -- Senior unsecured 'BB-'. Tenneco, Inc. -- IDR 'BB-'; -- Senior secured bank facility 'BB+'; -- Senior secured notes 'BB'; -- Subordinated 'B'. Hayes-Lemmerz International, Inc. -- IDR 'B'. Hayes Lemmerz Finance - Luxembourg S.A -- IDR 'B'. -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. HLI Operating Company, Inc. -- IDR 'B'. The UAW strike has the potential for far-reaching, crippling repercussions throughout the industry. Although the strike is expected to be short-lived, due to the potentially devastating consequences to both sides, the onset of a strike could limit the ability of both parties to control the subsequent chain of events. Negative cash flow at GM will accelerate, due to operating losses and working capital reductions. The costs of a strike would also have consequences on GM's restructuring program, extending the timetable and impairing financial resources available, which is occurring during an uncertain economic environment for industry sales. A reduction in cash holdings could also jeopardize the ability of GM to finance any VEBA agreement. Fitch estimates that a VEBA agreement would be in the range of $30-35 billion, and that GM is unlikely to fund the VEBA entirely in cash, as remaining liquidity would fall to uncomfortable levels given economic uncertainties, restructuring costs, and working capital requirements. The issue of job security is not easily resolvable, given the high priority placed on the issue by the UAW and GM. The flexibility to reduce production and costs in the event of an economic downturn or weak product performance will be critical to GM's ability to weather such events. Fitch forecasts that further restructuring actions will be necessary to achieve viable long-term margins. In the event that GM and the UAW reach an agreement following a strike, ratification will be the next hurdle. The financial and operating stresses of suppliers would be exacerbated in the event of a strike, although liquidity among tier-one suppliers remains adequate in the short term. Second- tier and third-tier suppliers are expected to face more difficult challenges, with lower levels of liquidity and less access to capital. Financial distress at this level could quickly spill over to first-tier suppliers and GM, challenging any assumptions that a production re-start can be accomplished smoothly and quickly. The suppliers placed on Rating Watch Negative contain varying combinations of exposure to GM North America and limited or negative free cash flow over the short term. In the event that the strike is settled within a short time frame, each of the suppliers on Rating Watch Negative is expected to return to their previously existing rating and outlook. Fitch anticipates that if the strike extends beyond a very short term, further rating actions would follow, and the ratings and outlook of other OEMs and suppliers could be reviewed. HOMEBANC CORP: Court Okays Servicing Rights Sale Protocol --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved HomeBanc Mortgage Corporation and its debtor-affiliates' proposed sale procedures for certain of their mortgage loan servicing rights. The Debtors may sell the Servicing Rights by conducting an auction, which will take place on October 9, 2007, at 10:00 a.m., Eastern Time, at the offices of Alston 7 Bird, LLP, at 90 Park Avenue, New York, or at another place and time, as the Debtors will notify all qualified bidders; the Official Committee of Unsecured Creditors; JPMorgan Chase Bank, N.A., as administrative agent for the lenders under certain servicing loan agreements; the Servicing Lenders; and other invitees. The Sale hearing will be held on October 16, 2007, at 1:30 p.m., Eastern Time, or as soon as counsel and interested parties may be heard. On or before October 5, 2007, the Debtors will serve a notice identifying any assumed contracts and leases to each non-Debtor party to an assumed contract and lease; the proposed cure amount; and the deadline to object ot the proposed assumption and cure amount. Objections to the Sale and proposed assumption of contracts and leases must be filed with the Bankruptcy Clerk no later than 4:00 p.m., on October 12, or a later date and time as the Debtors may agree. The servicing rights with respect to the loans that are subject of the September 12, 2003, February 3, 2004, and June 24, 2004 participation agreements between HBMC and First Charter Bank are excluded from the order and are not affected, in any way, by the order. Headquartered in Atlanta, Ga., HomeBanc Mortgage Corporation -- http://www.homebanc.com/-- is a mortgage banking company focused on originating primarily prime purchase money residential mortgage loans in the Southeast United States. HomeBanc Mortgage together with five affiliates filed for chapter 11 protection on Aug. 9, 2007 (Bankr. D. Del. Case Nos. 07-11079 through 07-11084). Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor was selected by the Debtors to represent them in these cases. The Debtors' financial condition as of June 30, 2007, showed total assets of $5,100,000,000 and total liabilities of $4,900,000,000. The Debtors' exclusive period to file a plan ends on Dec. 7, 2007. (HomeBanc Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). HOMEBANC CORP: JPMorgan Subservicing Accord Gets Court Approval --------------------------------------------------------------- HomeBanc Mortgage Corporation and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to enter into a subservicing agreement with JPMorgan Chase Bank, N.A., whereby JPMorgan will subservice certain of the Debtors' mortgage loan servicing rights. The servicing rights with respect to the loans subject of the September 22, 2003, February 3, 2004, and June 24, 2005 participation agreements between HBMC and First Charter Bank are excluded from the order and are not affected, in any way, by the order. Any objections to the Debtors' request, to the extent not withdrawn or resolved, are overruled. The agreement provides for JPMorgan to subservice the MSRs covered by the Agreement -- around $6,000,000,000 of the Debtors' total portfolio -- on behalf of the Debtors. Once the transfer of servicing is complete, JPMorgan will perform the servicing responsibilities currently performed by the Debtors. Loan servicing typically involves: -- collecting and remitting loan payments received from the borrowers; -- making required advances; -- accounting for principal and interest; -- customer service; -- holding escrow or impound funds for payment of taxes and insurance; and -- if applicable, contacting delinquent borrowers and supervising foreclosures and property dispositions in the event of unremedied defaults. As compensation for performing the services, JPMorgan will be paid, per month: Monthly Subservicing Fee $560,000 $15 per loan Float on Custodial Accounts $670,000 Late charges $130,000 All amounts are approximated, based on subservicing of approximately 37,300 loans. The amounts will be deducted from the servicing fee that would otherwise flow to the Debtors under the terms of their various MSRs. After deduction of the amounts, JPMorgan will remit the balance, if any, to the Debtors. JPMorgan will charge a one-time boarding charge to take on the subservicing responsibilities of $15 per loan, or $560,000, assuming that 37,300 loans are covered by the Agreement. JPMorgan will also charge a de-boarding charge to transfer the servicing to another subservicer or to a purchaser of the MSRs, of $15 per loan, or $560,000, assuming that 37,300 loans are covered by the Agreement. Pursuant to the terms of the Agreement, the Debtors will be required to reimburse JPMorgan for its reasonable costs and expenses incurred in taking on the subservicing responsibilities. These three items will be paid only out of the sales proceeds of the MSRs, Mr. Barry states. While the cost of the Agreement is not inexpensive, the Debtors believe it is reasonable under the circumstances. It is unlikely that the Debtors would be able to find another subservicer willing and able to take on the responsibilities in the Agreement on such short notice, Mr. Barry asserts. Even if a party could be located, it is unclear whether the cost would be materially less than the cost of the Agreement, he says. JPMorgan has informed the Debtors that the costs of the Agreement are in line with other, similar arrangements with which JPMorgan is familiar. As part of the Agreement, the Debtors will agree to indemnify and hold JPMorgan harmless from any and all claims, losses, damages and reasonable out-of-pocket expenses arising out of or in any way related to the material breach of any representation, warranty or covenant by the Debtors, or any actions of JPMorgan taken in compliance with written instruction from the Debtors or the failue of the Debtors or any prior subservicer of the mortgage loans to service or transfer the servicing of the Mortgage Loans in accordance with the applicable servicing requirements, applicable law or accepted servicing practices. JPMorgan will not be liable for any acts or omissions of the Debtors nor will JPMorgan be liable for the servicing of the Mortgage Loans before the related transfer date. About HomeBanc Mortgage Corp. Headquartered in Atlanta, Ga., HomeBanc Mortgage Corporation -- http://www.homebanc.com/-- is a mortgage banking company focused on originating primarily prime purchase money residential mortgage loans in the Southeast United States. HomeBanc Mortgage together with five affiliates filed for chapter 11 protection on Aug. 9, 2007 (Bankr. D. Del. Case Nos. 07-11079 through 07-11084). Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor was selected by the Debtors to represent them in these cases. The Debtors' financial condition as of June 30, 2007, showed total assets of $5,100,000,000 and total liabilities of $4,900,000,000. The Debtors' exclusive period to file a plan ends on Dec. 7, 2007. (HomeBanc Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). HOMEBANC CORP: Wants to Implement Category 3 Incentive Plan ----------------------------------------------------------- On August 31, 2007, HomeBanc Mortgage Corporation and its debtor-affiliates filed a motion with the U.S. Bankruptcy Court for the District of Delaware seeking to implement a non-insider employee retention plan. The United States Trustee for Region 3 objected to the Retention Motion, asserting that it should be denied as to certain employees in "Category 3." The Debtors supplemented their Retention Motion on September 17, which, among other things, withdrew the request as to five Category 3 employees. The Debtors now seek authority to implement an incentive plan for the five Category 3 employees -- Covered Employees -- for whom the Debtors have withdrawn the Retention Motion. The Covered Employees are "hands-on" management level employees who are responsible for overseeing and controlling the Debtors' servicing business on a day-to-day operational level. As the Debtors move expeditiously to sell their servicing business, the decisions these Covered Employees make will fundamentally impact the sales price the Debtors are able to obtain for the Servicing Business. The Covered Employees are: Annual Proposed Name Title Salary Payment ---- ----- ------ ------- Cameron Beane Director – Secondary $155,000 $116,250 Marketing Marilyn Eberhardt Loan Servicing Director 127,500 95,625 Roy Briggs, III Loan Servicing Director 120,000 72,000 Kortney Rollinger Resource Planning/ 90,000 54,000 Financial Analysis Manager Donna Cribbs Product Development 108,000 54,000 Manager The Debtors estimate the cost of the Incentive Plan to be around $391,875 in the aggregate. Under the Incentive Plan, the Debtors propose to make incentive payments to Covered Employees after the closing of the sale of the Debtors' servicing business, if and only if, the Covered Employees satisfy an objective and subjective performance criteria. The Debtors estimate the closing of the sale of the Servicing Business to occur no later than November 30, 2006. The precise timing of the Incentive Payments will be determined by the Debtors in their discretion, after consultation with the Official Committee of Unsecured Creditors and JPMorgan Chase, the administrative agent for the Debtors' secured lenders, but it will not be made until after the closing of the Servicing Business sale, Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, informs the Court. The proposed amount of the Incentive Payments is a maximum of (i) 50% of annual base compensation for Ms. Cribbs, (ii) 60% of annual base compensation with respect to Mr. Briggs and Ms. Rollinger, and (iii) 75% of annual base compensation with respect to Mr. Beane and Ms. Eberhardt. The Debtors will determine the ultimate amount of the Incentive Payments in consultation with the Creditors Committee and JPMorgan. According to Mr. Barry, the only condition to receipt of the Incentive Payments is that the Debtors determine that the Covered Employees have met the performance criteria. Entitlement to receive the Incentive Payments is unrelated to the Covered Employees' staying with the Debtors for any particular period of time, and only relates to their achievement of the performance criteria. The Debtors have formulated the performance criteria to ensure that their Servicing Business is appropriately operated pending its sale to maintain its value; that the Debtors' subservicing rights are properly transferred to JPMorgan; and that the Debtors' servicing rights are properly transferred to the ultimate purchaser of those rights. While there is a financial cost associated with the Debtors' making the Incentive Payments, the Debtors submit that the Incentive Plan will increase recoveries to creditors in the Debtors' Chapter 11 cases because the Covered Employees' achievement of the performance criteria will lead to an increase in the selling price of the Servicing Business that substantially exceeds the cost of the Incentive Payments. Mr. Barry states that the performace criteria cover: a) Operating metrics for the period August 1, 2007, through the applicable transfer date. The first set of performance criteria are designed to maintain the value of the Debtors' portfolio, and are objectively measurable through data in the Debtors' servicing system; b) Servicing transfer metrics. The second set of performance criteria relate to the smooth transfer of the Debtors' subservicing rights to JPMorgan. These criteria are designed to ensure that the Debtors do not suffer unnecessary loss in value of their assets during the transition phase of the subservicing rights; and c) Operating metrics for the period October 1, 2007, through the applicable sale date. The third set of performance criteria ensure the smooth transition of the Servicing Business to its ultimate purchaser. These criteria are designed to provide Covered Employees an incentive to ensure that the Debtors achieve the greatest possible value in the sale of their Servicing Business. Mr. Barry tells the Court that the Incentive Plan does not implicate any subsection of Section 503(c) of the Bankruptcy Code, as it does not induce the Covered Employees to remain with the Debtors' business. There is nothing temporal about the Incentive Plan. Therefore, the Incentive Plan is not a retention plan subject to Section 503(c)(1) review, he says. Moreover, the Incentive Plan does not contemplate any payments to the Covered Employees upon their severance. "While the Incentive Plan is outside the ordinary course of Debtors' business, the Incentive Plan is justified by the facts and circumstances of the case because the Incentive Plan appropriately provides incentives for Covered Employees to assist in maximizing the value of the sale of the Debtors' assets," Mr. Barry asserts. About HomeBanc Mortgage Corp. Headquartered in Atlanta, Ga., HomeBanc Mortgage Corporation -- http://www.homebanc.com/-- is a mortgage banking company focused on originating primarily prime purchase money residential mortgage loans in the Southeast United States. HomeBanc Mortgage together with five affiliates filed for chapter 11 protection on Aug. 9, 2007 (Bankr. D. Del. Case Nos. 07-11079 through 07-11084). Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor was selected by the Debtors to represent them in these cases. The Debtors' financial condition as of June 30, 2007, showed total assets of $5,100,000,000 and total liabilities of $4,900,000,000. The Debtors' exclusive period to file a plan ends on Dec. 7, 2007. (HomeBanc Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). INNOVATIVE COMM: Judge Places Company in Chapter 11 Bankruptcy -------------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the Western District of Pennsylvannia placed Innovative Communication Corporation in Chapter 11 bankruptcy over the objections of its principal, Jeffrey Prosser. ICC's parent companies, Innovative Communication Corporation, LLC, and Emerging Communications, Inc., and Mr. Prosser as an individual have been in voluntary bankruptcy proceedings since July 31, 2006. ICC, however, had opposed the requests of creditors to submit to its own proceedings. As reported in the Troubled Company Reporter on Sept. 14, 2007, the parent companies' Chapter 11 Trustee Stan Springel was granted control over ICC's common stock, but the creditors still sought bankruptcy court supervision for the company, citing its general failure to pay creditors. At the same time, Judge Fitzgerald took under advisement conversion of Mr. Prosser's personal bankruptcy case from Chapter 11 reorganization to Chapter 7 liquidation, which would appoint a trustee to take charge of Prosser's personal assets. Mr. Prosser's creditors, including the Rural Telephone Finance Cooperative, have complained that Mr. Prosser has refused to cooperate with his creditors and failed to fully and accurately disclose his financial affairs. Under Chapter 7, a trustee would search for and marshal Mr. Prosser's assets with the intention of liquidating them for the benefit of his creditors. "These are additional positive developments in this protracted proceeding," CFC and RTFC CFO Steven Lilly said. "We again appreciate the court's rulings, which move us closer to resolution of this troubled credit issue." National Rural Utilities Cooperative Finance Corporation is a not- for-profit finance cooperative that serves the nation's rural utility systems, the majority of which are electric cooperatives and their subsidiaries. With more than $18 billion in assets, CFC provides its member-owners with an assured source of low-cost capital and state-of-the-art financial products and services. Rural Telephone Finance Cooperative is a not-for-profit finance cooperative that serves the financial needs of the rural telecommunications industry. RTFC has approximately $2 billion in credit outstanding to its rural telecommunications members and their affiliates and is a managed affiliate of CFC. Both CFC and RTFC are headquartered in Herndon, Virginia. Based in Christiansted, St. Croix, U.S. Virgin Islands, Innovative Communication Corporation is telecommunications and media company with eextensive holdings throughout the Caribbean basin. The company's operations are in Belize, British Virgin Islands, Guadeloupe, Martinique, Saint-Martin, Sint Maarten, U.S. Virgin Islands and France and include local, long distance and cellular telephone companies, Internet access providers, cable television companies, business systems, and The Virgin Islands Daily News, a Pulitzer Prize-winning newspaper. On Feb. 10, 2006, creditors Greenlight Capital Qualified, L.P., Greenlight Capital, L.P., and Greenlight Capital Offshore, Ltd., filed involuntary chapter 11 petition againsts Innovative Communication Company LLC and Emerging Communications, Inc., and Jeffrey J. Prosser, the company's principal (Bankr. D. Del. Case Nos. 06-10133 through 06-10135). The Greenlight creditors disclosed $18,780,614 in total claims. On July 31, 2006, Innovative LLC, Emerging, and Mr. Prosser, filed voluntary chapter 11 petitions (Bankr. D. V.I. Case Nos. 06-30007 through 06-30009). Pursuant to Rule 1003-1 of the Local Bankruptcy Rules of the District Court of the Virgin Islands, Bankruptcy Division, Mr. Prosser, and Bobby Lubana, were designated as the individuals who are the principal operating officers of the alleged debtor. On Dec. 14, 2006, the Delaware Bankruptcy Court entered an order transferring the venue of the involuntary bankruptcy cases transferring to the U.S. District Court for the District of the Virgin Islands, Bankruptcy Division. On July 5, 2007, the Greenlight creditors filed an involuntary chapter 11 petition against Innovative Communication Corporation (Bankr. D. V.I. Case No. 07-30012). The creditors disclosed total aggregate claims of $56,341,843. Matthew J. Duensing, Esq., and Richard H. Dollison, Esq., at Stryker, Duensing, Casner & Dollison, and Matthew P. Ward, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the creditors. Stan Springel of Alvarez & Marsal, the Court-appointed chapter 11 trustee, is represented by Andrew Kamensky, Esq., Hunton & Williams. INTERFACE INC: Improved Performance Prompts S&P to Lift Rating -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Atlanta, Georgia-based carpet manufacturer Interface Inc. The corporate credit rating was raised to 'B+' from 'B', and the ratings were removed from CreditWatch, where they placed with positive implications on June 22, 2007. The outlook is stable. Total debt outstanding at July 1, 2007, was about $398 million. "The upgrade follows Standard & Poor's review of Interface and incorporates the company's improving operating performance and credit metrics," said Standard & Poor's credit analyst Kenneth Shea. "Interface's operations have benefited from its strategy to diversify its revenue base into other end markets, including the educational, government, health care and residential sectors," said Mr. Shea. "The company intends to also continue its focus on carpet tiles, which is the fastest-growing segment of the carpet market and has been the main driver of increased revenues for Interface." The rating on Interface reflects very competitive and cyclical market conditions within the global floorcovering market, as well as the company's heavy dependence on the corporate office segment, which accounted for about 60% of 2006 annual revenues, down from over 67% in 2002. Interface has a major market share (35%) in the worldwide modular carpet segment, which has been growing faster than the rest of the floorcovering market for several years. The growth momentum continues to be favorable, as carpet tiles are expanding the company's reach to more end-use markets. However, depressed demand in the corporate office sector has negatively affected Interface's operations over the past several years. IRVINGTON SCDO: Notes Redemption Cues S&P to Withdraw Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on nine classes of notes issued by Irvington SCDO 2004-1 Ltd., a synthetic CDO transaction. The rating withdrawals follow the redemption of the notes pursuant to section 9.7 of the indenture on Sept. 20, 2007. Ratings Withdrawn Irvington SCDO 2004-1 Ltd. Rating Balance ------ ------- Class To From Current Previous ----- -- ---- ------- -------- A-3F NR BBB 0.000 $10,000,000 B-1LD NR BB+ 0.000 $10,000,000 B-1L NR BB+ 0.000 $800,000 B-3L NR B 0.000 $800,000 B-3F NR B 0.000 $3,400,000 A-3F1 NR BBB 0.000 $2,000,000 A-3FD NR BBB 0.000 $2,000,000 A-3F2 NR BBB 0.000 $1,000,000 B-3L1 NR B 0.000 $750,000 ISONICS CORPORATION: Receives Two Delisting Notices from Nasdaq --------------------------------------------------------------- Isonics Corporation said it received two letters from the Nasdaq Stock Market advising the company that it failed to meet certain requirements for continued listing. The first letter from Nasdaq stated that, based on the company's Form 10-Q for the three months ended July 31, 2007, Isonics failed to meet the requirements for continued listing found in Marketplace Rule 4310(c)(3), which requires the company to maintain: (i) stockholders' equity of $2.5 million; (ii) market value of listed securities of $35 million; or (iii) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years. The letter went on to state that Nasdaq is reviewing the company's eligibility for continued listing on the Nasdaq Capital Market and has requested that Isonics provide by Oct. 2, 2007, a plan to achieve and sustain compliance with all the Nasdaq Capital Market listing requirements. If at the conclusion of the review, it is determined that the plan does not adequately address the issues noted, Isonics most likely will be delisted from Nasdaq. However, the company would have the right to appeal Nasdaq's decision to a Nasdaq Listing Qualifications Panel. Due to the company's current financial condition as disclosed in its Form 10-Q for the three months ended July 31, 2007, Isonics can offer no assurance that it will be able to provide to Nasdaq a plan of compliance. The second letter from Nasdaq advised the company that the minimum bid price of its common stock had closed below $1.00 per share for the previous 30 consecutive business days, and, as a result, did not comply with Marketplace Rule 4310(c)(4). Therefore, the company has been provided 180 calendar days, or until March 17, 2008, to regain compliance. The company said if it is delisted from Nasdaq because of its failure to meet the requirements of Marketplace Rule 4310(c)(3), the requirements of this letter become moot. The company added that if it remains listed on Nasdaq for the 180 day curative period and still fail to obtain compliance with the $1.00 minimum bid price as of March 17, 2008, Isonics will be granted an additional 180 calendar days to obtain compliance as long as the company meets the Nasdaq Capital Market initial listing criteria as set forth in Marketplace Rule 4310(c), except for the bid price requirement. If the company is not eligible for the additional compliance period, Isonics may be delisted by Nasdaq at that time. About Isonics Corporation Based in Golden, Colo., Isonics Corp. (NasdaqCM: ISON) -- http://www.isonics.com/-- develops, manufactures, and markets various specialty chemicals used in semiconductor devices, medical diagnostics, imaging and therapy, drug development, and energy production. Going Concern Doubt As reported in the Troubled Company Reporter on Aug. 2, 2007, Hein & Associates LLP, in Denver, expressed substantial doubt about Isonics Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of the years ended April 30, 2007, and 2006. The auditing firm reported that the company has suffered recurring losses from operations and will continue to require funding from investors for working capital. JOURNAL REGISTER: Scott Wright Promoted to Chief Operating Officer ------------------------------------------------------------------ Journal Register Company promoted Scott A. Wright to the position of President and Chief Operating Officer, and Julie A. Beck to Executive Vice President and Chief Financial Officer, each effective Oct. 1, 2007. In his new position, Mr. Wright will take on the role of managing the day-to-day operations for all six of the company's clusters. Located in the Corporate Offices in Yardley, Pennsylvania, he will also participate in planning, and developing the resources to achieve, the company's short and longer-term goals and objectives. Previously, Mr. Wright was Senior Vice President for the company's Michigan cluster. Ms. Beck will continue to be principally responsible for the financial affairs of the company. "It is with great pleasure that I announce the promotions of Scott Wright to President and Chief Operating Officer and Julie Beck to Executive Vice President and Chief Financial Officer," said James W. Hall, Acting Chief Executive Officer of the company. "[Mr. Wright]'s and [Ms. Beck]'s leadership skills, experience and expertise make them uniquely qualified to assume these important roles." Ms. Beck joined Journal Register in January 2006 after serving at Norwood Promotional Products Inc., Indianapolis, Indiana, since 2003 as Senior Vice President and Chief Financial Officer. From September 1999 to September 2003, she was Vice President of Finance for the Inland Paperboard and Packaging subsidiary of Temple-Inland Inc., also in Indianapolis. From March of 1986 to September of 1999, she was with Rockwell Corporation in a series of positions of increasing responsibility, lastly as Director of Finance, Rockwell Automation, in Milwaukee, Wisconsin. Ms. Beck has also worked for NCR Corporation and Deloitte. Ms. Beck is a Certified Public Accountant, and graduated with distinction from the University of Wisconsin with a Bachelor in Business Administration degree in Accounting. Mr. Wright has extensive newspaper industry experience starting in 1987 and most recently has been the President and Publisher at Suburban Community Newspapers located in Memphis, Tennessee. From 2004 to 2006, Mr. Wright was Publisher of Star Community Newspapers in Plano, Texas. In 2003 and 2004, Mr. Wright was Vice President and General Manager at the Oakland Press in Pontiac, Michigan under 21st Century Newspapers. Mr. Wright was Advertising Director from 1999 to 2000 at The Suburban Journals of Greater St. Louis while it was owned by Journal Register Company and Vice President from 2001 to 2003 at The Suburban Journals of Greater St. Louis while it was owned by Pulitzer Inc. From 1998 to 1999, Mr. Wright was Corporate Advertising Director for Ottaway Newspapers Inc. in Campbell Hall, New York and from 1993 - 1997 he was the Advertising Director for Ottaway Newspaper's Joplin Globe in Joplin, Missouri. Mr. Wright graduated with a Bachelor of Science degree in Communications from the University of Southern Indiana. About Journal Register Journal Register Company - http://www.journalregister.com/-- owns 22 daily newspapers and 345 non-daily publications. It currently operates 226 individual Web sites that are affiliated with the company's daily newspapers, non-daily publications and its network of employment Web sites that can be accessed through the company's Web site. All of the company's operations are clustered in six geographic areas: Greater Philadelphia; Michigan; Connecticut; Greater Cleveland; and the Capital-Saratoga and Mid-Hudson regions of New York. The company owns JobsInTheUS, a network of 19 premier employment Web sites. * * * As reported in the Troubled Company Reporter on Sept. 19, 2007, Moody's Investors Service downgraded Journal Register Company's Corporate Family rating to B1 from Ba3, concluding the review initiated on Aug. 13, 2007. The rating outlook is negative. Moody's downgraded the ratings of the company's $375 million senior secured revolving credit facility due 2012 to B1, LGD3, 34%, from Ba3, LGD3, 35%; $575 million senior secured term loan A due 2012 to B1, LGD3, 34%, from Ba3, LGD3, 35%; Corporate Family rating to B1 from Ba3; and Probability of Default rating to B2 from B1. KYPHON INC: Earns $11 Million in Second Quarter Ended June 30 ------------------------------------------------------------- Kyphon Inc. reported net income of $11.0 million for the second quarter ended June 30, 2007, compared to net income of $9.5 million for the same period a year ago. Non-GAAP net income for the second quarter of 2007 was $12.5 million compared to $9.5 million in the same quarter a year ago. The non-GAAP net income of $12.5 million for the second quarter of 2007 excludes $2.3 million in pre-tax costs for: -- purchase accounting adjustments related to inventory valuation for SFMT, -- severance and other transitional compensation expense related to the SFMT acquisition. Kyphon's worldwide revenues for the second quarter of 2007 totaled $144.3 million, an increase of 43.0%, or 41.0% at constant foreign currency exchange rates, over the $101.1 million in net sales reported for the second quarter of 2006. Total U.S. revenues for the quarter increased 36.0% to $110.7 million over the same period in 2006, while total international revenues increased 73.0% to $33.6 million. "We are very pleased with our performance during the second quarter, as increased procedural penetration delivered strong revenue growth for Kyphon," said Richard Mott, president and chief executive officer of Kyphon. "Our results continue to reflect strong clinician adoption and the value to patients of balloon kyphoplasty and the X-STOP(R) IPD(R) procedure. "Additionally, we made solid progress on key initiatives designed to fuel future growth including the introduction of new marketing programs to supplement expansion of our global sales channel, training of new spine specialists in performing balloon kyphoplasty and the X-STOP(R) IPD(R) procedure, and increased enrollments for our clinical trial programs," continued Mott. "We believe our focused efforts to bring innovative minimally invasive based technologies to physicians and patients around the world are creating a foundation for continued long-term growth," concluded Mott. For the first six months of 2007, Kyphon's worldwide revenues totaled $272.5 million, an increase of 42.0%, or 39.0% at constant foreign currency exchange rates, over the $192.5 million in net sales reported for the same period in 2006. Total U.S. revenues increased 35.0% to $211.8 million for the first half of the year, while total international revenues increased 72.0% to $60.7 million. For the first six months of 2007, Kyphon Inc. reported a net loss on a GAAP basis of $11.6 million compared to GAAP net income of $18.0 million for the same period a year ago. Non-GAAP net income for the first six months of 2007 was $21.8 million compared to $18.0 million for the same period a year ago. The non-GAAP net income of $21.8 million for the first six months of 2007 excludes $42.8 million in pretax costs for: -- in-process research & development, -- write-off of bank loan fees associated with the acquisition, -- purchase accounting adjustments related to inventory valuation, -- costs related to the transition of SFMT sales agent activities to Kyphon's direct sales force in the U.S., and -- severance and other transitional compensation expense. Kyphon's operating results on both a GAAP and non-GAAP basis include stock-based compensation expenses of $6.8 million and $6.9 million for the three-month periods ended June 30, 2007, and 2006, respectively, and $13.4 million and $13.3 million for the six-month periods ended June 30, 2007 and 2006, respectively. At June 30, 2007, the company's consolidated balance sheet showed $907.5 million in total assets, $571.4 million in total liabilities, and $336.1 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?23ac About Kyphon Headquartered in Sunnyvale, Calif., Kyphon Inc. (NASDAQ: KYPH) -- http://www.kyphon.com/-- and -- http://www.spinalfracture.com/-- develops and markets medical devices designed to restore and preserve spinal function and diagnose the source of low back pain using minimally invasive technologies. The company's products are used in balloon kyphoplasty for the treatment of spinal compression fractures caused by osteoporosis or cancer, in the Functional Anaesthetic Discography(TM) procedure for diagnosing the source of low back pain, and in the Interspinous Process Decompression(R) for treating the symptoms of lumbar spinal stenosis. * * * Kyphon Inc. carries Moody's Investors Service's 'Ba1' Bank Loan Debt and 'B1' Probability of Default ratings last placed on Feb. 9, 2007. Outlook is Stable. LAILA FEKAY: Case Summary & Nine Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Laila M. FeKay 340 Crane Hill Road Sugar Hill, NH 03585 Bankruptcy Case No.: 07-12055 Chapter 11 Petition Date: September 24, 2007 Court: District of New Hampshire (Manchester) Debtor's Counsel: Susan H. Hassan, Esq. Getman, Stacey, Schulthess & Steere, P.A. 3 Executive Park Drive, Suite 9 Bedford, NH 03110 Tel: (603) 634-4300 Fax: (603) 626-3647 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Nine Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Northborough Capital $850,000 Hallinan Capital Corp. $585,000 3 Bala Plaza East, Suite 117 Bala Cynwood, PA 19004 Whitehall Management International $313,000 312 Commack Road Commack, NY 11725 Washington Mutual $290,000 P.O. Box 2441 Chatsworth, CA 91313 John Montanti $280,000 17210 Ponderosa Lane Southwest Ranches, FL 33310 V.R. Concrete $18,650 Town of Bethlehem $11,784 Town of Carrol $10,055 Norris Davis Electric, Inc. $7,000 P.S.N.H. $5,464 LANDRY'S RESTAURANTS: Commences $400MM Sr. Notes Exchange Offer --------------------------------------------------------------- Landry's Restaurants Inc., in accordance with the terms of the settlement agreement entered into concerning the company's outstanding $400 million Senior Notes, has commenced an offering to exchange the Senior Notes for new senior notes with an interest rate of 9.5% and an option at specified times for either the company or the Exchange Note holders to redeem the Exchange Notes at 101% of par. The exchange offer will remain open until Oct. 23, 2007, unless extended. Any questions regarding procedures for tendering Senior Notes should be directed to the exchange agent at: U.S. Bank National Association Attention: Brandi Steward Specialized Finance Department West Side Flats, 60 Livingston Avenue St. Paul, MN 55107 Tel (651) 495-4738 Fax (651) 495-8158 Headquartered in Houston, Texas, Landry's Restaurants, Inc. (NYSE: LNY) -- http://www.landrysrestaurants.com/-- is a diversified restaurant hospitality and entertainment company principally engaged in the ownership and operation of full-service, casual dining restaurants, primarily under the names of Rainforest Cafe, Saltgrass Steak House, Landry's Seafood House, The Crab House, Charley's Crab and The Chart House. Its portfolio of restaurants consists of an array of formats, menus and price points that appeal to a wide range of markets and customer tastes. It offers concepts ranging from upscale steak and seafood restaurants to casual theme-based restaurants. The company is also engaged in the ownership and operation of select hospitality businesses, including hotel and casino resorts that provide dining, leisure and entertainment experiences. On Sept. 27, 2005, the company acquired the Golden Nugget Hotels and Casinos in downtown Las Vegas and Laughlin, Nevada. * * * As reported in the Troubled Company Reporter on Sept. 4, 2007, Standard & Poor's Ratings Services raised its ratings on Landry's Restaurant Inc. The corporate credit rating was raised to 'B' from 'CCC', and the ratings were removed from CreditWatch, where they were placed with developing implications on July 25, 2007. The outlook is stable. LEINER HEALTH: June 30 Balance Sheet Upside-Down by $162.1 Million ------------------------------------------------------------------ Leiner Health Products Inc.'s consolidated balance sheet at June 30, 2007, showed $359.7 million in total assets and $521.8 million in total liabilities, resulting in a $162.1 million total stockholders' deficit. The company reported a net loss of $27.5 million for the first quarter of fiscal 2008, compared to net income of $2.0 million for the same period in fiscal 2007. Credit Agreement EBITDA for the first quarter of fiscal 2008 was $17.5 million, compared to $18.1 million for the same period in fiscal 2007. Leiner was in compliance with all of its financial covenants as of June 30, 2007. Net sales for the first quarter of fiscal 2008 totaled $107.4 million compared to $163.9 million for the same period in fiscal 2007, a decrease of $56.5 million or 34.4%. U.S. net sales were $95.4 million in the first quarter of fiscal 2008, a decrease of $56.6 million, or 37.2%, from the same period in fiscal 2007. Canadian net sales were $12.0 million in the first quarter of fiscal 2008, an increase of $100,000, or 0.1%, from the same period in fiscal 2007. Net U.S. sales decreased due to the previously disclosed voluntary suspension of the company's U.S.- based over-the-counter pharmaceuticals manufacturing and distribution during the latter part of March 2007 and due to timing of promotional events, which had the effect of decreasing the company's Vitamin, Mineral and Supplement sales. Gross profit was $21.1 million, 19.7% of net sales, in the first quarter of fiscal 2008, a decrease of $18.8 million, or 47.0%, from $39.9 million, or 24.4% of net sales in the same period in fiscal 2007. First quarter gross profits were negatively affected by lower revenue and idle plant capacity due to the previously disclosed OTC product shipment suspension and Fort Mill consolidation. The company recorded total charges of $13.0 million in connection with the previously disclosed quality initiatives and the consolidation of its manufacturing and packaging operations. The charges consisted of restructuring expenses of $7.3 million, which reflects severance and other related costs related to the consolidation as well as operating expense of $5.7 million, included in general and administrative expenses, for consulting and legal costs relating to the FDA observations remediation. Robert Kaminski, chief executive officer, commented, "This has been a challenging, but productive quarter as we initiated our Fort Mill consolidation to align our cost structure with our revenue expectations. As a result, we expect total costs to be reduced by a targeted $50.0 million on an annualized basis. Our consolidation and OTC remediation plans continue to show progress, and we expect to emerge as a best-in-class, high quality OTC and VMS supplier of store brand products. As part of our efforts in this area, we recently recruited John M. Johnson to join Leiner's team as senior vice president, Quality and Compliance. John, who was most recently the senior quality executive for Mayne Pharma a global pharmaceutical company, has more than 30 years' experience and a demonstrated track record in successfully driving quality initiatives." Fill-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?23b0 About Leiner Health Headquartered in Carson, Calif., Leiner Health Products Inc. -- http://www.leiner.com/-- manufactures store brand vitamins, minerals, and nutritional supplements and supplies over-the- counter pharmaceuticals in the food, drug, mass merchant and warehouse club retail market, as measured by retail sales. It also supplies vitamins, minerals and nutritional supplements to the US military. Leiner markets its own brand of vitamins under YourLife(R) and sells over-the-counter pharmaceuticals under the Pharmacist's Formula(R) name. * * * As reported in the Troubled Company Reporter on June 13, 2007, Standard & Poor's Ratings Services said that the ratings on Leiner Health Products Inc., including the 'B-' corporate credit rating, would remain on CreditWatch with negative implications. LEUCADIA NATIONAL: Moody's Rates $500 Million Senior Notes at Ba2 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Leucadia National Corporation's $500 million senior notes. Moody's also assigned a (P) Ba2, (P) B1, (P) B1 to the company's senior, subordinated, and preferred debt shelf, respectively, and affirmed existing ratings. The ratings outlook remains negative. Moody's ratings on Leucadia National are largely influenced by the company's opportunistic acquisition-based growth profile. Moody's expects that Leucadia will continue to change its portfolio of companies through acquisitions and divestitures, including joint venture opportunities such as the current initiative with Jefferies high yield desk. Historically, the company's management team has been successful in profiting from investments in distressed companies. On Sept. 20, 2007, Leucadia also announced the offering and pricing of 5.5 million common shares at a price of $45.50 per share. Net proceeds of approximately $242 million are anticipated from the offering. It is anticipated that Leucadia will use the proceeds to invest opportunistically as they deem appropriate. These ratings were assigned: * $500 million 8 1/8% Senior Notes due 9/15/15, assigned Ba2 (LGD3, 46%); * Senior, subordinated, and preferred debt shelf, assigned (P) Ba2, (P) B1, (P) B1. These ratings/assessments were affirmed/revised: * $500 million, 7.125% Senior Notes, due 2017, affirmed at Ba2 (LGD3, 46%), previously at Ba2 (LGD3, 44%); * $376 million, 7% Senior Notes, due 2013, affirmed at Ba2 (LGD3, 46%), previously at Ba2 (LGD3, 44%); * $100 million, 7.75% Senior Notes, due 2013, affirmed at Ba2 (LGD3, 46%), previously at Ba2 (LGD3, 44%); * $350 million, 3.75% Senior Subordinated Convertible Notes, due 2014, affirmed at B1 (LGD6, 90%), previously at B1 (LGD5, 88%); * $98 million, Junior Subordinated Deferrable Interest Debentures, affirmed at B1 (LGD6, 96%), previously at B1 (LGD6, 95%) * Corporate Family Rating, affirmed at Ba2; * Probability of Default Rating, affirmed at Ba2. The negative rating outlook reflects the substantial risks involved with the company's acquisition based growth strategy as it relates to their historical willingness to purchase turnaround investments that on their own would likely be lower rated than Leucadia. The size of the company's war chest, post the debt and equity issuance, will have the ability to significantly affect the overall portfolio's risk if it were invested all at once. A material weakening of the underlying earnings or cash flow strength at the subsidiary level or a substantial reduction in holding company and consolidated liquidity resulting from further acquisitions, capital commitments or dividends to shareholders, could lead to a rating downgrade. Further, significant change in the company's business profile could pressure the rating. The ratings are unlikely to be upgraded in the near term given the market instability. However, a sustained strong liquidity position would likely lead to a reduction in the volatility of cash-coverage measures, and could lead to a stabilization of the rating outlook. Leucadia National Corporation, based in New York City, is a diversified holding company engaged in a variety of businesses, including manufacturing, real estate activities, medical product development, winery operations and residual banking and lending activities that are in run-off mode. The company also owns equity interests in operating businesses and investment partnerships which are accounted for under the equity method of accounting, including gaming entertainment, land based contract oil and gas drilling, real estate activities and is developing a copper mine in Spain. At June 30, 2007, the company's total assets amounted to $6.4 billion. LIFECARE HOLDINGS: Posts $5.2 Mil. Net Loss in Qtr. Ended June 30 ----------------------------------------------------------------- Lifecare Holdings Inc. reported a net loss of $5.2 million for the second quarter ended June 30, 2007, compared to a net loss of $21.6 million for the same period a year ago. Net patient service revenue increased by $1.3 million, or 1.7%, for the three months ended June 30, 2007, to $82.6 million from $81.3 million for the comparable period in 2006. Total expenses decreased by $13.4 million to $87.3 million for the three months ended June 30, 2007, as compared to $100.7 million for the comparable period in 2006. Included in the expenses for the 2006 period was an impairment charge of $24.6 million related to goodwill and net credit of $4.8 million associated with the company's New Orleans operations. Included in the New Orleans expenses for the three months ended June 30, 2006, was a credit of $5.3 million related to the recording of additional insurance proceeds during this period. Exclusive of the goodwill impairment charge and net expenses attributable to the company's New Orleans operations, total expenses increased by $6.4 million from $80.8 million for the three months ended June 30, 2006. For the quarter ended June 30, 2007, adjusted EBITDA was $9.9 million, a decrease of $7.1 million, or 41.7% from the prior year period. Adjusted EBITDA reflects the elimination of goodwill impairment charges, start-up costs and certain other non- recurring/operational expenditures. The decrease in adjusted EBITDA, on a dollar and percentage of net patient service revenue basis, was primarily due to the reduction in revenues associated with the CMS regulatory changes and the increase in expenses. At June 30, 2007, the company's consolidated balance sheet showed $537.2 million in total assets, $493.3 million in total liabilities, and $43.9 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?23ad Liquidity and Capital Resources At June 30, 2007, the company's outstanding indebtedness consisted of $147.0 million aggregate principal amount of senior subordinated notes, a $251.2 million term loan facility with a maturity of seven years, and capital lease obligations of $3.9 million with varying maturities. On May 2, 2007, the company entered into the Amendment No. 1 to the company's $326.8 million senior secured credit facility. Amendment No. 1 modified certain financial covenants effective March 31, 2007, and increased the spread on the variable interest rate to be paid by the company. The senior secured credit facility consists of (i) a $75.0 million Revolving Credit Facility and (ii) a $251.2 million Term Loan B Facility. About LifeCare Holdings Headquartered in Plano, Texas, LifeCare Holdings Inc. -- http://www.lifecare-hospitals.com/-- operates 19 long term acute care hospitals located in nine states. Long term acute care hospitals specialize in the treatment of medically complex patients who typically require extended hospitalization. * * * LifeCare Holdings Inc. carries Moody's Investors Service's 'Caa1' corporate family and 'B2' Bank Loan Debt ratings last placed on June 18, 2007. Outlook is Negative. LifeCare's senior subordinated notes have Moody's Caa3 rating. LONG BEACH: Monthly Losses Prompt S&P to Lower Ratings ------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on eight classes of mortgage-backed securities from Long Beach Mortgage Loan Trust's series 2006-WL2 and 2006-WL3. S&P lowered its ratings on classes M-7, M-8, M-9, and B-1 from series 2006-WL2 and its ratings on classes M-7 and M-8 from series 2006-WL3 because of an increasing amount of severe delinquencies (90-plus days, foreclosures, and REOs) and reduced credit enhancement as a result of monthly realized losses. Severe delinquencies for these series have been steadily increasing and make up 14.33% and 14.88% of the current pool balances, respectively. Over the past six months, monthly realized losses have consistently been greater than excess interest for both transactions. During this period, the average monthly loss was $3,402,121 for series 2006-WL2 and $3,882,918 for series 2006-WL3, and excess spread averaged $1,810,190 and $1,836,100, respectively. Overcollateralization, originally 50 basis points of each transaction's original pool balance, has been eroded in its entirety. We lowered our ratings on the class B-3 certificates from each series because these classes took principal write-downs of $984,336 and $3,599,844, respectively, as of the August remittance date. Subordination, overcollateralization, and excess spread provide credit support for these transactions. The collateral for these series consists of fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties. Ratings Lowered Long Beach Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-WL2 M-7 BB+ BBB+ 2006-WL2 M-8 BB BBB 2006-WL2 M-9 B BB- 2006-WL2 B-1 CCC B 2006-WL2 B-3 D CCC 2006-WL3 M-7 BB+ BBB+ 2006-WL3 M-8 BB BBB 2006-WL3 B-3 D CCC MAGNA ENTERTAINMENT: Buys De Francis' MJC Stake for $18.3 Million ----------------------------------------------------------------- Magna Entertainment Corp. has exercised its option, pursuant to an agreement with certain companies controlled by Joseph De Francis and Karin De Francis to acquire the remaining interest in The Maryland Jockey Club that it does not already own. MJC is the trade name under which Pimlico Race Course and Laurel Park operate. Under the terms of the Option Agreement, MEC will pay to the De Francis Entities approximately $18.3 million plus interest. MEC first acquired its ownership position in MJC in November 2002 and the option arrangements were scheduled to expire in November 2007. "From the time we acquired control of MJC in 2002, we have intended to acquire the balance of the shares in the company," Frank Stronach, Chairman and Interim Chief Executive Officer of MEC, stated. "The acquisition of this remaining interest in MJC was specifically contemplated in our recently announced Debt Elimination Plan, and reflects our intent to focus the business of MEC on our core strategic racetracks. MJC is a core asset of MEC, and while thoroughbred racing in Maryland is currently facing many difficult obstacles, we remain optimistic that with the assistance of other stakeholders horse racing in the state can have a bright future." Pursuant to the initial acquisition arrangements, Joseph De Francis and Karin De Francis will be leaving MJC in the near future, although Joe will remain a Director of MEC and MEC expects to continue working with Joe in connection with matters of importance to MEC. "On behalf of the Board of Directors of MEC, I would like to thank Joe and Karin for their contributions to MJC and MEC," Mr. Stronach stated. "I have worked with Joe and Karin for many years and I wish them well in their future endeavours." "On behalf of my sister and me, I want to thank Frank for the opportunities he has given us over these last five years," Joe De Francis stated. "We have both enjoyed working with MEC, and I look forward to continuing to contribute to MEC through my role on the Board." About Magna Entertainment Based in Aurora, Ontario, Magna Entertainment Corp. (NASDAQ: MECA; TSX: MEC.A) -- http://www.magnaentertainment.com/-- acquires, develops, owns and operates horse racetracks and related pari- mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty percent interest in HorseRacing TV, a 24-hour horse racing television network and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. Going Concern Doubt As reported in the Troubled Company Reporter on March 23, 2007, Chartered accountants, Ernst & Young LLP, expressed substantial doubt about Magna Entertainment'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 deficiency. MASTR ADJUSTABLE: S&P Affirms Ratings on 316 Classes ---------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on class B-2 from MASTR Adjustable Rate Mortgages Trust's series 2003-2 and on three classes from series 2004-3. Concurrently, S&P affirmed its ratings on 316 classes from various MASTR Adjustable Rate Mortgages Trust transactions, including the two that saw upgrades. The upgrade of class B-2 from series 2003-2 reflects improved current and projected credit support percentages in the form of subordination. Projected credit support percentages are 1.95x the loss coverage levels associated with the higher rating for the B-2 class. As a result, S&P have upgraded the class to 'A+' from 'A'. As of the August 2007 remittance date, total delinquencies for series 2003-2 were 0.93%; cumulative losses, as a percentage of the original trust balance, were 0.10%; and the series had paid down to 19.67% of its original pool balance. The upgrades of the three classes from series 2004-3 reflect improved current and projected credit support percentages in the form of subordination. Projected credit support percentages are 1.86x the loss coverage levels associated with the higher ratings for the B-1 and B-1-X classes and 1.89x the loss coverage level associated with the higher rating for the B-2 class. As a result, S&P upgraded the B-1 and B-1-X classes to 'AA+' from 'AA' and the B-2 class to 'A+' from 'A'. As of the August 2007 remittance date, total delinquencies for series 2004-3 were 4.27%; cumulative losses, as a percentage of the original trust balance, were 0.01%; and the series had paid down to 23.28% of its original pool balance. The affirmed ratings reflect loss coverage percentages that are sufficient to support the certificates at their current rating levels. These transactions benefit from subordination. As of the August 2007 remittance date, total delinquencies for the series with affirmed ratings ranged from 0.17% to 13.30%, and cumulative losses, as a percentage of the original trust balances, ranged from 0.00% to 0.32%. S&P will continue to monitor these transactions and take necessary rating actions as they are warranted. The loans in these transactions were originally secured by mortgages or deeds of trust on primarily one- to four-family residential properties, most of which had original terms to maturity of 30 years. The mortgage loans consist of prime, adjustable-rate, and conventional mortgage loans. Ratings Raised MASTR Adjustable Rate Mortgages Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-2 B-2 A+ A 2004-3 B-1 AA+ AA 2004-3 B-1-X AA+ AA 2004-3 B-2 A+ A Ratings Affirmed MASTR Adjustable Rate Mortgages Trust Series Class Rating ------ ----- ------ 2002-3 1-A-1, 2-A-1, 3-A-1, 4-A-1, B-1 AAA 2002-3 B-2 AA+ 2002-3 B-3 A- 2003-2 1-A-1, 2-A-1, 3-A-1, 3-A-X, 4-A-1, 4-A-2 AAA 2003-2 4-A-X, 5-A-1, 5-A-2, 6-A-1, 6-A-X AAA 2003-2 B-1 AA 2003-2 B-3 BBB 2003-3 1-A-1, 2-A-1, 3-A-4, 3-A-X, 4-A-1 AAA 2003-3 B-1 AA 2003-3 B-2 A 2003-3 B-3 BBB 2003-3 B-4 BB 2003-3 B-5 B 2003-4 1-A-1, 2-A-1, 3-A-1 AAA 2003-4 B-1 AA 2003-4 B-2 A 2003-4 B-3 BBB 2003-4 B-4 BB 2003-4 B-5 B 2003-5 1-A-1, 1-A-2, 1-A-X, 2-A-1, 2-A-X, 3-A-1 AAA 2003-5 4-A-1, 4-A-2, 4-A-3, 4-A-X, 5-A-1, 6-A-1 AAA 2003-5 B-1 AA+ 2003-5 B-2 A+ 2003-5 B-3 BBB+ 2003-5 B-4 BB+ 2003-5 B-5 B 2003-6 1-A-2, 1-A-2X, 2-A-1, 2-A-2, 2-A-X, 3-A-1 AAA 2003-6 3-A-X, 4-A-1, 4-A-2, 4-A-X, 5-A-1, 5-A-X AAA 2003-6 6-A-1, 7-A-1, 7-A-1X, 7-A-2, 7-A-2X, 7-A-3 AAA 2003-6 8-A-1, 8-A-X AAA 2003-6 B-1 AA+ 2003-6 B-2 A+ 2003-6 B-3 BBB 2003-6 B-4 BB 2003-6 B-5 B 2004-1 1-A-1, 2-A-1, 2-A-X, 3-A-1, 3-A-2, 3-A-3 AAA 2004-1 3-A-X, 4-A-1, 4-A-2, 4-A-X, 5-A-1, 5-A-X AAA 2004-1 6-A-1 AAA 2004-1 B-1, B-1X AA+ 2004-1 B-2 AA- 2004-1 B-3 BBB+ 2004-1 B-4 BB 2004-1 B-5 B 2004-3 1-A-1, 1-A-X, 2-A-1, 2-A-X, 3-A-1, 3-A-2 AAA 2004-3 3-A-3, 3-A-4, 3-A-X, 4-A-1, 4-A-2, 4-A-X AAA 2004-3 5-A-1, 5-A-2, 5-A-X, 6-A-1, 6-A-X, 7-A-1 AAA 2004-3 7-A-X, 8-A-1, 8-A-2, 8-A-3, 8-A-4, 8-A-X AAA 2004-3 B-3 BBB+ 2004-3 B-4 BB 2004-3 B-5 B 2004-4 1-A-1, 1-A-X, 2-A-1, 2-A-2, 2-A-3, 2-A-X AAA 2004-4 3-A-1, 3-A-X, 4-A-1, 4-A-2, 4-A-X, 5-A-1 AAA 2004-4 5-A-X AAA 2004-4 B-1 AA 2004-4 B-2 A 2004-4 B-3 BBB 2004-4 B-4 BB 2004-4 B-5 B 2004-5 1-A-1, 2-A-1, 2-A-X, 3-A-1, 4-A-1, 5-A-1 AAA 2004-5 6-A-1, 6-A-X, 7-A-1, 8-A-1, 9-A-2 AAA 2004-5 9-A-X AAA 2004-5 B-1 AA+ 2004-5 B-2 AA- 2004-5 B-3 A- 2004-5 B-4 BB 2004-5 B-5 B 2004-6 1-A-1, 2-A-1, 3-A-1, 4-A-3, 4-A-4 AAA 2004-6 4-A-5, 4-A-6, 4-A-7, 4-A-8, 4-A-9, 5-A-1 AAA 2004-6 6-A-1 AAA 2004-6 B-1 AA 2004-6 B-2 A 2004-6 B-3 BBB+ 2004-6 B-4 BB 2004-6 B-5 B 2004-10 1-A-1, 2-A-1, 2-A-2, 3-A-1, 3-A-2 AAA 2004-10 B-1 AA 2004-10 B-2 A 2004-10 B-3 BBB 2004-10 B-4 BB 2004-10 B-5 B 2004-12 1-A-1, 2-A-1, 3-A-1, 4-A-1, 5-A-1, A-C-1 AAA 2004-12 B-1 AA 2004-12 B-2 A- 2004-12 B-3 BBB 2004-12 B-4 BB 2004-12 B-5 B 2004-13 1-A-1, 1-A-2, 2-A-1, 2-A-2, 2-A-3, 3-A-1 AAA 2004-13 3-A-1A, 3-A-1B, 3-A-1C AAA 2004-13 3-A-3, 3-A-4, 3-A-5, 3-A-6, 3-A-7, 3-A-7A AAA 2004-13 3-A-7B, 3-A-8, 3-A-X, 4-A-1 AAA 2004-13 B-1 AA 2004-13 B-2 A- 2004-13 B-3 BBB 2004-13 B-4 BB 2004-13 B-5 B 2005-1 1-A-1, 1-A-X, 2-A-1, 3-A-1, 4-A-1, 5-A-1 AAA 2005-1 6-A-1, 7-A-1, 7-A-2, 7-A-3, 8-A-1, 8-A-2 AAA 2005-1 9-A-1, 10-A-1 AAA 2005-1 B-1 AA 2005-1 B-2 A 2005-1 B-3 BBB 2005-1 B-4 BB 2005-1 B-5 B 2005-2 1-A-1, 2-A-1, 3-A-1, 4-A-1, 5-A-1, 6-A-1 AAA 2005-2 7-A-1, 7-A-2, 7-A-X AAA 2005-2 B-1 AA 2005-2 B-2 A 2005-2 B-3 BBB 2005-2 B-4 BB 2005-2 B-5 B 2005-3 1-A-1, 1-A-2, 1-A-X, 2-A-1, 3-A-1, 3-A-2 AAA 2005-3 3-A-X, 4-A-1, 5-A-1 AAA 2005-3 B-1 AA- 2005-3 B-2 A- 2005-3 B-3 BBB- 2005-3 B-4 BB 2005-3 B-5 B 2005-6 1-A-1, 1-A-X, 2-A-1, 2-A-X, 3-A-1, 3-A-2 AAA 2005-6 3-A-X, 4-A-1, 4-A-2, 5-A-1, 5-A-2, 5-A-X AAA 2005-6 6-A-1, 7-A-1 AAA 2005-6 B-1 AA 2005-6 B-2 A 2005-6 B-3 BBB 2005-6 B-4 BB 2005-6 B-5 B 2005-7 1-A-1, 1-A-2, 2-A-1, 2-A-2, 3-A-1, 3-A-2 AAA 2005-7 B-1 AA 2005-7 B-2 A 2005-7 B-3 BBB 2005-7 B-4 BB 2005-7 B-5 B 2006-2 1-A-1, 1-A-2, 2-A-1, 3-A-1, 3-A-2, 4-A-1 AAA 2006-2 4-A-2, 5-A-1, 5-A-2, A-LR, A-UR AAA 2006-2 B-1 AA 2006-2 B-2 A 2006-2 B-3 BBB 2006-2 B-4 BB 2006-2 B-5 B MCLEODUSA INC: Inks Merger Pact with PAETEC and PS Acquisition -------------------------------------------------------------- McLeodUSA Inc., PAETEC Holding Corp. and PS Acquisition Corp., a direct wholly owned subsidiary of PAETEC, entered into an Agreement and Plan of Merger, dated as of Sept. 17, 2007. Pursuant to the merger agreement, the PAETEC subsidiary will merge with McLeodUSA, with McLeodUSA surviving the merger as a direct wholly owned subsidiary of PAETEC. Subject to the terms and conditions of the merger agreement, upon the completion of the merger, each outstanding share of McLeodUSA common stock will be automatically converted into and become the right to receive 1.30 shares of PAETEC common stock. The exchange ratio is fixed and will not be subject to any increase or decrease based on changes in the trading price of the PAETEC common stock or in the fair market value of the McLeodUSA common stock between execution of the merger agreement and the merger closing. McLeodUSA stock options will be assumed by PAETEC upon completion of the merger and converted into options to purchase shares of PAETEC common stock. The number of shares issuable upon exercise of the assumed options and the option exercise prices will be adjusted to give effect to the merger exchange ratio. About 40,000,000 shares of PAETEC common stock will be issued to holders of McLeodUSA common stock outstanding as of the date of the merger agreement. As of the same date, McLeodUSA had outstanding options to purchase about 2,700,000 shares of the company's common stock. PAETEC's offering of the merger shares will be registered with the Securities and Exchange Commission under the Securities Act of 1933. The merger is intended to be treated as a tax-free reorganization for federal income tax purposes. Board Membership Agreement Pursuant to the merger agreement and a board membership agreement, PAETEC will grant board membership and board observer rights to McLeodUSA stockholders consisting of investment funds managed by Wayzata Investment Partners LLC and investment funds and entities advised by Fidelity Management & Research Company and its affiliates. The Wayzata funds will be entitled to designate one individual for appointment or nomination for election as a PAETEC director, while the Fidelity funds will have the right to attend PAETEC board meetings as an observer. These rights will terminate on the second anniversary of the merger closing date or, if earlier, on the date on which the applicable funds cease to own at least 50% of the PAETEC shares they will acquire in the merger. Under the merger agreement, PAETEC is obligated to use commercially reasonable best efforts to enter into a registration rights agreement as of the merger closing date with the Fidelity funds and the Wayzata funds, pursuant to which PAETEC will grant the funds demand, shelf and piggyback registration rights specified in an exhibit to the merger agreement with respect to the PAETEC shares the funds will acquire in the merger. The exercise of the registration rights will be subject to limitations, qualifications and conditions. McLeodUSA's board of directors has unanimously adopted resolutions recommending adoption of the merger agreement and approval of the transactions contemplated by its stockholders. On Sept. 27, 2007, institutional holders of McLeodUSA common stock representing a majority of the voting power of the outstanding McLeodUSA common stock, including the Wayzata funds and the Fidelity funds, delivered to PAETEC written consents adopting the merger agreement and approving the merger. PAETEC's board of directors has adopted resolutions unanimously approving the issuance of PAETEC common stock in the merger pursuant to the merger agreement and the submission of this matter to PAETEC's stockholders for approval at a stockholder meeting in accordance with the NASDAQ Marketplace Rules. Each company has agreed not to solicit proposals relating to alternative business combination transactions or, subject to specified exceptions and for a specified period, to enter into discussions or an agreement concerning, or provide confidential information in connection with, any unsolicited proposals for alternative business combination transactions. Customary Conditions Completion of the merger is subject to customary conditions, including required approvals of PAETEC and McLeodUSA stockholders, receipt of regulatory approvals, and the absence of any law or order prohibiting the closing. Consummation of the merger also is subject to the repayment, as of or concurrently with the closing, of McLeodUSA's outstanding 10-1/2% senior second secured notes due 2011, of which about $104 million in principal amount is currently outstanding. Each party's obligation to complete the merger is subject to additional conditions, including the accuracy of the representations and warranties of the other party, material compliance of the other party with its covenants, and the absence of any continuing material adverse change affecting the other party. Termination Rights The merger agreement contains certain termination rights for both PAETEC and McLeodUSA and further provides that, upon termination of the merger agreement under specified circumstances, each company may be required to pay the other company a termination fee of $14 million plus reasonable out-of-pocket expenses incurred by the other company in an amount not to exceed $500,000. The merger agreement provides that the merger must be completed on or before 150 days after the merger agreement date, subject to a 30-day extension for specified reasons. The companies will not be required to complete the merger before Jan. 10, 2008. Lock-Up Agreements With the execution of the merger agreement, PAETEC entered into agreements with the Fidelity funds, the Wayzata funds and Jefferies High Yield Trading, LLC, which collectively own about 67% of the outstanding McLeodUSA common stock as of the date of the merger agreement. These stockholders have agreed not to sell or otherwise dispose of their McLeodUSA shares during the period ending on the merger closing date or their PAETEC merger shares during the 90-day period following the merger closing date. Voting Agreements With the execution of the merger agreement, PAETEC entered into voting agreements with: -- McLeodUSA, -- Arunas A. Chesonis, PAETEC's Chairman and Chief Executive Officer, -- Keith M. Wilson, a director of PAETEC and PAETEC's Executive Vice President and Chief Financial Officer, -- Edward J. Butler, who is PAETEC's Executive Vice President and Chief Operating Officer, and -- Mark Zupan, Williams R. McDermott and H. Russell Frisby, Jr., PAETEC directors. Pursuant to the voting agreement, among other things, the foregoing individuals have agreed to vote all of their shares of PAETEC common stock in favor of PAETEC's issuance of its common stock in the merger pursuant to the merger agreement. The PAETEC security holders who are parties to the voting agreements collectively own about 7.2% of PAETEC's common stock outstanding as of the date of the merger agreement. The agreements permit the disposition before PAETEC's stockholder meeting of a specified number of shares subject to the voting obligations of each of the foregoing PAETEC executive officers and directors. About PAETEC Holding Headquartered in Fairport, New York, PAETEC Holding Corp. (NASDAQ: PAET) -- http://www.paetec.com/-- fka US LEC Corp. is a full service provider of Internet protocol, data and voice solutions to medium-sized and large businesses and enterprise organizations throughout 16 eastern states and the District of Columbia. The company provides a range of voice and high-speed data network services on a retail basis to its end-user business and institutional customers. In addition, PAETEC offers a range of voice and high-speed data carrier services to other telecommunications companies. Its service offerings include core voice and data services, application services, network integration services and managed services. About McLeodUSA Inc. McLeodUSA Inc., http://www.mcleodusa.com/-- headquartered in Hiawatha, Iowa, provides integrated voice and data services to small and medium-sized business in nearly 500 cities throughout the Midwest, Rocky Mountain, Southwest and Northwest regions. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05- 63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represented the Debtors during their restructuring efforts. Judge Squires confirmed the Debtors' Joint Prepackaged Plan of Reorganization on Dec. 16, 2005, and that plan took effect on Jan. 6, 2006. McLeodUSA Inc. previously filed for chapter 11 protection on Jan. 30, 2002 (Bankr. D. Del. Case No. 02-10288). The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and that Plan took effect on April 16, 2002. The Court formally closed that case on May 20, 2005. * * * As reported in the Troubled Company Reporter on March 30, 2007, Moody's Investors Service has affirmed the ratings of McLeodUSA Incorporated and changed the outlook for all ratings to developing following the report of the company's proposed initial public offering of its common stock. The ratings affirmed by Moody's include McLeodUSA's corporate family rating, affirmed B3; probability-of-default rating, affirmed at B2; second lien secured notes, due 2011, affirmed at B3, LGD4, 62%; and speculative grade liquidity, affirmed SGL-1. The Outlook has changed to Developing from Stable. MISYS HOSPITAL: Moody's Puts Corporate Family Rating at B1 ---------------------------------------------------------- Moody's Investors Service has assigned a B1 Corporate Family rating and B1 rating for first lien bank credit facilities as first time ratings to Misys Hospital Systems, Inc. dba Misys Diagnostic Systems, Inc. The $200 million first lien term loan as well as approximately $200 million sponsor common equity will fund the acquisition of MDS, a leading provider of laboratory information systems to hospitals and commercial laboratories, by Vista Equity Partners, LLC. MDS is a carve-out of its former parent, Misys plc. As such, the company has no track record as a stand alone operating company. The transaction is expected to close in early October. The rating outlook is stable. MDS' B1 corporate family rating reflects key rating factors of size and profitability (as measured by pretax income), financial strength (as measured by its financial leverage and interest coverage ratios pro forma for the acquisition), and its business profile (as measured by its business line concentration and client diversity). MDS' B1 corporate family rating is constrained by the company's product concentration and small size. At the same time, the rating is supported by the company's leading niche market position as a provider of laboratory information systems and relatively supportive financial strength. MDS' debt to EBITDA pro forma for the transaction is in the 4x range as of May 2007, while the company's pro forma interest coverage ratio, as measured by EBITDA less capital expenditures to interest expense, is in the 2x to 3x range as of May 2007. The company has product concentration as MDS serves hospitals and commercial laboratories within a niche software product market. However, the company enjoys good customer diversity. Ratings assigned to Misys Hospital Systems, Inc. dba Misys Diagnostic Systems, Inc.: * Corporate Family Rating B1 * Probability of Default Rating B2 * $25 million Revolving Credit Facility B1, LGD3, 34% * $200 million First Lien Term Loan B1, LGD3, 34% With approximately $150 million in revenue for the twelve months ended May 2007, MDS, headquartered in Raleigh, North Carolina, is a leading provider of laboratory information systems to hospitals and commercial laboratories. Misys Hospital Systems, Inc. is the issuer of the debt, however the company does business as Misys Diagnostic Systems, Inc. MISYS HOSPITAL: S&P Assigns B+ Corporate Credit Rating ------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Raleigh, North Carolina-based Misys Hospital Systems Inc. dba Misys Diagnostic Systems Inc., a software and services provider in health care, generating about $150 million in revenues. The outlook is stable. At the same time, Standard & Poor's assigned its bank loan and recovery ratings to the company's proposed $225 million first-lien senior secured facilities, comprising a $25 million six-year revolving credit and a $200 million seven-year term loan. The proposed credit facilities are rated 'B+', the same as the corporate credit rating, with a recovery rating of '3', indicating that lenders can expect meaningful (50%-70%) recovery in the event of a payment default. All ratings are based on preliminary offering statements and are subject to review upon final documentation. Proceeds will be used to partially fund the acquisition of the company by Vista Equity Partners from Misys plc. "The rating reflects the company's very narrow product focus, challenging operating trends, and a capital structure that is weak but moderate for the rating," said Standard & Poor's credit analyst Lucy Patricola. "These factors are offset by a solid installed customer base and adequate cash flow." The company primarily provides software and services for use in hospital laboratories, a small segment of the hospital-based, $6 billion clinical information services market. Leverage is low for the rating, with pro forma debt to EBITDA in the 4x area estimated for fiscal year 2007. Free cash flow is adequate and provides some opportunity for deleveraging. MOVIE GALLERY: Mulls Shut Down of 520 Underperforming Stores ------------------------------------------------------------ Movie Gallery Inc., plans to close approximately 520 underperforming and unprofitable Movie Gallery and Hollywood Video stores. The company has been accelerating its efforts to conserve cash and reduce the company's cost structure to address the financial and industry challenges it has been experiencing. "Closing these stores was a difficult, but necessary decision to help protect the future of this company, Joe Malugen, Chairman, President and Chief Executive Officer of Movie Gallery, said. "These stores are being closed after evaluating a number of factors, including store profits and the terms of the leases at each location. This action will allow us to focus our resources on the approximate 4,000 stores that have a stronger operating performance and prospects for future growth." "We thank our many associates and partners who have remained loyal to us over the years," Mr. Malugen continued. "Where possible we will work with the customers at these locations to transfer their accounts to other nearby Movie Gallery and Hollywood Video locations. The talented associates and partners in the stores that will be closing have been notified. As always, we remain committed to treating all affected employees fairly and providing the necessary assistance to make this transition as smooth as possible" Movie Gallery has retained an outside professional services firm, the Great American Group, to assist it in conducting sales of the inventory at the closing stores. As reported in the Troubled Company Reporter on Sept. 17, 2007, Movie Gallery disclosed that it delivered: (i) a notice pursuant to a First Lien Credit and Guaranty Agreement, dated as of March 8, 2007 by and among the company and the guarantors, the agents and lenders relating to, among other things, the company's decision to defer payment of interest due Sept. 10, 2007, beyond the due date and applicable grace period for payment under the company's Second Lien Credit Agreement, (ii) a notice pursuant to the Second Lien Credit and Guaranty Agreement, dated as of March 8, 2007, among the company, certain of its subsidiaries, the lenders from time to time and Wells Fargo Bank, National Association (as successor to CapitalSource Finance, LLC), as Administrative Agent and Collateral Agent, relating to the company's decision to defer payment of interest due under the Second Lien Credit Agreement on Sept. 10, 2007, beyond the due date and applicable grace period, and (iii) a notice to BNY Western Trust Company as Trustee for the holders of the 9.625% Senior Subordinated Notes due 2011 issued pursuant to the First Supplemental Indenture dated as of Dec. 18, 2002 to Indenture dated as of Jan. 25, 2002, by Hollywood Entertainment Corporation and Hollywood Management Company, with respect to Hollywood's decision to defer the payment of interest due under the Hollywood Notes at least until the conclusion of the applicable grace period for payment. Likely Defaults As a result of the events described in the Notices, one or more events of default may occur under the First Lien Credit Agreement, Second Lien Credit Agreement, the Hollywood Notes and the company's 11% Senior Notes due 2012 issued pursuant to that certain Indenture, dated as of April 27, 2005 among the company, the Guarantors and the Trustee. About Movie Gallery Inc. Headquartered in Dothan, Alabama, Movie Gallery Inc. (Nasdaq: MOVI) -- http://www.moviegallery.com/-- is a 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. It operates over 4,600 stores in the United States, Canada, and Mexico under the Movie Gallery, Hollywood Entertainment, Game Crazy, and VHQ banners. Movie Gallery Inc.'s consolidated balance sheet at July 1, 2007, showed $892 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. MULTIPLAN INC: S&P Affirms B+ Counterparty Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' counterparty credit rating on MultiPlan Inc. The outlook remains negative. At the same time, Standard & Poor's assigned a recovery rating of '3' to its 'B+' senior secured debt ratings on Multiplan's credit facilities, which consist of a $50 million revolving credit facility due 2012, a $425 million term loan due 2013, and a $360 million term loan due 2013. The recovery rating indicates the expectation for meaningful (50%-70%) recovery in the event of a payment default. Proceeds from the term loans were used to partially fund the company's acquisition by The Carlyle Group and to fund Multiplan's acquisition of Preferred Healthcare Systems Inc. These transactions occurred in 2006. Standard & Poor's also affirmed its 'B-' rating on MultiPlan's $225 million 10.38% senior subordinated notes due 2016, which were issued in connection with the company's acquisition by The Carlyle Group. "MultiPlan's ratings reflect its significant financial leverage, marginal to weak balance sheet characteristics, and residual integration risk associated with the company's 2006 acquisition of PHCS," said Standard & Poor's credit analyst Joseph Marinucci. Offsetting factors include very good earnings profile, established competitive position, and potential for meaningfully improved scale. The negative outlook reflects the potential for the rating to be lowered by one notch if material operational challenges emerge in connection with the company's integration of PHCS. So far, the process has been smooth, but significant migration of PHCS accounts to Multiplan's IT platform will occur into the first half of 2008, and that could strain the company's operations. If Multiplan effectively integrates the planned acquisition of PHCS, the outlook could be revised to stable. Revenue is expected to be $370 million-$380 million in 2007 and $380 million-$390 million in 2008, and pretax income is expected to be 5%-10%. Debt to capital is expected to be 65%-75% and debt to EBITDA is expected to be 5x-6x while interest coverage is expected to be 2x-3x, which would be considered adequate for the rating assignment. NEWPAGE CORP: S&P Places 'B' Debt Ratings Under Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' second-lien senior secured debt ratings on Miamisburg, Ohio-based NewPage Corp. on CreditWatch with negative implications. The '3' recovery ratings are not on CreditWatch. At the same time, Standard & Poor's affirmed all other ratings, including its 'B' corporate credit rating, on NewPage, a paper manufacturer. The outlook is stable. The rating actions follow the company's definitive agreement to acquire Stora Enso Oyj's North American paper manufacturing operations for $1.5 billion in cash and a $200 million seller note. Stora Enso will receive a 19.9% equity interest in the combined company. The transaction is subject to regulatory approval. "The CreditWatch placement reflects the possibility that the 'B' ratings on NewPage's second-lien notes could be lowered, given the expected significant increase in senior secured first-lien obligations to complete the acquisition," said Standard & Poor's credit analyst Andy Sookram. The affirmation of the corporate credit rating reflects S&P's belief that the acquisition should be modestly positive for the company's business risk profile through substantially increased scale in a cyclical industry and potential synergies. NewPage expects annualized synergies of $265 million over the next two years through facility optimization, raw materials cost savings, and other cost savings initiatives. Although S&P believe synergies could be achieved because SENA's operations are complementary to NewPage's businesses, the benefit is tempered by the risks associated with integrating a large acquisition. Debt will increase by $2.1 billion to $3.5 billion, including debt-like obligations on a pro forma basis, and the combined company will remain highly leveraged. Pro forma debt to EBITDA at around 6.7x will be slightly higher than the current preacquisition level of 6.3x as of June 30, 2007. NewPage has obtained commitments for a $1.6 billion first-lien term loan to finance the transaction. It also plans to issue a $450 million add-on to its second-lien notes. The combined company will have about 35% of the North American coated paper market, and annual revenues of $4.1 billion. The ratings on NewPage reflect its very aggressive debt leverage; participation in mature, cyclical, and highly competitive coated- paper markets; limited product and geographic diversity; and some customer concentration. The company recently benefited from the antidumping and countervailing duties imposed by the U.S. government on coated freesheet paper imported from Asia, and from several facility closings that led to recent price increases. NewPage has an attractive customer base and a cost position that is competitive with other North American producers. It also benefits from full pulp integration. NORTHLAND AUTO: Case Summary & Seven Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Northland Auto Exchange Inc. 1001 Laurel Street Brainerd, MN 56401 Bankruptcy Case No.: 07-50681 Type of business: The Debtor sells and repairs automobiles. Chapter 11 Petition Date: September 25, 2007 Court: District of Minnesota (Duluth) Judge: Robert J. Kressel Debtor's Counsel: Steven H. Silton, Esq. Hinshaw & Culbertson, L.L.P. 333 South Seventh Street, Suite 2000 Minneapolis, MN 55402 Tel: (612) 333-3434 Total Assets: $0 Total Debts: $1,848,405 Debtor's Seven Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Midwest Bank Business Debt $958,000 14986 Lynwood Drive P.O. Box 2748 Baxter, MN 56425-9600 Chris Kurtzman Assignment of $450,000 P.O. Box 587 Judgment from Brainerd, MN 56401-0587 First Integrity Bank Derrick and Renee Taylor Personally paid off $428,000 P.O. Box 2754 Judgment against Baxter, MN 56425 business by Peoples Bank Erickson, Pearson & Aanes Legal Fees $905 Mansfield, Tanick & Cohen, Legal Fees Unknown P.A. Mills Motors Business Debt $6,500 Pam Oil Company Business Debt $5,000 OAK HILL: Notes Redemption Prompts S&P to Withdraw Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on the class A-1a, A-1b, A-2, B-1, B-2, C, D-1, and D-2 notes issued by Oak Hill Credit Partners I Ltd., an arbitrage high-yield CLO transaction originated Oct. 12, 2001. The rating withdrawals follow the optional redemption of the notes pursuant to section 9.2 of the indenture. The redemption took place on the Sept. 12, 2007, payment date. Ratings Withdrawn Oak Hill Credit Partners I Ltd. Rating Balance ------ ------- Class To From Original Current ----- -- ---- -------- ------- A-1a NR AAA $332,000,000 0.00 A-1b NR AAA $50,000,000 0.00 A-2 NR AAA $102,500,000 0.00 B-1 NR AAA $15,000,000 0.00 B-2 NR AAA $13,000,000 0.00 C NR AA- $30,000,000 0.00 D-1 NR BB+ $20,500,000 0.00 D-2 NR BB+ $2,500,000 0.00 NR - Not rated. OSHKOSH TRUCK: Promotes Charles L. Szews to President and COO ------------------------------------------------------------- Oshkosh Truck Corporation has promoted Charles L. Szews from executive vice president and chief financial officer to president and chief operating officer of the company, effective Oct. 1, 2007. In addition, David M. Sagehorn was promoted from vice president and treasurer to executive vice president, chief financial officer and treasurer, also effective Oct. 1, 2007. In his new capacity as COO, Mr. Szews will lead and direct all aspects of the company's four business segments and growth initiatives. Since joining Oshkosh in 1996, Mr. Szews has served as vice president and CFO, and was appointed executive vice president in 1997. He also served as interim president of JLG Industries Inc. during the integration of that acquisition. In May 2007, he was named to the Oshkosh board of directors. "It is with great pleasure that we disclose the promotion of Charlie Szews to president and chief operating officer at Oshkosh," Robert G. Bohn, chairman and chief executive officer, said. "Charlie has done a magnificent job as chief financial officer, continuing to be a driving force in the development of Oshkosh's business strategy, and he has guided the company to superior operational success during the last decade. His promotion is another step in the organizational transformation that Oshkosh is undertaking to drive worldwide growth and expansion across all of our business segments." Prior to joining Oshkosh, Mr. Szews was vice president and controller of Fort Howard Corporation, at the time the leading commercial tissue manufacturer in the U.S., and before that was a senior audit manager with Ernst & Young. He holds a bachelor's degree from the University of Wisconsin - Eau Claire and is a certified public accountant. Mr. Sagehorn as EVP, CFO and treasurer, has responsibility in directing the company's overall financial policies, well as managing all financial functions including accounting, investor relations, credit, insurance, tax and treasury. "Dave is a seasoned professional whose career portfolio includes extensive experience in business unit finance, corporate treasury and mergers and acquisitions," Mr. Bohn said. "We look forward to his continued contribution and strategic leadership on the executive team." Mr. Sagehorn joined Oshkosh in March 2000, and subsequently assumed roles of increasing responsibility, including director, business development and vice president, finance for Oshkosh's defense business before being promoted to vice president and treasurer. Prior to joining Oshkosh, Mr. Sagehorn worked in corporate finance at CNH Global (formerly Case Corporation), and began his career in public accounting. Mr. Sagehorn holds a bachelor's degree in accounting from the University of Wisconsin - Platteville, an MBA from Marquette University, and is a certified public accountant. About Oshkosh Truck Corporation Headquartered in Oshkosh, Wisconsin, Oshkosh Truck Corporation (NYSE:OSK) -- http://www.oshkoshtruckcorporation.com/-- is a designer, manufacturer and marketer of specialty access equipment, military, commercial and fire and emergency vehicles and vehicle bodies. Founded in 1997, Oshkosh's products are valued by rental and construction companies, defense forces, fire and emergency units, municipal and airport support services, and concrete placement and refuse businesses where high quality, superior performance, rugged reliability and long-term value are paramount. * * * Moody's Investor Services placed Oshkosh Truck's long term corporate family, bank loan debt and probability of default ratings at 'Ba3'. The outlook is stable. These ratings were placed in November 2006, and still hold to this date. Standard & Poor's assigned a 'BB' rating on the company's long term foreign and local issuer credit ratings. The outlook is stable. These ratings were placed in November 2006, and still hold to this date. PAETEC HOLDING: Earns $6.0 Million in Second Quarter Ended June 30 ------------------------------------------------------------------ PAETEC Holding Corp. reported net income of $6.0 million for the second quarter ended June 30, 2007, compared to a net loss of $5.8 million for the second quarter of 2006. Last year's reported net loss was largely attributable to the company's leveraged recapitalization that resulted in $14.8 million in additional expenses. For the second quarter of 2007, depreciation and amortization expense was $20.9 million and interest expense was $18.5 million, both up significantly year over year primarily from the depreciation of a larger asset base associated with the merger of PAETEC Corp. and US LEC Corp. on Feb. 28, 2007,, as well as increased debt levels as a result of the transaction. Total revenue for the second quarter of 2007 increased 89.0% to $274.5 million from $145.6 million for the second quarter of 2006, principally due to the addition of US LEC's results. Adjusted EBITDA for the second quarter of 2007 increased 109.0% to $52.5 million over adjusted EBITDA for the second quarter 2006 of $25.1 million. Adjusted EBITDA margin, which represents adjusted EBITDA as a percentage of total revenue, was 19.1% for the second quarter of 2007 compared to an adjusted EBITDA margin of 17.3% for the second quarter of 2006. Network operating leverage and merger-related synergies largely accounted for the increase in adjusted EBITDA margins. "Our first full quarter as a publicly traded company is one that we are excited about. PAETEC enjoyed the best financial quarter in our company's history," said PAETEC chairman and chief executive office Arunas A. Chesonis. "We continued to see significant growth and interest in our data and VoIP product offerings, while also benefiting from the synergies being realized from the US LEC merger." Network Services, which accounted for 83.0% of PAETEC's second quarter 2007 total revenue, experienced strong growth, increasing 100.0% year over year to $228.0 million. US LEC's operations, PAETEC's fast growing MPLS VPN product, and its integrated voice and data T1 sales all contributed to the positive results. Carrier Services represented 14.0% of second quarter 2007 revenues and grew 75.0% year over year to $37.5 million, largely reflecting the addition of US LEC's operations as well as solid 19.0% internal growth. Integrated Services accounted for the remaining 3.0% of second quarter revenues and experienced an 11.0% decline year over year. At June 30, 2007, the company's consolidated balance sheet showed $1.10 billion in total assets, $967.8 million in total liabilities, and $128.9 million total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?23b1 Integration Update Integration efforts related to the US LEC merger to date have focused on network consolidation, the segmentation of sales distribution channels, the rebranding of marketing materials, and the integration of job functions and personnel policies. The majority of synergies were expected from savings in network costs and streamlining of certain SG&A components, which have largely been completed. PAETEC continues to expect that it will be able to realize a total of $25.0 million in merger-related synergies for 2007, as well as an additional $15.0 million for 2008. "Integration with the former US LEC is proceeding very well, with several milestones – such as the June merger of our respective data networks – occurring faster than anticipated," said EJ Butler Jr., chief operating officer for PAETEC. "Our focus now and for the balance of the year is on the integration of systems, back office processes, and employee training. Continued progress should bring the availability of our entire product suite over the combined company footprint during the fourth quarter." Capital Expenditures PAETEC continues to invest in the enhancement of its network and product offerings. Capital expenditures for the second quarter of 2007 increased to $21.0 million, or 8.0% of total revenue, from $9.8 million, or 7.0% of total revenue, for the second quarter of 2006. Capital expenditures for second quarter 2007 were associated with investments in the PAETEC network, including expansion in the switching and information technology infrastructure. Cash flow, Financing, and Liquidity PAETEC reported second quarter 2007 free cash flow of $31.5 million, which increased 106.0% from $15.3 million in the second quarter of 2006. PAETEC also ended the quarter with a cash balance of $84.5 million, up from a first quarter of 2007 level of $53.4 million, largely due to increased cash flow from operations as well as cash received from the exercise of stock options. Cash flow provided by operations was $36.0 million in second quarter 2007 and $3.7 million used in operations in the second quarter of 2006. As of June 30, 2007, PAETEC's $50.0 million revolver remained undrawn and $798.0 million was outstanding under its credit facility term loan. On July 10, 2007, PAETEC closed on two advantageous financing transactions that did not result in any increase in total debt. PAETEC completed its sale of $300.0 million 9.5% Senior Notes due 2015 and used the proceeds from this issue to pay down its existing term loan from $798.0 to $498 million. In conjunction with the paydown, PAETEC amended its existing credit facility to consist of a $50.0 million revolver and a $500.0 million term loan. About PAETEC Holding Headquartered in Fairport, New York, PAETEC Holding Corp. (NasdaqGS: PAET) -- http://www.paetec.com/-- fka US LEC Corp. offers a comprehensive suite of IP, voice, data and Internet services, as well as enterprise communications management software, network security solutions, CPE, and managed services. * * * As reported in the Troubled Company Reporter on Sept. 19, 2007, Standard & Poor's Ratings Services affirmed the ratings on Fairport, New York-based competitive local exchange carrier PAETEC Holding Corp., including the 'B' corporate credit rating. The outlook is positive. PAETEC HOLDING: Signs Agreement to Merge with McLeodUSA ------------------------------------------------------- PAETEC Holding Corp., McLeodUSA Inc. and PS Acquisition Corp., a direct wholly owned subsidiary of PAETEC, entered into an Agreement and Plan of Merger, dated as of Sept. 17, 2007. Pursuant to the merger agreement, the PAETEC subsidiary will merge into McLeodUSA, with McLeodUSA surviving the merger as a direct wholly owned subsidiary of PAETEC. Subject to the terms and conditions of the merger agreement, upon the completion of the merger, each outstanding share of McLeodUSA common stock will be automatically converted into and become the right to receive 1.30 shares of PAETEC common stock. The exchange ratio is fixed and will not be subject to any increase or decrease based on changes in the trading price of the PAETEC common stock or in the fair market value of the McLeodUSA common stock between execution of the merger agreement and the merger closing. McLeodUSA stock options will be assumed by PAETEC upon completion of the merger and converted into options to purchase shares of PAETEC common stock. The number of shares issuable upon exercise of the assumed options and the option exercise prices will be adjusted to give effect to the merger exchange ratio. About 40,000,000 shares of PAETEC common stock will be issued to holders of McLeodUSA common stock outstanding as of the date of the merger agreement. As of the same date, McLeodUSA had outstanding options to purchase about 2,700,000 shares of the company's common stock. PAETEC's offering of the merger shares will be registered with the Securities and Exchange Commission under the Securities Act of 1933. The merger is intended to be treated as a tax-free reorganization for federal income tax purposes. Board Membership Agreement Pursuant to the merger agreement and a board membership agreement, PAETEC will grant board membership and board observer rights to McLeodUSA stockholders consisting of investment funds managed by Wayzata Investment Partners LLC and investment funds and entities advised by Fidelity Management & Research Company and its affiliates. The Wayzata funds will be entitled to designate one individual for appointment or nomination for election as a PAETEC director, while the Fidelity funds will have the right to attend PAETEC board meetings as an observer. These rights will terminate on the second anniversary of the merger closing date or, if earlier, on the date on which the applicable funds cease to own at least 50% of the PAETEC shares they will acquire in the merger. Under the merger agreement, PAETEC is obligated to use commercially reasonable best efforts to enter into a registration rights agreement as of the merger closing date with the Fidelity funds and the Wayzata funds, pursuant to which PAETEC will grant the funds demand, shelf and piggyback registration rights specified in an exhibit to the merger agreement with respect to the PAETEC shares the funds will acquire in the merger. The exercise of the registration rights will be subject to limitations, qualifications and conditions. McLeodUSA's board of directors has unanimously adopted resolutions recommending adoption of the merger agreement and approval of the transactions contemplated by its stockholders. On Sept. 27, 2007, institutional holders of McLeodUSA common stock representing a majority of the voting power of the outstanding McLeodUSA common stock, including the Wayzata funds and the Fidelity funds, delivered to PAETEC written consents adopting the merger agreement and approving the merger. PAETEC's board of directors has adopted resolutions unanimously approving the issuance of PAETEC common stock in the merger pursuant to the merger agreement and the submission of this matter to PAETEC's stockholders for approval at a stockholder meeting in accordance with the NASDAQ Marketplace Rules. Each company has agreed not to solicit proposals relating to alternative business combination transactions or, subject to specified exceptions and for a specified period, to enter into discussions or an agreement concerning, or provide confidential information in connection with, any unsolicited proposals for alternative business combination transactions. Customary Conditions Completion of the merger is subject to customary conditions, including required approvals of PAETEC and McLeodUSA stockholders, receipt of regulatory approvals, and the absence of any law or order prohibiting the closing. Consummation of the merger also is subject to the repayment, as of or concurrently with the closing, of McLeodUSA's outstanding 10-1/2% senior second secured notes due 2011, of which about $104 million in principal amount is currently outstanding. Each party's obligation to complete the merger is subject to additional conditions, including the accuracy of the representations and warranties of the other party, material compliance of the other party with its covenants, and the absence of any continuing material adverse change affecting the other party. Termination Rights The merger agreement contains certain termination rights for both PAETEC and McLeodUSA and further provides that, upon termination of the merger agreement under specified circumstances, each company may be required to pay the other company a termination fee of $14 million plus reasonable out-of-pocket expenses incurred by the other company in an amount not to exceed $500,000. The merger agreement provides that the merger must be completed on or before 150 days after the merger agreement date, subject to a 30-day extension for specified reasons. The companies will not be required to complete the merger before Jan. 10, 2008. Lock-Up Agreements With the execution of the merger agreement, PAETEC entered into agreements with the Fidelity funds, the Wayzata funds and Jefferies High Yield Trading, LLC, which collectively own about 67% of the outstanding McLeodUSA common stock as of the date of the merger agreement. These stockholders have agreed not to sell or otherwise dispose of their McLeodUSA shares during the period ending on the merger closing date or their PAETEC merger shares during the 90-day period following the merger closing date. Voting Agreements With the execution of the merger agreement, PAETEC entered into voting agreements with: -- McLeodUSA, -- Arunas A. Chesonis, PAETEC's Chairman and Chief Executive Officer, -- Keith M. Wilson, a director of PAETEC and PAETEC's Executive Vice President and Chief Financial Officer, -- Edward J. Butler, who is PAETEC's Executive Vice President and Chief Operating Officer, and -- Mark Zupan, Williams R. McDermott and H. Russell Frisby, Jr., PAETEC directors. Pursuant to the voting agreement, among other things, the foregoing individuals have agreed to vote all of their shares of PAETEC common stock in favor of PAETEC's issuance of its common stock in the merger pursuant to the merger agreement. The PAETEC security holders who are parties to the voting agreements collectively own about 7.2% of PAETEC's common stock outstanding as of the date of the merger agreement. The agreements permit the disposition before PAETEC's stockholder meeting of a specified number of shares subject to the voting obligations of each of the foregoing PAETEC executive officers and directors. About McLeodUSA Inc. McLeodUSA Inc., http://www.mcleodusa.com/-- headquartered in Hiawatha, Iowa, provides integrated voice and data services to small and medium-sized business in nearly 500 cities throughout the Midwest, Rocky Mountain, Southwest and Northwest regions. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05- 63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represented the Debtors during their restructuring efforts. Judge Squires confirmed the Debtors' Joint Prepackaged Plan of Reorganization on Dec. 16, 2005, and that plan took effect on Jan. 6, 2006. McLeodUSA Inc. previously filed for chapter 11 protection on Jan. 30, 2002 (Bankr. D. Del. Case No. 02-10288). The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and that Plan took effect on April 16, 2002. The Court formally closed that case on May 20, 2005. About PAETEC Holding Headquartered in Fairport, New York, PAETEC Holding Corp. (NASDAQ: PAET) -- http://www.paetec.com/-- fka US LEC Corp. is a full service provider of Internet protocol, data and voice solutions to medium-sized and large businesses and enterprise organizations throughout 16 eastern states and the District of Columbia. The company provides a range of voice and high-speed data network services on a retail basis to its end-user business and institutional customers. In addition, PAETEC offers a range of voice and high-speed data carrier services to other telecommunications companies. Its service offerings include core voice and data services, application services, network integration services and managed services. * * * As reported in the Troubled Company Reporter on Sept. 19, 2007, Standard & Poor's Ratings Services affirmed the ratings on PAETEC Holding Corp., including the 'B' corporate credit rating. The outlook is positive. The action follows PAETEC's announcement of a definitive agreement to acquire McLeodUSA Inc. PASCACK VALLEY: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Pascack Valley Hospital Association, Inc. 250 Old Hook Road Westwood, NJ 07675 Bankruptcy Case No.: 07-23686 Type of Business: The Debtor operates a full-service, 291-bed non-profit medical facility, part of a system of healthcare affiliates known as the Well Care Group, Inc., which provides a full range of the most advanced, technically specialized healthcare services available. See http://www.pvhospital.org/ Chapter 11 Petition Date: September 24, 2007 Court: District of New Jersey (Newark) Judge: Rosemary Gambardella Debtor's Counsel: Jack M. Zackin, Esq. Simon Kimmelman, Esq. Valerie A. Hamilton, Esq. Sills Cummis Radin Tischman Epstein & Gross, P.C. One Riverfront Plaza Newark, NJ 07102 Tel: (973) 643-6975 Fax: (973) 643-6281 Estimated Assets: $1 Million to $100 Million Estimated Debts: More than $1 Million The Debtor did not file a list of its 20 largest unsecured creditors. PIERRE FOODS: Possible Default Prompts Moody's to Review Ratings ---------------------------------------------------------------- Moody's Investors Service placed Pierre Foods, Inc.'s long term ratings on review for possible downgrade, and lowered the company's Speculative Grade Liquidity Rating to SGL-4 from SGL-2. The company's LGD Assessments are also subject to change. The downgrade to SGL-4 and review for possible downgrade of the long term ratings were triggered by the company's announcement on September 21, 2007 that it expects to be in default of the consolidated leverage ratio covenant in its senior credit facility for the second quarter ended September 1, 2007. Additionally, these rating actions reflect weaker than anticipated cash flow from operations and Moody's expectation that this weakness will persist over the intermediate term. The company is currently working with its lenders under the credit facility to obtain a waiver and amendment to the agreement. The SGL-4 rating reflects the significantly-weakened liquidity as a result of the expected covenant violation and Moody's expectation that the company will likely need to borrow under the credit facility over the next twelve months to fund seasonal working capital requirements and capital spending needs during a period of weakened cash flow from operations. Despite revenue growth, mostly related to the acquisitions of Clovervale Farms, Inc and Zartic, Inc. assets in 2006, the company's earnings have deteriorated due to significant increases in raw material prices, largely chicken, certain one-time costs associated with the acquisition of Zartic, and lower yields at certain manufacturing facilities. Moody's review will focus on: 1) the company's ability to obtain a waiver and amendment to its credit facility; 2) the company's ability to offset rising raw material costs and improve profitability through price increases and recently-initiated operational improvement initiatives; 3) the company's ability to reduce debt and leverage in line with expectations. These ratings were placed on review for possible downgrade: * B1 corporate family rating * B1 probability-of-default rating * Ba3 on the $40 million senior secured revolving credit facility maturing 2009 * Ba3 on the $227 million senior secured term loan facility maturing 2010 * B3 on the $125 senior subordinated notes, maturing 2012 The Speculative Grade Liquidity rating was lowered to SGL-4 from SGL-2. Pierre Foods, Inc. is a manufacturer and marketer of high-quality, differentiated processed food solutions, focusing on formed, pre- cooked protein products and hand-held convenience sandwiches, had revenues of approximately $540 million in the LTM period ended June 2, 2007. Pierre Foods was purchased by Madison Dearborn Partners and certain members of Pierre's management on June 30, 2004. The Company's headquarters are in Cincinnati, Ohio. R&G FINANCIAL: Fitch Junks Issuer Default Rating ------------------------------------------------ Fitch has downgraded the Long-term Issuer Default Rating of R&G Financial Corporation to 'CCC' from 'BB-'. Further, R&G has been placed on Rating Watch Negative. In addition, the Long-term IDR of R-G Premier Bank has been downgraded to 'B' from 'BB-'. R&G recently issued a press release detailing uncertainties regarding relationships with certain government agencies and GSEs, along with uncertainties related to the near-term renewal of two credit facilities. Further, R&G indicated the need to take mortgage impairment charges and provisions for construction loans in 3Q07. Audited financial statements still have not been released and financial metrics for 1H07 (based on regulatory filings) compare unfavorably to other financial institutions in the BB range. In particular, R&G posted sizable losses in 1H07, its asset quality problems continued to mount and its capital position remains comparatively weak. Within the R&G organization, R&G Premier Bank has had comparatively better results. Nevertheless, it too has been faced with declining financial performance and rising non-performers. Resolution of the Rating Watch Negative will be driven by these factors: repayment and/or renegotiation of credit facilities, the issuance of up-to-date, audited financial statements, resolution of regulatory and other government-related issues, as well as greater clarity regarding the potential negative impact of an SEC investigation and shareholder class action suit. Furthermore, a stabilization of R&G's operating performance and overall financial position would have to be attained. The ratings of R-G Crown Bank remain on Rating Watch Positive due to the pending sale to Fifth-Third Bancorp. The majority of proceeds from this sale are earmarked to redeem Series A preferred. Even after this redemption, a high level of trust preferred securities and preferred stock will remain in R&G's capital structure. Remaining proceeds from the sale of R-G Crown should give R&G greater financial flexibility to fund a potential obligation associated with an ongoing shareholder class action lawsuit. These ratings have been downgraded and are on Rating Watch Negative: R&G Financial Corporation -- Long-term IDR to 'CCC' from 'BB-'; -- Preferred stock to 'CC/RR5' from 'B-'; -- Individual to 'D/E' from 'D'; R-G Premier Bank -- Long-term IDR to 'B' from 'BB-'; -- Long-term deposits to 'B+/RR3' from 'BB'; -- Individual to 'D/E' from 'D'. R&G Mortgage -- Long-term IDR to 'CCC' from 'BB-''. These ratings have been placed on Rating Watch Negative: R-G Premier Bank -- Short-term IDR 'B'; -- Short-term Deposits 'B' These ratings are affirmed: R&G Financial Corporation -- Support at '5'. R-G Premier Bank -- Support '5'. These ratings are on Rating Watch Positive: R-G Crown Bank -- Long-term IDR 'BB-'; -- Long-term deposits 'BB'; -- Individual 'D'; -- Short-term Issuer 'B'; -- Short-term Deposits 'B'; -- Support at '5'. S-TRAN HOLDINGS: Court OKs Lockton as Insurance Litigation Expert ---------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware gave S-Tran Holdings Inc. and its debtor-affiliates authority to employ Lockton Companies LLC as their insurance litigation expert. On May 12, 2007, the Debtors filed with the Court a complaint for turnover, violation of automatic stay, unauthorized postpetition transfer, breach of contract and breach of fiduciacy duty againts Protective Insurance Company. In the complaint, the Debtors make several allegations regarding prepetition and postpetition activities of Protective Insurance, including, among others: i. approximatley $4 million in estate assets as collateral that allegedly represents an estimated reserve with respect to the insurance claims that could reasonable be expected to be paid by Protective Insurance under the policies. ii. Protective Insurance has settled numerouse pending claims without the prior approval of the Debtors and in excess of the legitimate value of the claims, since the Debtors' bankruptcy filing. As the Debtors' insurance litigation expert, the firm is expected to provide: a. analysis of approximately 10 worker's compensation claims that have been settled and paid by the Protective Insurance after the Debtors' bankruptcy filing; b. analysis of the current collateral held by Protective Insurance to determine if a reasonable reduction in the held collateral is appropriate; and c. expert testimony in support of the conclusion reached in its analysis. For this engagement, the Debtors will pay the firm a flat fee of $5,000 for the claims analysis and $25,000 for the collateral analysis. To the best of the Debtors' knowledge the firm does not hold any interests adverse to the Debtors' estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About S-Tran Holdings Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second day service to shippers in 11 states in the Southeast and Midwestern United States. The Company and its debtor-affiliates filed for chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05-11391). Laura Davis Jones, Esq. at Pachulski Stang Ziehl & Jones LLP represents the Debtors in their restructuring efforts. Donald A. Workman, Esq., at Foley & Lardner LLP represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. S-TRAN HOLDINGS: Wants Exclusive Plan Filing Moved to December 3 ---------------------------------------------------------------- S-Tran Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware to further extend the exclusive periods to: a. file a Chapter 11 plan until Dec. 3, 2007; and b. solicit acceptances of that plan unitl Feb. 4, 2008. The Debtors need more time to analyze information regarding potential asset recoveries, including, additional accounts receivables and other amounts. The Debtors discloses that it filed a complaint with the Court against Protective Insurance Company seeking turnover of substantial amount of collateral. The Debtors report that they received up to $800,000 from settlements of preference claims. The Debtors assure the Court that the extension is not to delay the administration of their cases and pressure their creditors to accept unsatisfactory plan. The Court will convene a hearing on Oct. 3, 2007, at 1:30 p.m., 824 Market St., 5th Floor, Courtroom #5, to consider the Debtors' request for extension. About S-Tran Holdings Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second day service to shippers in 11 states in the Southeast and Midwestern United States. The Company and its debtor-affiliates filed for chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No. 05-11391). Laura Davis Jones, Esq. at Pachulski Stang Ziehl & Jones LLP represents the Debtors in their restructuring efforts. Donald A. Workman, Esq., at Foley & Lardner LLP represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. SANTA ROSA: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Santa Rosa Energy Center, LLC fka CES Marketing VIII, LLC 50 West San Fernando Street San Jose, CA 95113 Bankruptcy Case No.: 07-12967 Type of Business: The Debtor is a subsidiary of Calpine Corporation, which filed for Chapter 11 protection on Dec. 20, 2005 along with its debtor-affiliates (Bankr. S.D.N.Y. Lead Case No. 05-60200). Like its affiliates, the Debtor operates a power plant. Chapter 11 Petition Date: September 20, 2007 Court: Southern District of New York (Manhattan) Judge: Burton R. Lifland Debtor's Counsel: Edward Sassower, Esq. Kirkland & Ellis LLP 153 East 53rd Street Citigroup Center New York, NY 10022-4611 Tel: (212) 446-4733 Fax: (212) 446-4900 Estimated Assets: Less than $10,000 Estimated Debts: Less than $10,000 The Debtor did not file a list of its 20 largest unsecured creditors. SERVICE CORP: S&P Holds BB Rating and Revises Outlook to Stable --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Houston, Texas-based death care products and services company Service Corp. International to stable from negative. S&P also affirmed the ratings on Service Corp., including the 'BB' corporate credit rating. The outlook revision reflects the company's synergies achieved from the Alderwoods integration, its greater-than- expected asset sales, and S&P's expectation that the financial risk profile will remain appropriate for the rating. "The ratings on Service Corp. reflect the company's leading position in a competitive industry that is characterized by generally flat business trends with few near-term growth prospects and a rising consumer preference for lower cost services," said Standard & Poor's credit analyst Rivka Gertzulin. "These risks are partially mitigated by the company's large base of operations, which affords it scale efficiencies, and significant pre-need revenue that is the source for about one-third of the company's funeral volume." With about $2.3 billion of annual sales with the completion of the Alderwoods acquisition, Service Corp. is by far the nation's largest cemetery and funeral home operator. The company and its affiliates operate about 1,600 funeral homes and 400 cemeteries in North America and own minority interests in funeral operations outside North America. The industry is extremely fragmented, with many small regional competitors, except for Stewart Enterprises Inc., which is now a distant second in size to Service Corp. SOLUTIA INC: Opens Saflex Business Facility in Suzhou, China ------------------------------------------------------------ Solutia Inc. celebrated the grand opening of its new plant in Suzhou, China. The plant is a manufacturing site for the company's Saflex(r) business. Saflex is the producer and seller of polyvinyl butyral interlayers. The Suzhou plant site is suited for future expansion of Saflex and for other Solutia businesses. "Solutia is committed to growth in China, and this new plant is a very significant symbol of that commitment," Jeff Quinn, chairman, president and CEO of Solutia Inc., said. "While Solutia has made a number of major capital investments in its businesses through the years, this is the first entirely new plant we have built from the ground up. We will continue to devote substantial resources to seizing the growth opportunities in China across each of our businesses." The plant has been developed as a full-scale facility that produces Saflex interlayer for the automotive market, with room for future capacity to serve the architectural market as well. The manufacturing line is designed to produce approximately 10 million square meters of Saflex interlayer per year, with space for further expansion as market growth requires more capacity. "Global demand for Saflex interlayers continues to rise around the world, especially in China," Dr. Luc De Temmerman, president of Solutia's Saflex business, said. "This new plant improves our ability to serve the needs of laminators and glass fabricators serving the rapidly growing Chinese automotive industry and the broader Asia-Pacific markets. We look forward to collaborating with these customers, and believe the new Suzhou plant will support significant growth in the laminated glass market." Saflex customers who participated in the opening ceremony included senior representatives from the Fuyao Glass Industries Group and Xinyi Glass Holdings Limited, well as key representatives from major multinational customers and many Chinese laminators. In addition to the Suzhou plant, Solutia's Saflex presence in the Asia-Pacific region includes a regional customer service center and finishing and distribution center in Singapore, well as sales offices across the region. This infrastructure continues to provide the high level of logistical support and customer service that customers have come to expect from Saflex. About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. Saflex is a registered trademark of Solutia Inc. The company and 15 debtor- affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Disclosure Statement hearing began on July 10, 2007. The Debtors have asked the Court to extend their exclusive plan filing period to Dec. 31, 2007. SPX CORPORATION: Moody's Withdraws Ba1 Rating on Credit Facilities ------------------------------------------------------------------ Moody's Investors Service has withdrawn its Ba1 (LGD4, 53%) ratings for SPX's recently terminated bank credit facilities that had a November 2010 maturity date. These facilities have been replaced by $2.3 billion in bank credit facilities that became effective September 21, 2007. The new bank credit facilities are not rated by Moody's. At the same time, Moody's affirmed the company's Ba1 corporate family rating. The outlook is stable. The ratings for the senior unsecured notes reflect both the overall probability of default of the company, to which Moody's assigns a PDR of Ba1, and a loss given default of LGD 5. The Ba2 rating assigned to the $49.5 million senior unsecured notes (rated one notch below the corporate family rating) are the most junior obligations in SPX's capital structure. These ratings/assessments were affected by this action: * Corporate family rating affirmed at Ba1; * Probability of default rating affirmed at Ba1; * $21.3 million senior unsecured notes due 2011 at Ba2 (LGD5, 80%) from Ba2 (LGD6, 96%); * $28.2 million senior unsecured notes due 2013 at Ba2 (LGD5, 80%) from Ba2 (LGD6, 96%); The company's speculative grade liquidity rating of SGL-1 is unchanged. SPX Corporation, headquartered in Charlotte, North Carolina, is a global, multi-industry company providing a diverse array of products and services across its four business segments: thermal equipment and services, flow technology, test and measurement, and industrial products and services. Revenues for the twelve months ended June 30, 2007 totaled almost $4.5 billion. STANDARD PACIFIC: Fitch Rates Proposed $100MM Sr. Notes at B ------------------------------------------------------------ Fitch Ratings has assigned a 'B' rating to Standard Pacific Corp.'s proposed $100 million convertible senior subordinated notes due 2012. The principal amount of the notes will be convertible into shares of the company's common stock, cash, or a combination of stock and cash, at the option of Standard Pacific. In connection with the notes offering, the company also plans to enter into convertible note hedge transactions to reduce the potential dilution to the holders of Standard Pacific's stock upon conversion of the notes. The company intends to use the proceeds of the notes offering to repay a portion of outstanding debt under its revolving credit facility and pay the cost of the convertible note hedge transactions. In consideration of the proposed notes offering, Standard Pacific's Board of Directors eliminated the company's quarterly cash dividend, which will save the company approximately $10 million per year. Fitch does not expect Standard Pacific's leverage ratio to be significantly higher following the completion of the notes offering as some of the proceeds will be used to pay down a portion of the company's revolving line of credit, which had $256.5 million outstanding at June 30, 2007. Moreover, the company may also use the cash saved from the elimination of the quarterly cash dividend for debt reduction. The issuance of subordinated debt and the subsequent paydown of some of the outstanding balance under the revolving credit facility should also increase the borrowing capacity under the company's revolving credit facility. As of June 30, 2007, the company had $256.9 million of borrowing base availability under its revolving credit facility. On August 28, 2007, Fitch downgraded Standard Pacific's IDR and senior unsecured ratings from 'BB' to 'BB-' and its senior subordinated debt from 'B+' to 'B' and kept the Rating Outlook at Negative. The downgrades reflect the current difficult U.S. housing environment, negative trends in Standard Pacific's operating margins, meaningful deterioration in credit metrics (particularly interest coverage and debt/EBITDA ratios) and slimming of its liquidity cushion. Recently, Standard Pacific completed amendments to its revolving credit facility and term loans. The amendments provide the company with additional operating flexibility under the facilities' borrowing base, consolidated tangible net worth, and minimum interest coverage covenants. However, the amendments will tighten the leverage covenant over time, and reduced the total commitment available under the revolver from $1.1 billion to $900 million and the outstanding principal amount of the Term Loan B from $250 million to $225 million. The reduced revolving credit facility should be sufficient at this time to fund working capital needs as the company moderates land acquisitions and pursues a positive cash flow generation strategy. The Negative Outlook for Standard Pacific reflects a more challenging outlook for homebuilders during the balance of calendar 2007 and probable future weakening in the housing market in 2008. Fitch has also taken into account the current and expected near-term deterioration in credit metrics which are similar to the trends being experienced by others in the industry and persistent high cancellation rates which add to speculative inventory totals. Future ratings and outlooks will be influenced by broad housing market trends as well as company specific activity, such as land and development spending, general inventory levels, speculative inventory activity (including the impact of high cancellation rates on such activity), gross and net new order activity, debt levels and free cash flow trends and uses. The ratings for Standard Pacific take into account the company's successful execution of its business model, relatively conservative land policies and geographic and product line diversity. The company has been an active consolidator in the homebuilding industry which has contributed to the past above average growth, but has kept debt levels a bit higher than its peers in recent years. Management has also exhibited an ability to quickly and successfully integrate its acquisitions. In any case, now that the company has reached current scale there may be somewhat less use of acquisitions going forward and acquisitions may be smaller relative to Standard Pacific's current size. It is unlikely that Standard Pacific will make an acquisition over the coming year. Standard Pacific employs conservative land and construction strategies. The company typically options or purchases land only after necessary entitlements have been obtained so that development or construction may begin as market conditions dictate. The company extensively uses a combination of lot options and JVs. The use of non-specific performance rolling options gives Standard Pacific the ability to renegotiate price/terms or void the option which limits down side risk in market downturns and provides the opportunity to hold land with minimal investment. At present 16% of its lots are controlled through options and 22.8% are controlled in JVs. Fitch views Standard Pacific's partnerships and joint ventures to be strategically and financially material to the company's operations. However, the manageable leverage levels and the supply of land in attractive markets held in the partnerships mitigate this risk to some extent. The company's unconsolidated homebuilding and land development joint ventures leverage was 54.7% at the end of the 2007 second quarter. Standard Pacific's consolidated homebuilding leverage was 55.5%. Adjusting for off- balance sheet commitments, Standard Pacific's adjusted homebuilding debt to adjusted capital was 61.7%. Fitch expects the company to continue to reduce the level of investment in inventories and to use the cash generated to pay down debt and reduce leverage to the lower end of its target range of 45%-55% by year-end 2007. STANDARD PACIFIC: Moody's Rates Proposed $100 Million Notes at B2 ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to the proposed new $100 million of convertible senior subordinated notes due 2012 of Standard Pacific Corp, proceeds of which will be used initially to pay down the company's revolver. At the same time, Moody's affirmed all of the company's existing ratings, including its corporate family rating of Ba3, senior unsecured notes rating of Ba3, and senior sub debt rating of B2. The ratings outlook was changed to negative from stable. The negative outlook is based on the fact that current industry conditions are far worse and likely to last far longer than earlier expected. As a result, the business risk for all homebuilders, including Standard Pacific, has ratcheted up considerably. To counterbalance this increased business risk, the company (and its peers) need to lessen the financial risk. Financial risk, however, appears to have grown apace, as most of the company's key financial benchmarks continue to deteriorate rapidly, particularly interest coverage, gross margins, and returns. In addition, the company's substantial off-balance sheet joint venture exposure remains a source of continuing concern. Offsetting this somewhat are these strengths that Standard Pacific has been able to demonstrate, even in the face of the industry's difficulties: 1. While the company, like many of its peers, has turned cash flow positive on a trailing twelve month basis, it has accomplished this, unlike most of its peers, largely through inventory reductions rather than from one-time sources. 2. Standard Pacific's cash flow generation has exceeded projections—both those of the company and of Moody's. 3. The company's California operations continue to outperform the competition, registering order growth (albeit on weak comparisons) and profitability (before impairment and option abandonment charges). The company's move-up buyer segment in coastal areas of California seems to be able to withstand the mortgage maelstrom more easily than the competition's first-time buyer segment in the Inland Empire and other non-coastal areas. Going forward, the ratings outlook could stabilize if the company were to continue to expand its positive cash flow generation and use the cash to augment liquidity and/or pay down debt. The company's ratings could come under pressure if debt leverage remains above 55%, if cash flow on a trailing twelve month basis were to turn negative, or if interest coverage were to drop below 1.5x on a trailing twelve month basis. Headquartered in Irvine, California and begun in 1966, Standard Pacific Corp. constructs and sells single-family attached and detached homes, with homebuilding operations located in California, Texas, Arizona, Colorado, Florida, North and South Carolina, and Nevada. Revenues and net income (including all charges) for the trailing twelve month period ended June 30, 2007 were approximately $3.5 billion and $(274) million, respectively. STAR GAS: S&P Affirms B- Corporate Credit Rating ------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on heating oil distributor Star Gas Partners LP. The affirmation follows annual surveillance on the company and incorporates S&P's expectation for improving financial performance over the next year. The outlook is stable. As of June 30, 2007, Stamford, Connecticut-based Star Gas had total debt of $216.9 million, adjusted for capitalized operating leases and tax-effected pension and postretirement obligations. The rating on Star Gas reflects the partnership's vulnerable business risk profile and highly leveraged financial risk profile. The rating Star Gas' historically high customer attrition rate, declining heating oil sales across the industry, exposure to volatile commodity prices, and the financial risks of its master limited partnership structure. These weaknesses are slightly moderated by recent improvements in the company's customer contract mix, lower leverage related to the partnership's 2006 recapitalization, and improved financial measures through June 30, 2007. "The vulnerable business risk profile acknowledges declining demand in the heating oil industry and the fact that heating oil distributors operate in a highly competitive environment, with few switching costs or barriers to entry to impede customer attrition," said Standard & Poor's credit analyst Michael Messer. Given generally unfavorable industry conditions, Standard & Poor's expects that Star Gas' customer base will continue to decline over time, absent acquisitions. "Growth through acquisitions raises credit concerns, because it may not be sustainable in the long run," he continued. The outlook on Star Gas is stable. The stable outlook reflects S&P's expectation that the company will maintain its current financial metrics. The outlook could be revised to positive if the company sustains its current financial profile through the next winter heating season and executes well on its revised acquisition plans. The outlook could be revised to negative if financial measures weaken due to increased customer attrition, cash flow underperformance, unsuccessful hedging of commodity prices, or weaker-than-expected results from acquisitions. STAR MORTGAGE: Fitch Rates $1.166MM Class B5 Certs. at B -------------------------------------------------------- Fitch has rated STARM Mortgage Loan Trust series 2007-4 residential mortgage pass-through certificates as: -- $826,124,200 classes 1A1, 1A2, 2A1, 2A2, 2A3, 2X, 3A1, 3A2, 4A1, 4A2, R and RC, ,'AAA'; ('senior certificates') -- $23,942,000 class M, 'AA+'; -- $4,431,000 class B1, 'AA'; -- $6,996,000 class B2, 'A'; -- $2,721,000 class B3, 'BBB'; -- $4,275,000 privately offered class B4, 'BB'; and -- $1,166,000 privately offered class B5, 'B'; The 'AAA' rating on the senior certificates reflects the 6.00% subordination provided by the 3.08% class M, the 0.57% class B1, the 0.90% class B2, the 0.35% class B3, the 0.55% privately offered class B4, the 0.15% privately offered class B5 and the 0.40% privately offered class B6. The ratings also reflect the quality of the underlying collateral, the strength of the legal and financial structures, and the master servicing capabilities of Wells Fargo Bank, N.A., which is rated 'RMS1' by Fitch Ratings. All of the mortgage loans were originated by SunTrust Mortgage, Inc. As of the cut-off date, Sept. 1, 2007, the pool of loans consists of 1,198 recently originated interest only and conventional hybrid, adjustable-rate, fully amortizing Mortgage Loans secured by first liens in one- to four-family residential real properties. Generally, the Mortgage Loans accrue interest at a fixed rate during an initial period from their respective dates of origination and thereafter provide for adjustment of their interest rate on an annual interest rate Adjustment Date to a rate based on an index plus a fixed margin. The mortgage pool has an average unpaid principal balance of $648,870 and a weighted average FICO score of 749. The weighted average original loan-to-value ratio is 72.21%. Rate/Term and Cashout refinances represent 24.51% and 22.90%, respectively. Second homes and investor-occupied properties comprise 13.75% and 3.62% of the collateral, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (39.11%), Florida (15.18%), Virginia (9.85%), Georgia (7.20%) and North Carolina (6.55%). All other states comprise fewer than 5% of properties in the pool. GS Mortgage Securities Corp. purchased the mortgage loans from the sponsor and deposited the loans in the trust, which issued the certificates, representing undivided and beneficial ownership in the trust. For federal income tax purposes, the securities administrator will cause multiple real estate mortgage investment conduit elections to be made for the trust. Wells Fargo Bank, N.A. will act as securities administrator, Deutsche Bank, N.A. will serve as the trustee and SunTrust Bank will serve as the custodian and servicer. STIEFEL LAB: Adds J.R. de Vink and J.S. Thompson to Board --------------------------------------------------------- Stiefel Laboratories Inc. appointed two new members to the company's board of directors including a representative of the private equity firm The Blackstone Group, which recently became a minority-share investor in the company. Joining the board are Lodewijk J.R. de Vink, a founding member of Blackstone Healthcare Partners LLP (BHP), and Jeffrey S. Thompson, chief operating officer for Stiefel Laboratories. Charles W. Stiefel is president, chief executive officer and chairman of Stiefel Laboratories. "I am pleased to welcome [Mr. Thompson] and [Mr. de Vink] to the board at this exciting time," Mr. Stiefel said. "Their appointments strengthen our board and thus our company. I am confident they will complement the team as our company continues to grow." Blackstone's $500 million investment in Stiefel Laboratories, a deal which closed August 10, includes the right to designate one member on the company's board of directors. Lodewijk de Vink has more than 40 years experience in the pharmaceutical and healthcare industries. In addition to working for those companies as Schering-Plough, Credit Suisse First Boston and Warner-Lambert Company as chairman and CEO, de Vink has been a consultant with Blackstone since 2003 and currently sits on several boards including Roche and Alcon. "An important aspect of our relationship with Blackstone," Mr. Stiefel said, "is the ability to leverage its resources and experience. I look forward to working with Lodewijk not only because of his warm persona, but because of the unparalleled experience he brings to the board." Jeffrey S. Thompson, COO, Stiefel Laboratories, also joins the board. Mr. Thompson, who is responsible for operations on a global level including corporate administration, facilities management, supply chain and technical operations, information technology, human resources, legal, quality and corporate compliance, plays a key role in the integration of the company''s U.S. and international business. Previously, Thompson served as the President of Glades Pharmaceuticals, a wholly-owned subsidiary of Stiefel. "Throughout his career at Stiefel Laboratories, [Mr. Thompson] has impressed us with his energy, enthusiasm and vast knowledge of the pharmaceutical industry," Mr. Stiefel said. "He was an instrumental part of the recent Connetics acquisition, spending several months living in Palo Alto, California and serving as the on-site integration leader. His management skills have contributed to the organization's growth and success internationally and we know he will be a valuable addition to the board." The Stiefel Laboratories board of directors also includes William D. Humphries, chief commercial officer; Richard MacKay, president, Stiefel Canada, Inc. and vice chairman of the board; Gabriel McGlynn, senior vice president of EURASIA; Brent Stiefel, executive vice president, global corporate development and product portfolio; Catherine Stiefel, certified public accountant, mergers & acquisitions; and Todd Stiefel, executive vice president, global strategy. Earlier this month, Stiefel Canada Inc., a Canadian dermatology company, appointed Pierre Boucher to Executive Vice President. Promoted from Vice President, Marketing and Sales, Boucher will continue to report directly to Richard MacKay, President of Stiefel Canada. About Stiefel Laboratories Headquartered in Coral Gables, Florida, Stiefel Laboratories Inc. -- http://www.stiefel.com/-- is the largest privately held pharmaceutical company specializing in dermatological products. Founded in 1847, the company manufactures and markets a variety of prescription and non-prescription dermatological products. Some of the best-known brands in Canada include CLINDOXYL(R) Gel, Stieprox(R) Shampoo, Nerisone(R) Cream, IMPRUV(R) Cream and Uremol(R). * * * As reported in the Troubled Company Reporter on Sept. 19, 2007, Moody's Investors Service affirmed the B1 Corporate Family Rating of Stiefel Laboratories Inc, but changed the rating outlook to negative from stable. This rating action follows Stiefel's recent issuance of $500 million of preferred stock to Blackstone. STRUCTURED ASSET: S&P Assigns Default Ratings on Two Classes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on five classes of mortgage-backed securities issued by Structured Asset Investment Loan Trust 2006-BNC1. The downgrades of classes M-3, M-4, and M-5 reflect an increasing amount of severe delinquencies (90-plus days, foreclosures, and REOs) and a reduction in credit enhancement as a result of monthly realized losses. Monthly realized losses consistently have been greater than excess interest during the past six months. The average monthly loss was $2,779,202 over the past six months, while excess spread averaged $1,151,389 for the same period. Severe delinquencies have been steadily increasing and make up 15.54% of the current pool balance. Overcollateralization, originally 50 basis points of the original pool balance, has been completely eroded. We downgraded classes B-1 and B-2 to 'D' because both classes saw principal write-downs, of $1,080,501 and $3,521,000, respectively, as of the August 2007 remittance date. Subordination, overcollateralization, and excess spread provide credit support for this transaction. The collateral consists of adjustable- and fixed-rate, fully amortizing and balloon mortgage loans secured by first and second liens on one- to four-family properties. Ratings Lowered Structured Asset Investment Loan Trust 2006-BNC1 Rating ------ Series Class To From ------ ----- -- ---- 2006-BNC1 M-3 BBB+ A+ 2006-BNC1 M-4 BBB A 2006-BNC1 M-5 B BBB 2006-BNC1 B-1 D CCC 2006-BNC1 B-2 D CCC STRUCTURED ASSET: S&P Lowers Ratings on Five Loan Classes --------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on five classes from Structured Asset Securities Corp. Mortgage Loan Trust's series 2006-GEL1 and 2006-GEL2. At the same time, S&P affirmed its ratings on the remaining 12 classes from these two transactions. Total and severe delinquencies for both transactions are currently at their highest levels since origination (20.32% and 11.85%, respectively, for series GEL1 and 23.92% and 15.76%, respectively, for series GEL2). The large pipeline of delinquent loans indicates that losses will likely continue to outpace excess interest. Because overcollateralization is currently below its target for both transactions, the risk of losses affecting the rated classes has increased; this increased risk is reflected in our rating actions. The collateral consists of fixed- and adjustable-rate, first- and second-lien mortgage loans secured by one- to four-family residential properties. Approximately 22.63% of series 2006-GEL1 and 18.93% of series 2006-GEL2 consists of interest-only loans that reset between two and 20 years after origination. Ratings Lowered Structured Asset Securities Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-GEL1 B CCC BB 2006-GEL1 M4 BB BBB- 2006-GEL2 M6 BB BBB 2006-GEL2 M7 B BBB- 2006-GEL2 B CCC BB Ratings Affirmed Structured Asset Securities Mortgage Loan Trust Series Class Rating ------ ----- ------ 2006-GEL1 A-1 AAA 2006-GEL1 A-2 AAA 2006-GEL1 M1 AA 2006-GEL1 M2 A+ 2006-GEL1 M3 BBB+ 2006-GEL2 A-1 AAA 2006-GEL2 A-2 AAA 2006-GEL2 M1 AA+ 2006-GEL2 M2 AA 2006-GEL2 M3 A+ 2006-GEL2 M4 A 2006-GEL2 M5 BBB+ SUNCOM WIRELESS: Posts $193 Million Net Loss in Qtr. Ended June 30 ------------------------------------------------------------------ SunCom Wireless Holdings Inc. reported a net loss of $193 million, which includes a loss of $182.9 million resulting from the debt- for-equity exchange, for the second quarter ended June 30, 2007. This compares to a net loss of $110.4 million a year ago. The loss resulted from exchanging 52,028,376 shares of Holdings' Class A common stock, with a value of $889.7 million based on a stock price of $17.10 per share on the close date, for $731.6 million principal amount of the SunCom Wireless Subordinated Notes, which had a carrying value of $721.0 million as of the date of the exchange. In addition, the company wrote- off $900,000 of unamortized debt issuance costs and $13.3 million of transaction costs related to the exchange. Total revenue increased to $242.5 million for the quarter ended June 30, 2007, compared to $206.7 million for the same period last year. Service revenue for the quarter was $195.7 million compared with $164.4 million in the second quarter of 2006. The increase in service revenue was the result of higher ARPU and a greater number of subscribers compared with the second quarter of 2006. Roaming revenue increased 29.0% to $25.1 million from $19.5 million in the second quarter of 2006 on the strength of higher roaming volumes and increased data traffic. Equipment revenue was $21.7 million, compared to $22.7 million a year ago. Adjusted EBITDA was $50.3 million for the quarter compared with $24.5 million in the second quarter of 2006. Cash flows used in operations were $12.5 million for the three months ended June 30, 2007, compared with a use of $20.8 million for three months ended June 30, 2006. "We continue to see improving performance in our business, driven by higher subscriber counts and ARPU, as well as improved efficiencies. This provides further evidence that our strategy to attract these high-ARPU subscribers with value rate plans is the right one," said Michael E. Kalogris, chairman and chief executive officer of SunCom Wireless. "With six consecutive quarters of Adjusted EBITDA growth and margin expansion, we remain confident in the growth of SunCom." Capital expenditures for the quarter were $11.0 million compared with $30.9 million a year ago, and the company ended the second quarter of 2007 with $184.6 million of cash and short-term investments. At June 30, 2007, the company's consolidated balance sheet showed $1.60 billion in total assets, $1.34 billion in total liabilities, and $252.5 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?23ae Debt-for-Equity Exchange On May 15, 2007, the company completed its previously disclosed exchange with holders of certain of SunCom Wireless Inc.'s subordinated notes, as well as the related reverse stock split. Both transactions were approved by the company's shareholders on April 20, 2007, and the exchange was subsequently approved by the Federal Communications Commission. As a result of the exchange transaction, SunCom reduced its principal debt amount by approximately $731.6 million. Bondholders who previously held or beneficially owned approximately 98.3% of the aggregate outstanding 9-3/8% Senior Subordinated Notes due 2011 and 8-3/4% Senior Subordinated Notes due 2011 of SunCom's indirect, wholly- owned subsidiary, SunCom Wireless Inc., have exchanged subordinated notes for 87.9% of the company's Class A common stock. In the merger transaction, which occurred immediately prior to the exchange transaction, each outstanding share of SunCom's Class A common stock was converted into 0.1 share of Class A common stock for the primary purpose of implementing a 1- for-10 reverse stock split. About SunCom Wireless Based in Berwyn, Pennsylvania, SunCom Wireless Holdings Inc. (NYSE: TPC) (OTC: SWSH.OB) -- http://www.suncom.com/-- offers digital wireless communications services to more than one million subscribers in the southeastern United States, Puerto Rico and the U.S. Virgin Islands. SunCom is committed to delivering Truth in Wireless by treating customers with respect, offering simple, straightforward plans and by providing access to the largest GSM network and the latest technology choices. * * * As reported in the Troubled Company Reporter on Aug. 9, 2007, Standard & Poor's Ratings Services raised its ratings on SunCom Wireless Holdings Inc., including the corporate credit rating, which was raised to 'B-' from 'CCC+'. TENNECO INC: UAW's GM Strike Prompts Fitch's Negative Watch ----------------------------------------------------------- Following the decision of the United Auto Workers union to go out on strike against General Motors Corp., Fitch Ratings has placed the Issuer Default Ratings and securities ratings of these companies on Rating Watch Negative: General Motors Corp. -- IDR 'B'; -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. American Axle & Manufacturing, Inc. -- IDR 'BB'; -- Senior unsecured bank facility 'BB'; -- Senior unsecured 'BB'. American Axle Manufacturing Holdings Inc. -- IDR 'BB'. ArvinMeritor Inc. -- IDR 'BB'; -- Senior secured 'BB+'; -- Senior unsecured 'BB-'. Tenneco, Inc. -- IDR 'BB-'; -- Senior secured bank facility 'BB+'; -- Senior secured notes 'BB'; -- Subordinated 'B'. Hayes-Lemmerz International, Inc. -- IDR 'B'. Hayes Lemmerz Finance - Luxembourg S.A -- IDR 'B'. -- Senior secured 'BB/RR1'; -- Senior unsecured 'B-/RR5'. HLI Operating Company, Inc. -- IDR 'B'. The UAW strike has the potential for far-reaching, crippling repercussions throughout the industry. Although the strike is expected to be short-lived, due to the potentially devastating consequences to both sides, the onset of a strike could limit the ability of both parties to control the subsequent chain of events. Negative cash flow at GM will accelerate, due to operating losses and working capital reductions. The costs of a strike would also have consequences on GM's restructuring program, extending the timetable and impairing financial resources available, which is occurring during an uncertain economic environment for industry sales. A reduction in cash holdings could also jeopardize the ability of GM to finance any VEBA agreement. Fitch estimates that a VEBA agreement would be in the range of $30-35 billion, and that GM is unlikely to fund the VEBA entirely in cash, as remaining liquidity would fall to uncomfortable levels given economic uncertainties, restructuring costs, and working capital requirements. The issue of job security is not easily resolvable, given the high priority placed on the issue by the UAW and GM. The flexibility to reduce production and costs in the event of an economic downturn or weak product performance will be critical to GM's ability to weather such events. Fitch forecasts that further restructuring actions will be necessary to achieve viable long-term margins. In the event that GM and the UAW reach an agreement following a strike, ratification will be the next hurdle. The financial and operating stresses of suppliers would be exacerbated in the event of a strike, although liquidity among tier-one suppliers remains adequate in the short term. Second- tier and third-tier suppliers are expected to face more difficult challenges, with lower levels of liquidity and less access to capital. Financial distress at this level could quickly spill over to first-tier suppliers and GM, challenging any assumptions that a production re-start can be accomplished smoothly and quickly. The suppliers placed on Rating Watch Negative contain varying combinations of exposure to GM North America and limited or negative free cash flow over the short term. In the event that the strike is settled within a short time frame, each of the suppliers on Rating Watch Negative is expected to return to their previously existing rating and outlook. Fitch anticipates that if the strike extends beyond a very short term, further rating actions would follow, and the ratings and outlook of other OEMs and suppliers could be reviewed. VENTAS REALTY: Moody's Lifts Senior Debt Ratings to Ba1 ------------------------------------------------------- Moody's Investors Service upgraded the senior debt ratings of Ventas Realty Limited Partnership to Ba1, from Ba2. The rating outlook is stable. "This upgrade results from the scale and tenant diversification benefits accruing to Ventas following its acquisition of Sunrise Senior Living Real Estate Investment Trust, its successful track record in integrating large transactions, and its growing leadership position in the health care real estate industry," noted Karen Nickerson, Moody's analyst. Ventas' capital structure has fluctuated over recent years, with negative fluctuations directly tied to its efforts to expand and diversify through acquisitions. The result has been a significant level of secured debt -- 25% of gross assets at 2Q07. Moody's believes management is committed to addressing this matter, in part demonstrated by its $1 billion common equity offering to finance the Sunrise acquisition. Nevertheless, reducing secured debt will be slow, though Moody's believes it will occur. In addition, tenant and operator concentrations remain high, although they are much reduced from levels of several years ago. In order to address these twin matters effectively, as well as expand, Ventas will likely need to at least partly make property acquisitions outside of senior housing and skilled nursing -- most likely in medical office buildings. In order to reach investment grade status, Ventas would need to permanently address its tenant/operator concentration, and reduce its secured debt while maintaining leverage close to 5.0X. A significant investment in medical office buildings would strengthen the REIT's diversity, while also opening a new avenue for growth. Moody's stated that an upgrade to Baa3 would also depend on the ability of the REIT to bring its secured debt level below 15% of gross assets, reduce its top two tenant exposure closer to 25% of revenue, while sustaining leverage at 5.0x. Continuing to increase its exposure to private pay health care segments and grow overall in size would also be viewed positively. A rating downgrade would likely result if Ventas were to change to a more aggressive capital strategy, demonstrated by sustained secured debt above 25%, most likely driven by a leveraged strategic transaction. These ratings were upgraded: Ventas Realty Limited Partnership -- Senior debt to Ba1, from Ba2; senior debt shelf to (P)Ba1, from (P)Ba2; subordinated debt shelf to (P)Ba2, from (P)B1 Ventas, Inc. -- Senior guaranteed debt to Ba1, from Ba2; senior debt shelf to (P)Ba2, from (P)Ba3; subordinated debt shelf to (P)Ba3, from (P)B1; preferred stock shelf to (P)Ba3, from (P)B1 Ventas Capital Corporation -- senior debt shelf to (P)Ba1, from (P)Ba2; subordinated debt shelf to (P)Ba2, from (P)B1 Ventas, Inc. [NYSE: VTR] is a health care real estate investment trust that owns 252 senior housing communities, 197 skilled nursing facilities, 42 hospitals and 22 medical office and other properties in 43 states and two Canadian provinces, including 78 senior housing communities acquired from Sunrise Senior Living Real Estate Investment Trust. At June 30, 2007, Ventas had $5.7 billion in book assets. VICORP RESTAURANTS: Posts $5.7 Mil. Net Loss in Qtr. Ended July 12 ------------------------------------------------------------------ VICORP Restaurants Inc. reported a net loss of $5.7 million for the third quarter ended July 12, 2007, compared with a net loss of $581,000 in the comparable period of 2006. Adjusted earnings before interest, taxes, depreciation, and amortization for the third quarter of 2007 was $5.9 million versus $11.3 million for the third quarter of 2006. Net revenues for the third quarter of 2007 were $106.9 million, a 1.4% increase from net revenues of $105.4 million reported in the third quarter of 2006. The increase in the net revenues resulted from a 13.1% increase in manufacturing sales to third parties as well as sales at the 11 new restaurants, net of closures, opened since the end of the third quarter of 2006. Comparable restaurant sales for the third quarter of 2007 declined 3.2% versus the previous year's third quarter. Operating profit was $926,000 in the third quarter of 2007 versus operating profit of $5.4 million in the third quarter of 2006, principally due to lower restaurant operating profit. During the third quarter of 2007, the company opened one new Village Inn restaurant in an existing market which brings the total year-to-date openings to nine Village Inn restaurants. No additional new restaurant openings are planned for the current fiscal year. Year-to-date, capital expenditures were $8.0 million. Capital expenditures for fiscal 2007 across all expenditure areas currently are projected at approximately $11 million. Year-to-date net revenues through the third quarter of 2007 were $336.0 million, an increase of 3.8% over the $323.7 million reported in 2006, primarily due to the 43.0% year-to-date increase in manufacturing sales to third parties, as well as incremental sales at the 11 net newly opened restaurants since the end of the third quarter of fiscal 2006. Comparable restaurant sales for fiscal 2007 declined 3.5% versus fiscal 2006. Net loss for the year-to-date through the third quarter 2007 was $14.2 million versus $1.8 million in the comparable period in 2006. Adjusted EBITDA was $22.1 million for year-to-date 2007, versus $35.0 million for year-to-date 2006. At July 12, 2007, the company's consolidated balance sheet showed $376.2 million in total assets, $327.2 million in total liabilities, $489,000 in stock subject to repurchase, and $48.5 million in total stockholders' equity. The company's consolidated balance sheet at July 12, 2007, further showed strained liquidity with $33.0 million in total current assets available to pay $52.5 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended July 12, 2007, are available for free at http://researcharchives.com/t/s?23b2 About VICORP Restaurants Headquartered in Denver, VICORP Restaurants Inc. -- http://www.vicorpinc.com/-- operates family-dining restaurants under two proven and well-recognized brands, Village Inn and Bakers Square. As of Aug. 28, 2007, VICORP, founded in 1958, has 409 restaurants in 25 states, consisting of 316 company-operated restaurants and 93 franchised restaurants. * * * As reported in the Troubled Company Reporter on Sept. 19, 2007, Moody's Investors Service downgraded VICORP Restaurants Inc.'s corporate family rating to Caa1 from B3 and the senior unsecured notes to Caa2 from Caa1. At the same time, the SGL-3 speculative grade liquidity rating was lowered to SGL-4 and the rating outlook remains negative. VICORP RESTAURANTS: Low Earnings May Prompt Defaults ---------------------------------------------------- VICORP Restaurants Inc. is close to breaching provisions on its bank loans due to low earnings, David Milstead, James Paton and Joyzelle Davis report for Rocky Mountain News. According to the report, the company can no longer cover its monthly interest payments and upgrade its restaurants. Around 40 restaurants may be closed due to non-profitability. The company is currently continuing discussions with its lenders, Rocky Mountain News relates citing CEO Ken Keymer. However, the report says, the company could likely face bankruptcy if negotiations with its lenders fail. CEO Keymer has however, outlined a four-point plan for recovery that includes strengthening the brand and putting emphasis on marketing, Rocky Mountain News discloses. As part of the plan, the company plans to enter into discussions with landlords to reduce rent on its restaurants. About VICORP Restaurants VICORP Restaurants Inc., with corporate headquarters in Denver, Colorado, operates and franchises family-style restaurants under the brand names Village Inn and Baker's Square. As of July 12, 2007, the company operated 170 Village Inn restaurants and 146 Bakers Square restaurants, and franchisees operated 93 Village Inn restaurants. Revenues for the last 23 months were about $478 million. * * * As reported in the Troubled Company Reporter on Sept. 19, 2007, Moody's Investors Service downgraded VICORP Restaurants Inc.'s corporate family rating to Caa1 from B3 and the senior unsecured notes to Caa2 from Caa1. At the same time, the SGL-3 speculative grade liquidity rating was lowered to SGL-4 and the rating outlook remains negative. VICORP operates and franchises family-style restaurants under the brand names Village Inn and Bakers Square. VISIPHOR CORP: June 30 Balance Sheet Upside-Down by CDN$1.9 Mil. ---------------------------------------------------------------- Visiphor Corp.'s consolidated balance sheet at June 30, 2007, showed CDN$3.2 million in total assets CDN$5.1 million in liabilities, resulting in a CDN$1.9 million total stockholders' equity. The company's consolidated balance sheet at June 30, 2007, also showed strained liquidity with CDN$737,854 in total current assets available to pay CDN$3.6 million in totla current liabilities. The company reported a net loss of CDN$917,742 for the second quarter ended June 30, 2007, compared with a net loss of CDN$2.0 million for the same period ended June 30, 2006. For the six-months ended june 30, 2007, the company reported a net loss of CDN$1.6 million, compared with a net loss of CDN$3.6 million for the same period ended June 30, 2006. Revenues for the second quarter totaled CDN$863,755, largely due to the successful completion of project work in the financial services and energy sectors, and CDN$2.1 Million for the 6 months ended June 30, 2007. This compares with revenues of CDN$1.5 million and CDN$3.8 million for the same periods in 2006, respectively. The company's year-to-date operating cash flow remained positive; reporting CDN$63,123 for the six months ended June 30, 2007. The company maintained its commitment to reduce expenses which were 49.0% lower as compared with 2006 with a related decrease in the quarterly losses. The loss for the six months ended June 30, 2007, decreased 55.0% as compared to the same period in 2006. "In order to move toward profitability, we have reduced staffing and operations costs; although this has improved profitability, there has been a corresponding drop in revenues this quarter," commented Visiphor chief executive officer Roy Trivett. "Business activity in the law enforcement and healthcare sectors is increasing, and we believe that we are on track to achieve our objective of operational profitability before the end of the year." 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?23af Going Concern Doubt The report of Grant Thornton LLP on the company's Dec. 31, 2006, financial statements includes an explanatory paragraph that indicates the financial statements are affected by conditions and events that cast substantial doubt on the company's ability to continue as a going concern. For the year ended Dec. 31, 2006, the company incurred a loss from operations of CDN$6,678,371 and a deficiency in operating cash flow of CDN$2,602,248. In addition, the company incurred significant operating losses and net utilization of cash in operations in all prior periods. About Visiphor Corp. Headquartered in Vancouver, Visiphor Corp. (OTC BB: VISRF.OB) (CDNX: VIS.V) -- http://www.visiphor.com/ -- sells software products and services that deliver practical, rapidly deployable solutions that integrate business processes and databases. The company's solutions focus on disparate process and data management problems that exist in numerous verticals spanning government, energy, law enforcement, security, health care and financial services. * 55 Winstead Lawyers Named in Texas Super Lawyers List ------------------------------------------------------- 55 of Winstead PC's attorneys have been selected as Texas Super Lawyers by Law & Politics magazine and will be published in the October issues of Texas Monthly and Texas Super Lawyers. The annual Texas Super Lawyers list honors Texas' top lawyers based on surveys of more than 57,000 active attorneys across the state. The final list -- only 5% of Texas's licensed attorneys – is a comprehensive and diverse listings of top lawyers in Texas ever assembled. The Texas Super Lawyers winners are selected through a four-part selection process that includes a ballot and point system established by the publishers of Texas Monthly and Law & Politics magazines followed by a panel review, interviews, independent research and a final selection process. Lawyers nominated are evaluated by evidence of peer recognition, professional achievement and service to the community as a lawyer, including pro bono work. These, separated by city location, are the 55 Winstead attorneys who were recognized, along with their specialty areas: -- Austin Albert R. Axe, Jr. - Energy & Environmental Law Robert C. Bass, Jr. - Construction Linda J. Burgess - Government Enforcement & Regulated Industries Litigation J. Rowland Cook - Corporate & Securities Michael L. Cook - Tax Craig T. Enoch - Appellate Alex Gonzales - Insurance Industry Kathryn K. Lindauer - Corporate & Securities William M. Parrish - Commercial Litigation Pete Winstead - Government Relations -- Dallas Michael F. Alessio - Real Estate Arthur J. Anderson - Real Estate W. Mike Baggett - Commercial Litigation John F. Bergner - Wealth Preservation Talmage Boston - Commercial Litigation James David Brown - Commercial Litigation Mark A. Calhoun - Commercial Litigation William Frank Carroll - Commercial Litigation Dan C. Dargene - Labor & Employment T. Andrew Dow - Real Estate Ira D. Einsohn - Business Restructuring/Bankruptcy R. Michael Farquhar - Business Restructuring/Bankruptcy Thomas R. Helfand - Tax Michael W. Hilliard - Finance & Banking Harry J. Joe - Labor, Employment & Immigration James R. Littlejohn - Finance & Banking G. Roland Love - Commercial Litigation Jay J. Madrid - Commercial Litigation John Michael Nolan - Real Estate Michael Kent O'Neal - Finance & Banking Edward A. Peterson - Real Estate Thomas E. Reddin - Labor, Employment & Immigration Michelle I. Rieger - Construction Melissa Ruman Stewart - Finance & Banking Kevin A. Sullivan - Real Estate Daniel F. Susie - Finance & Banking J. Richard White - Real Estate Robert J. Witte - Commercial Litigation Michael C. Wright - Commercial Litigation -- Fort Worth G. Thomas Boswell - Corporate & Securities -- Houston Nelson R. Block - Banking Denis Clive Braham - Real Estate/Sports & Entertainment Jeffery James Brashier - Finance & Banking Michael P. Cash - Commercial Litigation Melvin A. Dow - Real Estate Greg Erwin - Real Estate J. Robert Fisher - Real Estate Mark C. Guthrie - Construction Jeff Joyce - Commercial Litigation David R. Keyes - Finance & Banking Vincent L. Marino - Real Estate Barry E. Putterman - Real Estate Frederick J. Tuthill - Tax -- The Woodlands Thomas J. Forestier - Commercial Litigation Clyde R. Parker, Jr. - Corporate & Securities About Winstead PC Winstead PC -- http://www.winstead.com/-- is a business law firms in Texas, representing major companies regionally and nationally in the real estate, financial services and technology industries. Winstead attorneys and consultants serve as trusted advisors to mid-market and large businesses, providing a core range of legal services that are critical to their operation and success. From its broad corporate practice to high-stakes litigation and appellate matters, Winstead has the power to perform. Winstead has offices in Austin, Dallas, Fort Worth, Houston, San Antonio, and The Woodlands, Texas; and Washington D.C. * Chadbourne & Parke Names Hal Stewart as Chief Operating Officer ----------------------------------------------------------------- Hal M. Stewart has joined Chadbourne & Parke LLP as chief operating officer, based in the New York office. "We welcome Hal as a key new member of the management of Chadbourne," managing partner Charles O'Neill, said. "These are exciting times at the Firm and Hal will have an immediate impact on executing our growth strategies." Mr. Stewart, 52, joins Chadbourne from Wilson, Elser, Moskowitz, Edelman & Dicker LLP, a New York law firm where he had been chief executive officer. Earlier in his career, he held executive and management positions at public accounting firms, including serving as firmwide controller for a Big 8 accounting firm. He had also been corporate controller of an international footwear manufacturer. Mr. Stewart will supervise all non-legal personnel and use his expertise in technology and law firm management to help Chadbourne provide the best services to its clients. In his capacity as COO, he will also serve as an ex- officio member of the management committee. Mr. Stewart holds a B.A. in public accounting and finance from Queens College of the City University of New York, and an M.B.A. in management information systems from St. Johns University About Chadbourne & Parke LLP Headquartered in New York City, Chadbourne & Parke LLP -- http://www.chadbourne.com/-- is a law firm that provides a full range of legal services, including mergers and acquisitions, securities, project finance, private funds, corporate finance, energy, communications and technology, commercial and products liability litigation, securities litigation and regulatory enforcement, special investigations and litigation, intellectual property, antitrust, domestic and international tax, insurance and reinsurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. Major geographical areas of concentration include Central and Eastern Europe, Russia and the CIS, and Latin America. The firm has offices in New York, Washington, DC, Los Angeles, Houston, Moscow, St. Petersburg, Warsaw (through a Polish partnership), Kyiv, Almaty, Tashkent, Beijing, and a multinational partnership, Chadbourne & Parke, in London. * James Mcdermott Joins Alvarez & Marsal as Managing Director ------------------------------------------------------------- Alvarez & Marsal has named James P. McDermott as a managing director in the firm's North America Restructuring practice. Mr. McDermott is based in New York. Formerly managing director of The Eagle Rock Group, LLC, a business advisory firm he co-founded, Mr. McDermott has significant experience in financial restructuring, crisis management and capital markets transactions. He has also advised companies and boards of directors on complex accounting and actuarial issues, SEC investigations and matters involving shareholder derivative actions. Mr. McDermott has an outstanding background, having served in interim management and advisory capacities in numerous complex turnaround situations, particularly in the financial services sector, said Joe Bondi, managing director and head of the New York Turnaround and Restructuring practice of Alvarez & Marsal. The firm is delighted to welcome him to the team. Mr. McDermott's clients have included Genworth Financial Group, RSL Communications and World Black Belt Association, among others. He most recently served as president and CEO of AF&L, Inc., a privately-held specialty insurer. Prior to forming Eagle Rock, Mr. McDermott was CFO of PennCorp Financial Group, Inc., where he helped lead an operational stabilization, debt reduction and recapitalization plan that was ultimately completed through the Chapter 11 process. Mr. McDermott began his career with the accounting firm Peat Marwick Mitchell & Co. now know as KPMG. Mr. McDermott holds a bachelor's degree in business administration, with concentrations in accounting, actuarial science and quantitative analysis, from the University of Wisconsin. Mr. McDermott is a Certified Public Accountant licensed in the state of Georgia. Mr. McDermott has been admitted and testified as an expert in U.S. Federal District Court on acquisition due diligence matters. About Alvarez & Marsal Alvarez & Marsal -- http://www.alvarezandmarsal.com/-- is a professional services firm with expertise in guiding underperforming companies and public sector entities through complex operational, financial and organizational challenges. The firm excels in problem solving and value creation, and brings a bias toward executing solutions with a distinctive hands-on approach to serving clients, management and stakeholders. Founded in 1983, Alvarez & Marsal draws on its strong operational heritage to provide specialized services, including Turnaround and Management Advisory, Crisis and Interim Management, Performance Improvement, Creditor Advisory Services, Corporate Finance, Dispute Analysis and Forensics, Tax Advisory, Business Consulting, Real Estate Advisory and Transaction Advisory. A network of experienced professionals in locations across the U.S., Europe, Asia and Latin America, enables the firm to deliver on its proven reputation for leadership, problem solving and value creation. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Sept. 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION Hedge Funds: Why Should I Care About Them and How Do They Affect Me? Faegre & Benson, Minneapolis, Minnesota Contact: http://www.turnaround.org/ Sept. 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Arizona Chapter Meeting TBA, Arizona Contact: http://www.turnaround.org/ Sept. 27-30, 2007 TURNAROUND MANAGEMENT ASSOCIATION 8th Annual Cross Border Business Restructuring & Turnaround Conference Contact: http://www.turnaround.org/ Oct. 1, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Pittsburgh 4th Annual Golf Outing Fox Chapel Golf Club, Pittsburgh, Pennsylvania Contact: 412-644-8794 or http://www.turnaround.org/ Oct. 2, 2007 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast TBD, Bridgewater, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ Oct. 4, 2007 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Event Carnelian Room, San Francisco, California Contact: 510-346-6000 ext 226 or http://www.turnaround.org/ Oct. 4, 2007 NEW YORK SOCIETY OF SECURITY ANALYSTS Investing in Distressed and Defaulted Debt New York, New York Contact: http://www.nyssa.org/ Oct. 5, 2007 PRACTISING LAW INSTITUTE Intercreditor Agreements & Bankruptcy Issues - Creating the Best Structures University Club, New York, New York Contact: http://www.pli.edu/ Oct. 5, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown University Law Center Washington, District of Columbia Oct. 9-10, 2007 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC Annual Fall Conference Orlando, Florida Contact: http://http://www.iwirc.org// Oct. 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES 81st Annual National Conference of Bankruptcy Judges Contact: http://www.ncbj.org/ Oct. 11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, Florida Contact: 561-882-1331 or http://www.turnaround.org/ Oct. 11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Winn Dixie Bankruptcy University Club, Jacksonville, Florida Contact: 561-882-1331 or http://www.turnaround.org/ Oct. 11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Chuck Bauer - Client Satisfaction Dallas Country Club, Dallas, Texas Contact: http://www.turnaround.org/ Oct. 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Westin Buckhead, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ Oct. 12, 2007 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION Presentation by George F. Will: The Political Argument Today Orlando, Florida Contact: http://www.ardent-services.com/ Oct. 12, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Educational Program at NCBJ Orlando World Marriott, Orlando, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 16-19, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place Boston, Massachussets Contact: 312-578-6900; http://www.turnaround.org/ Oct. 17, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS AIRA Presents Lifetime Achievement Awards to Charles C. Crumley and William G. Hays, Jr. Cherokee Town Club, Atlanta, Georgia Contact: http://www.airacira.org/ Oct. 21-24, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Restructuring and Investing Conference Portman Ritz Carlton, Shanghai, China Contact: http://www.airacira.org/ Oct. 22-23, 2007 STRATEGIC RESEARCH INSTITUTE 9th Annual Distressed Debt - West Venetian Resort Hotel Casino, Las Vegas, Nevada Contact: http://www.almevents.com/ Oct. 23, 2007 BEARD AUDIO CONFERENCES Partnerships in Bankruptcy Contact: 240-629-3300; http://www.beardaudioconferences.com/ Oct. 24, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Event - TBA McCormick & Schmick's Fresh Seafood Restaurant, Las Vegas, Nevada Contact: 702-952-2480 or http://www.turnaround.org/ Oct. 25, 2007 TURNAROUND MANAGEMENT ASSOCIATION LI Turnaround Member Social Davenport Press, Mineola, New York Contact: 631-261-6296 or http://www.turnaround.org/ Oct. 25, 2007 TURNAROUND MANAGEMENT ASSOCIATION Capital Markets Case Study Seattle, Washington Contact: http://www.turnaround.org/ Oct. 25, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Arizona Chapter Meeting Contact: http://www.turnaround.org/ Oct. 26, 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Hotel Adlon Kempinski, Berlin, Germany Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 29, 2007 TURNAROUND MANAGEMENT ASSOCIATION Monthly Luncheon, Carolinas Chapter - Topic TBA Sheraton Greensboro Hotel, Greensboro, North Carolina Contact: http://www.turnaround.org/ Oct. 29, 2007 FINANCIAL RESEARCH ASSOCIATES LLC 6th Annual Distressed Debt Summit The 3 West Club, New York, New York Contact: http://www.frallc.com/ Oct. 30, 2007 BEARD AUDIO CONFERENCES Using Virtual Data Rooms to Expedite M&A and Insolvency Proceedings Contact: 240-629-3300; http://www.beardaudioconferences.com/ Oct. 30, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, Florida Contact: 561-882-1331; http://www.turnaround.org/ Oct. 30, 2007 TURNAROUND MANAGEMENT ASSOCIATION Crisis Communications With Employees, Vendors and Media Centre Club, Tampa, Florida Contact: http://www.turnaround.org/ Nov. 1, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Claims Trading - Issues and Implications New York, New York Contact: http://www.airacira.org/ Nov. 1, 2007 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Event Carnelian Room, San Francisco, California Contact: 510-346-6000 ext 226 or http://www.turnaround.org/ Nov. 1, 2007 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast TBD, Hackensack, New Jersey Contact: 908-575-7333; http://www.turnaround.org/ Nov. 5, 2007 TURNAROUND MANAGEMENT ASSOCIATION 2007 Newsmaker Dinner with Jean Chretien Fairmont Royal York Hotel, Toronto, Ontario Contact: http://www.turnaround.org/ Nov. 7, 2007 TURNAROUND MANAGEMENT ASSOCIATION Lenders Forum Milleridge Cottage, Jericho, New York Contact: http://www.turnaround.org/ Nov. 12, 2007 AMERICAN BANKRUPTCY INSTITUTE Consumer Bankruptcy Conference Marriott, Troy, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ Nov. 13-14, 2007 TURNAROUND MANAGEMENT ASSOCIATION 6th Annual Distressed Debt Symposium Jumeirah Carlton Tower, London, United Kingdom Contact: http://www.turnaround.org/ Nov. 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Holiday Mixer McCormick & Schmick's, Las Vegas, Nevada Contact: 702-952-2480 or http://www.turnaround.org/ Nov. 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Aloha Airlines Story Bankers Club, Miami, Florida Contact: http://www.turnaround.org/ Nov. 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Australia 4th Annual Conference and Gala Dinner Hilton, Sydney, Australia Contact: http://www.turnaround.org/ Nov. 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Dinner TBA, South Florida Contact: 561-882-1331 or http://www.turnaround.org/ Nov. 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Portland Holiday Party University Club, Portland, Oregon Contact: 206-223-5495; http://www.turnaround.org/ Nov. 16, 2007 TURNAROUND MANAGEMENT ASSOCIATION Meeting with Chapter President, Bruce Sim Westin Buckhead, Atlanta, Georgia Contact: http://www.turnaround.org/ Nov. 22, 2007 TURNAROUND MANAGEMENT ASSOCIATION Networking Mixer TBA, Vancouver, British Columbia Contact: 206-223-5495; http://www.turnaround.org/ Nov. 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Real Estate Panel Citrus Club, Orlando, Florida Contact: http://www.turnaround.org/ November 26-27, 2006 BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT Fourteenth Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Jumeirah Essex House, New York, NY Contact: 800-726-2524; 903-595-3800; http://beardconferences.com/ Nov. 29, 2007 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION Holiday Gala Yale Club, New York, New York Contact: http://www.iwirc.org/ Nov. 29, 2007 TURNAROUND MANAGEMENT ASSOCIATION Special Speaker TBD, New Jersey Contact: 908-575-7333; http://www.turnaround.org/ Nov. 29, 2007 TURNAROUND MANAGEMENT ASSOCIATION Special Speaker Hilton, Sydney, Australia Contact: http://www.turnaround.org/ Nov. 29, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Arizona Chapter Meeting Contact: http://www.turnaround.org/ Dec. 5, 2007 TURNAROUND MANAGEMENT ASSOCIATION Joint Holiday Networking Event with TMA/CFA TBA, Philadelphia, Pennsylvania Contact: 215-657-5551 or http://www.turnaround.org/ Dec. 6, 2007 TURNAROUND MANAGEMENT ASSOCIATION Seattle Holiday Party Athletic Club, Seattle, Washington Contact: 206-223-5495; http://www.turnaround.org/ Dec. 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ Dec. 10, 2007 TURNAROUND MANAGEMENT ASSOCIATION Holiday Party Guy Anthony's Restaurant, Merrick, New York Contact: 631-251-6296 or http://www.turnaround.org/ Dec. 13, 2007 TURNAROUND MANAGEMENT ASSOCIATION Holiday Extravaganza - TMA & CFA Georgia Aquarium, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ Dec. 13, 2007 TURNAROUND MANAGEMENT ASSOCIATION Holiday Extravaganza - TMA & CFA Georgia Aquarium, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ Dec. 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South Florida Contact: 561-882-1331; http://www.turnaround.org/ Jan. 10, 2008 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, Florida Jan. 11, 2008 TURNAROUND MANAGEMENT ASSOCIATION Annual Lenders Panel Westin Buckhead, Atlanta, Georgia Contact: http://www.turnaround.org/ Feb. 7, 2008 TURNAROUND MANAGEMENT ASSOCIATION PowerPlay Philips Arena, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ Feb. 7, 2008 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Event Carnelian Room, San Francisco, California Contact: 510-346-6000 ext 226 or http://www.turnaround.org/ Feb. 14-16, 2008 AMERICAN BANKRUPTCY INSTITUTE 13th Annual Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colorado Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 23-26, 2008 NORTON INSTITUTES ON BANKRUPTCY LAW Bankruptcy Litigation Seminar I Park City, Utah Contact: http://www.nortoninstitutes.org/ Feb. 26, 2008 TURNAROUND MANAGEMENT ASSOCIATION Retail Panel Citrus Club, Orlando, Florida Contact: http://www.turnaround.org/ Mar. 6-8, 2008 ALI-ABA Fundamentals of Bankruptcy Law Mandalay Bay Resort, Las Vegas, Nevada Contact: http://www.ali-aba.org/ Mar. 25-29, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Ritz Carlton Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Mar. 27-30, 2008 NORTON INSTITUTES ON BANKRUPTCY LAW Bankruptcy Litigation Seminar II Las Vegas, Nevada Contact: http://www.nortoninstitutes.org/ Apr. 3-6, 2008 AMERICAN BANKRUPTCY INSTITUTE 26th Annual Spring Meeting The Renaissance, Washington, District of Columbia Contact: http://www.abiworld.org/ Apr. 25-27, 2008 NATIONAL ASSOCIATION OF BANKRUPTCY JUDGES NABT Spring Seminar Eldorado Hotel & Spa, Santa Fe, New Mexico Contact: http://www.nabt.com/ May 1-2, 2008 AMERICAN BANKRUPTCY INSTITUTE Debt Symposium Hilton Garden Inn, Champagne/Urbana, Illinois Contact: 1-703-739-0800; http://www.abiworld.org/ June 4-7, 2008 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 24th Annual Bankruptcy & Restructuring Conference J.W. Marriott Spa and Resort, Las Vegas, Nevada Contact: http://www.airacira.org/ June 12-14, 2008 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: http://www.abiworld.org/ June 19-21, 2008 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Omni Hotel, San Francisco, California Contact: http://www.ali-aba.org/ June 26-29, 2008 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains Bankruptcy Law Seminar Jackson Hole, Wyoming Contact: http://www.nortoninstitutes.org/ July 10-13, 2008 TURNAROUND MANAGEMENT ASSOCIATION 16th Annual Northeast Bankruptcy Conference Ocean Edge Resort Brewster, Massachussets Contact: http://www.turnaround.org/ July 31 - Aug. 2, 2008 AMERICAN BANKRUPTCY INSTITUTE 4th Annual Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay Cambridge, Maryland Contact: http://www.abiworld.org/ Aug. 16-19, 2008 AMERICAN BANKRUPTCY INSTITUTE 13th Annual Southeast Bankruptcy Workshop Ritz-Carlton, Amelia Island, Florida Contact: http://www.abiworld.org/ Aug. 20-24, 2008 NATIONAL ASSOCIATION OF BANKRUPTCY JUDGES NABT Convention Captain Cook, Anchorage, Alaska Contact: http://www.nabt.com/ Sept. 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ Oct. 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott New Orleans, Louisiana Contact: 312-578-6900; http://www.turnaround.org/ Dec. 3-5, 2008 AMERICAN BANKRUPTCY INSTITUTE 20th Annual Winter Leadership Conference Westin La Paloma Resort & Spa Tucson, Arizona Contact: http://www.abiworld.org/ May 7-10, 2009 AMERICAN BANKRUPTCY INSTITUTE 27th Annual Spring Meeting Gaylord National Resort & Convention Center National Harbor, Maryland Contact: http://www.abiworld.org/ June 21-24, 2009 INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY & BANKRUPTCY PROFESSIONALS 8th International World Congress TBA Contact: http://www.insol.org/ Sept. 10-12, 2009 AMERICAN BANKRUPTCY INSTITUTE 17th Annual Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Oct. 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ BEARD AUDIO CONFERENCES 2006 BACPA Library Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com; http://researcharchives.com/t/s?20fa BEARD AUDIO CONFERENCES BAPCPA One Year On: Lessons Learned and Outlook Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Carve-Out Agreements for Unsecured Creditors Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES China's New Enterprise Bankruptcy Law Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Clash of the Titans -- Bankruptcy vs. IP Rights Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Deepening Insolvency – Widening Controversy: Current Risks, Latest Decisions Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Diagnosing Problems in Troubled Companies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Claims Trading Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Market Opportunities Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Equitable Subordination and Recharacterization Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Handling Complex Chapter 11 Restructuring Issues Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Homestead Exemptions under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Hospitals in Crisis: The Insolvency Crisis Plaguing Hospitals Across the U.S. Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES IP Rights In Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES KERPs and Bonuses under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Non-Traditional Lenders and the Impact of Loan-to-Own Strategies on the Restructuring Process Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Partnerships in Bankruptcy: Unwinding The Deal Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Real Estate Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Reverse Mergers—the New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Second Lien Financings and Intercreditor Agreements Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Surviving the Digital Deluge: Best Practices in E-Discovery and Records Management for Bankruptcy Practitioners and Litigators Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Technology as a Competitive Advantage For Today's Legal Processes Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Twenty-Day Claims Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Using Virtual Data Rooms to Expedite M&A and Insolvency Proceedings Contact: 240-629- 3300;http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES When Tenants File -- A Landlord's BAPCPA Survival Guide Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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, Joseph C. Martirez, 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 ***