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/raid1/www/Hosts/bankrupt/TCR_Public/071004.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 4, 2007, Vol. 11, No. 235 Headlines 360NETWORKS INC: Dreier LLP Recovers $55.4 Million for Creditors ADVANCED MARKETING: Plan Confirmation Hearing Scheduled on Nov. 15 ADVANCED MARKETING: Judge Sontchi OKs Baker Taylor Settlement Pact ANN-LEE CONSTRUCTION: Wants Case Converted to Chapter 7 ACXIOM CORP: Expects Improved Second Quarter Financial Results AGILYSYS INC: Paying $0.03/Share Cash Dividend on November 1 ALANCO TECHNOLOGIES: Semple Marchal Raises Going Concern Doubt ALLIANCE PHARMACEUTICAL: KMJ Corbin Raises Going Concern Doubt AMERICAN TOWER: Posts $20 Million Net Loss in Qtr. Ended June 30 APPLICA INC: Parent Inks Merger Agreement with Salton ARCAP 2005-RR5: Credit Erosion Prompts S&P to Lower Ratings ARGENT SECURITIES: S&P Junks Rating on Class M-10 Certificates AXIA INC: S&P Downgrades Corporate Credit Rating to B- BAPTIST HEALTH: Moody's Places Ba2 $193MM Debt's Rating on Watch BEAR STEARNS: Credit Enhancement Cues S&P to Affirm Ratings BIOMERGE INDUSTRIES: Xillix Shares Delisted on TSX BIOMERGE INDUSTRIES: B.C. Court Okays Amended Plan of Arrangement BIRCH REAL: Fitch Cuts Rating on $11.04MM Notes to B from BB BLUE RIDGE: S&P Removes Negative Watch and Withdraws Ratings BODISEN BIOTECH: Earns $2.6 Million in Quarter Ended June 30 BOWNE & CO: Earns $15.7 million in Second Quarter Ended June 30 CALA CORP: Posts $135,795 Net Loss in Second Quarter Ended June 30 CARIBBEAN RESTAURANTS: S&P Revises Outlook to Neg. from Stable CATHOLIC CHURCH: San Diego Posts Lists of Accused Priests CATHOLIC CHURCH: San Diego Inks Pact Suspending MOR Submission CATHOLIC CHURCH: Spokane Posts Names of Accused Priests CATHOLIC CHURCH: Spokane Parishes Raised Up To Half of $10MM Share CATHOLIC CHURCH: Spokane Wires $11.7MM Initial Payment to Trust CHARTER COMMS: Moody's Holds Caa1 Corporate Family Rating CHRYSLER LLC: September 2007 U.S. Sales Down 5% CLASSIC COUNTRY: Voluntary Chapter 11 Case Summary COTT CORP: S&P Revises CreditWatch to Negative from Developing COUNTRYWIDE FINANCIAL: State Pension Wants to Recover Losses CYGNUS BUSINESS: S&P Affirms All Ratings and Removes Pos. Watch DANA CORP: Appaloosa Re-Affirms Investment Offer; Sends Final Deal DANA CORP: Wants to Enter Into Mexican Unit Restructuring Process DAVID SNYDER: Case Summary & 17 Largest Unsecured Creditors DAVID WU: Voluntary Chapter 11 Case Summary DEAN FOODS: Moody's Reviews Ba3 Corporate Family Rating DELPHI CORP: U.S. Trustee Adds SABIC to Creditors Committee DENNIS WICKS: Voluntary Chapter 11 Case Summary DEWEY INVESTMENTS: Voluntary Chapter 11 Case Summary DURA AUTOMOTIVE: Gets Court Nod to Submit Plan to Creditors EL POLLO: Weakening Liquidity Cues S&P to Cut Rating to B- FLEXTRONICS INT'L: Moody's Holds Corporate Family Rating at Ba1 FLEXTRONICS INT'L: Fitch Affirms 'BB+' Issuer Default Rating FORD MOTOR: Overall September 2007 Vehicle Sales Decline by 21% FREESTAR TECHNOLOGY: Auditor Raises Going Concern Doubt GALLETTA REALTY: Voluntary Chapter 11 Case Summary GAP INC: Reports $0.08 Per Share Dividend Payable on Oct. 30 GENERAL MOTORS: September 2007 Deliveries Up 4% H&K INVESTMENT: Voluntary Chapter 11 Case Summary HARBORVIEW MORTGAGE: Fitch Rates $11.5 Million Certs. at BB+ HD SUPPLY: High Leverage Cues S&P's B Corporate Credit Rating HOLLY MARINE: Judge Sonderby Approves Bell Boyd as Panel's Counsel HOMEBANC CORP: Taps MountainView Servicing as Broker HOMEBANC CORP: Court Approves Ernst & Young As Tax Advisor INGE BONGO: Case Summary & 13 Largest Unsecured Creditors INTERSTATE BAKERIES: Lenders Reduce DIP Commitment by $10 Mil. INTERSTATE BAKERIES: Court Defers Plan-Filing Deadline to Nov. 8 IPOFA WEST OAKS: Voluntary Chapter 11 Case Summary JOURNAL REGISTER: Weakening Financial Cues S&P to Cut Ratings LABRANCHE & CO: Moody's Cuts Senior Unsecured Rating to B2 LAIDLAW INT'L: Loan Termination Cues Moody's to Witdraw Ratings LANDRY'S RESTAURANTS: Paying $0.05/Share Dividend on October 25 LIBERTY ELECTRIC: Moody's Rates $335 Million Loans at (P)Ba3 LINENS 'N THINGS: Fitch Junks Issuer Default Rating LONG BEACH: Moody's Reviews Low-B Ratings on Four Tranches LUMINENT MORTGAGE: Completes Asset Sale, Repays Lines of Credit M FABRIKANT: Files Joint Chapter 11 Plan of Liquidation MANARIS CORP: Raymond Chabot Raises Going Concern Doubt MARCAL PAPER: Amends Plan of Reorganization; To Sell Assets MELVA HUFF: Case Summary & Largest Unsecured Creditor MERIDIAN AUTOMOTIVE: Judge Walrath Closes Chapter 11 Cases MERIDIAN AUTOMOTIVE: Claims Objection Deadline Extended to Dec. 3 MERRILL LYNCH: Moody's Assigns Low-B Ratings on Six Certs. MGM MIRAGE: Discloses Management Changes at Resorts MICHAEL ACABADO: Voluntary Chapter 11 Case Summary MORGAN STANLEY: S&P Holds 'BB-' Rating on Class F Certificates MORGAN STANLEY: S&P Cuts Class M Certs. Rating to CCC from CCC- MUSICLAND HOLDING: Plan Confirmation Hearing Adjourned Sine Die MUSICLAND HOLDING: Trade Creditors Appeal Complaint Dismissal MUZAK HOLDINGS: David Moore Resigns as Chief Technology Officer MUZAK HOLDINGS: June 30 Balance Sheet Upside-Down by $381.2 Mil. NEW JERSEY ECONOMIC: Fitch Withdraws 'BB+' Revenue Bonds Rating NEXINNOVATIONS INC: TechData Confirms Second Bankruptcy Filing NASDAQ STOCK: Buying Boston Stock Exchange for $61 Million NASDAQ STOCK: Completes Sale of 28% LSE Stake to Borse Dubai NETWOLVES CORP: Marcum & Kliegman Raises Going Concern Doubt NTCA INC: Voluntary Chapter 11 Case Summary NVIDIA CORP: S&P Holds 'BB-' Rating and Revises Outlook to Pos. OASYS MOBILE: Court Confirms Amended Chapter 11 Plan OASYS MOBILE: Focus Management Approved as Financial Advisor PARKER DRILLING: Improved Performance Cues S&P to Lift Ratings PARMALAT SPA: Judge Doubts EUR2.1 Billion Claim Against Banks PIRATES' REALITY: Voluntary Chapter 11 Case Summary PORTELLA MANUFACTURING: Voluntary Chapter 11 Case Summary PRA INTERNATIONAL: Moody's Places Corporate Family Rating at B3 PRA INTERNATIONAL: S&P Assigns 'B' Corporate Credit Rating PRECISION OPTICS: Vitale Caturano Raises Going Concern Doubt PRIDE INTERNATIONAL: Earns $146.1 Million in Qtr. Ended June 30 PW LLC: Judge Bluedbond Converts Chapter 11 Case QUEST TRUST: S&P Junks Ratings on Class M-3 Certificates RELIANT ENERGY: Panel Taps Pepper Hamilton as Bankrupty Counsel RH DONNELLEY: Moody's Rates Proposed $500MM Senior Notes at B3 RH DONNELLEY: Proposed $500MM Add-On Cues S&P to Hold B Rating RURAL/METRO: Special Stockholder Meeting Scheduled on Oct. 10 SABEE PRODUCTS: Case Summary & 20 Largest Unsecured Creditors SALTON INC: Inks Agreement to Acquire Applica SATINDER TAMBER: Case Summary & Four Largest Unsecured Creditors SCO GROUP: Taps Berger Singerman as General Counsel SCO GROUP: Promotes Sandy Gupta to President of SCO Operations SOLECTRON CORP: Flextronics Deal Cues Fitch to Withdraw Ratings STEEL DYNAMICS: Moody's Affirms Ba1 Corporate Family Rating SULTAN INC: Case Summary & 15 Largest Unsecured Creditors SWEET TRADITIONS: Panel Wants DIP Financing Terms Clarified SWEET TRADITIONS: Wants Guilfoil Petzall as Special Counsel TERRENCE HAVANEC: Voluntary Chapter 11 Case Summary TESORO CORP: Earns $443 Million in Second Quarter Ended June 30 TORONTO-DOMINION: Moody's Holds B+ Financial Strength Rating US CONCRETE: Completes Acquisition of Architectural Precast US ENERGY: Lenders Extend Credit to Meet Capital Deficiencies * 22 McKissock & Hoffman Attorneys to Join Eckert Seamans * 34 Bankruptcy Lawyers Join Lavery de Billy * Cohen & Grisby Adds Five New Attorneys to Pittsburgh Offices * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* 360NETWORKS INC: Dreier LLP Recovers $55.4 Million for Creditors ---------------------------------------------------------------- Dreier LLP reported that as a result of two recent settlements it will recover $55.4 million for the creditors of 360networks inc. (USA). Judge Allan L. Gropper of the United States Bankruptcy Court for the Southern District of New York recently approved a settlement agreement resolving a lawsuit filed by Dreier LLP on behalf of its client, the Official Committee of Unsecured Creditors of 360networks (USA) inc., against Nortel Networks Inc., pursuant to which Nortel has already paid in full the $45.5 million settlement amount. Dreier LLP also announced that it entered into a separate settlement agreement last week with Sycamore Networks, Inc. resolving another lawsuit filed by the Creditors Committee, pursuant to which Sycamore has agreed to pay $9.9 million. The Sycamore settlement agreement was submitted to Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York on Sept. 28, 2007 and is expected to be approved shortly. Norman N. Kinel, a partner at Dreier LLP and founder and co-chair of its Bankruptcy & Corporate Reorganization Department, represented the Creditors Committee both during 360networks' bankruptcy proceedings and in the lawsuits against Nortel and Sycamore. Dreier LLP partner Brian Dunefsky, senior associate Terence D. Watson and associate Timothy A. Solomon worked on the proceedings with Mr. Kinel. Shalom L. Kohn of Sidley Austin LLP also assisted in the representation of the Creditors Committee in both matters. The Creditors Committee sued Nortel in January 2003, alleging that approximately $100 million in payments and equipment returns that 360networks had made to Nortel prior to declaring bankruptcy in 2001 constituted preferential transfers. The lawsuit was commenced in connection with 360networks' financial restructuring, which began in June 2001 and concluded when 360networks emerged from bankruptcy protection in 2002. Nortel was a vendor that supplied equipment to 360networks for the construction of what was intended to be a global fiber-optics network. The Creditors Committee similarly sued Sycamore in January 2003, alleging that approximately $16 million in payments that 360networks had made to Sycamore constituted preferential transfers. The lawsuit against Sycamore was scheduled to proceed to trial this month. "While preferential transfer cases are common in bankruptcies, the size of the Nortel lawsuit, the nature of the defenses raised by Nortel -- including the claim that 360networks was solvent prior to its bankruptcy filing and thus precluded from recovering any preferential transfers -- and the size of the recovery for the creditors makes this result unique," stated Mr. Kinel. "After more than four years of litigation, we are pleased to have obtained through settlement what is believed to be one of the largest amounts ever recovered in a single preference action and at the same time to have avoided what likely would have been several more years of protracted litigation for our client. We are also pleased to have resolved our action against Sycamore, which together with the Nortel settlement, will result in very significant recoveries to unsecured creditors in a case where at the outset it was widely predicted that that there would be no recoveries for unsecured creditors at all." Mr. Kinel continues to pursue, among others, a $17 million preference action against Pirelli Communications Cables and Systems USA LLC on behalf of the Committee for the benefit of the creditors of 360networks. Under U.S. law, money that is paid to creditors within 90 days of a bankruptcy filing can be recovered later by the debtor's creditors under certain circumstances. Background on Dreier LLP About Dreier LLP Manhattan- based Dreier LLP, an affiliate of Dreier Stein & Kahan LLP, represents institutional, entrepreneurial and individual clients in diverse sectors of financial, industrial and service- oriented markets. The firm has three affiliates: Schlesinger Gannon & Lazetera LLP practices in trusts and estates law; Pitta & Dreier LLP specializes in labor law; and Pitta, Bishop, Del Giorno & Dreier LLP specializes in government relations as well. About 360Networks Headquartered in Vancouver, British Columbia, 360networks, Inc. -- http://www.360.net/-- provides fiber optic communications network products and services worldwide. The company, together with 22 affiliates, filed for chapter 11 protection on June 28, 2001 (Bankr. S.D.N.Y. Case No. 01-13721), obtained confirmation of their plan on October 1, 2002, and emerged from chapter 11 on November 12, 2002. Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, represent the company in this case. Lawyers at Dreier LLP represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $6,326,000,000 in assets and $3,597,000,000 in liabilities. ADVANCED MARKETING: Plan Confirmation Hearing Scheduled on Nov. 15 ------------------------------------------------------------------ The Honorable Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware has set a hearing on Nov. 15, 2007, to consider confirmation of the Second Amended Joint Plan of Liquidation filed by Advanced Marketing Services Inc. and its debtor-affiliates and the Official Committee of Unsecured Creditors. Objections to the Plan, if any, must be submitted by November 6. As reported in the Troubled Company Reporter on Sept. 28, 2007, the Court had approved the Disclosure Statement describing the Plan. At the September 26 hearing, Judge Sontchi found that the Disclosure Statement, as amended, contains "adequate information" as required by Section 1125 of the Bankruptcy Code. Judge Sontchi said at the hearing that creditors whose debt is not backed by collateral will be paid from $0.29 to $0.42, according to Bloomberg. Pursuant to the Court-approved Disclosure Statement, the unsecured creditors, which are owed between $29,000,000 and $36,000,000, and all others who receive only partial payment of what they are owed, are allowed to vote on the Liquidating Plan before the Court decides whether it should be confirmed. In addition, secured creditors, whose debts are guaranteed by collateral, will be paid in full. Unsecured creditors of PGW will be paid in full on debts up to $11,000,000. The funds to be used to pay AMS' debts will come from the sale of most of the Debtor's assets to its competitor, Baker & Taylor, Inc., according to Bloomberg. Baker & Taylor agreed in March to buy the AMS assets for $20,000,000 in cash, plus an amount to be based on the value of the AMS debts and book inventory. Baker & Taylor has paid $57,800,000 under its original Asset Purchase Agreement with AMS. The Debtors and the Committee also delivered at the September 26 hearing a copy of their Second Amended Plan of Liquidation and accompanying Disclosure Statement to add specific provisions with respect to the Reclamation Claims and the 20 Day Administrative Claims filed against AMS, which are allowed as Administrative Claims pursuant to Sections 502 and 503 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure. A blacklined copy of the Second Amended Liquidating Plan is available for free at http://researcharchives.com/t/s?23c4 A blacklined copy of the Second Amended Disclosure Statement is available for free at http://researcharchives.com/t/s?23c5 The Second Amended Liquidating Plan provides that each of those claims may be reduced dollar for dollar for returns of goods up to a certain current amount reflecting the goods in possession of the Debtors at or about the time of the report for each claim. A schedule of the Reclamation Claims and their approved current amounts is available at no charge at: http://researcharchives.com/t/s?23c6 Judge Sontchi has directed the creditors to submit their votes on the Plan by November 6. Creditors whose claims are being objected to are not eligible to vote unless such objections are resolved in their favor or, the claims are temporarily allowed by the Court for the purpose of voting to accept or reject the Plan. The Plan Proponents believe that the Liquidating Plan is in the best interests of the creditors and is fair and equitable, and, accordingly, are encouraging the creditors to vote in favor of the Plan. Curtis R. Smith, Chief Executive Officer of AMS, stated in Court filings that upon entry of the Plan Confirmation Order, the cash and assets of the Deferred Compensation Trust will be transferred to Reorganized AMS and will become property of the AMS estate and available for distribution to holders of Allowed Unsecured Claims against AMS. Individuals who contributed to the Deferred Compensation Plan will be treated as holders of Unsecured Claims against AMS. William C. Sinnott of Random House Inc., Chairman of the Creditors Committee, added that on or before the Plan's substantial consummation, the Plan Proponents may file with the Court certain agreements or other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. About Advanced Marketing Based in San Diego, Calif., Advanced Marketing Services, Inc. -- http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Suzzanne S. Uhland, Esq., Austin K. Barron, Esq., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP, represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors as Local Counsel. Lowenstein Sandler PC represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. (Advanced Marketing Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). ADVANCED MARKETING: Judge Sontchi OKs Baker Taylor Settlement Pact ------------------------------------------------------------------ The Honorable Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware issued a final order approving the settlement agreement between Advanced Marketing Services, Inc., and Baker and Taylor, Inc. Under the Settlement Agreement, Baker & Taylor will pay AMS $6,050,000, and deliver to the Debtor $1,750,000 of specific inventory. Judge Sontchi has extended until Oct. 31, 2007, the terms of the Transition Services Agreement, pursuant to which AMS will pay Baker & Taylor $4,250,000 as a one-time payment that nets all amounts due to either party under the TSA through and including October 31. Baker & Taylor agreed to promptly pay AMS the net amount of $1,800,000 by wire transfer, consisting of the $6,050,000 APA payment, less the $4,250,000 TSA payment. As reported in the Troubled Company Reporter on March 23, 2007, Baker & Taylor, completed the acquisition of the wholesale operations of Advanced Marketing. Baker & Taylor's acquisition includes Advanced Marketing assets through which it distributes bestsellers, children's books, culinary titles, reference works, and other books to membership warehouse clubs. Baker & Taylor also acquired Advanced Marketing's wholesale distribution operations in the United Kingdom and in Mexico. As reported in the Troubled Company Reporter on July 24, 2007, the Debtors asked the Court to compel Baker & Taylor, Inc., to pay the remaining $6,216,222 due under their Asset Purchase Agreement. Under the agreement, the purchase price was to be paid in three installments: -- on the closing date, $20,000,000 plus certain additional sums, including 33.3% of the "Combined APG/AR Price"; -- 30 days after the closing date, 33.3% of the Combined APG/AR Price; and -- 60 days after the Closing Date, 33.4% of the Combined APG/AR Price, minus $1,000,000. Pursuant to the terms of the APA, the amount of the Final Payment should have been $10,350,632. However, B&T paid only $4,134,410 on May 18, 2007, leaving the $6,200,000 shortfall. AMS disclosed that it tried many times to persuade B&T to pay what it owes, B&T continues to withhold the amount. To justify its refusal to pay, B&T has relied on unfounded and patently erroneous interpretations of the Purchase Agreement. B&T has insisted it is entitled to $2,043,969 held by AMS in its ban account at the time of closing, on the ground that any funds deposited in the account on or after 12:01 a.m. on March 19, 2007, belong to B&T. AMS contends B&T's position is false. AMS points out the Purchase Agreement provides that any cash in its bank accounts prior to 2:00 p.m. on March 19, 2007, belongs to it. The parties did not agree to an earlier or later date, AMS says. About Advanced Marketing Based in San Diego, Calif., Advanced Marketing Services, Inc. -- http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Suzzanne S. Uhland, Esq., Austin K. Barron, Esq., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP, represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors as Local Counsel. Lowenstein Sandler PC represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. (Advanced Marketing Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). ANN-LEE CONSTRUCTION: Wants Case Converted to Chapter 7 ------------------------------------------------------- Ann-Lee Construction and Supply Company Inc. asks the United States Bankruptcy Court for the Western District of Pennsylvania to convert its Chapter 11 bankruptcy proceeding into a Chapter 7 liquidation proceeding. The Debtor tells the Court that they have incurred additional losses from Jan. 11, 2007, to Aug. 17, 2007 and as a result, it is unable to meet its debts as they come due. The Debtor further says that it is unable to file a viable Chapter 11 plan and disclosure statement within the required time set by the Court. The Debtor's exclusive plan filing period expired on Sept. 19, 2007. The Court will convene a hearing on Oct. 10, 2007, at 10:00 a.m., to consider the Debtor's request. Based in Saltsburg, Pennsylvania, Ann-Lee Construction and Supply Company, Inc. offers construction consulting & management services. The company filed for Chapter 11 protection on Jan. 11, 2007 (Bankr. W.D. Pa. Case No. 07-20226). Michael J. Henny, Esq. and Joseph V. Luvara, Esq. represent the Debtor in its restructuring efforts. Kirk B. Burkley, Esq., at Bernstein Law Firm PC, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $1 million to $100 million. ACXIOM CORP: Expects Improved Second Quarter Financial Results -------------------------------------------------------------- Acxiom Corporation expects improved revenue, income from operations and net income in its second fiscal quarter ended Sept. 30, 2007 compared to its first fiscal quarter ended June 30, 2007. Acxiom’s revenue in the first quarter was $338.2 million; its income from operations was $4.1 million and its net income was a loss of $11.5 million. The diluted loss per share of $0.15 included the impact of $20.6 million, in unusual expense items, net of income tax effect. The unusual items in the first quarter included costs related to the then-pending transaction with Silver Lake and ValueAct Capital of $15.1 million, which were non-deductible for tax purposes, and $5.5 million predominantly related to the write-off of certain long-term assets related to an amended contract. These items reduced first-quarter net income by approximately $18.5 million and diluted earnings per share by $0.24. “Our forecast for the second half of the fiscal year is for improved results compared to the first half of the year,” Charles D. Morgan, Acxiom Company Leader and Chairman of the Board stated. “Also, I should note that the $65 million we expect to receive related to the termination of the merger agreement will be substantially more than any one-time expenses related to the merger agreement.” “Acxiom is a leader in database marketing services and data products,” Mr. Morgan concluded. “Our technology, solid financial position, strong client relationships and dedicated associates will ensure that we remain the market leader.” The company plans to disclose second quarter financial results on Oct. 24, 2007. Based in Little Rock, Arkansas, Acxiom(R) Corporation (Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's solutions are Customer Data Integration technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom has locations throughout the United States, Europe, Australia and China. * * * As reported in the Troubled Company Reporter on Oct. 3, 2007, Standard & Poor's Ratings Services said its 'BB' corporate credit rating on Little Rock, Arkansas-based Acxiom Corp. remains on CreditWatch with negative implications, where it was placed on May 17, 2007. At the same time, S&P also placed the 'BB' senior secured debt ratings on CreditWatch with negative implications, because the debt will no longer be refinanced as part of the LBO financing. AGILYSYS INC: Paying $0.03/Share Cash Dividend on November 1 ------------------------------------------------------------ Agilysys Inc. affirmed its quarterly cash dividend on common stock of $0.03 per share, payable Nov. 1, 2007, to shareholders of record as of Oct. 12, 2007. Based in Mayfield Heights, Ohio, Agilysys Inc. (Nasdaq: AGYS) -- http://www.agilysys.com/-- is one of the distributors and resellers of enterprise computer technology solutions. The company is delivering complex server and storage hardware, software and services to resellers, large and medium-sized corporate customers, well as public-sector clients across a diverse set of industries. In addition, the company provides customer-centric software applications and services focused on the retail and hospitality markets. Agilysys has sales offices throughout the United States and Canada. * * * Standard and Poor's placed Agilysys Inc.'s long term foreign and local issuer credit ratings at "BB-" in October 2004. The ratings still hold to date. ALANCO TECHNOLOGIES: Semple Marchal Raises Going Concern Doubt -------------------------------------------------------------- Phoenix-based Semple, Marchal & Cooper LLP expressed substantial doubt about Alanco Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm stated that the company has incurred significant losses from operations, anticipates additional losses in the next year, and has insufficient working capital as of June 30, 2007 to fund the anticipated losses. The company posted a $5,871,700 net loss on $18,474,100 of net sales for the year ended June 30, 2007, as compared with a $4,085,100 net loss on $5,444,500 of net sales in the prior year. The company also posted an operating loss of $4,449,700 at June 30, 2007, compared with a $4,078,300 operating loss in the prior year. At June 30, 2007, the company's balance sheet showed $27,882,900 in total assets and $12,369,400 in total liabilities, resulting a $14,698,500 stockholders' equity. The company had a working capital deficit of $219,100 at June 30, 2007. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?23f2 About Alanco Technologies Headquartered in Scottsdale, Arizona, Alanco Technologies, Inc. (NASDAQ: ALAN) -- http://www.alanco.com/-- provides wireless tracking and asset management solutions through its StarTrak Systems and Alanco/TSI PRISM subsidiaries. The company also participates in the data storage industry through its Excel/Meridian Data, Inc. subsidiary, a manufacturer of Network Attached Storage systems. ALLIANCE PHARMACEUTICAL: KMJ Corbin Raises Going Concern Doubt -------------------------------------------------------------- Irvine, Calif.-based KMJ Corbin & Company LLP raised substantial doubt about Alliance Pharmaceutical Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended June 30, 2007, and 2006. The auditor pointed to the company's lack of sufficient working capital to service its debts and to fund its operations through the fiscal year ending June 30, 2008. Financials For the year ended June 30, 2007, the company reported a $4,093,000 net loss on $573,000 of revenues, as compared with a $9,575,000 net loss on $129,000 of revenues for the year ended June 30, 2006. At June 30, 2007, the company's balance sheet showed $1,069,000 in total assets and $13,765,000 in total liabilities, resulting in a $12,696,000 stockholders' deficit. The company's balance sheet at June 30, 2007, also showed strained liquidity with $933,000 in total current assets and $13,015,000 in total current liabilities. Default As of Sept. 27, 2007, the company is in default under the Senior Notes in the aggregate principal and interest amount of approximately $12 million. Alliance is continuing to seek additional financing that would qualify as a Qualified Financing for the purpose of funding its continuing operations through June 2008. In April 2006, Alliance entered into the 2006 Amendment of its Senior Notes. Pursuant to the 2006 Amendment, the maturity date of each outstanding Senior Note was extended from March 24, 2006, to April 1, 2007. Since the company did not have the funds to pay the Senior Notes on April 1, 2007, in two confidential teleconferences with the holders, Alliance requested that each holder of a Senior Note execute an amendment to extend the maturity date of the Senior Note from April 1, 2007, to June 30, 2008. On May 15, 2007, Alliance entered into the 2007 Amendment of its Senior Convertible Promissory Note Purchase Agreement and Registration Rights Agreement with essentially all of the existing holders of Alliance's Senior Notes. Pursuant to the 2007 Amendment, the maturity date of each outstanding Senior Note was extended: (a) The maturity date was extended from April 1, 2007, to the date 90 days after the date of the 2007 Amendment. If the company received more than $1.5 million but less than $3 million in connection with a Qualified Financing (as defined in the 2007 Amendment) prior to the expiration of the 90 days (which the company did not receive), the maturity date would have been automatically extended to the date that is 180 days after the date of the 2007 Amendment; and (b) If the company receives at least $3 million in connection with a Qualified Financing prior to the extended maturity date, the maturity date will automatically become June 30, 2008. The holders of the Senior Notes also agreed to subordinate their rights to any debt that is issued in a Qualified Financing. Further, any financing that qualifies as a Qualified Financing will not require additional approval from the Senior Note holders. Alliance also agreed to issue to each current holder of a Senior Note an additional note with principal amount equal to 20% of the outstanding principal amount of such Senior Note on the date of the 2007 Amendment, which resulted in Alliance issuing new promissory notes in the aggregate principal amount of approximately $1.8 million. These new notes bear interest at the rate of 10% per annum, will mature on June 30, 2008, and may become convertible into common stock of Alliance on the same terms as the Senior Notes at such time as Alliance has a sufficient number of authorized and unreserved shares of common stock to accommodate such conversion and Alliance provides written notice to the holders of these notes that they are then convertible into common stock. The Company also agreed to an increase of 20% to the current royalty/milestone payment participation amounts set forth in the 2006 Amendment. Under the 2006 Amendment, the Senior Note holders receive 50% of the total amounts of royalties and milestones received by the company from third parties until 100% of the payment participation amounts have been received. The Senior Note holders will now receive payment sharing until 120% of the payment participation amounts have been received if they continue to hold their Senior Notes through June 30, 2008. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?23f8 Headquartered in San Diego, Calif., Alliance Pharmaceutical Corp. (OTCBB: ALLP.OB) -- http://www.allp.com/-- is an emerging pharmaceutical company that is currently focused on developing its lead product, OXYGENT, which is based on its proprietary perfluorochemical technology. OXYGENT is being developed as an intravascular oxygen carrier designed to augment oxygen delivery in surgical patients. AMERICAN TOWER: Posts $20 Million Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- American Tower Corporation reported a net loss of $20.0 million for the second quarter ended June 30, 2007, compared with net income of $7.7 million for the same period last year. The net loss for the quarter ended June 30, 2007, reflects income from continuing operations of $12.0 million, offset by a $32.0 million loss from discontinued operations, net related to the Verestar bankruptcy proceedings. Operating income increased to $93.3 million and income from continuing operations increased to $12.0 million. Income from continuing operations includes a $28.9 million pre-tax loss on retirement of long-term obligations related to the refinancing of certain of the company's outstanding indebtedness and an $8.1 million pre-tax gain on the termination of related interest rate swaps. Total revenues increased 10% to $358.4 million and rental and management segment revenues increased 10% to $350.8 million. Jim Taiclet, American Tower's chief executive officer stated, "We again experienced strong operational results in the second quarter as demonstrated by our 10% and 12% tower revenue and Adjusted EBITDA growth, respectively. Tower leasing activity continues to reflect our customers' efforts to expand and improve their network quality and coverage, the deployment of new technologies, and the coverage and capacity expansion of relatively newer entrants into the wireless space. We believe these underlying trends that are driving the current levels of demand for tower space are sustainable as telephony, data, and entertainment services continue to migrate from wired to wireless. "Meanwhile, our focus internally continues to be to provide highly responsive customer service while pursuing operational initiatives to improve our cycle time, quality and efficiency, as evidenced by our industry leading Adjusted EBITDA margins and other operating metrics. In addition, we are confident that our solid financial position provides us with the flexibility to pursue strategic opportunities to expand our scale, both internationally as well as in the US." Cash provided by operating activities increased to $210.8 million, which includes approximately $80.0 million received in connection with the company's previously disclosed federal income tax refund. Free Cash Flow increased to $174.6 million, consisting of $210.8 million of cash provided by operating activities, less $36.1 million of payments for purchases of property and equipment and construction activities, including $15.2 million of discretionary capital spending. The company completed the construction of 22 towers and the installation of 5 in-building systems during the quarter and spent approximately $10.5 million on ground lease purchases. At June 30, 2007, the company's consolidated balance sheet showed $8.38 billion in total assets, $4.74 billion in total liabilities, $3.5 million in minority interest, and $3.64 billion 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?23ee Stock Repurchase Program During the quarter ended June 30, 2007, the company repurchased a total of 10.2 million shares of its Class A common stock for approximately $414 million. As of July 26, 2007, the company had repurchased pursuant to its publicly announced stock repurchase programs an aggregate of 38.5 million shares of its Class A common stock for approximately $1.43 billion since November 2005, which includes the repurchase of 2.7 million shares of its Class A common stock for approximately $119 million subsequent to June 30, 2007. The company expects to complete the remaining $822 million of stock repurchases pursuant to its current $1.5 billion stock repurchase program by the end of February 2008. Verestar Bankruptcy Proceeding The company agreed in September 2006 to mediate the bankruptcy proceedings and related litigation of its Verestar subsidiary, which filed for protection under the federal bankruptcy laws in December 2003. In July 2007, the company participated in mediation with the creditors' committee, and the parties reached an agreement on terms for a proposed settlement in which the company would pay $32.0 million and the parties would agree to a mutual release of all claims existing prior to the execution of the settlement agreement. The company has recorded an estimated liability associated with the Verestar bankruptcy proceedings in an amount equal to the proposed settlement amount, which is reflected in loss from discontinued operations, net for the three and six months ended June 30, 2007. About American Tower Headquartered in Boston, American Tower Corporation (NYSE: AMT) -- http://www.americantower.com/-- 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. * * * As reported in the Troubled Company Reporter on Sept. 26, 2007, Fitch Ratings assigned a 'BB+' rating to American Tower Corporation's proposed ten-year $250 million senior unsecured notes. Fitch also rated AMT's Issuer Default Rating at 'BB+'. The Rating Outlook is Stable. APPLICA INC: Parent Inks Merger Agreement with Salton ----------------------------------------------------- Salton, Inc. has entered into a definitive merger agreement with APN Holding Company, Inc., the parent company of Applica Inc., pursuant to which Applica will become a wholly-owned subsidiary of Salton. APN Holding Company is owned by Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. As reported in the Troubled Company Reporter on Aug. 7, 2007, Salton Inc. received from APN Holding Company Inc. a written notice of termination of the merger agreement dated Feb. 7, 2007, between Salton and APN Holdco. Salton argues that the termination confirms Salton's belief that APN Holdco has, for some time, not acted in good faith and that the company intends to vigorously pursue its claims and remedies against APN Holdco, its affiliates and representatives. As a result of the proposed merger and the related transactions, Harbinger Capital Partners will beneficially own 92% of the outstanding common stock of Salton, and existing holders of Salton's Series A Voting Convertible Preferred Stock (excluding Harbinger Capital Partners), Series C Nonconvertible (NonVoting) Preferred Stock (excluding Harbinger Capital Partners) and common stock (excluding Harbinger Capital Partners) would own approximately 3%, 3% and 2%, respectively, of the outstanding common stock of Salton immediately following the merger and related transactions. In addition to the merger, the definitive merger agreement contemplates the consummation of these transactions simultaneously with the closing of the merger: (1) the mandatory conversion of all outstanding shares of Salton's Series A Voting Convertible Preferred Stock, including those held by Harbinger Capital Partners, into shares of Salton's common stock; (2) the mandatory conversion of all outstanding shares of Salton's Series C Nonconvertible (NonVoting) Preferred Stock, including those held by Harbinger Capital Partners, into shares of Salton's common stock; and (3) the exchange by Harbinger Capital Partners of approximately $90 million principal amount of Salton's second lien notes and approximately $15 million principal amount of Salton's 2008 senior subordinates notes, for shares of a new series of non-convertible (non voting) preferred stock of Salton, bearing a 16% cumulative preferred dividend. The combination of Salton and Applica is expected to create one of the largest U.S. public companies focused on the household small appliance industry, with the scale and customer relationships to provide category leadership and efficiencies. The combined company will have a broad portfolio of well recognized brand names such as Salton(R), George Foreman(R), Black & Decker(R), Westinghouse(TM), Toastmaster(R), Melitta(R), Russell Hobbs(R), Windmere(R), LitterMaid(R) and Farberware(R). Salton and its subsidiaries after the merger will continue to design, service, market and distribute a wide range of products under these brand names, including small kitchen and home appliances, electronics for home, lighting products, and personal care and wellness products. The combination of Salton and Applica is expected to provide enhanced scale which should enable the combined company to reduce costs; attract new and expand existing customer relationships; capitalize on organic and external growth opportunities more effectively than either company could have on a stand alone basis; improve cost of goods through larger volume purchasing; and benefit from improved capital structure flexibility. In addition, Salton and Applica have complementary geographic strengths that can be utilized to enhance the distribution of each company's products outside the United States. In particular, Salton's business is well established in Europe, Australia and Brazil (with additional distribution in Southeast Asia, Middle East and South Africa), while Applica's business is well established in Mexico, South America and Canada. The executive leadership of the combined companies after the merger is expected to consist of members of both Salton's and Applica's existing management teams as well as new management personnel. "We believe that this transaction is the best strategic alternative available to enhance stockholder value,” William Lutz, Interim Chief Executive Officer of Salton, said. “The combination of Salton and Applica is expected to create the opportunity for significant future value enhancement for Salton stockholders, as well as benefit customers and suppliers, as a result of the expanded brand portfolios, strengthened international presence and improved capital structure flexibility of the combined companies. The combined company can operate more efficiently than either Applica or Salton on a stand alone basis, and will benefit significantly from cost and revenue synergies." "The combined company will be well positioned as a leading provider of quality, innovative consumer appliances around the world,” Terry Polistina, Chief Operating Officer and Chief Financial Officer of Applica, added. “The company will be able to leverage brands, products and geographies, as well as provide the scale to drive organic growth. In addition, we believe the combined company will be a compelling platform for future expansion in our industry." The companies intend to complete this transaction within the next three to four months. The consummation of the merger and related transactions is subject to various conditions, including the approval by the Company's stockholders and the absence of legal impediments. The merger and related transactions are not subject to any financing condition. Houlihan Lokey Howard & Zukin acted as financial advisor and Sonnenschein Nath & Rosenthal LLP acted as legal advisor to Salton. Lazard Freres & Co. LLC acted as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to Harbinger Capital Partners and APN Holding Company. About Salton Salton, Inc. -- http://www.saltoninc.com/-- designs, markets and distributes branded, high-quality small appliances, home decor and personal care products. Its product mix includes a range of small kitchen and home appliances, electronics for the home, time products, lighting products, picture frames and personal care and wellness products. About Applica Applica, Inc. (NYSE: APN) -- http://www.applicainc.com/-- is a marketer and distributor of a range of branded small household appliances in five categories: kitchen products, home products, pest control products, pet care products and personal care products. * * * Standard & Poor's rated Applica Inc.'s 10% Senior Subordinated Notes due 2008 at CCC-. ARCAP 2005-RR5: Credit Erosion Prompts S&P to Lower Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 12 classes of commercial mortgage-backed securities pass-through certificates from ARCap 2005-RR5 Resecuritization Inc. Concurrently, S&P affirmed its ratings on three other classes from the same transaction. The downgrades reflect actual and expected credit support erosion related to expected losses that are greater than Standard & Poor's expectations at issuance. To date, the trust has incurred a loss of $74.1 million, which has reduced the original balance of the unrated class O certificate by 82%. The affirmations reflect credit support levels that adequately support the current ratings. As of the Sept. 24, 2007, remittance report, the collateral pool consisted of 18 classes of subordinated fixed-rate CMBS pass- through certificates and five classes of subordinated fixed-rate re-REMIC certificates with an aggregate principal balance of $232.3 million, compared with 26 classes of certificates totaling $306.4 million at issuance. The collateral pool includes 16 distinct CMBS transactions issued between 1998 and 2005. Losses on the specially serviced assets in the underlying transactions are expected to reduce the balance of the class O certificate to zero upon liquidation. Transactions from every vintage year except 2005 have contributed to losses incurred by the trust, and the 2000 vintage has contributed the most (37%). The 2000 vintage loans were originated in peak real estate years, a period in which leases were signed at fairly high rent levels. When those leases rolled to lower market rents, the amount of cash flow available to service debt payments was reduced, which contributed to higher defaults and loss severities. In addition, 60% of the trust's collateral balance is concentrated in these five underlying transactions: -- ARCap 2004-RR3 Resecuritization Inc.’s series 2004-RR3 (28%); -- First Union National Bank Commercial Mortgage Trust's series 2000-C1 (10%); -- Chase Manhattan Bank – First Union National Bank Commercial Mortgage Trust’s series 1999-1 (8%); -- J.P. Morgan Commercial Mortgage Finance Corp.'s series 2000-C9 (8%); and -- J.P. Morgan Commercial Mortgage Finance Corp.’s series 1999-C8 (6%). The 16 CMBS transactions are collateralized by 2,574 loans with a current outstanding principal balance of $14.4 billion, down from 3,031 loans with an aggregate principal balance of $18.8 billion at issuance. The certificates in the collateral pool with public ratings from Standard & Poor's (15% of the current trust balance) and those with credit estimates (85% of the current trust balance) exhibit credit characteristics consistent with 'CCC-' rated obligations, down from 'CCC' at issuance. Two percent of the certificates have investment-grade ratings or have received credit estimates commensurate with investment-grade obligations, unchanged from issuance. The collateral consists of CMBS pass-through certificates rather than mortgage loans. As such, losses associated with the loans are first realized by the CMBS trusts that issued the pass-through certificates. Realized losses on the first-loss positions will directly result in principal losses to the unrated O class from ARCap 2005-RR5 Resecuritization Inc. Currently, first-loss positions account for 69% of the collateral. Subordination is available to absorb various losses experienced by the remaining collateral before the ARCap 2005-RR5 Resecuritization Inc. certificates are affected. Standard & Poor's analysis included loss projections on the underlying collateral and an evaluation of the impact of those losses on the transaction's capital structure. The resultant credit support levels adequately support the lowered and affirmed ratings. Ratings Lowered ARCap 2005-RR5 Resecuritization Inc. Commercial mortgage-backed securities pass-through certificates Rating ------ Class To From Credit enhancement ----- -- ---- ---------------- A-3 AA+ AAA 66.27% B A+ AAA 56.83% C BBB+ AA- 47.38% D BBB A+ 46.06% E BBB- A- 40.63% F BB BBB 36.59% G BB- BBB- 32.54% H B BB 25.79% J B- BB- 23.09% K CCC+ B+ 19.05% L CCC B- 15.00% M CCC- CCC 10.95% Ratings Affirmed ARCap 2005-RR5 Resecuritization Inc. Commercial mortgage-backed securities pass-through certificates Class Rating Credit enhancement ----- ------ ---------------- A-1 AAA 88.76% A-2 AAA 77.53% N CCC- 6.90% ARGENT SECURITIES: S&P Junks Rating on Class M-10 Certificates -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of mortgage-backed securities issued by Argent Securities Inc.’s series 2004-PW1 and removed one of the ratings from CreditWatch with negative implications. Concurrently, S&P affirmed its ratings on the remaining six classes from this transaction. The downgrades of classes M-7, M-8, M-9, and M-10 reflect a high 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 have consistently exceeded excess interest during the past six months. As of the September remittance date, the average monthly loss was approximately $519,382 over the past six months, while excess spread averaged about $108,260 for the same period. Cumulative losses have almost doubled over the past year, rising to 3.2% from 1.59%. Severe delinquencies make up 15.05% of the current pool balance. There is currently no overcollateralization in the pool. Principal write-downs are being made on the M-11 class, which has a current balance of $2,393,812. S&P removed the rating on class M-10 from CreditWatch negative because S&P lowered it to 'CCC'. According to Standard & Poor's surveillance practices, ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch negative. The affirmations reflect sufficient credit enhancement for the current ratings. The classes with affirmed ratings have actual and projected credit support amounts that are in line with their original levels. Subordination, overcollateralization, and excess spread provide credit support for this transaction. The underlying collateral consists of conventional, fully amortizing, adjustable- and fixed- rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered Argent Securities Inc. Rating ------ Series Class To From ------ ----- -- ---- 2004-PW1 M-7 BBB BBB+ 2004-PW1 M-8 BB BBB 2004-PW1 M-9 BB- BBB- Rating Lowered and Removed from Creditwatch Negative Argent Securities Inc. Rating ------ Series Class To From ------ ----- -- ---- 2004-PW1 M-10 CCC BB/Watch Neg Ratings Affirmed Argent Securities Inc. Series Class Rating ------ ----- ------ 2004-PW1 M-1 AA+ 2004-PW1 M-2 AA 2004-PW1 M-3 AA- 2004-PW1 M-4 A+ 2004-PW1 M-5 A 2004-PW1 M-6 A- AXIA INC: S&P Downgrades Corporate Credit Rating to B- ------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Axia Inc., including lowering the corporate credit rating to 'B-' from 'B'. The ratings remain on CreditWatch, where they were placed with negative implications on June 7, 2007, based on S&P's expectation that the sharp decline in the company's end markets would cause credit measures to weaken significantly, possibly causing it to breach its bank covenant agreements. Axia had total debt, adjusted for operating leases, of $162 million at June 30, 2007. "The downgrade and continued CreditWatch listing reflect our assessment that weak end markets continue to materially hurt the company's operating results, causing a deterioration of its credit measures to a level inconsistent with the former rating," said Standard & Poor's credit analyst Sean McWhorter. "We also expect the difficult operating conditions in the company's end markets, concentrated in California and Florida, to continue for the next several quarters." As a result, the potential exists in the near term for the company to violate its bank loan covenants, which were amended in June 2007. These include covenants covering its minimum interest coverage and maximum total leverage ratios. In resolving the CreditWatch listing, S&P will meet with management and evaluate its near-term operating expectations and their impact on the company's near- and intermediate-term liquidity. Duluth, Georgia-based Axia manufactures, sells, and rents automatic tape-finishing tools for drywall joints under the Ames name. BAPTIST HEALTH: Moody's Places Ba2 $193MM Debt's Rating on Watch ---------------------------------------------------------------- Moody's Investors Service placed on Watchlist for possible downgrade Baptist Health System of East Tennessee Obligated Group's Ba2 rating assigned to $193 million of outstanding debt issued by the Health, Educational and Housing Facilities Board of the County of Knox, Tennessee. This action follows a review of the internal fiscal year 2007 financial statements which shows a continued decline in utilization measures and a near doubling of the operating loss over the prior year that resulted in near zero operating cash flow generation. Furthermore, liquidity declined dramatically in the second half of FY 2007 to about $20 million and 28 days cash on hand at June 30, 2007 from $37.5 million and 53 days cash on hand at Jan. 31, 2007. Moody's notes that BHSET has signed a letter of intent to merge with St. Mary's Health System (part of Catholic Healthcare Partners). The parties are currently involved in due diligence and, upon completion of due diligence and regulatory approvals, expect to consummate the merger before Jan. 1, 2008. Moody's anticipates meeting with management within the next 90 days to discuss the historical and budgeted operating performance along with its strategic plans, and to review the rating at that time. Rated Debt (debt outstanding as of June 30, 2007): -- Series 1996 ($58.1 million outstanding), the bonds maturing in 2007 and 2008 are rated Aaa based upon Ambac insurance, the bonds maturing in 2011 and 2017 are insured by Connie Lee whose insurance policy on this transaction has not been rated -- Series 2002 ($135 million outstanding) BEAR STEARNS: Credit Enhancement Cues S&P to Affirm Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class B and C commercial mortgage pass-through certificates from Bear Stearns Commercial Mortgage Securities Trust 2004-TOP14. Concurrently, S&P affirmed its ratings on 16 classes from the same transaction. The raised ratings reflect increased credit enhancement levels resulting from principal paydowns. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Sept. 12, 2007, remittance report, the collateral pool consisted of 103 loans with an aggregate trust balance of $766.9 million, down slightly from 107 loans with an $894.2 million balance at issuance. Excluding the defeased collateral ($52.9 million, 1%), the master servicer, Wells Fargo Bank N.A., reported year-end 2006 financial information for just under 100% of the pool. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 2.10x, down slightly from 2.12x at issuance. All of the loans in the pool are current, and there are no loans with the special servicer. The trust has experienced no losses to date. The top 10 loans secured by real estate have an aggregate outstanding balance of $316.9 million (41%) and a weighted average DSC of 2.35x, up slightly from 2.31x at issuance. The third- largest loan is on the watchlist and is discussed further below. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans. One property was characterized as "excellent," and the remaining collateral was characterized as "good." Credit characteristics for three of the top 10 loans and the 11th- largest loan remain consistent with those of investment-grade obligations. Details of these loans are: -- The largest loan in the pool, One & Three Christina Centre, has a trust and whole-loan balance of $74.5 million (9.7%). The loan is secured by two adjacent office towers totaling 632,797 sq. ft. in the central business district of Wilmington, Delaware. Occupancy as of June 30, 2007, was 100%, with approximately 91% of the space leased to J.P. Morgan ('AA'). The year-end 2006 DSC was 3.03x. Standard & Poor's adjusted net cash flow is similar to its level at issuance. -- Greenville Place Apartments is the seventh-largest loan in the pool, with a trust and whole-loan balance of $19.45 million. The loan is secured by a 519-unit multifamily property comprising 52 two-story apartment and townhouse-style buildings in Greenville, Delaware, approximately three miles northwest of Wilmington's CBD. The property was built in phases between 1947 and 1953 and renovated in 1998. As of year-end 2006, occupancy was 94% and DSC was 2.07x. Standard & Poor's adjusted NCF is 15% higher than its level at issuance. -- The ninth-largest loan in the pool, 12 E. 22nd Street, has a trust and whole-loan balance of $13.5 million (2%). The loan is secured by a 12-story, 88-unit multifamily property in Manhattan. The property was built in 1911 and renovated in 1988. Year-end 2006 occupancy was 100%, and DSC was 2.45x. Standard & Poor's adjusted NCF was 10% higher than its level at issuance. -- Lincoln Tower Cooperative is the 11th-largest loan, with a trust and whole-loan balance of $12.5 million (2%). The loan is secured by a 28-story multifamily property in Manhattan with 403 cooperative units. The property was built in 1959 and renovated in 1987. Year-end occupancy was 100%, and DSC was 1.09x. The loan appears on the master servicer's watchlist due to a low DSC based on the financial statements provided by the borrower. Standard & Poor's adjusted NCF, based on market rents, is similar to the level at issuance. Wells Fargo reported a watchlist of four loans with an aggregate outstanding balance of $58.2 million (8%), which includes the aforementioned Lincoln Tower Cooperative loan. The largest loan on the watchlist and the third-largest loan in the pool, 840 Memorial Drive ($41 million, 5%), is on the watchlist due to low occupancy. Occupancy was 53% as of June 30, 2007, after the largest tenant vacated the property when its lease expired in April 2007. The year-end 2006 DSC was 1.71x. Standard & Poor's adjusted DSC is below 1.0x at the property's current occupancy level of 53%. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Bear Stearns Commercial Mortgage Securities Trust 2004-TOP14 Commercial mortgage pass-through certificates series 2004-TOP14 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ B AA+ AA 11.06% C AA AA- 10.06% Ratings Affirmed Bear Stearns Commercial Mortgage Securities Trust 2004-TOP14 Commercial mortgage pass-through certificates series 2004-TOP14 Class Rating Credit enhancement ----- ------ ---------------- A-2 AAA 14.14% A-3 AAA 14.14% A-4 AAA 14.14% D A 7.73% E A- 6.56% F BBB+ 5.25% G BBB 4.52% H BBB- 3.50% J BB+ 2.92% K BB 2.33% L BB- 2.04% M B+ 1.75% N B 1.46% O B- 1.17% X-1 AAA N/A X-2 AAA N/A N/A — Not applicable. BIOMERGE INDUSTRIES: Xillix Shares Delisted on TSX -------------------------------------------------- The common shares of Xillix Technologies Corp. was delisted at the close of business on Sept. 27, 2007. The foregoing is a result of the company not meeting the continued listing requirements of TSX and the company's effected plan of compromise and arrangement, which includes the lifting of the stay of proceedings imposed on the company under the Companies' Creditors Arrangement Act and the change of the company's name to "Biomerge Industries Ltd.". TSX was advised that the company's common shares will commence trading under the new name and stock symbol (BIL.H) on NEX at the opening on Sept. 27, 2007. About Biomerge Industries Ltd. Based in Richmond, British Columbia, Biomerge Industries Ltd. (NEX:BIL.H) fka Xillix Technologies Corp. (TSX:XLX) --- http://www.xillix.com/ -- is a medical device company. It was engaged in the research, development and commercialization of medical imaging technologies, which aid in the detection and localization of cancer. Its fluorescence-based helps physicians diagnose early stage lung and gastrointestinal tract cancers. Xillix LIFE (light induced fluorescence endoscopy) technology incorporated specialized light sources and sensitive cameras that helped physicians detect subtle changes in the tissue fluorescence of early stage cancer and pre-cancerous lesions. * * * As reported in the Troubled Company Reporter on Oct. 25, 2006, Xillix Technologies Corp. disclosed that, as a result of the demand letter which it received from its secured lender, Hercules Technology Growth Capital, Inc., on Oct. 13, 2006, the company sought and obtained an order of the British Columbia Supreme Court granting it protection from creditors under the Companies' Creditors Arrangement Act. Biomerge Industries has completed the amended and restated consolidated plan of compromise and arrangement of the company and its subsidiaries dated Sept. 7, 2007, and was approved by the Supreme Court of British Columbia on Sept. 12, 2007. BIOMERGE INDUSTRIES: B.C. Court Okays Amended Plan of Arrangement ----------------------------------------------------------------- Biomerge Industries Ltd. fka Xillix Technologies Corp. has completed the amended and restated consolidated plan of compromise and arrangement of the company and its subsidiaries dated Sept. 7, 2007, as approved by the Supreme Court of British Columbia on Sept. 12, 2007. Pursuant to the Plan these have occurred: 1. Nexia Biotechnologies Ltd., successor by amalgamation to Cavalon Capital Partners Ltd., has made a non-interest bearing loan of $4,400,000 to the company; 2. all of the claims of the company's secured and unsecured creditors' have been settled and released for payments by the company totalling $3,600,000; 3. the authorized share capital of the company has been increased by creating an unlimited number of non voting shares and an unlimited number of preferred shares; 4. 94.5% of the Loan has been converted into 112,023,510 common shares of the company and 435,647,055 non voting shares of the company, such that Nexia now holds 45% of the common shares of the company and 100% of the non- voting shares of the company, providing Nexia with the ownership of 80% of the total equity interests in the company; 5. all outstanding options, warrants, exchange rights and conversion rights of the company and its subsidiaries have been cancelled; 6. the company's name has changed to "Biomerge Industries Ltd."; 7. PricewaterhouseCoopers Inc. has been discharged as the interim receiver of the company appointed by the British Columbia Supreme Court; and 8. pursuant to the Plan and the Court Order approving the Plan, on Sept. 26, 2007, the stay of proceedings imposed on the company by order of the British Columbia Supreme Court under the Companies' Creditors Arrangement Act will be lifted and the company will no longer be subject to the CCAA. In connection with the completion of the Plan, the company's common shares will, effective on Sept. 26, 2007, be delisted from the Toronto Stock Exchange and listed on the NEX, under the symbol "BIL.H". Trading on the NEX will commence on that same date. The company's non voting shares will not be listed. About Biomerge Industries Ltd. Based in Richmond, British Columbia, Biomerge Industries Ltd. (NEX:BIL.H) fka Xillix Technologies Corp. (TSX:XLX) --- http://www.xillix.com/ -- is a medical device company. It was engaged in the research, development and commercialization of medical imaging technologies, which aid in the detection and localization of cancer. Its fluorescence-based helps physicians diagnose early stage lung and gastrointestinal tract cancers. Xillix LIFE (light induced fluorescence endoscopy) technology incorporated specialized light sources and sensitive cameras that helped physicians detect subtle changes in the tissue fluorescence of early stage cancer and pre-cancerous lesions. * * * As reported in the Troubled Company Reporter on Oct. 25, 2006, Xillix Technologies Corp. disclosed that, as a result of the demand letter which it received from its secured lender, Hercules Technology Growth Capital, Inc., on Oct. 13, 2006, the company sought and obtained an order of the British Columbia Supreme Court granting it protection from creditors under the Companies' Creditors Arrangement Act. Biomerge Industries has completed the amended and restated consolidated plan of compromise and arrangement of the company and its subsidiaries dated Sept. 7, 2007, and was approved by the Supreme Court of British Columbia on Sept. 12, 2007. BIRCH REAL: Fitch Cuts Rating on $11.04MM Notes to B from BB ------------------------------------------------------------ Fitch has affirmed five classes and downgrades one class of notes issued by Birch Real Estate CDO I, Ltd. These rating actions are effective immediately: -- $24,803,328 class A-1L notes affirmed at 'AAA'; -- $10,000,000 class A-1 notes affirmed at 'AAA'; -- $26,000,000 class A-2L notes affirmed at 'AA'; -- $5,000,000 class A-2 notes affirmed at 'AA'; -- $10,000,000 class A-3L notes affirmed at 'A'; -- $11,040,000 class B-1 notes downgraded to 'B' from 'BB' and assigned a Distressed Recovery rating of 'DR2'. Birch CDO is a collateralized debt obligation which closed Dec. 20, 2002. At closing, the sales proceeds of notes and preferred shares of approximately $202.5 million were used to purchase a static investment portfolio consisting primarily of approximately 81% of residential mortgage-backed securities, 12% of commercial mortgage-backed securities, as well as approximately 7% of asset-backed securities. The collateral was selected by Bear Stearns & Co. Inc. The notes have a legal final maturity of February 2038. Par coverage at the class B-1 level has continued to erode due to defaulted and distressed assets. The current portfolio contains approximately $13 million of defaulted assets with an additional $7 million of distressed assets. According to the September 2007 trustee report, the class B overcollateralization level has dropped to 96.8% versus a trigger of 102.5%. The additional OC test continues to fail at 88.7% versus a trigger of 102.5%. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward, relative to the minimum cumulative default rate hurdles for the rated liabilities. As a result of this analysis, Fitch has determined that the previous rating assigned to the class B-1 notes no longer reflects the current risk to noteholders. The ratings on the classes A-1L, A-1, A-2L, A-2 and A-3L notes address the timely payment of interest and ultimate payment of principal as outlined in the governing documents. The rating on the class B-1 notes addresses the ultimate payment of interest and principal as outlined in the governing documents. BLUE RIDGE: S&P Removes Negative Watch and Withdraws Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services removed its 'B-' ratings on Blue Ridge Paper Products Inc. from CreditWatch, where they were placed with negative implications on June 15, 2007, and withdrew them. The rating withdrawal follows the completion of Blue Ridge's change-of-control offer for its $125 million senior secured notes, of which $124.3 million in aggregate principal were successfully tendered. Blue Ridge was acquired by The Rank Group PLC (BB-/Negative/B) in July 2007. BODISEN BIOTECH: Earns $2.6 Million in Quarter Ended June 30 ------------------------------------------------------------ Bodisen Biotech Inc. disclosed last week interim results for the three and six month periods ended June 30, 2007. Net income for the second quarter ended June 30, 2007, was $2.6 million, compared to net income of $5.9 million for the same period last year. Net income for the first six months of 2007 was $1.1 million, compared to net income of $8.6 million for the same six month period ended June 30, 2006. Revenues for the three months ended June 30, 2007, was $3.2 million, compared to revenues of $16.4 million in the same period last year. Revenues for the six months ended June 30, 2007, of $8.2 million was down from revenues of $26.9 million reported for the same period of 2006. Results for 2007 were negatively impacted by the company's delisting from the American Stock Exchange and the severe Springtime weather in Shaanxi province. Cash position was $6.47 million as of June 30, 2007. Chen Bo, chairman of Bodisen, commented: "This has been a difficult year for the company with the impact of the abnormally cold spring time in Shaanxi and the massive flooding we experienced in August, together with the impact of the AMEX de-listing. However, the business continues to trade profitably and we have a strong balance sheet. The organic fertilizer market in China is still in its infancy and there remains an enormous market opportunity. Accordingly, the company has continued confidence in the future of the business." At June 30, 2007, the company's consolidated balance sheet showed $74.87 million in total assets, $1.7 million in total liabilities, and $73.1 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?23ef Going Concern Doubt As reported in the Troubled Company Reporter on May 8, 2007, Kabani & Company Inc., in Los Angeles, expressed substantial doubt about Bodisen Biotech Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to certain lawsuits filed by investors against the company and the company being subject to potential claims from certain investors who have a right to receive the company's shares. Lawsuits filed by Shareholders As disclosed by the company, various shareholders of the company, in late 2006, filed eight purported class actions in the U.S. District Court for the Southern District of New York against the company and certain of its officers and directors, asserting claims under the federal securities laws. The complaints contain general and non-specific allegations about prior financial disclosures and its internal controls and a prior, now-terminated relationship with a financial advisor. The court has consolidated each of the actions into a single proceeding and has selected the lead plaintiff and counsel to represent the plaintiff class. The time for the company to respond formally to these lawsuits has not come. The complaints do not specify an amount of damages that plaintiffs seek. The company believes it has meritorious defenses to each of these actions and intend to defend them vigorously, About Bodisen Biotech Headquartered in Shaanxi province, China, Bodisen Biotech Inc. (Other OTC: BBCZ.PK) -- http://www.bodisen.com/ -- manufactures liquid and organic compound fertilizers, pesticides, insecticides and agricultural raw material certified by the Petroleum Chemical Industry Administrative office of China, Shaanxi provincial government and Chinese government. The company was incorporated in the State of Delaware. BOWNE & CO: Earns $15.7 million in Second Quarter Ended June 30 --------------------------------------------------------------- Bowne & Co. Inc. reported net income of $15.7 million in the second quarter ended June 30, 2007, compared with net income of $6.2 million for the same period ended June 30, 2006. Income from continuing operations increased to $15.8 million from $10.2 million reported in the 2006 period. Revenue was $261.9 million in the second quarter of 2007, compared to $260.3 million in 2006. Gross margin improved to 38.2% from 36.0% in the second quarter of 2006. Net income was $26.4 million for the six months ended June 30, 2007, compared to $7.8 million reported in the 2006 period. Income from continuing operations increased to $25.9 million from $11.6 million in 2006. For the six months ended June 30, 2007, revenue was $473.5 million, up 2% from $466.0 million reported in the first six months of 2006. Gross margin improved to 38.5% from 35.2% in the first half of 2006. David J. Shea, Bowne chairman, president and chief executive officer, stated, "We are pleased with our strong second quarter and year-to-date performance. These results reflect our ongoing commitment to execute on our strategic initiatives and enhance operating efficiencies. The improvement in margins and increased profitability are especially noteworthy, as well as the significant growth in non-transactional revenue. Year-to-date total revenue from continuing operations is the highest since 2000. We are optimistic about the remainder of 2007 and anticipate we will be in the upper end of the EPS guidance previously provided." John J. Walker, senior vice president and chief financial officer, added, "Our commitment to improving operating efficiencies and reducing our overall cost structure is evidenced by the recent consolidation of our leased space at 55 Water Street in New York City. This action will save the company approximately $50 million over the remaining 19-year lease term." Restructuring, integration and asset impairment charges totaled $7.9 and $10.0 million for the 2007 second quarter and year-to- date respectively, compared to $6.1 and $10.2 million in the comparable 2006 periods. Year-to-date 2007 charges include facility exit costs and asset impairment charges of approximately $5.7 million related to the consolidation of the company's leased space at 55 Water Street in New York City and severance, integration and facility costs related to the integration of the St Ives Financial business. At June 30, 2007, the company's consolidated balance sheet showed $537.5 million in total assets, $275.5 million in total liabilities, and $262.0 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?23f1 Cash Flow For the six months ended June 30, 2007, cash and marketable securities declined $37.5 million from year-end 2006, reflecting the funding of $18.7 million in stock repurchases, $12.6 million for acquisitions, $10.9 million in capital expenditures, including $2.9 million related to the consolidation of the 55 Water Street facility, and the normally high seasonal working capital usage in the period. The company has no borrowings outstanding under its $150 million five-year senior, unsecured revolving credit facility. Share Repurchase Program In the 2007 second quarter, the company spent $5.7 million repurchasing 333,980 shares of its common stock at an average price per share of $17.20. During the six months ended June 30, 2007, the company repurchased 1.2 million shares of its common stock for $18.7 million at an average price of $16.01. From December 2004, the inception of the company's share repurchase program, through June 30, 2007, Bowne has spent approximately $164.0 million to repurchase 11.0 million shares at an average price per share of $14.89. As of Aug. 8, 2007, $29 million of its share repurchase authorization remained. About Bowne & Co. Inc. Headquartered in New York City, Bowne & Co. Inc. (NYSE: BNE) -- http://www.bowne.com/ -- provides financial, marketing and business communications services around the world. Bowne has 3,200 employees in 60 offices around the globe. * * * Bowne & Co. Inc. still carries Moody's 'Ba3' corporate family rating which was affirmed last January 2007. The outlook remains positive. CALA CORP: Posts $135,795 Net Loss in Second Quarter Ended June 30 ------------------------------------------------------------------ Cala Corp. reported a net loss of $135,795 for the second quarter ended June 30, 2007, compared with a net loss of $211,947 for the same period last year. The company reported no revenues for the three months ended June 30, 2007, and 2006. The company receives rental income from the building it owns but this revenue is classified as other income in the company's books. At June 30, 2007, the company's consolidated balance sheet showed $1.2 million in total assets, $728,969 in total liabilities, and $511,743 in total stockholders' equity. The company's consolidated balance sheet at June 30, 2007, further showed strained liquidity with $0 in total current assets available to pay $153,504 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?23f0 Going Concern Doubt As reported in the Troubled Company Reporter on Aug. 6, 2007, Henderson, Nev.-based De Joya Griffith & Company LLC expressed substantial doubt about Cala Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's recurring losses, negative cash flow from operations and net working capital deficit. About Cala Corporation Headquartered in Titusville, Fla. Cala Corp. (Other OTC: CCAA) -- http://www.undersearesort.com/ -- is in the development stage of building an undersea resort and casino. The company, formerly known as Magnolia Foods Inc., was incorporated in 1985. CARIBBEAN RESTAURANTS: S&P Revises Outlook to Neg. from Stable -------------------------------------------------------------- Standard & Poor's Ratings Services revised its ratings outlook on San Juan, Puerto Rico-based Caribbean Restaurants LLC to negative from stable. "The outlook revision reflects the continued weakness in the Puerto Rican economy," said Standard & Poor's credit analyst Charles Pinson-Rose, "causing lower sales and decreased operating efficiency." He added that the negative outlook indicates that S&P would lower the rating if poor economic conditions in Puerto Rico further strain CRI's sales and operating performance. CATHOLIC CHURCH: San Diego Posts Lists of Accused Priests --------------------------------------------------------- The Roman Catholic Bishop of San Diego posted in its Web site two lists of priests, who have credible allegations of sexual abuse. The first list contains names of priests from the Diocese of San Diego or San Bernardino. The second list contains names of priests from other dioceses or religious orders. Copies of the Lists are available for free at: -- http://ResearchArchives.com/t/s?23fa -- http://ResearchArchives.com/t/s?23fb The Diocese encourages anyone who has been abused or who knew someone abused by the listed priests, or by any other person, who have been working in the Diocese, to contact the Diocese through: Rev. Msgr. Steven Callahan P.O. Box 85728 San Diego, CA 92186-5728 Phone: (858) 490-8310 The Diocese also discloses that it has received allegations of sexual abuse, which have questionable probability or appear to be false, hence, the names of the accused individuals are not included in the Lists. About the San Diego Diocese The Roman Catholic Diocese of San Diego in California -- http://www.diocese-sdiego.org/-- employs approximately 3,000 people in various areas of work. The Diocese filed for Chapter 11 protection just before commencement of the first of court proceedings for 140 sexual abuse lawsuits filed against the Diocese. Authorities of the San Diego Diocese said they were not in favor of litigating their cases. The San Diego Diocese filed for chapter 11 protection on Feb. 27, 2007 (Bankr. S.D. Calif. Case No. 07-00939). Gerald P. Kennedy, Esq., at Procopio, Cory, Hargreaves and Savitch LLP, represents the Diocese. Attorneys at Pachulski Stang Ziehl & Jones LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Diocese listed total assets of $152,510,888 and total liabilities of $72,754,092. On March 27, 2007, the Debtor filed its plan and disclosure statement. San Diego's exclusive period to file a chapter 11 plan expires on Oct. 15, 2007. (Catholic Church Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: San Diego Inks Pact Suspending MOR Submission -------------------------------------------------------------- The Hon. Louise DeCarl Adler of the U.S. Bankruptcy Court for the Southern District of California approves the stipulation, and rules that any obligation of the Parishes to file reports with the Court for the period after July 2007, is suspended pending the Court's ruling on the Diocese of San Diego's request to dismiss its Chapter 11 case. The Organization of Parishes of the Roman Catholic Diocese of San Diego, The Roman Catholic Bishop of San Diego, and the Official Committee of Unsecured Creditors agree to suspend the requirement that the parishes in the geographic area of the Diocese of San Diego file monthly financial reports as required by Steven J. Katzman, the United States Trustee for Region 15, or by the Bankruptcy Court. The Parishes had asserted that the preparation and filing of the Reports requires significant effort and expense. Consequently, the Diocese and the Creditors Committee agreed that any obligation of the Parishes to file Reports may be suspended pending the Court's ruling on the bankruptcy case's dismissal. Accordingly, the Parties agree that the Reports for the months up to and including July 2007 will be filed by October 2, 2007. They also agree that if the Court does not dismiss the Case, then the Reports not filed as a result of the Stipulation would be filed by the first filing date following the Court's denial of the Dismissal. Except as agreed, the Parties reserve all their rights and defenses. Moreover, Mr. Katzman informs the Court that he has reviewed, and does not oppose, the Stipulation. About the San Diego Diocese The Roman Catholic Diocese of San Diego in California -- http://www.diocese-sdiego.org/-- employs approximately 3,000 people in various areas of work. The Diocese filed for Chapter 11 protection just before commencement of the first of court proceedings for 140 sexual abuse lawsuits filed against the Diocese. Authorities of the San Diego Diocese said they were not in favor of litigating their cases. The San Diego Diocese filed for chapter 11 protection on Feb. 27, 2007 (Bankr. S.D. Calif. Case No. 07-00939). Gerald P. Kennedy, Esq., at Procopio, Cory, Hargreaves and Savitch LLP, represents the Diocese. Attorneys at Pachulski Stang Ziehl & Jones LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Diocese listed total assets of $152,510,888 and total liabilities of $72,754,092. On March 27, 2007, the Debtor filed its plan and disclosure statement. San Diego's exclusive period to file a chapter 11 plan expires on Oct. 15, 2007. (Catholic Church Bankruptcy News, Issue No. 103 and 104; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Spokane Posts Names of Accused Priests ------------------------------------------------------- Pursuant to its confirmed Second Amended Plan of Reorganization, the Diocese of Spokane posted on its Web site lists of known Diocesan clergy; religious clergy not incardinated in the Diocese, who nevertheless were functioning as clergy in and for the Diocese; and "order clergy or religious", who are admitted, proven or credibly accused perpetrators of sexual abuse. The Diocese noted that the names of deceased perpetrators will be posted in accordance with the Spokane Diocesan Review Board Policy, which provides for publication of the name of a deceased priest with credible allegation of sexual abuse, only if it is requested by the abused person that the name be publicized. The Diocese further noted the lists will be modified and incorporated as discussed under the Diocese Action of Article 26.1. The perpetrators are: * Reinard Beaver; * Garry Boulden; * Theodore Bradley; * Berard Connelly, Franciscan brother; * Gerald Dezurick (deceased), Benedictine priest; * Joseph Knecht (deceased); * Louis Ladenburger, Franciscan priest; * Augustine Ludwig, Marianist brother; * Arthur Mertens; * Patrick O'Donnell; * James O'Malley (deceased); * Bernard "Benno" Oosterman; * Joseph Pineau (deceased); and * Joseph Sondergeld (deceased) The priests, who are removed from the ministry, are: * Reinard Beaver; * Garry Boulden; * Theodore Bradley; * Arthur Mertens; * Patrick O'Donnell; * James O'Malley (deceased); and * Bernard "Benno" Oosterman A full-text copy of the lists may be accessed for free at: http://ResearchArchives.com/t/s?23f9 About The Diocese of Spokane The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. On April 24, 2007, the Court confirmed Spokane's 2nd Amended Joint Plan. That plan became effective on May 31, 2007. (Catholic Church Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Spokane Parishes Raised Up To Half of $10MM Share ------------------------------------------------------------------ The Association of Parishes in the Diocese of Spokane's Chapter 11 case have raised between $6,000,000 to $7,000,000 to meet their $10,000,000 share of the Diocese's $48,000,000 settlement with sex abuse claimants, KXLY.com reports. The Parishes have until the end of the year to raise more funds, the report says. Money that the Parishes won't be able to raise will have to be paid for with a loan -- secured with Parish property and to be paid off in five years. Under the Diocese's settlement, the Diocese must pay out $37,000,000 on October 1, 2007, with $10,000,000 coming from the Parishes and $20,000,000 from insurance carriers. The rest will come from the sale of Church properties, including the bishop's house. "The plan right now is for the Diocese to wire a $5 Million payment to the bankruptcy trustee on Monday," according to Erik Loney of KXLY.com. Mr. Loney says about half of the Diocese's 82 parishes have met their fundraising goals. Some Parishes have sold property or have taken money from building projects. "Organizers of the parish campaign told me this has not been easy," he said. "People have taken money out of savings. Some of the elderly have even made payments out of social security or retirement checks. People are doing their best to come up with the money as soon as possible again so we can avoid paying interest on it if we can," Bob Bailey, of the Association of Parishes told KXLY.com. Aside from the Parishes, Catholic entities like Catholic cemeteries raised $6,000,000, while Bishop William Skylstad will raise $6,000,000 on his own. KXLY.com further reports that Bishop Skylstad has not raised all funds for the bankruptcy settlement, so the Diocese had to take a $3,400,000 loan. Bishop Skylstad said he will continue fundraising campaigns to pay off this debt. About The Diocese of Spokane The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. On April 24, 2007, the Court confirmed Spokane's 2nd Amended Joint Plan. That plan became effective on May 31, 2007. (Catholic Church Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Spokane Wires $11.7MM Initial Payment to Trust --------------------------------------------------------------- The Diocese of Spokane and its parishes wired into the Diocese's bankruptcy trust on October 1, 2007, an initial payment of $11,700,000 for victims of clergy sexual abuse, Nicholas K. Geranios of The Associated Press reports. Of the $48,000,000 settlement amount, the Trust has so far received $44,000,000, the AP says. Settling claimants are expected to to receive payments next month. According to Mr. Geranios, the remaining Settlement Amount is due October 2009. "Compensation to victims of sexual abuse is just one small step toward healing for the victims," Bishop William Skylstad said in a statement. "I hope and pray that the entire community of Eastern Washington can continue to heal and reconcile." About The Diocese of Spokane The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. On April 24, 2007, the Court confirmed Spokane's 2nd Amended Joint Plan. That plan became effective on May 31, 2007. (Catholic Church Bankruptcy News, Issue No. 104; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CHARTER COMMS: Moody's Holds Caa1 Corporate Family Rating --------------------------------------------------------- Moody's Investors Service affirmed Charter Communications Inc.'s Caa1 corporate family rating, lowered the probability of default rating to Caa2 and assigned a Ca rating to the company's new $479 million issuance of 6.5% senior convertible notes due 2027. Moody's also revised its ratings for the company's existing instruments to reflect the completion of the pending transaction as well as a more refined view of the underlying default and loss severity components embedded in the CFR, as highlighted below. Concurrently, affirmed its stable outlook. The notes are being issued pursuant to an exchange offer for Charter's existing $413 million of 5.875% senior convertible notes due 2009, 88% of which are to be tendered as part of the exchange. The new senior convertible note issue is neutral to the company's consolidated debt profile, although it pushes the bulk of the company's earliest significant debt maturity beyond 2009 and hence marginally improves its short-to-medium term liquidity profile. Downgrades: Issuer: Charter Communications Holdings, LLC -- Senior Unsecured Regular Bond/Debenture, Downgraded to Ca from Caa3 Issuer: Charter Communications Inc. -- Probability of Default Rating, Downgraded to Caa2 from Caa1 -- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to Ca from Caa3 Upgrades: Issuer: CCH I Holdings LLC -- Senior Unsecured Regular Bond/Debenture, Upgraded to 76 - LGD5 from 91 - LGD6 Issuer: CCH I, LLC -- Senior Secured Regular Bond/Debenture, Upgraded to 58 - LGD4 from 79 - LGD5 Issuer: CCH II, LLC -- Senior Unsecured Regular Bond/Debenture, Upgraded to 40 - LGD3 from 63 - LGD4 Issuer: CCO Holdings, LLC -- Senior Secured Bank Credit Facility, Upgraded to 30 - LGD3 from 53 - LGD4 -- Senior Unsecured Regular Bond/Debenture, Upgraded to 30 - LGD3 from 53 - LGD4 Issuer: Charter Communications Holdings, LLC -- Senior Unsecured Regular Bond/Debenture, Upgraded to 84 - LGD5 from 95 - LGD6 Issuer: Charter Communications Inc. -- Senior Unsecured Conv./Exch. Bond/Debenture, Upgraded to 87 - LGD5 from 96 - LGD6 Issuer: Charter Communications Operating, LLC -- Senior Secured Bank Credit Facility, Upgraded to 06 - LGD1 from 15 - LGD2 -- Senior Secured Regular Bond/Debenture, Upgraded to a range of 22 - LGD2 to B2 from a range of 42 - LGD3 to B3 Assignments: Issuer: Charter Communications Inc. -- Senior Unsecured Conv./Exch. Bond/Debenture, Assigned a range of 87 - LGD5 to Ca -- Senior Unsecured Conv./Exch. Bond/Debenture, Assigned Ca As it has for many years now, Charter's Caa1 corporate family rating continues to reflect very high (and likely unsustainable) financial risk, including Debt/EBITDA leverage of close to 10 times, interest coverage in the low 1 time range, and fixed charge coverage of about 0.5 times. In addition, the rating also reflects Moody's belief that Charter will likely continue to burn cash over the next few years, due to its high interest burden, capital expenditures related to its roll-out of telephony and other success-based investments that are necessary to drive top- line growth. While the company's operational performance has improved modestly in the most recent quarter, Charter still lags certain of its peers in respect to penetration of advanced services, such as telephony. The company also continues to lose basic subscribers. Charter's ratings benefit from its substantial available bank capacity, which Moody's estimates will remain close to $1 billion throughout 2007. Furthermore, the ratings incorporate Moody's belief in the company's meaningful asset value, including a sizeable (albeit shrinking) subscriber base of about 5.4 million and its ability to sell assets to raise capital, should the need arise. The revised instrument ratings reflect several factors, including a modest shift in the company's capital mix, the refinancing of the junior-most debt securities with longer-dated but equivalent ranking securities, and Moody's shift to a higher default and lower loss severity bias, which results in a widening of the notching between the company's most senior and most junior instruments to incorporate the divergence of the expected credit losses likely to be realized. In particular, with the passage of time, and insufficient improvement to operating performance, senior secured creditors will be expected to realize higher recoveries in default while recovery prospects for junior-ranking creditors -- notably those at the ultimate parent company, where the new converts are being issued -- continue to diminish. Moreover, the impact of the increasingly competitive operating environment suggests recovery for junior creditors will become more vulnerable over time. Extending the near-term maturities of the junior capital should enhance the recovery prospects for the senior lenders, however, by allowing the company more time to implement its capital improvement program and thereby foster a greater ability to retain and/or grow its customer base. Default risk remains notably high, given Moody's view of the company's unsustainable capital structure that remains significantly burdened with excessive debt and related debt service costs. Charter Communications is one of the largest domestic cable operators serving about 5.4 million subscribers. Charter's annual revenue is about $5.4 billion. The company maintains its headquarters in St. Louis, Missouri. CHRYSLER LLC: September 2007 U.S. Sales Down 5% ----------------------------------------------- Chrysler LLC reported U.S. sales for September 2007 of 159,799 units; down 5% compared to September 2006 with 168,888 units sold. All sales figures are reported as unadjusted. “With the overall industry down versus September 2006, Chrysler retail sales remain strong,” Darryl Jackson, Vice President – U.S. Sales, said. “Our fleet sales continue to trend down more than 20 percent driving the overall sales decrease for the month. This is directly in line with our plan to reduce daily rental fleet during the second half of the year.” Chrysler brand car sales were led by Sebring Sedan which posted sales of 4,418 units and Sebring Convertible which finished the month with sales of 1,639 units. Chrysler Aspen sales rose 8 percent versus August 2007 with 3,875 units. Jeep(R) brand sales were down 11% year-over-year with retail sales up and fleet down driven by planned fleet reductions, while Wrangler posted gains. Jeep Wrangler and Wrangler Unlimited posted sales of 8,605 units, up 71% versus September 2006. Dodge brand sales increased 5% over last year led by Dodge Ram which posted a gain of 20%. The all-new Dodge Nitro was up 2% over August 2007. “Our sell down on 2007 models is going very well and in October we will continue to offer aggressive lease and retail payments for our customers,” Michael Keegan, Vice President – Volume Planning and Sales Operations said. “We will extend the 0% APR offering for 60 months on more 2007 models through the end of the month.” Chrysler finished the month with 450,733 units of inventory, or a 71-day supply. Inventory is down by 15% compared to September 2006 when it was at 533,220 units. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Aug. 8, 2007, Standard & Poor's Ratings Services revised its loan and recovery ratings on Chrysler LLC's (B/Negative/--) $10 billion senior secured first-lien term loan facility due 2013, following various changes to terms and conditions prior to closing. The $10 billion first-lien term loan now consists of a $5 billion "first-out" tranche and a $5 billion "second-out" tranche, so the aggregate amount of first-lien debt remains unchanged. Accordingly, S&P assigned a 'BB-' rating to the $5 billion "first- out" first-lien term loan tranche. This rating, two notches above the corporate credit rating of 'B' on Chrysler LLC, and the '1' recovery rating indicate S&P's expectation for very high recovery in the event of payment default. S&P also assigned a 'B' rating to the $5 billion "second-out" first-lien term loan tranche. This rating, the same as the corporate credit rating, and the '3' recovery rating indicate S&P's expectation for a meaningful recovery in the event of payment default. Moody's Investors Service has affirmed Chrysler Automotive LLC's B3 Corporate Family Rating, and the Caa1 rating of the company's $2 billion senior secured, second lien term loan in connection with Monday's closing of DaimlerChrysler AG's sale of a majority interest of Chrysler Group to Cerberus Capital Management LLC. CLASSIC COUNTRY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Classic Country Living, Inc. 109 Savanah Jon Boulevard Boerne, TX 78006 Bankruptcy Case No.: 07-52624 Type of business: The Debtor provides assisted living services. Chapter 11 Petition Date: October 2, 2007 Court: Western District of Texas (San Antonio) Debtor's Counsel: Joris Robert Vanhemelrijck, Esq. 1100 Northwest Loop 410, Suite 700 San Antonio, TX 78213 Tel: (210) 804-1529 Fax: (866) 830-3521 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million The Debtor does not have any creditors who are not insiders. COTT CORP: S&P Revises CreditWatch to Negative from Developing -------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch implications on Toronto-based beverage provider Cott Corp. to negative from developing. The ratings were placed on CreditWatch developing on April 16, 2007, following Cott's decision to explore its possible participation in industry consolidation. The change in the CreditWatch placement results from Cott having made no significant progress in this regard, even though management continues to consider this option. "The CreditWatch negative placement follows Cott's announcement that it expects substantially lower operating income in 2007 compared with 2006," said Standard & Poor's credit analyst Lori Harris. "The effects of volume declines in key carbonated soft drink markets and of higher raw material costs have precipitated this revision to operating income," Ms Harris added. Furthermore, the company remains stressed as reflected by the weaker-than- expected financial performance in the second quarter ended June 30, 2007. Despite largely flat revenues for the quarter, reported operating income dropped 35% during this time compared with second-quarter 2006. Moreover, gross margin declined to 12% for the second quarter, from 14.4% for the same period in 2006, because of higher ingredient, packaging, and plant-related costs. Standard & Poor's is concerned about the drop in 2007 operating income and the uncertainty related to the magnitude of the decline. S&P will meet with Cott's senior management to discuss the company's expected performance for 2007 as well as its ongoing business and financial strategies. COUNTRYWIDE FINANCIAL: State Pension Wants to Recover Losses ------------------------------------------------------------ Massachusetts' Pension Reserves Investment Management Board will file a lawsuit against Countrywide Financial Corporation to recover as much as $20 million it lost due to the company's downfall, Jay Fitzgerald of Boston Herald reports. Michael Travaglini, executive director of the state pension system, told Boston Herald that the state will file a suit by a court-ordered deadline of Oct. 15, and will seek to become the lead defendant in any class-action case. Countrywide's consolidated net earnings for the second quarter of 2007 decreased by 33%, to $485,068,000, from net earnings of $722,190,000 for the second quarter of 2006. Countrywide's total revenues for the current quarter also decreased to $2,548,397,000, from total revenues if $3,000,216,000 for the same period in 2006. According to the company, the results reflect the effect of increased credit-related costs in the current quarter, which increase was caused by higher delinquencies and defaults resulting from softer housing markets. Countrywide said it will be reporting its 2007 third quarter earnings on Oct. 26, 2007. 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. In September 2007, Countrywide 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. CYGNUS BUSINESS: S&P Affirms All Ratings and Removes Pos. Watch --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed all ratings, including the 'CCC+' corporate credit rating, on Cygnus Business Media Inc. and its parent company, CommerceConnect Media Holdings Inc., and removed all ratings from CreditWatch, where they had been placed on April 18, 2007 with positive implications. The outlook is developing. S&P analyze Cygnus Business Media, a business-to- business publisher and event organizer, on a consolidated basis with its parent. "The developing outlook reflects our uncertainty regarding the company's liquidity amid tightening covenants and refinancing risk within the next two years," explained Standard & Poor's credit analyst Tulip Lim. At June 30, 2007, the company had $191.1 million in debt on a consolidated basis. The ratings on Cygnus reflect the company's limited liquidity, high tolerance for risk, high debt leverage, small EBITDA base, and difficult business fundamentals. These factors are minimally offset by Cygnus's cash flow diversity, and the niche competitive positions of its complementary trade publications, expositions, and related operations serving eight industry sectors. DANA CORP: Appaloosa Re-Affirms Investment Offer; Sends Final Deal ------------------------------------------------------------------ Appaloosa Management, L.P., on Sept. 21, 2007, re-affirmed its investment offer, to replace the investment offer of Centerbridge Capital Partners, L.P., and delivered to Dana Corp. and its debtor-affiliates the Official Committee of Unsecured Creditors a final investment proposal letter. James Bolin, a partner at Appaloosa, stated, in the September 21 Letter, that Appaloosa's Investment Offer is substantially similar to Centerbridge's Proposal, with certain material improvements and modifications,. The improvements and modifications are: (a) Appaloosa proposes to eliminate and waive the break-up fee described in the Centerbridge Proposal. (b) Appaloosa will enhance the conversion price from 0.83 times Distributable Market Equity Value Per Share to 0.90 times Distributable Market Equity Value Per Share. (c) In lieu of the limited Rule 144A offering contemplated by the Centerbridge Proposal, the right to purchase the Series B Preferred at par will be offered to all holders of allowed unsecured claims on a pro rata basis. Any shares of Series B Preferred not purchased in the Series B Rights Offering will be purchased at par by Appaloosa and certain other entities, who will receive a guaranteed minimum of 40% of the Series B Preferred and a commitment fee of $10,000,000 as consideration for their agreement to perform the foregoing Standby Purchaser obligations. (d) Appaloosa proposes to eliminate the ceiling/floor "collar" mechanism contained in the Centerbridge Proposal. (e) Most of Appaloosa's approval rights will be subject to being over-ridden by a 2/3 vote of common shareholders with the exception of certain specified protective approval rights, which are not subject to over-ride. The approval rights not subject to over-ride relate to: -- issuance of securities that are senior to or on parity with the Series A Preferred; -- amendments to the Company's by-laws that materially change the rights of members of the Investor Group or Qualified Purchaser Transferees or the Company's shareholders generally, or to the Charter or Articles if the amendment would adversely impact Appaloosa's rights or investment; and -- other than the annual 4.0% dividends on the Series B Preferred, declaration and payment of dividends on stock that ranks junior to or on parity with the Series A Preferred. (f) Appaloosa will select three members of the Board of Directors, and the Creditors Committee will select the other three. One director will be the chief executive officer, one director will be the new Executive Chairman, one director will be selected by the Standby Purchasers other than Appaloosa. The initial Executive Chairman of the Board will be selected by a selection committee comprised of one Appaloosa representative and one representative of the Standby Purchasers. The Executive Chairman will be approved by a majority vote of the Selection Committee. Any successor Executive Chairman will be selected by the Nominating and Governance Committee of the Board, subject to the approval of Appaloosa. (g) All of Appaloosa's approval rights will continue until the earlier of (i) the date on which Appaloosa ceases to own Series A Preferred Shares having an aggregate liquidation preference of at least $125,000,000, and (ii) the third anniversary of Appaloosa's investment. (h) Appaloosa proposes to include an additional closing condition to the effect that there will not have occurred any material strike or labor stoppage or slowdown at Dana Corp., General Motors, Chrysler, Ford Motor Company or any of their respective subsidiaries. A full-text copy of Appaloosa's September 21 Letter is available for free at http://ResearchArchives.com/t/s?23e0 Aside from the Investment Letter, Appaloosa also delivered to the Debtors and the Creditors Committee drafts of: (1) an Amended Joint Plan of Reorganization, a copy of which is available for free at http://ResearchArchives.com/t/s?23e1 (2) a Plan Support Agreement, a copy of which is available for free at http://ResearchArchives.com/t/s?23e2 (3) an Investment Agreement, a copy of which is available for free at http://ResearchArchives.com/t/s?23e3 (4) a Shareholders Agreement, a copy of which is available for free at http://ResearchArchives.com/t/s?23e4 (5) Articles of Designation with Respect to Preferred Stock, a copy of which is available for free at: http://ResearchArchives.com/t/s?23e5 (6) a Series A Registration Rights Agreement, a copy of which is available for free at http://ResearchArchives.com/t/s?23e6 (7) a Series B Registration Rights Agreement, a copy of which is available for free at http://ResearchArchives.com/t/s?23e6 (8) a Market Maker Agreement, a copy of which is available for free at http://ResearchArchives.com/t/s?23e7 About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. The Court has set a hearing on Oct. 23, 2007, to consider the adequacy of the Disclosure Statement explaining the Debtors' Plan. (Dana Corporation Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Wants to Enter Into Mexican Unit Restructuring Process ----------------------------------------------------------------- In July 2006, Spicer S.A., de C.V., a Mexican joint venture between Dana Corp. and DESC S.A. de C.V., was dissolved, and the Debtors acquired 100% ownership of certain of the subsidiaries of Spicer Mexico. Since that acquisition, the Debtors determined, after consultation with their U.S. and Mexican advisors, to take several steps to optimize the tax and operational efficiencies of their operations in Mexico, which will involve converting certain of their operations into maquiladoras: (a) Dana Heavy Axle Mexico S.A. de C.V. operations in Monterrey, Mexico will be contributed into a non-debtor subsidiary known as Dana Ejes S.A. de C.V., which will subsequently be converted into a maquiladora; (b) A maquiladora will be created out of the current operations of Spicer Group members Ejes Tractivos S.A. de C.V., Autometales S.A. de C.V., and Dana de Mexico Corporacion S. de R.L. de C.V.; (c) Nondebtor Tecnologia de Mocion Controlada S.A. de C.V. will expand its existing maquiladora operations to include a new maquiladora to support the sealing business; (d) Dana will acquire additional equipment to expand the operations at DHAM's Toluca facility; and (e) Dana's ownership of certain Mexican Dana Companies will be transferred to Debtor Spicer Heavy Axle Holdings, Inc., which will be renamed Dana Global Products, Inc. A maquiladora, according to Corinne Ball, Esq., at Jones Day, in New York, explains, is a Mexican corporation that operates under a program developed by the Mexican Secretariat of Commerce and Industrial Development that permits the Mexican corporation to: -- temporarily receive component parts and raw materials from a foreign company without being charged any import duties; -- convert the component parts and raw materials into finished goods; -- ship the finished goods to, or on behalf of, the foreign company; and -- charge the foreign company for the value added in Mexico plus a relatively modest government mandated mark-up. After these transactions, the inventory, finished goods and equipment for the Sealing Maquila will be owned by Debtor Dana Global Products, Inc., which will also conduct all the future purchasing of goods for the Sealing Maquila. In addition, as part of the Debtors' strategy to expand low cost manufacturing operations, the Toluca Facility requires additional equipment to be able to expand production. Dana Heavy Axle Mexico does not currently have the cash to purchase additional equipment for the Toluca Facility. Instead, the Debtors will transfer approximately $2,500,000 in equipment from their Glasgow, Kentucky, plant to the Toluca Facility, and the Debtors will purchase approximately $11,000,000 of equipment from third party vendors for use at the Toluca Facility. Both the transferred and purchased equipment will be placed in the name of Dana Holdings Mexico as an investment. Dana Heavy Axle Mexico will purchase the equipment from Dana Holdings Mexico by issuing a $13,500,000 note in return for the equipment. Because the Debtors will indirectly own Dana Holdings Mexico through DGPI, they will benefit from the note held by Dana Holding Mexico and will thus be receiving equivalent value on their investment in Dana Holdings Mexico. Ms. Ball tells the Court that in connection with the Debtors' emergence from bankruptcy, they are planning to rationalize the holding structure of their international affiliates. For Mexican tax reasons, each of the maquiladoras to be formed must be owned by a stable U.S. entity that can conduct the purchasing of goods required to operate the maquiladoras on a going forward basis -- that entity will be DGPI. The Debtors will transfer their 100% ownership interest in Dana Holdings Mexico and DHAM and almost 100% ownership interest in Tecnologia de Mocion Controlada to DGPI in return for additional stock to be issued by DGPI. Because the Debtors own 100% of the stock of DGPI, they will receive reasonably equivalent value for the transfer through the increase in value of DGPI by the value of the shares of Dana Holdings Mexico, DHAM and TMC, that are to be transferred to DGPI. The Debtors' Disclosure Statement explaining their Plan of Reorganization provides that a critical part of their restructuring plan has been to optimize their manufacturing footprint so as to minimize costs, Ms. Ball notes. A critical focus of these efforts is the movement to low cost manufacturing operations, a significant block of which are in Mexico. The various transactions involved in the Mexican Affiliate Restructuring will allow the Debtors to increase their production of low-cost goods in Mexico and provide a tax-efficient structure for the production of those goods. The Debtors project that the Mexican Affiliate Restructuring will: -- generate approximately $4,700,000 in annual tax savings over the current structure; -- provide more than $12,000,000 in additional U.S. income annually; and -- facilitate labor savings for the Debtors as part of their manufacturing footprint optimization. Accordingly, the Debtors seek the U.S. Court Bankruptcy Court for the Southern District of New York's authority to enter into the Mexican Affiliate Restructuring process. The Debtors also seek a waiver of any stay of the effectiveness of the order approving the Restructuring Motion. While the go-live date for the Mexican maquiladoras is Nov. 1, 2007, the purchases of the assets and other activities described in the step transactions must occur before that date, and certain of those purchases can only occur after the transfer of shares in DHAM, Dana Holdings Mexico and TMC are made to Debtor DGPI, Ms. Ball says. If the various asset sales and share transfers cannot commence until the anticipated expiration of the automatic stay on October 29, 2007, the go-live date on the maquiladoras will have to be delayed by an additional month because it will be difficult to make the necessary accounting changes in the middle of a month. Delaying the project will cost the Debtors approximately $375,000 in lost tax savings and decrease income in the U.S. by approximately $1,000,000, Ms. Ball adds. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. The Court has set a hearing on Oct. 23, 2007, to consider the adequacy of the Disclosure Statement explaining the Debtors' Plan. (Dana Corporation Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). DAVID SNYDER: Case Summary & 17 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: David L. Snyder 4216 North Charles Street Baltimore, MD 21218 Bankruptcy Case No.: 07-19635 Type of business: The Debtor practices law. Chapter 11 Petition Date: October 2, 2007 Court: District of Maryland (Baltimore) Judge: James F. Schneider Debtor's Counsel: Gary R. Greenblatt, Esq. Mehlman, Greenblatt & Hare, L.L.C. 723 South Charles Street, Suite LL3 Baltimore, MD 21230 Tel: (410) 547-0300 Fax: (410)547-7474 Total Assets: $507,902 Total Debts: $1,027,854 Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Peter and Lisa Ireland real estate; value $96,500 11933 Thurloe Drive of security: Lutherville Timonium, MD $405,000; value of 21093-7444 senior lien: $326,985 Internal Revenue Service Income taxes $66,629 Centralized Insolvency Office P.O. Box 21126 Philadelphia, PA 19114 Hoch Family Partnership $61,405 c/o Jane Snyder Hoch Kibbutz Saad Jon Ber, Inc. $50,000 Bally's Park Place, Inc. real estate; value $49,917 of security: $405,000; value of senior lien: $423,485 Rio Suite Hotel and Casino $49,525 Boardwalk Regency Corp. real estate; value $45,694 of security: $405,000; value of senior lien: $473,404 Atlantic City Hilton Casino $44,000 Resort The Venetian $36,325 Bank of America $46,671 Paris Las Vegas $35,225 Jon Ber, Inc. $25,000 Bank of America NA $28,137 Abraham Helfand $20,000 Chase $13,829 C.I.T. $9,080 State of Maryland Income taxes $7,467 DAVID WU: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: David Mingwhei Wu aka David M. Wu 601 Ambrose Drive Pflugerville, TX 78660 Bankruptcy Case No.: 07-11838 Chapter 11 Petition Date: October 2, 2007 Court: Western District of Texas (Austin) Debtor's Counsel: Frederick E. Walker, Esq. 609 Castle Ridge Road, Suite 220 Austin, TX 78746 Tel: (512) 330-9977 Fax: (512) 330-1686 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. DEAN FOODS: Moody's Reviews Ba3 Corporate Family Rating ------------------------------------------------------- Moody's Investors Service placed Dean Foods, Inc.'s long term ratings on for review for possible downgrade and lowered the company's speculative grade liquidity rating to SGL-3 from SGL-2 after the company lowered its guidance for its full year 2007 earnings and announced restructuring plans. The company's revised earnings guidance is due to the adverse impact of continued high level of commodity prices on its business. These ratings were placed on review for possible downgrade: Dean Foods Company: -- Corporate Family Rating and Probability of Default Rating at Ba3 -- Senior Secured $1.5 billion. Revolving Credit Facility at Ba3 -- $1.5 billion Senior Secured Tranche A Term Loan at Ba3 -- $1.8 billion Senior Secured Tranche B Term Loan at Ba3 -- $500 million Guaranteed Senior Notes at B1 Dean Holding Company: -- Guaranteed Senior Notes at B1 -- LGD assessments are also subject to change. Dean Foods announced that third quarter results are likely to be much weaker than previously expected and that the current difficult operating environment will be sustained into the fourth quarter. Having levered up earlier this year for a $1.94 billion special dividend, Dean is now facing not only higher input costs but several other potential structural shifts that in Moody's opinion, could have longer term impact on the company's ability to de-lever. These include a shift from higher-margin branded product to private label in some of its regional brands and an oversupply of organic milk. Moody's said that a downgrade could lower the rating by one or more notches. The review for possible downgrade will focus on 1. the impact of the current difficult operating environment given unprecedented rise in dairy commodity prices on Dean's earnings and cash flows; 2. the ability of the company to pass on the higher input costs to its customers in a timely fashion; 3. the amount and timing of benefits to be derived from cost savings initiatives and structural realignment that are being implemented to address the current challenging environment; 4. the impact on sales volumes and on mix of the current higher dairy prices; 5. the possible longer-term impact of the oversupply of organic milk and the shift to private label; and 6. the company's ability to meet rating Moody's rating triggers set earlier this year in the April, 2007 credit opinion for year-end 2007 and 2008. Moody's credit opinion stated that Debt/EBITDA above 5.5 times or EBIT to interest below 2.5 times by year end 2007 (per Moody's FM) could result in a downgrade versus actual ratios (per Moody's FM) of 6 times and 2.4 times respectively as of LTM June, 30, 2007. Moody's lowered the company's speculative grade liquidity opinion to SGL-3 from SGL-2 due to the revised earnings and cash flow expectations and our view that covenant compliance may, as a result, be tighter than earlier anticipated both this year and next, especially since the company's leverage covenant steps down to 6.25 at year end 2007, and the coverage covenant steps up to 2.5 in fourth quarter 2008. Moody's notes that the company still has ample availability under its $1.5 billion revolver with about $700 million available. Dean Foods Corporation, based in Dallas, Texas is a leading processor, producer and distributor of dairy and dairy-related products in the United States. For the twelve months ended June 2007, revenue was about $10.5 billion. DELPHI CORP: U.S. Trustee Adds SABIC to Creditors Committee ----------------------------------------------------------- Diana G. Adams, the U.S. Trustee for Region 2, has appointed SABIC Innovative Plastics as a member of the Official Committee of Unsecured Creditors of Delphi Corp. and its debtor-affiliates. Electronic Data Systems Corp. and General Electric Company are no longer Committee members. The Creditors Committee now consists of: 1. SABIC Innovative Plastics 9930 Kincey Avenue Huntersville, North Carolina Attention: Valerie Venable Tel: (704) 992-5075 2. Tyco Electronics Corporation 60 Columbia Road Morristown, New Jersey Attention: MaryAnn Brereton Tel: (973) 656-8365 3. IUE-CWA 2360 W. Dorothy Lane, Suite 201 Dayton, Ohio Attention: Lauren Aspland Tel: (937) 294-7813 4. Capital Research and Management Company 11100 Santa Monica Blvd., 15th Floor Los Angeles, California Attention: Michelle Robson Tel: (310) 996-6140 5. Wilmington Trust Company, as Indenture Trustee Rodney Square North, 1100 North Market Street Wilmington, Delaware Attention: Steven M. Cimalore Tel: (302) 636-6058 6. Freescale Semiconductor, Inc. 6501 William Cannon Drive West, MD: OE16 Austin, Texas Attention: Richard Lee Chambers, III Tel: (512) 895-6357 About Delphi Headquartered in Troy, Mich., Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Mar. 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on Dec. 31, 2007. On Sept. 6, 2007, the Debtors filed their Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan. (Delphi Bankruptcy News, Issue No. 87 Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DENNIS WICKS: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtors: Dennis Dean Wicks Stine Maria Wicks 673 Boling Ranch Road Azle, TX 76020 Bankruptcy Case No.: 07-44358 Chapter 11 Petition Date: October 1, 2007 Court: Northern District of Texas Judge: D. Michael Lynn Debtors' Counsel: Julie C. McGrath, Esq. Forshey & Prostok, LLP 777 Main Street, Suite 1290 Fort Worth, TX 76102 Tel: (817) 877-8855 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtors did not file a list of their 20 largest unsecured creditors. DEWEY INVESTMENTS: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Dewey Investments 160, LLC P.O. Box 30205 Mesa, AZ 85275 Bankruptcy Case No.: 07-05068 Chapter 11 Petition Date: October 2, 2007 Court: District of Arizona (Phoenix) Judge: Charles G. Case II Debtor's Counsel: Allan D. Newdelman, Esq. Allan D. Newdelman, P.C. 80 East Columbus Avenue Phoenix, AZ 85012 Tel: (602) 264-4550 Fax: (602) 277-0144 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. DURA AUTOMOTIVE: Gets Court Nod to Submit Plan to Creditors ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved DURA Automotive Systems Inc.'s Disclosure Statement, solicitation procedures and creditor ballots. In a hearing that took place yesterday, Oct. 3, 2007, the U.S. Bankruptcy Court for the District of Delaware determined that DURA's Disclosure Statement contains the necessary information to enable creditors to vote on DURA's Plan of Reorganization. In addition, the Official Committee of Unsecured Creditors supports confirmation of DURA's Plan and has filed a statement urging creditors to vote to accept the Plan. "This favorable Court decision and support from the Committee for our plan to reorganize the Company, paves the way for DURA to exit Chapter 11 this year as planned," said Larry Denton, Chairman and Chief Executive Officer of Dura Automotive Systems. "We are looking forward to completing the legal process and focusing all of our resources on innovation and execution of our financial and operational strategy to aggressively compete and grow in the global automotive marketplace." The Plan and Disclosure Statement provide details on how DURA intends to treat claims against the Company and emerge from Chapter 11 protection in the fourth quarter of 2007. The Court's approval of the Disclosure Statement enables DURA to begin sending its Plan of Reorganization and Disclosure Statement to creditors to obtain their vote on the Plan. The ruling allows DURA's balloting agent to soon begin distribution of ballots and accompanying support materials to parties eligible to vote to accept or reject the Plan. The Court also set Nov. 26, 2007, as the hearing date for Plan confirmation. Once the Plan is confirmed and administrative procedures are completed, DURA will officially emerge from Chapter 11. DURA was advised by AlixPartners, Kirkland & Ellis and Miller Buckfire in connection with its Chapter 11 reorganization. About DURA Automotive Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Del. Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors' exclusive plan-filing period expired on Sept. 30, 2007. (Dura Automotive Bankruptcy News, Issue No. 31 Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). EL POLLO: Weakening Liquidity Cues S&P to Cut Rating to B- ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Irvine, California-based El Pollo Loco Inc., including the corporate credit rating, to 'B-' from 'B'. The outlook is negative. The downgrade is based on the company's weakening liquidity position that could worsen depending upon the outcome of its current legal proceedings. On Aug. 1, 2007, a Texas jury rendered its verdict in a trademark lawsuit filed against El Pollo Loco and found it liable for damages of approximately $22 million. Subsequently, the company filed motions that may alter the trial judge's final verdict and it stated that it would appeal the court's decision if the jury's verdict is upheld. However, throughout the appeals process, El Pollo Loco would likely have to post a LOC in the amount of the damages, which Standard & Poor's feels would strain the company's liquidity. "The outlook is negative," said Standard & Poor's credit analyst Charles Pinson-Rose, "and indicates that we would lower the rating if liquidity weakened further from an adverse court decision, a breach of financial covenants, or a decline in operating performance." FLEXTRONICS INT'L: Moody's Holds Corporate Family Rating at Ba1 --------------------------------------------------------------- Moody's Investors Service confirmed the ratings of Flextronics International Ltd. with a negative outlook and assigned a Ba1 rating to the company's new $1.75 billion delayed draw unsecured term loan in response to the closing of the Solectron acquisition. The initial draw on the term loan ($1.1 billion) will finance the cash portion of the merger consideration. Ratings confirmed include the company's Ba1 corporate family rating and the Ba2 ratings on its senior subordinated notes. At the same time, Moody's upgraded Solectron's convertible senior notes and senior subordinated notes to Ba2 from B3 and withdrew Solectron's B1 corporate family, B1 probability-of-default and SGL-1 speculative grade liquidity ratings. These rating actions conclude a review of Flextronics' and Solectron's ratings initiated on June 4, 2007. The Ba1 rating of the new unsecured term loan is consistent with Moody's press release dated Sept. 19, 2007 in which a provisional rating of (P)Ba1 was assigned to the proposed $2.5 billion unsecured term loan pending closing of the Solectron acquisition. The total amount of the term loan has been reduced to $1.75 billion as the majority of Solectron shareholders elected stock over cash. The remaining $650 million will be drawn down and used to pay off Solectron debt over the next several months. The company has the option to redeem the $150 million senior subordinated notes at the make-whole premium plus accrued and unpaid interest in accordance with the indenture. The holders of the $450 million convertible notes have the right to redeem the notes upon a change in control. Moody's expects the process for redeeming the Solectron senior subordinated and convertible notes to be completed by the end of 2007. Upon repayment of the notes in full, Moody's will withdraw the note ratings. To the extent that any stub notes remain outstanding, they would likely be rated Ba2. Flextronics' Ba1 corporate family rating reflects the company's size and scale with combined revenue more than double that of Jabil (its largest competitor in the North American market), product and end market diversity, and reasonable credit metrics with the expectation of improving cash flow generation and de- leveraging. The catalysts for EMS industry growth are largely attributable to the overall increase in the electronics markets and the outsourcing trends of OEMs, as well as the convergence of similar capabilities of certain EMS companies with distributors and ODM's. Moody's believes that the acquisition of Solectron will allow Flextronics to more effectively compete against the major Asian providers on a global basis, most importantly Hon Hai. The combined company will not only be able to generate significant production volumes at very low costs to provide scalable economies for consumer markets, but also manufacture highly-customized products in the networking, communications, and computing markets. In addition, Flextronics will differentiate itself from its competitors through vertical integration, breadth of service offerings, and geographic reach. The rating also reflects risks associated with the volatility of the EMS industry, exacerbated by client concentration and the inherent challenges Flextronics will face in managing a global business with revenue approximating $30 billion. Synergies from the Solectron acquisition should be achievable given the physical proximity of several key facilities to each other, which provides an easier transition with facility closures, and limited overlap between the various businesses and customers. While it is expected that there will be a loss of some customer accounts, due in part to customers' desire to find a second source provider, there is limited overlap in the customer base. Where there is overlap, there appear to be only a few business lines where both Flextronics and Solectron provide the same type of product or service. The negative rating outlook for Flextronics reflects the near-term integration and execution risks associated with the Solectron acquisition as well as Moody's expectation that there will continue to be pricing pressures from the OEM's. The ratings could be downgraded if there is a significant decline of revenue or profitability or if the company is unable to generate positive free cash flow on a sustained basis. Flextronics' leverage is moderate on a reported basis with pro forma total debt to CY 2008 EBITDA of 2.1x. Moody's makes further adjustments to this indebtedness with the inclusion of operating leases and securitized accounts receivables, bringing this adjusted pro forma debt to about $4.5 billion with leverage of around 3x. Flextronics ratings assigned and confirmed: -- New $1.75 billion Unsecured Term Loan due 2014 (of which $1.1 billion is drawn), Ba1; -- Corporate Family Rating, Ba1; -- Probability-of-Default Rating, Ba1; -- $400 million 6.25% Senior Subordinated Notes, due 2014, Ba2; -- $400 million 6.5% Senior Subordinated Notes, due 2013, Ba2; -- $8.2 million 9.875% Senior Subordinated Notes, due 2010, Ba2; -- Speculative Grade Liquidity Rating of SGL-1. Solectron ratings upgraded: -- $450 million 0.5% Convertible Senior Notes due 2034, Ba2; -- $150 million 8% Senior Subordinated Notes due 2016, Ba2. Solectron ratings withdrawn: -- Solectron Corporate Family Rating, B1; -- Solectron Probability-of-Default Rating, B1; -- Speculative Grade Liquidity Rating of SGL-1. Flextronics International Ltd., headquartered in Singapore and with its main U.S. offices in San Jose, California, is one of the largest global providers of contract electronics manufacturing services to OEMs. Upon the merger with Solectron, its focus will be primarily with telecommunications equipment, enterprise and personal computing, and mobile and consumer digital markets. FLEXTRONICS INT'L: Fitch Affirms 'BB+' Issuer Default Rating ------------------------------------------------------------ Fitch Ratings has completed its review of Flextronics International Ltd. following the company's acquisition of Solectron Corp. and resolved Flextronics' Rating Watch Negative status by affirming these ratings: -- Issuer Default Rating at 'BB+'; -- Senior unsecured credit facility at 'BB+'. Fitch also rated Flextronics' new senior unsecured Term B loan at 'BB+'. Additionally, Fitch has downgraded the rating on Flextronics' senior subordinated notes from 'BB' to 'BB-'. The Rating Outlook is Negative. Fitch's action affects approximately $5.4 billion of total debt including the revolving credit facility. The Negative Outlook reflects: -- Integration risks inherent in an acquisition of this size, with the combined company expected to generate in excess of $30 billion in annual revenue, particularly in an industry that is dependent on seamless day-to-day execution. -- The risk of customer loss following the acquisition of Solectron, although Fitch expects this risk to be manageable. -- Historically volatile free cash flow combined with relatively high leverage adds risk to the expectation that Flextronics will be able to reduce leverage in the near term in line with expectations. The ratings reflect these expectations: -- Flextronics has significant opportunity to decrease costs and improve cash flow pro forma for its acquisition of Solectron. -- Flextronics will continue to outgrow its North American peers and gain global market share. -- Pro forma free cash flow in excess of $500 million which will be utilized to repay debt over the next several years in addition to making small acquisitions. -- Pro forma leverage of approximately 2.7 times (x), which is expected to decrease to 2x or below within 2 years. -- The global competitive environment remains challenging, which could negatively affect profitability and free cash flow expectations. Credit strengths include: -- Flextronics' competitive advantage in its scale and scope of operations; -- Strong execution track record as evidenced by the company's peer leading metrics including return on invested capital of 10.4% and cash conversion cycle days of 13. -- High working capital nature of the business, which represents an additional source of liquidity in business downturns. Credit concerns include: -- Near-term integration risks; -- Difficult competitive environment which has pressured profitability across the industry; -- Potential for future acquisitions to have a negative impact on the expected repayment of debt; -- Customer concentration risk as the top 10 customers represent approximately 60% of total revenue. Flextronics acquired Solectron for $3.6 billion in total consideration. Approximately $2.5 billion of that consideration was paid in Flextronics stock with the remaining $1.1 billion paid in cash. Additionally, Flextronics will redeem Solectron's existing debt totaling approximately $675 million. Flextronics is utilizing a $1.9 billion senior unsecured term loan which matures in 2014 to cover the cash expense of the acquisition and debt redemption. The downgrade of the subordinated notes from 'BB' to 'BB-' reflects the issuance of senior unsecured debt where previously all of Flextronics' outstanding debt was subordinated. Fitch estimates pro forma leverage (total debt/operating EBITDA) to be 2.7x and interest coverage (EBITDA/interest expense) at approximately 4.8x including the EBITDA contribution from Solectron for its latest 12 month period ended June 1, 2007. After adjusting for off-balance sheet debt and operating leases, Fitch estimates pro forma adjusted leverage (total adjusted debt/ operating EBITDAR) to be 3.8x. Pro forma for the close of the transaction, liquidity is expected to be solid with approximately $1.4 billion in cash and a fully available $2 billion senior unsecured revolving credit facility which matures in 2012. Additionally, Flextronics utilizes a $750 million accounts receivable securitization program which provides additional liquidity, of which $538 million was outstanding on June 29, 2007, for which the company received $416 million of cash proceeds with the remaining balance representing Flextronics' investment participation in the program. Total debt, pro forma for the close of the acquisition, is expected to be approximately $3.4 billion, consisting of $1.9 billion in a senior unsecured term loan B which matures in 2014, $195 million in 0% junior subordinated convertible notes which mature in 2009, $500 million in 1% convertible subordinated notes which mature in 2010, $400 million in 6.5% senior subordinated notes which mature in 2013, and $400 million in 6.25% senior subordinated notes which mature in 2014. In addition to the $416 million in cash proceeds from outstanding receivables under Flextronics' $750 million accounts receivable securitization facility, which Fitch includes in its calculation of adjusted debt, Flextronics also utilizes one-time sales of accounts receivable which, as of June 29, 2007, represented an additional $443 million in off-balance-sheet debt. FORD MOTOR: Overall September 2007 Vehicle Sales Decline by 21% --------------------------------------------------------------- Demand continues to grow for Ford Motor Company’s all-new and redesigned crossover vehicles, even as overall sales declined in September 2007. Total September sales were 189,863, down 21% compared with a year ago. Sales to daily rental companies were down 62% and sales to individual retail customers were down 15%. Ford, Lincoln and Mercury’s all-new and redesigned crossover utility sales were up 96% in September and up 52% year-to-date -– the largest increase of any major manufacturer. “We continue to be encouraged by customers’ strong response to our new products, which we’re launching with high quality,” Mark Fields, president, The Americas, said. “Demand for our new crossovers continues to grow and contributes to our efforts to stabilize U.S. retail market share.” In September, Ford Edge sales were 11,632 and Lincoln MKX sales were 3,805. Both new crossovers achieved their highest retail sales month to date. The Edge and Lincoln MKX were introduced in December 2006 and already are among the best sellers in the mid- size and premium CUV segments. Sales for the redesigned 2008 model Ford Escape and Mercury Mariner crossovers were higher in September. Escape sales were 11,132, up 10%, and Mariner sales were 2,699, up 4%. The Lincoln brand posted its 12th month in a row of higher retail sales. In September, total Lincoln sales were up 33% (retail up 40%). Year-to-date, total Lincoln sales were up 15% (retail up 17%). Lincoln’s rebound reflects the new Lincoln MKX crossover, the new Lincoln MKZ sedan (up 25% in September) and the redesigned Navigator (up 38% in September). “We’re building a strong foundation for future growth at Lincoln,” Mr. Fields said. “This is the early phase of an aggressive plan to restore Lincoln as America’s choice for luxury vehicles.” Land Rover’s September sales were 4,190, up 21%, reflecting the addition of the all-new LR2 crossover. Land Rover sales were up 8% year-to-date. About Ford Motor 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. FREESTAR TECHNOLOGY: Auditor Raises Going Concern Doubt ------------------------------------------------------- New York-based RBSM LLP raised substantial doubt about FreeStar Technology Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended June 30, 2007. The auditor said the company is experiencing difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. Name Change On July 10, 2007, FreeStar Technology's board of directors approved a proposed amendment to the company's Articles of Incorporation to change its name to Rahaxi, Inc. The board has recommended that the company shareholders adopt the name change amendment. It also directed the company to take appropriate action to obtain shareholder approval of the name change amendment. "Though our Finnish subsidiary, Rahaxi Processing Oy, we believe that 'Rahaxi' has a valuable, established brand name in our core markets in the Scandanavian region. We believe that in this region, Rahaxi conveys quality, innovation and reliability to our customers," Freestar Technology President and CEO Paul Egan said. "We believe that the Rahaxi brand is a valuable asset, and that by changing FreeStar\u2019s name to Rahaxi, we can maximize the goodwill associated with Rahaxi and uniformly brand our products in our other markets," Mr. Egan added. Financials For the year ended June 30, 2007, the company reported a $16,305,197 net loss on $3,780,335 of total revenues, as compared with a $13,999,773 net loss on $2,097,749 of total revenues for the year ended June 30, 2006. At June 30, 2007, FreeStar Technology's balance sheet showed $8,617,035 in total assets, $2,949,518 in total liabilities, $184,008 in minority interest, and $5,667,517 in total stockholders' equity. The company's balance sheet at June 30, 2007, showed strained liquidity with $2,466,845 in total current assets available to pay $2,765,510 in total current liabilities. Acquisition of Project Life Cycle Partners On Nov. 21, 2006, the company has acquired 50% of the outstanding capital stock of Project Life Cycle Partners, Ltd., a technology- consulting firm located in Dublin, Ireland. PLC Partners is a niche project consulting firm specializing in the management and implementation of information systems projects. PLC Partners has international experience within the financial services sector. Total consideration for the transaction was $1,000,000, consisting of $200,000 cash and 2,222,222 shares of the company's common stock, valued at $0.36 per share based upon a 30-day average closing price per share. The company also assumed 50%, or approximately $132,000, of PLC's liabilities at the date of acquisition. The company may be required to issue additional shares, capped at a maximum of an additional 50%, if, on the one- year anniversary of the acquisition, the 30-day average closing price per share of the company's stock is less than $0.36. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?23f5 FreeStar Technology Corp. (OTCBB: FSRT) -- http://www.freestartech.com/and http://www.rahaxi.com/-- provides electronic payment processing services, including credit and debit card transaction processing, point-of-sale related software applications and other value-added services. The company, which was incorporated in Nevada, has principal offices in Dublin, Ireland. The company also has offices in Helsinki, Finland; Stockholm, Sweden; Geneva, Switzerland; and Santo Domingo, the Dominican Republic. GALLETTA REALTY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Galletta Realty-Vineland, LLC 427 West Landis Avenue Vineland, NJ 08360 Bankruptcy Case No.: 07-24244 Chapter 11 Petition Date: October 2, 2007 Court: District of New Jersey (Camden) Debtor's Counsel: Joseph McCormick, Jr., Esq. Weinberg & McCormick, P.A. 109 Haddon Avenue Haddonfield, NJ 08033 Tel: (856) 795-1600 Fax: (856) 795-9469 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor does not have any creditors who are not insiders. GAP INC: Reports $0.08 Per Share Dividend Payable on Oct. 30 ------------------------------------------------------------ Gap Inc.'s board of directors voted a quarterly dividend of $0.08 per share payable on Oct. 30, 2007 to shareholders of record at the close of business on Oct. 16, 2007. Gap Inc. (NYSE: GPS) -- http://www.gapinc.com/-- is an international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy, Forth & Towne and Piperlime brand names. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Ireland and Japan. In addition, Gap Inc. is expanding its international presence with franchise agreements for Gap and Banana Republic inSoutheast Asia and the Middle East. * * * The company continues to carry Fitch's BB+ Issuer Default Rating. The company also carries Standard & Poor's Ratings Services' BB+ corporate credit rating. GENERAL MOTORS: September 2007 Deliveries Up 4% ----------------------------------------------- General Motors Corp. dealers in the United States delivered 337,640 vehicles in September, up 4% compared with a year ago. The company's 255,274 retail deliveries were up more than 7%. For the second consecutive month GM bucked industry trends, led by brisk retail sales of full-size trucks, mid-utility crossovers, the Cadillac CTS and Chevrolet Cobalt. "Our market share performance of more than 25% over the last quarter demonstrates strong consumer acceptance of our new products and the continued progress we've made in our North America turnaround strategy," Mark LaNeve, GM North America vice president, Vehicle Sales, Service and Marketing, said. "Our industry-leading truck lineup continued its strong performance, and we were particularly pleased by our performance in passenger cars, led by the fuel-efficient Chevy Cobalt and all-new Cadillac CTS. The CTS had its best-ever September performance with more than 5,400 vehicles sold, a testament to the power of the all-new model." The company continues transforming its North American business with overall incentive spending flat compared with a year ago. September inventories were down about 100,000 vehicles to approximately 900,000 vehicles. Fleet deliveries were down, as planned, by more than 6%. "Our retail share, which has been stable for two years, improved in Q3 with all three months solid from a share standpoint," Mr. LaNeve added. "For the second consecutive month, we posted good retail volume despite a challenging industry. To build on that retail strength, we're gearing up for the all-new Chevrolet Malibu launch later this month and are encouraging folks to try our pickups and SUVs as part of the Truck Month sales event." Cadillac CTS total sales surged ahead 74%, compared with year-ago performance, due to the strength of the all-new CTS, now in showrooms. GMC Acadia, Saturn OUTLOOK and Buick Enclave together had total sales of nearly 13,000 vehicles, pushing the significant increase in GM's mid-crossover segment. Total sales of the fuel- efficient Cobalt were up more than 35% compared with last September. Other vehicles with retail sales increases, compared with year-ago levels, include: Chevrolet Aveo, Impala, Silverado, Tahoe, Suburban, HHR and Equinox; Saturn AURA and VUE; GMC Sierra, Yukon and Yukon XL; Cadillac Escalade; Pontiac G5, G6 and Torrent; Buick Lucerne and Saab 9-3. An increasing number of consumers cite warranty coverage as a reason for buying a new GM vehicle. GM's 5 Year/100,000 Mile Powertrain Limited Warranty continues to be a better choice for customers. GM's coverage focuses on the complete ownership experience and includes other provisions that competitors do not offer, including transferability to the next owner, more complete coverage of parts, and coverage for new and certified used vehicles. In addition, GM offers superior complementary programs, such as courtesy transportation and roadside assistance. "GM provides the best coverage in the industry and takes care of the vehicle and the owner like no other vehicle manufacturer," Mr. LaNeve added. Certified Used Vehicles September 2007 sales for all certified GM brands, including GM Certified Used Vehicles, Cadillac Certified Pre-Owned Vehicles, Saturn Certified Pre-Owned Vehicles, Saab Certified Pre-Owned Vehicles, and HUMMER Certified Pre-Owned Vehicles, were 41,118 vehicles, down 10.5% from last September. Total year-to-date certified GM sales are 402,191 vehicles, up 2% from the same period last year. GM Certified Used Vehicles, the industry's top-selling manufacturer-certified used vehicle brand, posted 36,206 sales, down 9% from last September. There was one less selling day than last September. Year-to-date sales for GM Certified Used Vehicles are 353,600 vehicles, up 4% from the same period in 2006. Cadillac Certified Pre-Owned Vehicles posted September sales of 3,038 vehicles, down 20% from last September. Saturn Certified Pre-Owned Vehicles sold 1,173 vehicles in September, down 21%. Saab Certified Pre-Owned Vehicles sold 564 vehicles, down 26%, and HUMMER Certified Pre-Owned Vehicles sold 137 vehicles, up 22%. "Through September, GM Certified Used Vehicles continues to lead the manufacturer-certified category, with year-to-date sales up 4% from last year's industry-leading annual sales results," Mr. LaNeve said. "GM Certified customers enjoy the certified segment's broadest selection of vehicles from the largest dealer network, backed by a fully transferable 5-year/100,000-mile powertrain limited warranty, the best coverage of any full-line automaker." GM North America September and 3rd Quarter 2007 Production In September, GM North America produced 323,000 vehicles (118,000 cars and 205,000 trucks). This is down 64,000 units or 16% compared with September 2006 when the region produced 387,000 vehicles (161,000 cars and 226,000 trucks). Production totals include joint venture production of 15,000 vehicles in September 2007 and 22,000 vehicles in September 2006. GM North America built 1.020 million vehicles (367,000 cars and 653,000 trucks) in the third-quarter of 2007. This is down 30,000 vehicles or 3% compared with third-quarter of 2006 when the region produced 1.050 million vehicles (417,000 cars and 633,000 trucks). The third-quarter 2007 production decline versus last month's guidance is largely due to the recent UAW work stoppage in the U.S. Additionally, GM North America's 2007 fourth-quarter production forecast is unchanged at 1 million vehicles (334,000 cars and 666,000 trucks). In the fourth-quarter of 2006 the region produced 1.107 million vehicles (446,000 cars and 661,000 trucks). 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. * * * As reported in the Troubled Company Reporter on Sept. 28, 2007, Fitch Ratings has affirmed and removed the Issuer Default Rating and debt ratings of General Motors from Rating Watch Negative following the announcement that GM has reached an agreement on a new contract with the United Auto Workers. Fitch currently rates GM as: IDR 'B'; Senior secured 'BB/RR1'; and Senior unsecured 'B- /RR5'. GM's Rating Outlook is Negative. As reported in Troubled Company Reporter on Sept. 26, 2007, 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. Following the decision of the United Auto Workers union to go out on strike against General Motors Corp., Fitch Ratings placed General Motors Corporation's 'B' issuer default rating, 'BB/RR1' senior secured debt rating; and 'B-/RR5' senior unsecured debt rating on Rating Watch Negative. H&K INVESTMENT: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: H&K Investment Holdings, LLC dba Braddock's Tavern 39 South Main Street Medford, NJ 08055 Bankruptcy Case No.: 07-24209 Chapter 11 Petition Date: October 2, 2007 Court: District of New Jersey (Trenton) Debtor's Counsel: Ira Deiches, Esq. Deiches & Ferschmann, P.C. 25 Wilkins Avenue Haddonfield, NJ 08033 Tel: (856) 428-9696 Fax: (856) 795-6983 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. HARBORVIEW MORTGAGE: Fitch Rates $11.5 Million Certs. at BB+ ------------------------------------------------------------ Fitch has rated Harborview Mortgage Loan Trust mortgage pass- through certificates, series 2007-7 as: -- $1.43 billion classes 1A-1A, 2A-1A, 2A-1B, 2A-1C (senior certificates) 'AAA'; -- $34.5 million class B-1 'AA+'; -- $51.8 million class B-2 'AA+'; -- $18.1 million class B-3 'AA'; -- $17.3 million class B-4 'AA-'; -- $15.6 million class B-5 'A+'; -- $12.3 million class B-6 'A'; -- $8.2 million class B-7 'BBB+'; -- $10.7 million class B-8 'BBB-'; -- $11.5 million class B-9 (privately offered) 'BB+'. The 'AAA' rating on the senior certificates reflects the 12.95% subordination provided by the 2.10% class B-1, the 3.15% class B- 2, the 1.10% class B-3, the 1.05% class B-4, the 0.95% class B-5, the 0.75% class B-6, the 0.50% class B-7, the 0.65% class B-8, and the privately-offered 0.70% class B-9, as well as the 2.00% initial and target overcollateralization. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the master servicing capabilities of Wells Fargo Bank, N.A. rated 'RMS1' by Fitch. The certificates represent an ownership interest in a group hybrid adjustable rate, first lien residential mortgage loans originated by Downey Savings and Loan Association, F.A. (26.18%), Flagstar Capital Markets (16.53%), GMAC Mortgage, LLC (12.06%), American Home Mortgage Corp. (11.76%) and other originators (33.47%) totaling $1,597,071,439 as of the cut-off date, Sept. 1, 2007. Approximately 78.37% of the initial mortgage loans in the trust fund provide for negative amortization. The mortgage pool, as of the cut-off date, demonstrates a weighted average mortgage rate of 7.444%. The pool has a weighted average original loan-to-value ratio of 74.99% and a weighted average combined loan-to-value ratio of 78.52%. The weighted average FICO credit score is approximately 715. Cash-out refinance loans represent 50.40% of the mortgage pool and second homes represent 3.48%. The average loan balance is $358,892. The state that represents the largest portion of mortgage loans is California (53.00%). On the closing date, the seller will deposit approximately $46,298,444, which represents 2.82% of the total asset pool and 2.90% of the total principal balance of the offered certificates, into a segregated account maintained with the securities administrator. The issuing entity will use these funds to purchase subsequent mortgage loans from the depositor after the closing date and before December 28, 2007. The certificates are issued pursuant to a pooling and servicing agreement dated September 1, 2007 among Greenwich Capital Acceptance, Inc. as depositor, Greenwich Capital Financial Products, Inc. as seller, Deutsche Bank National Trust Company as trustee, and Clayton Fixed Income Services Inc. as Credit Risk Manager. For federal income tax purposes, elections will be made to treat the trust as separate multiple real estate mortgage investment conduits (REMICs). HD SUPPLY: High Leverage Cues S&P's B Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Atlanta, Georgia-based HD Supply Inc. At the same time, S&P assigned its 'BB-' ratings and '1' recovery ratings (indicating S&P's expectation for very high (90%-100%) recovery in the event of a payment default) to HD Supply's $2.1 billion asset-based loan credit facility and $300 million senior secured revolving credit facility, S&P's 'BBB+' rating to HD Supply's $1 billion senior secured term loan (fully and unconditionally guaranteed by The Home Depot Inc. (BBB+/Stable/A- 2)), and S&P's 'CCC+' rating to HD Supply's $2.5 billion senior unsecured notes and $1.3 billion senior subordinated payment-in- kind (PIK) notes. The outlook is stable. HD Supply is Home Depot's wholesale construction materials distribution business. Home Depot sold the business to a consortium of private investors for a total consideration of $8.5 billion, including $6.1 billion of funded debt at the close of the sale. "The ratings on HD Supply reflect high financial leverage and pressure on operating performance stemming from the severe, and potentially protracted, downturn in U.S. residential construction activity," said Standard & Poor's credit analyst Joshua Davis. "Partially offsetting these factors are some business-level diversity, leading market positions, and operational scale, as well as some financial flexibility to weather the housing downturn ." However, uncertainty about the ultimate depth and duration of the housing downturn increases uncertainty regarding HD Supply's near- to intermediate-term operating performance and financial leverage levels. The stable outlook reflects the expectation that EBITDA interest coverage and lack of near-term debt maturities are sufficient to offset significant uncertainty about operating profitability and cash flow over the next one to two years. Considerable deterioration in profitability and cash flow generation resulting in material declines in EBITDA interest coverage and increases in financial leverage could result in a revision in outlook to negative and/or a reduction in the rating. By contrast, success in reducing debt with free cash flow, coupled with gradual improvements in operations stemming from recovery in business conditions, could result in a positive outlook. HOLLY MARINE: Judge Sonderby Approves Bell Boyd as Panel's Counsel ------------------------------------------------------------------ The Honorable Susan Pierson Sonderby of the U.S. Bankruptcy Court for the Northern District of Illinois gave the Official Committee of Unsecured Creditors of Holly Marine Towing Inc.'s bankruptcy case, permission to employ Bell Boyd & Lloyd LLP as its counsel. Bell Boyd is expected to: a. advise the Committee on all legal issues as they arise; b. represent and advise the Committee regarding the terms of any sales of assets or plans of reorganization of liquidation, and assist the Committee in negotiations with the Debtor and others parties; c. investigate the Debtor's assets and prebankruptcy conduct; d. prepare, on behalf of the Committee, all necessary pleadings, reports, and other papers; e. represent and advise the Committee in all proceedings in this case; f. assist and advise the Committee in its administration; and g. provide other services as are customarily provided by counsel to a creditors' committee in cases of this kind. The firm's professionals billing rates are: Professioanls Designations Hourly Rates ------------- ------------ ------------ Harley J. Goldstein, Esq. Partner $475 James E. Morgan, Esq. Partner $475 Sven T. Nylen, Esq. Associate $275 Joseph B. DiRago, Esq. Associate $250 Designations Hourly Rates ------------ ------------ Senior Partners $650 New Associates $230 Legal Assistants $140 - $225 To the best of the Committee's knowledge the firm does not hold any interest adverse to the Debtor's estate and is a “disinterested person” as defined in Section 101(14) of the Bankrutcy Code. Headquartered in Chicago, Illinois, Holly Marine Towing Inc. provides towing and tugboat services. The company filed for Chapter 11 protection on Jan. 8, 2007 (Bankr. N.D. Il. Case No. 07-00266). Paul M. Bauch, Esq., at Bauch & Michaels LLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. HOMEBANC CORP: Taps MountainView Servicing as Broker ---------------------------------------------------- HomeBanc Mortgage Corporation and its debtor-affiliates seek permission from the United States Bankruptcy Court for the District of Delaware to employ MountainView Servicing Group, LLC, as providers of investment banking services, nunc pro tunc to Aug. 9, 2007, pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code, The Debtors tell the Court that they have been advised that MountainView employs professionals who have knowledge and experience of investment banking issues, specifically those related to the valuation and sale of mortgages servicing rights. Since the sale of the Debtors' portfolio is a complicated and time consuming process and requires the employment of professionals, MountainView qualifies as investment banking services provider. As of its bankruptcy filing, the Debtors serviced approximately 48,300 loans with an aggregate principal amount of approximately $8,800,000,000. The Debtors continue to conduct the servicing business, which constitutes a valuable asset of their estates. The Debtors, however, have obtained the Court's approval to implement an expedient bidding and auctions procedure for a sale of their servicing business. MountainView will provide these services in order to maximize the price of the Debtors' mortgage servicing portfolio: (i) Construction of a servicing sales offering to be distributed to qualified buyers; (ii) Distribution of the servicing offering along with loan level data and pricing models to qualified buyers; (iii) Coordinating due diligence requests; (iv) Review of all bids (pricing and terms and conditions) with appropriate parties; (v) Negotiation of pricing terms and conditions; and (vi) Discussion of due diligence findings and negotiation of purchase and sale agreement. Pursuant to a Brokerage Agreement signed with the Debtors, MountainView's brokerage fee will be calculated according to the ultimate purchase price of the portfolio: (a) If HomeBanc sells the portfolio for less than 72 basis points ($63,360,000), MountainView will be paid one half basis point (.005%), or $440,000 ($8,800,000,000 X .005%); (b) If HomeBanc sells the portfolio for a minimum of 72 basis points ($66,360,000) but less than or equal to 75 basis points ($66,000,000) then MountainView shall receive five eighths of one basis point (.00625%), or $550,000; (c) If HomeBanc sells the portfolio at a price greater than 75 basis points ($66,000,000) but less than or equal to 81 basis points ($71,280,000), then MountainView will be paid three quarters of one basis point (.0075%), or $660,000; and (d) If HomeBanc sells the portfolio for more than 81 basis points ($71,280,000), then MountainView will be paid one basis point (.01%), or $880,000. The calculated fees will be a minimum of $50,000 and will increase depending on the ultimate purchase price of the portfolio. MountainView will have the exclusive right to market the Debtors' servicing business for 90 days. The Debtors will reimburse MountainView for other charges, including expense reimbursements, photocopy services and the like. The Debtors submit that MountainView does not hold any disqualifying interest adverse to the Debtors in matters upon which the firm is to be engaged for Debtors. 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. 7; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). HOMEBANC CORP: Court Approves Ernst & Young As Tax Advisor ---------------------------------------------------------- The United States Bankrutptcy Court for the District of Delaware gave HomeBanc Mortgage Corporation and its debtor-affiliates, permission to employ Ernst & Young LLP, as their providers of tax advisory and compliance services. Ernst & Young has worked for certain Debtors since 2000 providing tax advisory and compliance services to the Debtors. The Debtors' tax returns are due to be filed on September 15 and, immediately before the Petition Date, the firm was working diligently to prepare the required returns, Joel A. Waite, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, informs the Court. Maintaining the services of Ernst & Young in connection with the Debtors' Chapter 11 cases is essential in order to get the tax returns filed, and the services of the firm are important for the Debtors in their reorganizational efforts, he says. Ernst & Young is expected to provide the Debtors with various tax advisory and compliance services, among others: -- assist and advise with the identification and resolution of tax issues that will arise during the course of the bankruptcy; -- assist and advise Debtors in developing an understanding of the tax implications of its restructuring or reorganization alternatives, including evaluating the tax impacts that may result from a change in the equity, capitalization or ownership of the shares of the Debtors or assets, and as needed, research of analysis of the Internal Revenue Code sections, treasury regulations, case law and other relevant tax authority; -- tax advice regarding availability, limitations, preservation and enhancement of tax attributes, and reduction of tax costs in connection with stock or asset sales, if any; -- assist with tax issues and transactional issues, or assisting Debtors in connection with their dealings with tax authorities; -- tax advice regarding the validity of tax claims in order to determine if the tax amount claimed correctly reflects the true tax liability pursuant to applicable law; -- assist and advise with respect to open or potential tax refund claims and including support to assist in securing tax refunds; and -- analyzes of legal and other professional fees incurred for purposes of determining the future deductibility of costs for purposes of United States federal, state and local income taxes. The Debtors will pay Ernst & Young its standard hourly rates, and other charges, including expense reimbursements. The hourly rates of the professionals are: Designations Hourly Rates ------------ ------------ Partners, Principals and Directors $700 Senior Managers $510 Managers $450 Seniors $280 Staff $190 Jeffrey Travis, a partner at Ernst & Young, disclosed that the firm provided litigation support services to certain parties-in- interest in unrelated litigation matters. One of the parties is Alston & Bird, the Debtors' counsel in their Chapter 11 cases. The other parties are Millbank, Tweed, Hadley & McCloy LLP; PriceWaterhouseCoopers; U.S. Bank, N.A.; and Wells Fargo Bank, N.A. Mr. Travis assured the Court that the firm does not hold or represent any interest materially adverse to the Debtors in the matters for which Ernst & Young is proposed to be retained. As of Aug. 31, 2007, the Debtors owed $106,531 to the firm in respect of services provided by Ernst & Young both prior to and following the Petition date -- $59,579 for prepetition services and $46,952 for postpetition services. Upon approval of the firm's retention in the Debtors' cases, Ernst & Young will waive its right to receive any fees incurred on the Debtors' behalf before the Petition Date, Mr. Travis tells the Court. 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. 7; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). INGE BONGO: Case Summary & 13 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Inge Alia Bongo 710 Kingman Avenue Santa Monica, CA 90402 Bankruptcy Case No.: 07-18682 Chapter 11 Petition Date: October 1, 2007 Court: Central District Of California Judge: Vincent P. Zurzolo Debtor's Counsel: Thomas B. Ure, Esq. Ure, Ranieri & Associates 800 Wilshire Boulevard, Suite 1050 Los Angeles, CA 90017 Tel: (213) 202-6070 Fax: (213) 202-6075 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's list of its 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Household $10,817 c/o Arrow Financial 5996 West Touhy Avenue Niles, IL 60714 Cap One Bank $13,119 PO Box 85015 Richmond, VA 23285 WF Fin Ban $3,119 3201 North 4th Avenue Sioux Falls, SD 541018901009 Nordstorm $3,054 Citi $1,057 Glove Carpet $985 DS Waters of North America $389 St. Johns Emergency Medicine $353 Tower Imaging Medical Group $239 Comcast $165 Pimex lab $163 St. Johns Emergency Medicine $154 Automobile Club of South California $53 INTERSTATE BAKERIES: Lenders Reduce DIP Commitment by $10 Mil. -------------------------------------------------------------- Interstate Bakeries Corporation on Monday entered into a First Amendment to its $200,000,000 Amended and Restated Revolving Credit Agreement, dated as of Feb. 16, 2007, with JPMorgan Chase Bank, N.A., and a syndicate of other commercial banks, finance companies, insurance companies and other financial institutions. JPMorgan acts as administrative agent and collateral agent for the Lenders. The parties revised the DIP Agreement to change the borrowing base formula, which, in effect, reduces the amount available to the Borrowers by $10 million. However, the parties agreed that the $10 million reduction will be restored upon: -- the entry of a final order by the Bankruptcy Court approving a disclosure statement filed by the Borrowers with respect to a plan of reorganization that provides for repayment in full of the Borrowers' obligations under the DIP Agreement; and -- receipt by the Borrowers of a binding commitment for exit financing necessary to consummate the plan. The Borrowers are required to deliver to JPMorgan and the DIP Lenders, on or before Dec. 1, 2007, a revised plan if the Borrowers fail to reach an agreement in principle with both the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and the International Brotherhood of Teamsters. The DIP Lenders require the plan to detail the Borrowers' proposed strategy for maximizing the value of their estates, including, without limitation, through a sale of the Borrowers or their assets in their entirety, or in a series of transactions, and cash flows resulting from those transactions. The DIP Lenders require any modifications to the Borrowers' existing collective bargaining agreements with the unions must provide for union alignment to a more capable and more cost- effective path-to-market, certain health and welfare concessions, and increased work rule flexibility. The parties also agreed to change the cash restructuring covenant to allow the Borrowers to incur cash restructuring charges not exceeding $23 million. The parties agreed that the amount is sufficient to provide for the estimated cash restructuring charges incurred in connection with the consolidation of the Borrowers' Southern California bakery operations. The Debtors paid $500,000 (1/4 of 1% of $200 million) for the DIP Loan Amendment. The DIP lending consortium consists of: * JPMorgan Chase Bank, N.A., as lender and agent; * Nationwide Life Insurance Company; * The Foothill Group, Inc.; * Prospect Harbor Credit Partners, LP; * Sankaty High Yield Partners II L.P.; * Blackport Capital Fund Ltd.; * Capital Source Finance LLC; * Canadian Imperial Bank of Commerce; * Grand Central Asset Trust, BDC Series; * DK Acquisition Partners, L.P.; * Spiret IV Loan Trust 2003-B; * Highland Floating Rate Advantage Fund; * Highland Floating Rate Limited Liability Company; * General Electric Capital Corporation; and * SPCP Group, L.L.C. A full-text copy of the First Amendment to the DIP Credit Facility is available at no charge at: http://ResearchArchives.com/t/s?2406 Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh-baked bread and sweet goods, under various national brand names, including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and Drake's(R). Currently, IBC employs more than 25,000 people and operates 45 bakeries, as well as approximately 800 distribution centers and approximately 800 bakery outlets throughout the country. The company and seven of its debtor-affiliates filed for chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No. 04- 45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6% senior subordinated convertible notes due Aug. 15, 2014) in total debts. The Debtors' exclusive period to file a chapter 11 plan has recently been extended to Nov. 8, 2007. (Interstate Bakeries Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). INTERSTATE BAKERIES: Court Defers Plan-Filing Deadline to Nov. 8 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri extended Interstate Bakeries Corporation and its debtor- affiliates' exclusive period, until Nov. 8, 2007, to file a plan of reorganization and, until Jan. 7, 2007, to solicit acceptances and to exit the bread market in Southern California by Oct. 20, 2007, as planned. The Court will convene a hearing to consider further extension of the Exclusive Periods on Nov. 7, 2007. As the company indicated in its exclusivity motion and arguments to the Court, it still believes that IBC's best alternative for maximizing value for all of its stakeholders is to emerge from bankruptcy as a stand-alone company. However, to meet its fiduciary responsibility to all of its constituents, the company has determined it necessary to use this 30-day period to pursue all other alternatives for maximizing the value of its bankruptcy estates, including a potential sale of the company in its entirety or in a series of transactions. The company said it was disappointed that, to date, it has been unable to reach alignment with the International Brotherhood of Teamsters on its business plan. "We continue to believe the best alternative for saving 25,000 IBC jobs and meeting our fiduciary responsibility for maximizing recovery for our creditors is to reach a mutually acceptable agreement with the Teamsters that enables rational financing to fund our business plan," Chief Executive Officer Craig Jung said. "However, time is running out. Our current debtor-in-possession financing agreement expires on Feb. 9, 2008. Bottom line, if the Teamsters want to help save our company and its members' jobs, they need to move quickly." As reported in the Troubled Company Reporter on Oct. 1, 2007, IBC reached an agreement with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union leadership on Sept. 28, 2007. The agreement is currently being voted on for ratification by the local unions across the country. "The management team and I regret that we have not achieved the changes we needed with the Teamsters that would allow IBC to emerge as a stand-alone company prior to today's hearing,” Mr. Jung said. "While we negotiated hard to win critical modifications to our collective bargaining agreements that would have created sustainable competitive advantage and, at the same time, provided good jobs at good pay to our employees, our focus now must be on maximizing value of the bankruptcy estate, recognizing that other alternatives may not protect our employees' jobs or benefits," Mr. Jung said. Mr. Jung added that IBC was committed to putting in place a broad process to evaluate all available alternatives while day-to-day business activities continue. He emphasized that throughout this process normal operations will continue uninterrupted in order to protect the value of the company, its assets and brands during the bankruptcy, and reiterated that the company stands ready to negotiate a mutually acceptable agreement with the Teamsters. Parties Balk at Excl. Period Extension Plea JPMorgan Chase Bank, N.A. and the Official Committee of Unsecured Creditors of the Debtors had asked the Court to limit any extension of the Debtors' exclusive periods to file and solicit acceptances of a Chapter 11 plan. Lisa A. Epps, Esq., at Spencer, Fane, Britt & Browne, LLP, in Kansas City Missouri, on behalf of JPMorgan, told the Court that the Debtors' request for an extension of exclusivity to finalize any real, viable plan funding proposals, or if all else fails, develop a comprehensive plan to sell their businesses, should not go beyond Oct. 31, 2007. JPMorgan serves as agent for the prepetition secured lenders under an April 2002 Amended and Restated Credit Agreement among Interstate Bakeries Corporation and Interstate Brands Corporation as borrowers. The Debtors' obligations under the prepetition credit agreement currently total $539.6 million, plus $30 million of unpaid default rate interest. "October 31 is as late as that can be, and all will be served if a strategy has been made before that day arrives," Ms. Epps said. The prepetition lenders have accommodated the Debtors in their efforts to reorganize their businesses, and in doing so have allowed the Debtors and all the junior constituencies -- unsecured creditors and equity holders -- more than ample time to develop a viable business plan, find suitable debt and equity financing to fund the business plan and confirm a chapter 11 plan, Ms. Epps informed the Court. Ms. Epps contended that the Debtors continue to operate with negative cash flow as they have for the past three years, and there are neither sufficient non-core assets to liquidate nor enough surplus working capital to support a bleeding business. The prepetition lenders' interests have become precarious; further deterioration and consumption of the secured lenders' collateral would compromise the adequate protection of those interests and require affirmative remedial relief, Ms. Epps added. "[T]he Debtors need to stop chasing the ghosts of unfinanced plan alternatives and focus on what is real. It is past time for the Debtors to adopt a rational sense of value -- based on concrete proposals," Ms. Epps said. Ms. Epps added that the Prepetition Lender Steering Committee will actively oppose a plan predicated on an equity commitment that is contingent on exit financing, hence it would be irresponsible for the Debtors to move forward on that basis as it raises the likelihood that the Prepetition Lenders' claims will be impaired. The Prepetition Lender Steering Committee is comprised of JPMorgan, McDonnell Investments, The Quadrangle Group and Silver Point Capital. The Prepetition Lender Steering Committee collectively represents not less than 42% of the Prepetition Credit Agreement obligations. The Creditors Committee, on the other hand, has been involved in ongoing discussions with the Debtors concerning the parameters, terms, and progress of the Debtors' proposed process to solicit exit financing and an equity infusion from third parties to assist the Debtors in funding their business plan. Despite the parties' ongoing discussions, the Debtors have precluded the Creditors Committee from engaging in any discussions with potential investors, Scott Cargill Esq., at Lowenstein Sandler, PC, in Roseland, New Jersey, told the Court on behalf of the Committee. Notwithstanding repeated requests by the Creditors Committee, the Debtors have refused to solicit interest from potential strategic investors, Mr. Cargill added. The Creditors Committee understands that the Debtors intended to conclude the Solicitation Process on a timetable that will permit the Debtors to confirm and effectuate a chapter 11 plan prior to the Feb. 9, 2008, the maturity date of the Debtors' post-petition financing facility with the Debtors' DIP lenders, Mr. Cargill explained. The timeline imposed by the DIP lenders gives the Debtors approximately 120 days to: (a) reach agreements with all necessary constituents, including the labor unions, to allow for the implementation of the business plan; (b) identify, negotiate, and secure approval of a bid from an investor to provide the necessary funding; (c) propose and confirm a plan of reorganization; and (d) implement the plan. If the Debtors are unable to achieve any one of the four requirements in the next four months, the Debtors will be forced to consider and act upon other alternatives, the most likely of which maybe a rushed sale of the Debtors' businesses. According to Mr. Cargill, any further extension of the Debtors' exclusivity periods must be conditioned upon the Debtors' immediate solicitation of Strategic Investors to ensure that all possible plan alternatives are fully explored. In a short time frame, the Debtors must be required to solicit interest from both financial investors and strategic investors who may be interested in purchasing all or parts of the Debtors' business, Mr. Cargill says. The Debtors have spent months in an effort to attract a financial investor, but the Debtors have failed to solicit strategic investors despite the Creditors Committee's repeated requests dating back to June 2007, Mr. Cargill explains. He adds that that the Debtors will include strategic investors in the Solicitation Process only after they have identified a financial investor. "Unless the Debtors immediately include Strategic Investors in the Solicitation Process, the Debtors will virtually ensure that Strategic Investors will not have any meaningful opportunity to become involved in the Solicitation Process, perform due diligence, and propose a transaction that will lead to a feasible plan," Mr. Cargill says. In addition, the Debtors must be directed to exclude the Communication Restriction from all future Confidentiality Agreements, Mr. Cargill says. The Debtors have required potential investors interested in the Solicitation Process to execute a confidentiality agreement. The agreement currently contains a provision that forbids a potential investor from having any discussions with any third parties, including the Creditors Committee and its advisors, about information concerning the Debtors. The Creditors Committee represents one of the largest constituents in the Debtors' cases, and potential investors should not be prohibited from communicating with the Committee, Mr. Cargill argues. "The elimination of the Communication Restriction as it relates to the Committee will have no detrimental effect on the Solicitation Process. On the other hand, allowing the Committee to engage in communications with potential investors will promote the fundamental goal of creditor participation in the plan formation process," Mr. Cargill tells the Court. Teamsters Objects The Teamsters had also asked the Court to deny the Debtors' request to extend exclusive periods. "Because the [Debtors have] an exclusive privilege of [six] months during which others may not file a plan, a court's decision to grant an extension should be based on a showing of some promise of probable success [for reorganization]," Frederick Perillo, Esq., at Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, s.c., in Milwaukee, Wisconsin, argued on behalf of the International Brotherhood of Teamsters. The Debtors' estimate of their chance of success is speculative, Mr. Perillo said. Mr. Perillo pointed out that the bulk of the progress the Debtors detail was completed more than a year ago. Little progress has occurred since. Furthermore, the current relationship between the Debtors and the Teamsters suggest that even less progress will occur during any future extension, Mr. Perillo told the Court. The Teamsters, which represent roughly 10,000 of the Debtors' current workforce of 25,000, related that the Debtors are single- mindedly pursuing an unobtainable business model. The new model, the union said, is marred by significant flaws: -- Management has sought over the last several months to pay itself ever increasing bonuses and generous wage packages at the same time that it seeks unprecedented concessions from its unionized workers; -- Management's new plan contemplates paying increases to non- union workers from the "savings" generated by paying union workers less; -- Management requires that all contracts be ratified no later than Sept. 30, 2007. Given that it took roughly 18 months to ratify the initial concessions, this demand, made in August 2007, is wholly unrealistic; -- Management wants to use a delivery model that has not been tested successfully by any major operator in the baking industry, union or non-union; -- Management has presented a large number of wholly non- economic proposals of no conceivable benefit to a reorganization, including waivers of the future right to bargain, requirements that Teamsters act as strikebreakers in other entities' labor disputes, elimination of successorship clauses which protect workers in the event of sale of the business, and limitations on what matters can be arbitrated under collective bargaining agreements; and -- Management wants authority to eliminate the jobs of all Teamsters in its sole discretion -- by replacing them with outside contractors, common or contract carriers, part-time employees, and by any other means. The Teamsters noted that the Debtors have been singularly inflexible in their discussions with the union, refusing to consider or rejecting out-of-hand every suggestion made by the Teamsters, and reiterating at every meeting held since June 14, 2007, that only complete, unequivocal acceptance of every term demanded by the Debtor without modification will be considered. The Teamsters also related that the Debtors have required potential investors to sign a confidentiality agreement that prohibits the investors from speaking to the labor unions or the official committee of unsecured creditors. Mr. Perillo said the Teamsters presented two major investors -- One Equity Partners, a firm affiliated with J.P. Morgan, and the Yucaipa Companies -- but neither has been considered seriously by the Debtors because both would not sign an agreement prohibiting them from speaking with the labor unions. Mr. Perillo also noted that the Debtors' announcement to close their Southern California profit center exacerbates the Debtors' delicate financial condition, and will negatively impact the value of their business in the event of a sale due to the deterioration of their national brand. Moreover, the impasse on negotiations has worried retail stores, and the Debtors' sans souci response in the press that they will simply liquidate has not given these entities -- other than the competitors -- any comfort. Extending the exclusivity period, Mr. Perillo asserted, would have a detrimental effect on creditors and other interested parties and further increase the amount of time it will ultimately take to resolve the case matter, if it can be resolved. The Debtors' assertion that their combined bankruptcy cases are large and complex no longer provides good cause to extend the exclusivity period, according to Mr. Perillo. "Like a beached whale, these large Debtors are going nowhere," Mr. Perillo said. The Debtors have no ideas but to threaten to liquidate as the alternative take-it-or leave-it offer to labor that cannot be ratified in time to satisfy their lenders, Mr. Perillo asserted. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh-baked bread and sweet goods, under various national brand names, including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and Drake's(R). Currently, IBC employs more than 25,000 people and operates 45 bakeries, as well as approximately 800 distribution centers and approximately 800 bakery outlets throughout the country. The company and seven of its debtor-affiliates filed for chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No. 04- 45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6% senior subordinated convertible notes due Aug. 15, 2014) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). IPOFA WEST OAKS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Lead Debtor: IPofA West Oaks Mall, L.P. 10800 Midlothain Turnpick, Suite 309 Richmond, VA 23235 Tel: (540) 510-3011 Bankruptcy Case No.: 07-33649 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- IPofA West Oaks LeaseCo 07-33650 IPofA WOM Master LeaseCo, L.P. 07-33651 Type of business: The Debtors own and manages real estate. Chapter 11 Petition Date: October 2, 2007 Court: Eastern District of Virginia (Richmond) Debtors' Counsel: Richard D. Scott, Esq. LeClair Ryan 1800 Wachovia Tower, Drawer 1200 Roanoke, VA 24006 Tel: (540) 777-3067 Fax: (540) 510-3050 Estimated Assets Estimated Debts ---------------- --------------- IPofA West Oaks Mall, L.P. More than $1 Million to $100 Million $100 Million IPofA West Oaks LeaseCo, $1 Million to $1 Million to L.P. $100 Million $100 Million IPofA WOM Master LeaseCo, $1 Million to $1 Million to L.P. $100 Million $100 Million The Debtors did not file lists of their 20 largest unsecured creditors. JOURNAL REGISTER: Weakening Financial Cues S&P to Cut Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on Journal Register Co. to 'B+' from 'BB-'. The ratings were removed from CreditWatch, where they were placed with negative implications on June 29, 2007. The rating outlook is negative. "The rating downgrade reflects the company's weakening financial profile, with deteriorating profitability and cash flow generation due to declining newspaper advertising revenue," said Standard & Poor's credit analyst Emile Courtney. The negative rating outlook is based on our expectation that Journal Register will continue to experience operating challenges over the near-to-intermediate term. In addition, even though the company is currently in compliance with financial covenants in its senior secured credit facility, it will likely need to obtain amendments to covenants by the March 2008 quarter, when the covenants begin to tighten. At July 1, 2007, Journal Register had about $675 million in total debt, adjusted for operating leases and debt-like unfunded pension and postretirement obligations. The rating on Journal Register reflects the Yardley, Pa.-based company's heavy debt levels, its moderate-size cash flow base, and a challenging newspaper advertising climate. The company is a newspaper publisher with 22 daily newspapers, about 346 non-daily publications, and related Internet operations. Operations are clustered in six regions-–Greater Philadelphia, Michigan, Connecticut, Greater Cleveland, and the Capital-Saratoga and Mid- Hudson regions of New York. LABRANCHE & CO: Moody's Cuts Senior Unsecured Rating to B2 ---------------------------------------------------------- Moody's Investors Service downgraded LaBranche & Co Inc.'s senior unsecured rating to B2 from B1. This concludes the rating review period commenced on June 15, 2007. The rating outlook is now stable. The review, which began following the company's decision to not take advantage of a call opportunity on its $200 million 2009 notes in May 2007, focused on evaluating what others steps, if any, the company intended to take to reduce its high debt burden. On July 9, LaBranche announced that it had initiated a review of strategic alternatives for enhancing stockholder value. It is not clear when this review will be concluded and what, if any, impact its outcome will have on the company's capital structure. Moody's believes that LaBranche's bondholders are relatively well protected by the provisions included in its debt indentures including the bondholders being entitled to full repayment of all senior indebtedness in the event of a change of control, as well proceeds from any major asset sales. LaBranche's operating performance for the first six months of 2006 has continued to deteriorate and its long-term business prospects remain uncertain, Moody's said. Although the company has been reducing expenses, earnings have continued to decline, given diminishing participation rates and profit opportunities for all specialists, including LaBranche. As a result, as of June 30, 2007, LaBranche's cash-flow leverage has increased to 7.7x, while interest coverage, excluding certain one-time costs, is thin at 1.3x, prompting today's downgrade. Although these credit metrics are weak even for the B2 rating, the rating is supported by LaBranche's well-capitalized and liquid balance sheet. What Could Move the Rating Up? Moody's sees limited prospects of upward rating potential, though substantially improved cross-cycle profitability, cash-flow generation and reduced earnings volatility would be positive for the firm's credit standing. What Could Move the Rating Down? Moody's views LaBranche's rating as relatively well-positioned. However, if interest coverage falls below 1x, and the company's cash position starts getting depleted, this would reduce the positive effect of LaBranche's well-capitalized balanced sheet. Consequently, if occurring over several quarters, this would exert negative pressure on the rating. LaBranche & Co Inc. is a holding company whose LaBranche & Co. LLC subsidiary is one of the oldest (founded in 1924) and largest specialist firms on the New York Stock Exchange. The company ranks as the NYSE's #1 specialist by share volume traded and dollar volume traded. LaBranche is also the parent of LaBranche Structured Holdings Inc., whose subsidiaries are specialists and market-makers in options, exchange-traded funds and futures. As of June 30, 2007, LaBranche reported total assets and common equity of $5.3 billion and $503 million, respectively. LAIDLAW INT'L: Loan Termination Cues Moody's to Witdraw Ratings --------------------------------------------------------------- Moody's Investors Service withdrew all of its ratings of Laidlaw International Inc. The withdrawals follow the termination of Laidlaw's senior secured credit facilities upon the closing on Oct. 1, 2007 of its sale to FirstGroup PLC (not rated). Withdrawals: Issuer: Laidlaw International Inc. -- Corporate Family Rating, Withdrawn, previously rated Ba2 -- Probability of Default Rating, Withdrawn, previously rated Ba3 -- Speculative Grade Liquidity Rating, Withdrawn, previously rated SGL-2 -- Senior Secured Bank Credit Facility, Withdrawn, previously rated Ba1, 26 - LGD2 Outlook Actions: Issuer: Laidlaw International Inc. -- Outlook, Changed To Rating Withdrawn From Stable Laidlaw International Inc., headquartered in Naperville, Illinois, has been the leading provider of outsourced school bus services in the US and Canada; and the 100% owner of Greyhound Inc., North America's largest provider of inter-city passenger bus services. Laidlaw also provides para-transit services to many U.S. municipalities through its public transit segment. LANDRY'S RESTAURANTS: Paying $0.05/Share Dividend on October 25 --------------------------------------------------------------- Landry's Restaurants Inc. has declared its cash dividend for the quarter ended Sept. 30, 2007, payable to stockholders of record Wednesday, Oct. 10, 2007. The dividend, in the amount of $0.05 per share, will be payable Thursday, Oct. 25, 2007. 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. * * * 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. LIBERTY ELECTRIC: Moody's Rates $335 Million Loans at (P)Ba3 ------------------------------------------------------------ Moody's Investors Service assigned a (P)Ba3 rating with a stable outlook to Liberty Electric Power LLC's $300 million first lien term loan and $35 million traditional working capital facility. According to Moody's analyst Aaron Freedman, "the rating reflects the borrower's moderate leverage, which is offset by a high degree of cash flow certainty for the first half of the loan term and the strength of the wholesale power market in which the facility is located." Proceeds of the first lien facilities will be used to repay existing debt of $235 million, cash fund a $13 million debt service reserve, and make a $39 million distribution to equity. The working capital facility will be available for both working capital and letters of credit. The loans are secured by a first priority interest in all the assets and capital stock of borrower. In conjunction with the current transaction, Liberty's parent, Liberty Electric PA 2 LLC is also contemplating the issuance of about $75 million of unsecured mezzanine PIK notes, the proceeds of which would be used to make an additional distribution to equity. The Ba3 rating considers these specific credit factors: 1. Highly predictable cashflows for first half of loan term, supported by a 39-month hedge for 95% of the plant's capacity and PJM's recent capacity market redesign. However, this is offset by the absence of hedging in the second half of the loan term. While the capacity market redesign is expected to help stabilize an important source of revenue after the expiration of the hedge and cashflows should be sufficient to service debt, there remains a degree of uncertainty regarding the level of capacity payments in the medium-term. 2. Moderate leverage reflected in relatively robust projected financial metrics. Due to the 100% cash sweep, about 35% of 1st lien debt is projected to repaid during the term of the hedge. 3. Debt is expected to be substantially paid down by loan maturity even if merchant period energy revenues fall somewhat below relatively optimistic projections. 4. The project is wholly exposed to a single wholesale power market. This lack of diversification is offset by the strength of the PJM East market resulting from its low reserve margins and high barriers to entry, which are forecast to result in steady improvements in dispatch rates for this efficient unit. 5. Single-asset operating risk and limited operating history are mitigated by the use of proven technology together with an outage insurance policy. 6. Increasing construction costs expected to support stable capacity pricing and high collateral valuations. 7. Current ownership and management team bring significant experience and stability to a project with a somewhat turbulent history. 8. Strong project finance lender protections, including a cash-funded debt service reserve and a 100% cash sweep. This provisional rating is based upon Moody's current understanding of the proposed terms and conditions of the transaction and is subject to our receipt and review of final documentation. Liberty is a 568 MW (winter capacity) combined-cycle gas turbine located 10 miles from downtown Philadelphia in the PJM East market. The 2x1, water-cooled facility, which utilizes GE 7FA technology and has a full-load heat rate of about 7,000 MMBtu (excluding duct burners), commenced operations in 2002. Liberty is a wholly-owned indirect subsidiary of an investment fund managed by Strategic Value Partners, which currently oversees interests in over 8,500 MW of US generation assets. LINENS 'N THINGS: Fitch Junks Issuer Default Rating --------------------------------------------------- Fitch Ratings has downgraded its ratings on Linens 'n Things, Inc. as: -- Issuer Default Rating to 'CCC' from 'B-'; -- Asset-based revolver to 'B-/RR2' from 'B+/RR2'; -- Senior secured notes to 'CCC-/RR5' from 'CCC/RR6'. The Rating Outlook is Stable. Approximately $1.35 billion of debt is affected by these actions. The downgrades reflect LIN's continued weak operating performance which has resulted in worsening credit metrics and negative cash flow generation as well as the challenging operating environment and intense competition from other specialty retailers, discounters and department stores in the home furnishings segment. As a result, the company is dependent on favorable business and market conditions to meet its financial commitments as it carries out the lengthy process of re-positioning the business. These concerns are balanced by the adequate near-term liquidity available to meet the company's capital and debt service requirements, its #2 market position in the home furnishings market and its strong brand recognition. In the past one and a half years, management has implemented a number of merchandising and marketing initiatives to turn around LIN's business. While some of the initiatives have gained traction, the company has continued to report weak operating results. In the first half of 2007, comparable store sales declined 6.3% and operating margin fell 240 basis points to -8.8% compared to the first half of 2006. Given the company's weak financial results, LIN has continued to have negative free cash flow and credit metrics have deteriorated. In the last twelve months ending June 30, 2007, total adjusted debt/EBITDAR was 9.8 times compared to 8.6x in 2006. LTM coverage, defined as EBITDAR/interest expense plus rent, decreased slightly to 0.9x from 1.0x. In addition, as a result of the company's negative LTM free cash flow generation of $111 million, LIN is using external funding, in the form of its $700 million asset-based revolving credit facility, to fund its operations. While Fitch expects LIN will have adequate near-term liquidity, mainly from the $219 million available under its credit facility as of June 30, 2007, Fitch remains concerned about the company's longer-term liquidity position. Going forward, the company's sustainability is dependent on favorable business and market conditions, which Fitch views as a concern in light of the soft demand for home furnishings as well as the lengthy process of LIN's turnaround. As a result, Fitch does not expect LIN to produce positive cash flow in the near to medium term. However, the company is currently in the second half of the first phase of a three-phase turnaround plan which Fitch expects will improve the company's operating performance over time. In addition, the company's #2 market position, strong brand recognition and enhanced product offerings should help LIN to compete. The Recovery Ratings and notching in the debt structure reflect Fitch's recovery expectations in a distressed scenario. The recovery ratings for the asset-based revolver ('RR2', reflecting expected recovery of 71%-90%) benefit from collateral of inventory, accounts receivable, cash and securities. The senior secured floating rate notes ('RR5', reflecting expected recovery of 11%-30%) are secured by equipment, intellectual property rights and other intangibles which would yield below-average recovery in a distressed case. LONG BEACH: Moody's Reviews Low-B Ratings on Four Tranches ---------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade ratings of seven and five tranches issued by Long Beach Mortgage Loan Trust in 2003 and 2004 respectively. The collateral backing each deal placed on review consists primarily of first-lien, subprime fixed and adjustable rate mortgage loans. The tranches being reviewed have experienced a decrease in available credit enhancement and the recent pace of losses in each deal has eroded overcollateralization below its targeted level. This has caused the protection available to the subordinate bonds to be diminished. Moody's review will focus on available credit enhancement, including overcollateralization, subordination, and excess spread relative to expected losses. Complete rating actions are: Issuer: Long Beach Mortgage Loan Trust 2003-2 Review for possible downgrade: -- Cl. M-4, currently Baa1; on review for possible downgrade; -- Cl. M-5, currently Baa3; on review for possible downgrade; Issuer: Long Beach Mortgage Loan Trust 2003-3 Review for possible downgrade: -- Cl. M-3, currently Baa2; on review for possible downgrade; -- Cl. M-4, currently Ba3; on review for possible downgrade; Issuer: Long Beach Mortgage Loan Trust 2003-4 Review for possible downgrade: -- Cl. M-5A, currently Baa2; on review for possible downgrade; -- Cl. M-5F, currently Baa2; on review for possible downgrade; -- Cl. M-6, currently Ba2; on review for possible downgrade; Issuer: Long Beach Mortgage Loan Trust 2004-1 Review for possible downgrade: -- Cl. M-9, currently Baa3; on review for possible downgrade; -- Cl. B, currently Ba2; on review for possible downgrade; Issuer: Long Beach Mortgage Loan Trust 2004-2 Review for possible downgrade: -- Cl. M-6, currently Baa2; on review for possible downgrade; -- Cl. M-7, currently Baa3; on review for possible downgrade; -- Cl. B, currently Ba1; on review for possible downgrade. LUMINENT MORTGAGE: Completes Asset Sale, Repays Lines of Credit --------------------------------------------------------------- Luminent Mortgage Capital Inc. has completed numerous actions in light of the changed market conditions caused by the extraordinary disruptions that have occurred in real estate and mortgage markets in recent months. Specifically, Luminent reported: -- the company has completed the sale of assets financed by its asset-backed commercial paper program, and no longer has any outstanding commercial paper liabilities under its asset-backed commercial paper program; -- Luminent repaid all of its warehouse lines of credit that were used to finance whole loan purchases, and has no balances outstanding under its warehouse lines of credit; -- Luminent has either paid in full or negotiated settlement agreements for all but less than $25 million of disputed repurchase agreement liabilities; -- the company expects to cure the events of default with respect to its convertible senior debt upon delivery of an officer's certificate to the trustee. -- the company has entered into an amended and restated definitive credit agreement with Arco Capital Corporation Ltd., providing the company with a revolving liquidity line of credit of up to $60 million to be used to stabilize existing repurchase agreements, to meet financing maturities and to provide working capital; -- Arco has also provided a limited guarantee with regard to possible future excess margin deficit payments through the remainder of 2007 to support repurchase obligations we entered into as part of clearing our commercial paper liabilities. -- the company has reduced expenses by downsizing its work force, and it plans to close its San Francisco office by Dec. 31, 2007. After signing the definitive agreement with Arco, Luminent appointed four new members to its board of directors, who will bring their substantial experience and expertise in the financial sector to the company. These are: a) Craig Cohen, co-founder of Proprietary Capital LLC and an Arco director, will serve as chairman of the board; b) Jay Johnston, chairman and CEO of Arco; c) Francesco Piovanetti, president and COO of Arco; and d) Zachary H Pashel, executive vice president and head of structured finance of The Chotin Group Corporation. They succeed Gail Seneca, who resigned as chairman of the board, and Leonard Auerbach and Donald H. Putnam, who resigned as directors. The company increased the total number of board members from eight to nine. "We at Arco are impressed with the ability of the company to navigate through the difficult events of the past months, including the precipitous decline in prime asset valuations, all while negotiating a new infusion of capital into the company,” Jay Johnston, CEO of Arco, said. “Luminent's progress speaks to the strength of CEO Trez Moore and his management team.” "As a result of their hard work, we believe that Luminent is now well-positioned to pursue the successes that characterized its prior years' performance,” Mr. Johnston continued. “We look forward to working closely with Trez and his team as part of our investment." "I believe that Luminent has made tremendous progress in the past six weeks towards stabilizing its funding sources,” Craig Cohen, the newly appointed chairman of the board, said. “In my opinion, Luminent has a world-class platform and is a premier credit risk manager in this sector. I am delighted to be joining the board as chairman." "We have taken many steps to strengthen Luminent's financial position and are pleased with our forward momentum,” Trez Moore, chief executive officer, said. “We look forward to working together with Arco to position the company for long-term growth." About Luminent Mortgage Headquartered in San Francisco, California, Luminent Mortgage Capital Inc. -- http://www.luminentcapital.com/-- (NYSE: LUM) is a real estate investment trust, or REIT. Luminent is an asset management company that invests in prime whole loans, U.S. agency and other highly-rated, single-family, adjustable-rate, hybrid adjustable-rate and fixed-rate mortgage-backed securities, which it acquires in the secondary market. Occurrence of Default As reported in the Troubled Company Reporter on Oct. 1, 2007, the company stated that it was unable to roll over approximately $168 million of commercial paper financing because liquidity in the market for commercial paper had declined. Since Aug. 7, 2007, eight of the company's repo lenders declared the company in default because the company did not post margin or repurchase the assets under various master repurchase agreements. As a result, repurchase transactions with an aggregate repurchase price of approximately $1.6 billion became immediately payable. These declarations resulted in an event of default on the company's convertible senior notes of $90 million, in respect of which these notes may be declared to be immediately due and payable. In addition, these declarations resulted in a program default on the company's commercial paper of $580 million, which has been declared to be immediately due and payable. M FABRIKANT: Files Joint Chapter 11 Plan of Liquidation ------------------------------------------------------- M. Fabrikant & Sons Inc., its debtor-affiliate, Fabrikant- Leer International Ltd., the Official Committee of Unsecured Creditors, and Wilmington Trust Company delivered to the United States Bankruptcy Court for the Southern District of New York their joint chapter 11 plan of liquidation and an accompanying disclosure statement explaining that plan. The Plan provides for the liquidation of the assets of the Debtors' estates, including the investigation and prosecution of certain causes of action, by two liquidating trusts to be formed pursuant to the Plan and related liquidating trust agreements. Plan Funding On May 29, 2007, the Debtors obtained Court authority to sell certain of their inventories to Surya Capital LLC for $10.4 million and six remaining lots of assets to Wilmington for $38.5 million. The Surya and Wilmington asset sale agreements closed on June 1, 2007, and July 12, 2007, respectively. The Debtors also obtained Court approval on July 10, 2007, to sell two life insurance policies owned by MFS for Charles Fortgang and Marjorie Fortgang. Each policy provided for a payment of $4 million to MFS upon the death of each respective insured. MFS paid annual premiums on the Charles Fortgang policy in the amount of $136,922 per year, and on the Marjorie Fortgang policy in the amount of $88,087 per year. The surrender value of each policy was zero dollars on account of surrender charges that would have to have been paid by the policy holder upon surrender of each policy. To capitalize on the policies, the Debtors hired Melville Capital, a life settlement broker, to sell the policies. Melville had estimated their value at approximately $1.3 million to $1.75 million in the aggregate. To date, no closing on the sale of the policies has taken place. At first, Charles and Marjorie Fortgang, whose lives are insured by the policies, refused to execute the necessary consents to transfer the Debtors’ interests in the policies to the prospective purchaser. After negotiations among the Debtors, Charles and Marjorie Fortgang, and the Plan Proponents, the Fortgangs agreed to sign the necessary documentation only if the proceeds from the sale of the policies are escrowed and that the Debtors, the Committee and Wilmington agree not to pursue the funds in the escrow before Sept. 15, 2007. In an effort to facilitate the sale of the policies and to avoid costly and potentially protracted litigation with the Fortgangs over the issue, the Debtors and the Plan Proponents agreed to this arrangement. Further, under the "sweep" provisions of the Court's final order on the Debtors' use of their lenders' cash collateral, Wilmington has collected numerous cash sweeps throughout the course of the Debtors' cases aggregating approximately $33,000,000. Treatment of Claims Under the Plan, holders of Administrative Ex1pense Claims, Priority Tax Claims, Professional Fee Claims, and Other Priority Claims will receive payments in full, in cash. Holders of Allowed Class 3 Claims will receive any of these alternative treatments, at the election of a shared assets trustee: a) payment in full in cash; b) unaltered legal, equitable and contractual rights to which the claim entitles the holder; c) treatment pursuant to Section 1124(2) of the Bankruptcy Code; or d) transfer and surrender of all collateral securing the Claim. Holders of Class 4 Unsecured Claims and Class 5 Unsecured Claims will receive pro rata distribution from the proceeds of any and all claims or causes of action of the Debtors, the estates, or the Committee, against third parties. Claims under both classes will also receive pro rata distribution from the proceeds of any claims and causes of action of the Debtors, the estates, or the Committee against the Debtors' original lenders, which include ABN Amro Bank N.V., Antwerpse Diamantbank N.V., and Bank of America, N.A. Holders of Current Lender Claims will receive pro rata distribution from the proceeds of any and all claims or causes of action of the Debtors, the estates, or the Committee, against third parties. The current lenders are successors in interest to the original lenders under an intercreditor agreement dated Jan. 13, 2006, among the original lenders and JPMorgan Chase Bank, N.A. as collateral agent. The current lenders would ordinarily be entitled to assert a claim for adequate protection arising out of the use of their cash collateral throughout the course of the Debtors' cases. However, the Plan settles the adequate protection claim by: -- providing for priority payment in full of all professional fees and expenses incurred by Wilmington, on behalf of the Current Lenders, throughout the course of the Debtors' cases; and -- payment out of the net proceeds of a shared assets trust. Class 6 Claims, which consists of all interests in any of the Debtors, and all claims arising from rescission of a purchase or sale of those interests, or for damages arising from a purchase or sale, are not entitled to any distribution under the Plan. A full-text copy of the Joint Chapter 11 Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=071003212249 A full-text copy of the Disclosure Statement explaining that Joint Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=071003212044 About M. Fabrikant Headquartered in New York City, M. Fabrikant & Sons, Inc. -- http://www.fabrikant.com/-- sells diamonds and jewelries. The company and its affiliate, Fabrikant-Leer International Ltd., filed for chapter 11 protection on Nov. 17, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-12737). Mitchel H. Perkiel, Esq., Lee W. Stremba, Esq., and Paul H. Deutch, Esq., at Troutman Sanders LLP represent the Debtors in their restructuring efforts. Alan Kolod, Esq., Lawrence L. Ginsberg, Esq., and Christopher J. Caruso, Esq., at Moses & Singer LLP serve as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. MANARIS CORP: Raymond Chabot Raises Going Concern Doubt ------------------------------------------------------- Montreal, Canada-based Raymond Chabot Grant Thornton LLP raised substantial doubt about Manaris Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditor pointed to the company's significant losses since inception and reliance on non-operational sources of financing to fund operations. Financials For the year ended June 30, 2007, the company reported a $2,370,754 net loss on $18,740,561 of revenues, as compared with an $11,902,443 net loss on $10,498,505 of revenues for the year ended June 30, 2006. At June 30, 2007, the company's balance sheet showed $18,193,489 in total assets, $9,458,397 in total liabilities, $23,193 in non- controlling interest, and $8,711,899 in total stockholders' equity. Subsequent Events a) Departure of President of Subsidiary Company On July 16, 2007, the company announced the departure of the president of Avensys Inc. The company will accrue approximately $212,000 of salary expense and $64,684 in stock-based compensation expense in the first quarter of fiscal 2008 as a result of a mutually agreed upon severance agreement. As part of the Agreement, the former president has 90 days from the date of the Agreement to exercise all vested stock options granted to him in prior periods. b) Cashless Exercise of Series G and Series I Warrants In August 2007, the holders of Series G and Series I warrants exercised, on a cashless basis, 2,653,845 warrants, respectively, resulting in the issuance of 2,709,090 common shares. The exercise price of the Series G and Series I warrants, on a cashless basis, was $0.052. The contractual provisions of the Series G warrants stipulate that for each warrant exercised, a new Series K warrant will be issued carrying an exercise price of $0.70. Therefore, as a result of the exercise of 2,653,845 Series G warrants, 2,653,845 Series K warrants were issued to the same holders of such warrants. There remains 1,144,131 Series G and Series I warrants outstanding. c) Employee Stock Plan On Aug. 21, 2007, the company filed an S-8 with the Securities and Exchange Commission establishing an Employee Compensation Plan. The Plan is designed to retain employees, consultants, advisors and professionals and reward them for making major. These objectives are accomplished by making long-term incentive awards under the Plan, which will provide participants with a proprietary interest in the growth and performance of the company. The Company registered 4,000,000 common shares under the Plan. d) Amended and Restated 2006 Non Qualified Stock Option Plan On Sept. 5, 2007, the 2006 Non Qualified Stock Option Plan was amended and restated to augment the Plan by 5,000,000 stock options. e) Redemption of Series B Notes and Series B Original Issue Discount Notes During the first quarter of fiscal 2008, the company redeemed its Series B Subordinated Secured Convertible Promissory Notes and its Original Issue Discount Series B Subordinated Secured Convertible Promissory Notes, both originally due Feb. 11, 2009. Under an arrangement with a majority of the holders of the Notes, the company also redeemed half of the associated Series Y and Series Z Warrants previously issued in August 2006 and November 2006 relating to the redeemed Notes. The total purchase price for the redemption of the Notes and half of the Warrants was $3.4 million. The remaining half of the Warrants that are retained by the holders of the Notes will have their exercise prices reduced to and fixed at $0.11 per share, with no further ratchet or anti- dilution provisions. In connection with the redemption of the Notes, the company received a $3.4 million secured loan facility from Imperium Master Fund, LTD. The terms of the loan facility state that interest will be paid by the company on the unpaid principal amount at an annual rate equal to 8.5%. It was the intention of the company and Imperium Master Fund to replace the secured loan facility with a comprehensive refinancing to facilitate a capital restructuring that will provide the company with additional working capital and credit facilities. On Sept. 24, 2007, the company entered into a Securities Purchase and Loan Agreement with Imperium Master Fund for the sale of a 6% Original Issue Discount Senior Secured Convertible Note in the amount of $4,708,900. The principal value and the gross proceeds of the Convertible Note is $4,000,000. The gross proceeds will be used to repay the secured loan facility, with the balance of funds to be used for working capital purposes. The Convertible Note matures on Sept. 24, 2012, and the original principal amount is convertible into common shares of the company at a conversion price of $0.11. The principal value will accrete to the value of the Convertible Note over a two-year period and will subsequently accrue interest at 6%. Monthly installments of principal and interest will be payable commencing after the second year up to the maturity date. The SPL Agreement also provides the holder of the Convertible Note with a Warrant to purchase up to 20,276,190 shares of the company's outstanding common stock on a fully diluted basis. On Aug. 22, 2007, the company issued to the holder of the Convertible Note a Warrant to purchase up to 5% of the company's outstanding common stock on a fully diluted basis. In addition, the SPL Agreement provides the company with a $2,500,000 Working Capital Facility. In connection with the redemption of the Notes, the company will record a non-cash charge of approximately $1.4 million in the first quarter of fiscal 2008. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?23f6 Manaris Corporation -- http://www.manariscorp.com/-- through its two wholly owned subsidiaries, offers risk mitigation solutions. C-Chip Technologies (North America) specializes in the high-tech sector of the security industry, offering technology that allows business users to access, control, manage and monitor remote assets at low cost. Avensys, Inc., enables businesses to monitor different types of environments, including air, soil and water, as well as buildings and materials. Avensys also produces fiber optic components and sensors. MARCAL PAPER: Amends Plan of Reorganization; To Sell Assets ----------------------------------------------------------- Marcal Paper Mills Inc. has filed its intent to proceed with an amended plan of reorganization and sale process with the United States Bankruptcy Court for the District of New Jersey. "After expending a considerable amount of time and effort exploring various restructuring alternatives, we have concluded that a sale of the company as part of a plan of reorganization - while we continue to operate in the ordinary course of business - is the best way for us to provide continuing employment to our loyal people, ensure our ongoing relationships with our many valued customers and vendors, and maximize value for the benefit of our creditors," Nicholas Marcalus, company chairman and CEO, said. Pending the submission of the anticipated amended plan, the company and its investment banker, NatCity Investments Inc., will proceed with an orderly and efficient sale process with the object to close a transaction by year end. "Importantly, our company's operations will continue in the ordinary course of business with funding from our DIP lenders,” Mr. Marcalus added. “This will ensure the continued employment of our dedicated employees, payment of all of our post-petition obligations and high-quality service to our customers. Unfortunately, the tightening of the credit markets and inability to meet certain closing conditions under the existing plan of reorganization requires the company to pursue an alternative strategy for the best interests of all stakeholders." About Marcal Paper Mills Based in Elmwood Park, New Jersey, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- is a privately-held, fourth generation family business. Founded in 1932, it employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The company produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from- home use in hotels, restaurants, hospitals, offices and factories. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard P.A. represent the Debtor. Kenneth Rosen, Esq., and Mary E. Seymour, Esq., at Lowenstein Sandler PC represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MELVA HUFF: Case Summary & Largest Unsecured Creditor ----------------------------------------------------- Debtor: Melva Dell Huff 6644 Summertrail Place Highland, CA 92346 Bankruptcy Case No.: 07-16082 Chapter 11 Petition Date: October 2, 2007 Court: Central District Of California (Riverside) Judge: David N. Naugle Debtor's Counsel: Michael Sacks, Esq. Law Office of Michael Sacks 1894 Commercenter West, Suite 108 San Bernardino, CA 92408 Tel: (909) 381-9321 Fax: (909) 890-5991 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's list of its Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Washington Mutual Bank Loan $3,044 Florence, SC 29501 MERIDIAN AUTOMOTIVE: Judge Walrath Closes Chapter 11 Cases ---------------------------------------------------------- The Honorable Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware entered a final decree closing the Chapter 11 cases of Meridian Automotive Systems-Composites Operations, Inc., and its eight debtor-affiliates: Case No. Debtor Entity -------- ------------- 05-11168 Meridian Automotive Systems-Composites Operations, Inc. 05-11169 Meridian Automotive Systems, Inc. 05-11170 Meridian Automotive Systems-Angola Operations, Inc. 05-11171 Meridian Automotive Systems-Construction, Inc. 05-11172 Meridian Automotive Systems-Detroit Operations, Inc. 05-11173 Meridian Automotive Systems-Grand Rapids Operation Inc. 05-11174 Meridian Automotive Systems-Heavy Truck Operations Inc. 05-11175 Meridian Automotive Systems-Shreveport Operations, Inc. 05-11176 Meridian Automotive Systems-Mexico Operations, LLC Judge Walrath said the Reorganized Debtors may terminate the services of The Trumbull Group without further Court order or notice to any party other than Trumbull. Trumbull will prepare final claims register for the Bankruptcy Clerk's Office pursuant to Rule 156(c) of the Judiciary and Judicial Procedures Code. Headquartered in Dearborn, Mich., Meridian Automotive Systems Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. The Hon. Mary Walrath confirmed Meridian's Revised Fourth Amended Reorganization Plan on Dec. 6, 2006. The company emerged from chapter 11 protection on Dec. 29, 2006. (Meridian Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MERIDIAN AUTOMOTIVE: Claims Objection Deadline Extended to Dec. 3 ----------------------------------------------------------------- The Honorable Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware extends the deadline by which Reorganized Meridian Automotive Systems Inc. and will file objections to claims until Dec. 3, 2007. Headquartered in Dearborn, Mich., Meridian Automotive Systems Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. The Hon. Mary Walrath confirmed Meridian's Revised Fourth Amended Reorganization Plan on Dec. 6, 2006. The company emerged from chapter 11 protection on Dec. 29, 2006. (Meridian Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MERRILL LYNCH: Moody's Assigns Low-B Ratings on Six Certs. ---------------------------------------------------------- Moody's Investors Service assigned these definitive ratings to securities issued by Merrill Lynch Financial Assets Inc. Series 2007-Canada 23: -- Class A-1, $56,817,000, rated Aaa -- Class A-2, $129,160,000, rated Aaa -- Class A-3, $153,822,000, rated Aaa -- Class A-J, $31,856,000, rated Aaa -- Class XP-1, Interest Only, rated Aaa -- Class B, $9,026,000, rated Aa2 -- Class C, $10,619,000, rated A2 -- Class D-1, $12,210,000, rated Baa2 -- Class D-2, $1,000, rated Baa2 -- Class E-1, $4,247,000, rated Baa3 -- Class E-2, $1,000, rated Baa3 -- Class F, $4,247,000, rated Ba1 -- Class G, $1,699,000, rated Ba2 -- Class H, $850,000, rated Ba3 -- Class J, $1,274,000, rated B1 -- Class K, $1,062,000, rated B2 -- Class L, $1,274,000, rated B3 -- Class XP-2, Interest Only, rated Aaa; and -- Class XC, Interest Only, rated Aaa MGM MIRAGE: Discloses Management Changes at Resorts --------------------------------------------------- MGM MIRAGE disclosed several major personnel changes and promotions at the company's resorts. These executive moves were made in preparation for the November 2009 opening of CityCenter, the company's $7.4 billion mixed-use development on the Las Vegas Strip. "Our company disclosed the promotion of eight key individuals whose contributions and leadership skills will be key to our company's continued success," Terry Lanni, chairman and CEO of MGM MIRAGE, said. "We are very fortunate to have such highly qualified people in our company, each of whom possesses the vast experience required to lead our dynamic resorts, as well as our industry. These professionals enjoy our confidence as they assume their new positions and begin to address the new opportunities of the future." Bill McBeath has been named president and chief operating officer of the new 4,000-room resort and casino at CityCenter, scheduled to open in November 2009. Mr. McBeath will also oversee the Vdara Condo Hotel at CityCenter. Mr. McBeath has served as president of Bellagio since February 2005. He graduated from the University of Nevada, Las Vegas with a Bachelor of Science degree in Hotel Administration before joining the company in 1987. In 1998, he was promoted to president and chief executive officer of Treasure Island and was named president and chief operating officer of The Mirage in 2000. Randy Morton has been named president and chief operating officer of Bellagio. Mr. Morton joined MGM MIRAGE in 2000 as vice president of hotel operations for Bellagio, where he led the property to receive the prestigious AAA Five Diamond Award from 2002 to 2005. Under his direction, Bellagio became the first Las Vegas casino-hotel and the largest hotel ever to receive this award. Most recently, as president of Monte Carlo Resort, Mr. Morton managed several high profile enhancements to the property, including the new Diablo's Cantina. Mr. Morton is a graduate of George Brown College in Toronto, Canada. Anton Nikodemus has been promoted to president and chief operating officer of Monte Carlo Resort & Casino. Mr. Nikodemus served as senior vice president of hotel operations for Bellagio where he had executive oversight of the hotel division, food & beverage division, entertainment and engineering. He joined MGM MIRAGE in 2005 as Senior vice president of hotel operations for MGM Grand, playing an instrumental role in establishing the property as a AAA Four Diamond resort in 2007, achieving this status for the first time in its 13-year history. Mr. Nikodemus is a graduate of Arizona State University with a Bachelor of Science degree in Business Management and Marketing. In their new positions, Mr. McBeath, Mr. Morton and Mr. Nikodemus will all report to Bobby Baldwin, chief design and construction officer for MGM MIRAGE and president and CEO of CityCenter. Jon Corchis has been named sr. vice president and chief financial officer of the resort and casino at CityCenter. Mr. Corchis recently served in the same position at Bellagio. He has been with the company since 1993, holding positions at The Mirage, Beau Rivage and Bellagio. Mr. Corchis holds a Bachelor of Science in Finance from the University of Detroit and an MBA from the University of Nevada, Las Vegas. Mr. Corchis will report to Bill McBeath. Mike Longi has been named vice president and chief financial officer at Bellagio. Mr. Longi began his career with MGM MIRAGE in 1989 and has worked in positions at the Golden Nugget, Las Vegas; Treasure Island and The Mirage, where he served recently as vice president and CFO. He is a CPA and holds Bachelor of Science degree in Business Administration from the University of Nevada, Las Vegas. Mr. Longi will report to Randy Morton. Bill Boasberg has been named vice president and chief financial officer at The Mirage. Mr. Boasberg joined MGM MIRAGE in 2005, after experience in the financial world, serving recently as vice president and CFO at New York-New York. He is a licensed CPA and holds a Bachelor of Science degree in Accounting from Louisiana State University and an MBA in Finance from the University of New Orleans. Mr. Boasberg will report to Scott Sibella, president and COO at The Mirage. Courtney Wenlender has been promoted to vice president and chief financial officer at New York-New York Hotel & Casino. Mr. Wenlender joined the company in 2002, and has served as financial controller at Bellagio and, as vice president and CFO at Beau Rivage. She is a licensed CPA in Nevada and holds her Bachelors degree in Business Administration from Virginia Commonwealth University, and a Masters in Accountancy from the University of Nevada, Las Vegas. Ms. Wenlender will report to Lorenzo Creighton, president and COO of New York-New York. Jorge Perez has been promoted to vice president and chief financial officer at Beau Rivage Resort in Biloxi, Ms. Perez joined the company in 1995, and has served in several financial positions, including hotel controller at Bellagio and executive director of financial projects for Mirage Resorts Division. He holds a Bachelors degree in Managerial Studies from Rice University in Houston and an Executive MBA from the University of Nevada, Las Vegas. Perez will report to George Corchis, president of Beau Rivage. These promotions are effective immediately. About MGM MIRAGE Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. * * * As reported in the Troubled Company Reporter on Aug. 27, 2007, Moody's Investors Service changed MGM MIRAGE's rating outlook to stable from negative and affirmed all existing ratings, including its "Ba2" corporate family rating and speculative grade liquidity rating of SGL-3. MICHAEL ACABADO: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Michael Acabado 199 New Montgomery, Suite 1610 San Francisco, CA 94105 Bankruptcy Case No.: 07-31277 Chapter 11 Petition Date: October 2, 2007 Court: Northern District of California (San Francisco) Debtor's Counsel: James T. Cois, Esq. Law Offices of James T. Cois P.O. Box 2705 San Francisco, CA 94126-2705 Tel: (415) 561-1445 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. MORGAN STANLEY: S&P Holds 'BB-' Rating on Class F Certificates -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on two classes of commercial mortgage pass-through certificates from Morgan Stanley Capital I Inc.’s series 1998-CF1. Concurrently, S&P affirmed its ratings on seven classes from the same transaction. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Sept. 17, 2007, remittance report, the collateral pool consisted of 147 loans with an aggregate trust balance of $507.2 million, down from 380 loans totaling $1.107 billion at issuance. Excluding the defeased loans ($185 million, 37%), the master servicer, Capmark Finance Inc., reported financial information for 95.88% of the pool. Eighty-one percent of the servicer-reported information was full-year 2006 data. Using this information, Standard & Poor's calculated a weighted average debt service coverage of 1.52x. There are four loans with the special servicer, LNR Partners Inc., two of which are REO and two are 90-plus-days delinquent. Appraisal reduction amounts (ARAs) totaling $3.8 million are in effect on these four loans. All of the remaining loans in the pool are current. The trust has experienced cumulative losses totaling $72.8 million to date, resulting in principal losses for seven of the subordinate classes, six of which have lost 100% of their original balance. The top 10 loans secured by real estate have an aggregate outstanding balance of $102.7 million (20%) and a weighted average DSC of 1.57x. The ninth-largest loan in the pool is with the special servicer and is discussed below. In addition, two of the top 10 loans are on the watchlist because of occupancy issues and upcoming lease expirations and are also discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans. Three of the properties were characterized as "excellent," and the remaining assets were characterized as "good." There are two assets and two loans with the special servicer. Details are: -- The Brooksedge Corporate Center, the ninth-largest loan exposure ($7.7 million, 2%), is secured by six industrial properties in Westerville, Ohio, totaling 182,694 sq. ft. This loan was transferred to LNR in August 2006 due to monetary default and became REO in February 2007. An ARA totaling $2.1 million is in effect. The property was listed for sale, and a sales contract was signed on Oct. 1, 2007. -- The Microtel Inn loan ($2.2 million, 0.5%) is secured by a 102-room limited-service hotel built in 1994 in McAllen, Texas. The loan was transferred to LNR in June 2005 due to monetary default and became REO in September 2006. An ARA totaling $1.4 million is in effect. The property is listed for sale with CB Richard Ellis. -- The Morrone Co. loan ($668,396, 0.1%) is secured by a 39,462-sq.-ft. industrial property built in 1996 in Macon, Georgia. The loan was specially serviced between 2003 and 2005 and was transferred to LNR again in August 2006 due to payment default. The loan is 90- plus-days delinquent. LNR will proceed to foreclose in the next 60 days, as the sole warehouse tenant will vacate the premises within the next 90 days. An ARA totaling $255,859 is in effect. -- The Moore's Adult Care Facility loan ($182,411, 0.1%) is secured by a 12-unit assisted living facility built in 1987 in Charlotte, Michigan. The loan is 90-plus- days delinquent and was accelerated in October 2006. The borrower has been unresponsive to LNR. LNR has filed a complaint against the sponsor and plans to start foreclosure proceedings. Wells Fargo reported a watchlist of 45 loans with an aggregate outstanding balance of $106 million (21%). The sixth-largest loan, Pharmaceutical Formulations Building ($9.5 million, 2%), is secured by a 220,000-sq.-ft. industrial property built in 1989 in Edison, New Jersey. The property became 100% vacant in July 2005 when the single tenant declared bankruptcy and rejected its lease. The year-end 2006 DSC was 0.17x. A new lease was recently executed, and the DSC is projected to be above 1.0x. The 10th-largest loan, 132 West 125th Street, ($7.3 million, 1.5%), is secured by a 135,897–sq.-ft. office building built in 1996 in New York, New York. The City of New York is the largest tenant (81% of the space), and the lease expired in July 2007. The borrower is negotiating the final lease terms with the tenant and expects to renew the lease. As of December 2006, DSC was 3.75x and occupancy was 100%. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1998-CF1 Rating ------ Class To From Credit enhancement ----- -- ---- ---------------- D A- BBB+ 16.46% E BBB BBB- 12.64% Ratings Affirmed Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1998-CF1 Class Rating Credit enhancement ----- ------ ---------------- A-2 AAA 51.39% A-MF1 AAA 51.39% A-MF2 AAA 51.39% B AAA 40.48% C AAA 28.47% F BB- 8.28% X AAA N/A N/A - Not applicable. MORGAN STANLEY: S&P Cuts Class M Certs. Rating to CCC from CCC- --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on four classes of commercial mortgage pass-through certificates from Morgan Stanley Capital I Inc.'s series 1998-WF2. Concurrently, S&P lowered its rating on class M to 'CCC-' from 'CCC' and affirmed its ratings on the remaining classes from the same transaction. The raised ratings reflect increased credit enhancement levels resulting from principal paydowns. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The lowered rating on class M reflects concerns regarding several underperforming assets in the pool, as well as anticipated credit support erosion upon the resolution of the specially serviced asset in the pool. As of the Sept. 17, 2007, remittance report, the collateral pool consisted of one asset and 122 loans with an aggregate trust balance of $479.4 million, down from 226 loans totaling $1.062 billion at issuance. Excluding the defeased collateral ($34.9 million, 7% of the pool), the master servicer, Wells Fargo Bank N.A. , reported financial information for 99.6% of the pool. Ninety-seven percent of the servicer-reported information was full-year 2006 data. Using this information, Standard & Poor's calculated a weighted average debt service coverage of 1.81x. Twelve assets (6%) have DSC levels that are less than 1.0x. There is one real estate owned asset with a total exposure amount of $2.7 million, which is the only asset with the special servicer, also Wells Fargo. The remaining loans in the pool are current. To date, the trust has experienced one loss totaling $5.5 million. The top 10 loans secured by real estate have an aggregate outstanding balance of $201.5 million (42%) and a weighted average DSC of 1.71x. Five of the top 10 loans have near-term maturities and one has an anticipated repayment date within the next nine months. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans. All of the properties were characterized as "good." Builders Square – Lansing is the one asset with the special servicer. It has a total exposure of $2.7 million and is secured by a 106,080-sq.-ft. retail property in Lansing, Michigan. The loan was transferred to Wells Fargo in December 2006 due to payment default and became REO in July 2007. An "as-is" appraisal dated January 2007 valued the asset at $2.6 million. The servicer has indicated that a new appraisal may be requested. Wells Fargo reported a watchlist of 13 loans with an aggregate outstanding balance of $30 million (6%). Midtown Center is the largest loan on the watchlist with an outstanding balance of $4.7 million (1%) and is secured by a 138,535-sq.-ft. office property in Charleston, West Virginia. The loan is on the watchlist due to low DSC. As of Dec. 31, 2006, DSC was 0.79x and occupancy was 82%. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1998-WF2 Rating ------ Class To From Credit enhancement ----- -- ---- ----------------- E AA+ AA- 19.90% F AA- A- 15.47% G BBB+ BBB 10.49% H BBB BBB- 8.27% Rating Lowered Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1998-WF2 Rating ------ Class To From Credit enhancement ----- -- ---- ---------------- M CCC- CCC 0.52% Ratings Affirmed Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1998-WF2 Class Rating Credit enhancement ----- ------ ---------------- A-2 AAA 56.45% B AAA 45.37% C AAA 35.41% D AAA 24.33% J BB+ 6.61% K BB- 4.95% L B- 1.63% X AAA N/A N/A - Not applicable. MUSICLAND HOLDING: Plan Confirmation Hearing Adjourned Sine Die --------------------------------------------------------------- The hearing to consider confirmation of Musicland Holding Corp. and its debtor-affiliates' Second Amended Joint Plan of Liquidation has been further adjourned to a date yet to be specified by the U.S. Bankruptcy Court for the Southern District of New York, Andrea L. Johnson, Esq., at Kirkland & Ellis LLP, in New York, notifies all parties-in-interest. Hearing on certain of the Debtors' Objection to Claims; the pre- trial conference in the Media Play, Inc., v. Hob-Lob, LP adversary proceeding; Wachovia's motion to compel trade creditors to file a verified statement; and the Official Committee of Unsecured Creditors' application for an order authorizing discovery will also be covered on the same date. About Musicland Holding Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. At March 31, 2007, the Debtors disclosed $20,121,000 in total assets and $321,546,000 in total liabilities. On May 12, 2006, the Debtors filed their Joint Plan of Liquidation with the Court. On Sept. 14, 2006, they filed an amended Plan and a Second Amended Plan on Oct. 13, 2006. The Court approved the adequacy of the Amended Disclosure Statement on Oct. 13, 2006. (Musicland Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MUSICLAND HOLDING: Trade Creditors Appeal Complaint Dismissal ------------------------------------------------------------- Seven secured trade creditors ask the U.S. District Court for the Southern District of New York to determine whether the Bankruptcy Court erred in dismissing their complaint wherein they seek to recover $25,000,000, alleged to be wrongfully paid to Harris Bank N.A. and its putative agent, Wachovia Bank, N.A. The Trade Creditors are: * Buena Vista Home Entertainment, Inc., * Cargill Financial Services International, Inc., * Hain Capital Group, LLC, * Paramount Pictures Corporation, * Twentieth Century Fox Home Entertainment LLC, * UBS Willow Fund, LLC, and * Varde Investment Partners, L.P. As previously reported, the Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York dismissed the Trade Creditors' Complaint ruling that Wachovia Bank did not breach the Intercreditor Agreement between Bank of New York, in its capacity as agent for the Trade Creditors, and Wachovia, as agent for the Revolving Lenders. The Court ruled that Wachovia did not tortuously interfere with the Trade Creditor's contractual rights or participate in the conversion of the Trade Creditors' collateral, and that Harris N.A. was not unjustly enriched with the repayment of the $25,000,000 supplemental Term Loan. The Trade Creditors supplied Musicland Holding Corp. and its debtor-affiliates, on credit, music CDs, DVDs, and similar and related merchandise for sale at the Debtors' retail stores. To induce the Trade Creditors to continue supplying inventory, the Debtors entered into a security agreement with the Trade Creditors in November 2003. Concurrent with the Security Agreement, the Intercreditor Agreement was entered into among Bank of New York and Wachovia. About Musicland Holding Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. At March 31, 2007, the Debtors disclosed $20,121,000 in total assets and $321,546,000 in total liabilities. On May 12, 2006, the Debtors filed their Joint Plan of Liquidation with the Court. On Sept. 14, 2006, they filed an amended Plan and a Second Amended Plan on Oct. 13, 2006. The Court approved the adequacy of the Amended Disclosure Statement on Oct. 13, 2006. (Musicland Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MUZAK HOLDINGS: David Moore Resigns as Chief Technology Officer --------------------------------------------------------------- Muzak Holdings LLC and Muzak LLC reported the resignation of David Moore as chief technology officer of Muzak LLC. The resignation was effective as of Sept. 28, 2007. Muzak LLC has decided not to appoint an immediate successor. Headquartered in Fort Mill, South Carolina, Muzak Holdings LLC -- http://www.muzak.com-- provides business music programming to clients through its integrated nationwide network of owned operations and franchises. All of the operating activities are conducted through the company's subsidiaries. As of June 30, 2007, ABRY Partners LLC and its respective affiliates, collectively own 64.2% of the beneficial interests in the company's voting interests. * * * As reported in the Troubled Company Reporter on June 1, 2007, Moody's Investors Service affirmed the ratings of Muzak Holdings, LLC and those of Muzak's wholly-owned subsidiary, Muzak LLC and changed the outlook to developing from negative. The ratings affirmed for Muzak LLC were $220 million senior unsecured notes due 2009 at Caa1 and $115 million 9.875% senior subordinated notes at Caa3. Ratings affirmed for Muzak Holdings LLC (Muzak LLC's direct parent) were 13% senior discount notes at Caa3, Corporate Family Rating at Caa1, and Probability of Default Rating at Caa1. MUZAK HOLDINGS: June 30 Balance Sheet Upside-Down by $381.2 Mil. ---------------------------------------------------------------- Muzak Holdings LLC's consolidated balance sheet at June 30, 2007, showed $373.7 million in total assets, $505.7 million in total liabilities, $241.4 million in redeemable preferred units, and $7.8 million in redeemable purchased Class A units, resulting in a $381.2 million total members' deficit. The company reported a net loss of $7.9 million for the second quarter ended June 30, 2007, compared with a net loss of $9.4 million for the same period ended June 30, 2006. Total revenue for the quarter ended June 30, 2007, was $62.8 million, a 2.1% increase, compared to $61.5 million for the quarter ended June 30, 2006. Music and other business services revenue for the quarter ended June 30, 2007 was $47.9 million, a 1.6% increase, compared to $47.2 million for the quarter ended June 30, 2006. Equipment sales and related services revenue increased to $14.9 million in the quarter ended June 30, 2007, as compared to $14.3 million for the same period in 2006. Total revenue for the six months ended June 30, 2007, was $125.1 million, a 3.5% increase, compared to $120.9 million for the six months ended June 30, 2006. Net loss was $15.9 million compared to a net loss of $20.5 million for the six months ended June 30, 2006. Earnings before interest, taxes, depreciation and amortization was $17.3 million for the quarter ended June 30, 2007, which excludes $800,000 in expenses directly associated with the proposed DMX transaction, an increase of $1.4 million or 9.1% as compared to $15.9 million in the quarter ended June 30, 2006. EBITDA was $34.9 million for the six months ended June 30, 2007, which excludes $1.5 million in expenses directly associated with the proposed DMX transaction, an increase of $4.4 million or 14.2% as compared to $30.6 million in the six months ended June 30, 2006. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?23f3 Positive Cash Flow The company generated a net cash increase of $1.2 million for the three months ended June 30, 2007, versus an increase of $600,000 for the three months ended June 30, 2006, and generated $3.7 million and $1.6 million for the six months ended June 30, 2007 and 2006, respectively, excluding $600,000 and $700,000 in proposed DMX transaction expenses paid in the quarter and six months ended June 30, 2007, respectively. Proposed Combination with DMX Inc. On April 12, 2007, the company announced that it was contemplating a future consolidation or combination with DMX Inc. This combination would be contingent on a sale of the combined entity to an undetermined third party buyer following clearance by federal regulators. Accordingly, the parties have submitted a Hart-Scott-Rodino filing seeking clearance for such a transaction. In the interim, Muzak and DMX will remain independent companies and continue to compete and to provide, without disruption, the highest-quality products and services to their respective clients. About Muzak Holdings Headquartered in Fort Mill, South Carolina, Muzak Holdings LLC -- http://www.muzak.com-- provides business music programming to clients through its integrated nationwide network of owned operations and franchises. All of the operating activities are conducted through the company's subsidiaries. As of June 30, 2007, ABRY Partners LLC and its respective affiliates, collectively own 64.2% of the beneficial interests in the company's voting interests. NEW JERSEY ECONOMIC: Fitch Withdraws 'BB+' Revenue Bonds Rating --------------------------------------------------------------- Fitch Ratings has withdrawn the 'BB+' rating on the New Jersey Economic Development Authority revenue bonds (Harrogate Incorporated), series 2007A and 2007B as the issuance of the bonds has been postponed from the original scheduled issuance date (August 2007). Fitch rates Harrogate Incorporated's outstanding series 1997 bonds at 'BB+', which incorporates the expected issuance of additional debt in calendar 2008. The Rating Outlook is Stable. NEXINNOVATIONS INC: TechData Confirms Second Bankruptcy Filing -------------------------------------------------------------- TechData Canada Corporation verified reports that NexInnovations Inc. has sought protection from its creditors under the Companies' Creditors Arrangement Act, Jeff Jedras of Canada Technology News relates. NexInnovations' representative could not be reached to comment on the issue, Mr. Jedras say. On the other hand, TechData refused to give details about the matter but expressed continued support for the ailing solutions provider, the report reveals. TechData, along with Wachovia Capital Finance Corp. and IBM Canada Ltd., is among the major creditors to whom the NexInnovations owes money, according to the report. When the company first filed for bankruptcy in 2006, then president and chief executive officer, Hubert Kelly, had disclosed that the company had insufficient working capital triggered by drops in average price points of about 15% to 20%, Mr. Jedras notes. Documents submitted to the Court during the 2006 bankruptcy filing reveal that NexInnovations owe creditors more than $72 million, the report say. About NexInnovations NexInnovations Inc., headquartered in Mississauga, Ontario, -- http://www.nexinnovations.com/-- is one of Canada's leading online retailers of computer equipment. NexInnovations provides computer hardware and services, including systems integration and technical support. It sells and installs equipment and systems from companies like Cisco, CA plc, IBM, and Microsoft. NexInnovations, founded in 1978, was one of Canada's Top 100 Solution Providers, and according to that list, in 2005 the company reported revenues between $500 million and $550 million. In August 2006, the company filed for bankruptcy protection under the CCAA and was granted 30-day period to allow the company time to restructure due to financial difficulties. NASDAQ STOCK: Buying Boston Stock Exchange for $61 Million ---------------------------------------------------------- The Nasdaq Stock Market, Inc. entered into a definitive agreement to acquire the Boston Stock Exchange, including the holding company, the Boston Equities Exchange, the Boston Stock Exchange Clearing Corporation, and BOX Regulation. Along with these businesses, NASDAQ will acquire a Self-Regulatory Organization license for trading both equities and options. NASDAQ's acquisition of the BSE Group is valued at approximately $61 million. NASDAQ will not acquire an interest in the Boston Options Exchange from the BSE. However, a regulatory framework for the BOX market will remain in place. NASDAQ, through BOXR, will operate the regulatory services provider to the BOX, which is an options trading facility of the BSE. NASDAQ and BOX are discussing a plan regarding the future regulatory structure for BOX. "NASDAQ is very focused on meeting the needs of its customers,” Bob Greifeld, President and Chief Executive Officer of NASDAQ, said. “This transaction provides added liquidity, new trading choices and an enhanced competitive market environment. NASDAQ's acquisition of the BSE will expand NASDAQ's execution offerings, and deliver user and investor benefits consistent with our Brut and INET acquisitions. "We believe a second exchange license in both equities, and in the future options, will provide market structure flexibility as we continue to deliver on our mission of being the number one trading platform in the transactions business." Upon approval of the transaction, NASDAQ will have the ability to offer a second quote within the U.S. equities marketplace. NASDAQ anticipates operating the BSE using its INET trading system. Additionally, subject to SEC approval, NASDAQ anticipates utilization of the BSE Clearing Corporation. "This deal will allow our customers to better execute their trading strategies,” NASDAQ Executive Vice President of Transaction Services, Chris Concannon commented. “From critical trading functionality, to crossing products, and risk management offerings, NASDAQ's second quote in NASDAQ, NYSE and AMEX-listed securities will arm our diverse customer base with more choices and competitive pricing options. Additionally, we are optimistic that the clearing business will provide valuable benefits for both NASDAQ and our customers over time." As previously noted, NASDAQ anticipates organically launching The NASDAQ Options Market, a price/time priority options market in December 2007, subject to SEC approval. The transaction is subject to SEC approval and approval by BSE members. NASDAQ & BSE's board of directors have approved the transaction, which is expected to close by early first quarter 2008. It is anticipated that the transaction will be accretive to NASDAQ shareholders within 12 months from closing. About BSE Founded in 1834 as the third oldest exchange in the U.S., the Boston Stock Exchange –- http://www.bostonstock.com/-- has, from its beginnings, played a vital role as an exchange within the strongest capital market system in the world. About NASDAQ Stock Headquartered in New York City, The Nasdaq Stock Market Inc. (Nasdaq: NDAQ) -- http://www.nasdaq.com/-- is an electronic equity securities market in the United States with about 3,200 companies. * * * As reported in the Troubled Company Reporter on Oct. 2, 2007, Moody's Investors Service withdrew its ratings on The Nasdaq Stock Market Inc.'s $750 million Six Year Senior Secured Term Loan, $335 million Six Year Senior Secured Term, and the Five Year $75 million Senior Secured Revolving Credit Facility. The credit facilities have been repaid and terminated. However, the Ba3 Corporate Family Rating remains on review for upgrade. As reported in the Troubled Company Reporter on Sept. 24, 2007, Standard & Poor's Ratings Services placed its ratings on The Nasdaq Stock Market Inc, including its 'BB' long-term counterparty credit rating, on CreditWatch Positive, after Nasdaq disclosed that it is selling the bulk of its investment in the London Stock Exchange PLC to Borse Dubai, and using the proceeds to pay down rated term loans. NASDAQ STOCK: Completes Sale of 28% LSE Stake to Borse Dubai ------------------------------------------------------------ Nasdaq Stock Market Inc., through its wholly-owned subsidiary Nightingale Acquisition Limited, completed on Sept. 25, 2007, its previously-announced sale of 28% of the share capital of the London Stock Exchange Group plc to Borse Dubai Limited for about $1.6 billion in cash. On Sept. 28, 2007, Nasdaq used about $1.1 billion of the proceeds from this transaction to repay in full and terminate these agreements: i. the Amended and Restated Credit Agreement, dated as of May 19, 2006, by and among, Nasdaq as borrower, the lenders party thereto and Bank of America, N.A., as administrative agent, swingline lender and issuing bank and ii. the Amended and Restated Term Loan Credit Agreement, dated as of May 19, 2006, by and among, Nasdaq as borrower, Nightingale, as additional borrower, the lenders party thereto and Bank of America Bridge LLC, as administrative agent. In conjunction with the termination of the credit agreements, Nasdaq also terminated these additional agreements, which had never become effective: i. the Credit Agreement, dated as of November 20, 2006, among Nasdaq and the other parties thereto, ii. the Term Loan Credit Agreement, dated as of November 20, 2006, among Nasdaq, Nightingale and the other parties thereto and iii. the Bridge Loan Agreement, dated as of November 20, 2006, among Nasdaq, Nightingale and the other parties thereto. The terms and conditions of the November credit agreements are set forth in Nasdaq’s Form 8-K dated Nov. 27, 2006. About NASDAQ Stock Headquartered in New York City, The Nasdaq Stock Market Inc. (Nasdaq: NDAQ) -- http://www.nasdaq.com/-- is an electronic equity securities market in the United States with about 3,200 companies. * * * As reported in the Troubled Company Reporter on Sept. 24, 2007, Moody's Investors Service placed the Ba3 corporate family rating of Nasdaq Stock Market Inc. on review for upgrade. As reported also in the Troubled Company Reporter on Oct. 2, 2007, Moody's Investors Service withdrew its ratings on The Nasdaq Stock Market Inc.'s $750 million Six Year Senior Secured Term Loan, $335 million Six Year Senior Secured Term, and the Five Year$75 million Senior Secured Revolving Credit Facility. The credit facilities have been repaid and terminated. NETWOLVES CORP: Marcum & Kliegman Raises Going Concern Doubt ------------------------------------------------------------- Marcum & Kliegman LLP raised substantial doubt about NetWolves Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm pointed out that the company has incurred a net loss during the year ended June 30, 2007, and, as of that date, had working capital and shareholders' deficiencies. The company posted a $4,035,105 net loss on $17,408,061 of total revenues for the year ended June 30, 2007, as compared with a $3,761,741 net loss on $21,836,709 total revenues in the prior year. At June 30, 2007, the company's balance sheet showed $7,811,984 in total assets and $8,328,847 in total liabilities, resulting in $516,863 stockholders' deficit. The company had a working capital deficit of $4,987,795 at June 30, 2007. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?23fc About NetWolves Based in Tampa, Florida, NetWolves Corporation (Pink Sheets: WOLV) -- http://www.netwolves.com/-- provides telecommunications and Internet-managed services to more than 1,000 customers through its neutral FCC-licensed carrier. Some of NetWolves' customers include General Electric, University of Florida, McLane Company, JoAnn Stores and Marchon Eyewear. The company and three of its affiliates filed for Chapter 11 protection on May 21, 2007 (Bankr. M.D. Fla. Case Nos. 07-04186 through 07-04196). David S. Jennis, Esq., at Jennis Bowen & Brundage, P.L., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, it listed total assets of $8,847,572 and total liabilities of $7,637,029. NTCA INC: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: N.T.C.A., Inc. fka H.O.T. Golf, Inc. 5626 Rosalie Drive Waco, TX 76708 Bankruptcy Case No.: 07-61002 Type of business: The Debtor is a golf school. See http://www.hotgolfinc.com/ Chapter 11 Petition Date: October 2, 2007 Court: Western District of Texas (Waco) Judge: Frank R. Monroe Debtor's Counsel: John A. Montez, Esq. Montez & Williams, P.C. 3809 West Waco Drive Waco, TX 76710 Tel: (254) 759-8600 Fax: (254) 759-8700 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor does not have any creditors who are not insiders. NVIDIA CORP: S&P Holds 'BB-' Rating and Revises Outlook to Pos. -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Santa Clara, California-based Nvidia Corp. to positive from stable, following several quarters of strong operating performance despite the acquisition of a key competitor by Advanced Micro Devices Inc. The corporate credit rating is affirmed at 'BB-'. "The ratings reflect a narrow business profile, frequent product introductions, and challenges to expand the company's graphics technology to new applications," said Standard & Poor's credit analyst Lucy Patricola. "These are offset only partially by the company's strengthening market share and strong operating performance." Nvidia had $127.7 million of lease-adjusted debt outstanding as of July 29, 2007, and no funded debt. Nvidia competes in a small subsegment of the semiconductor industry, designing graphics processors used in desktop and notebook computers and handheld devices. The components are sold to consumers, as an add-in card, to computer OEMs, or in partnership with Intel or AMD for an integrated chipset. Profitability is strong and improving with increased volumes. EBITDA margin was 23% for the July quarter, up from 18%-20%. Profitability should be sustained in the near-to-intermediate term, based on expectations of a continued strong share in the high performance segment. The company's leverage is very light for the rating, with debt to EBITDA of less than 1x. OASYS MOBILE: Court Confirms Amended Chapter 11 Plan ---------------------------------------------------- The Honorable Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware confirmed, on Sept. 28, 2007, Oasys Mobile Inc.'s Amended Chapter 11 Plan of Reorganization. As reported in the Troubled Company Reporter on Aug. 30, 2007, Under the Amended Plan, Administrative Claims, Priority Tax Claims, Priority Non-Tax Claims and Other Secured Claims will be paid in full. On the effective date, holders of Senior Lender Secured Claims will receive 100% of the New Common Stock, subject to dilution as a result of the issuance of New Common Stock at the direction o the holders of the claim. To the extent that General Unsecured Creditors are not paid by the effective date, they will receive a pro rata share of the beneficial interests in the Plan Trust. This will entitle the holder to the first pro rata distributions of any Cash Distribution Trigger Payment or Transaction Trigger Payment to be made on the Plan Trust on Account o the Plan Note. Preferred Stock Interests will be extinguished and holders will receive a pro rata share o the beneficial interests in the Plan Trust. Common Stock Interests will also be extinguished. About Oasys Mobile Oasys Mobile, Inc. -- http://www.oasysmobileinc.com/-- (OTCBB: OYSM) provides mobile media content, products and services distributed through OasysMobile.com and top-tier wireless carriers in the U.S. and abroad. The company filed for chapter 11 protection on July 18, 2007 (Bankr. D. Del. Case No. 07-10961). Justin Cory Falgowski, Esq., and Kimberly Ellen Connolly Lawson, Esq., at Reed Smith LLP, represent the Debtor. Bradford J. Sandler, Esq., at Benesch Friedlander Coplan & Aronoff, represents the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor disclosed $1,727,848 in total assets and $11,474,328 in total liabilities. OASYS MOBILE: Focus Management Approved as Financial Advisor ------------------------------------------------------------ Focus Management Group has been appointed Financial Advisor to Oasys Mobile, Inc. under an Order entered by the United States Bankruptcy Court for the District of Delaware, effective July 18, 2007. Focus Management Group provided Oasys Mobile with advisory services in the planning of its Chapter 11 filing and assisted the Company in the preparation of its Plan of Reorganization and the internal administration of its Chapter 11 case. The Court has subsequently confirmed and approved the Debtor’s Plan of Reorganization on September 28, 2007. The FOCUS restructuring and bankruptcy advisory team was led by Ken Naglewski, a turnaround manager and restructuring specialist who has extensive leadership experience in Chapter 11 reorganizations, financial restructurings, operational turnarounds and distressed business sales. Naglewski, a Managing Director of Focus Management Group, is a Certified Insolvency and Restructuring Advisor and Certified Turnaround Professional. About Focus Management Group Focus Management Group offers nationwide capabilities in turnaround management, business restructuring and asset recovery. Headquartered in Tampa, FL, with offices in Atlanta, Chicago, Cleveland, Greenwich, Los Angeles and Nashville, Focus Management Group provides turn-key support to stakeholders including secured lenders and equity sponsors. The Company provides a comprehensive array of services including turnaround management, interim management, operational analysis and process improvement, bank and creditor negotiation, asset recovery, recapitalization services and investment bankers to distressed companies. Over the past decade, Focus Management Group has successfully assisted hundreds of clients operating in diverse industries, guiding them to maximize performance or asset recovery. Adverse situations are Focus Management Group’s forte – finding winning compromises in a timely manner when faced with the most discouraging of circumstances is what separates FOCUS Management Group from the competition. PARKER DRILLING: Improved Performance Cues S&P to Lift Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on oil and gas contract driller Parker Drilling Co. to 'B+' from 'B'. At the same time, S&P raised the issue ratings on Parker's senior and convertible notes to 'B+' from 'B-'. These consist of its $125 million 2.125% convertible notes due 2012, and $225 million 9.625% senior notes due 2013. The outlook is stable. As of June 30, 2007, Houston, Texas-based Parker had about $338 million in debt, adjusted for operating leases. "The upgrade is based on improved operating performance and significantly improved credit protection measures," said Standard & Poor's credit analyst Aniki Saha-Yannopoulos. Further improvement in operating performance should result from Parker's recent capital expenditure program and favorable industry conditions. Also, multiple international contracts have increased contract visibility through 2010 in certain areas of the company's business. S&P raised the ratings on the notes by one additional notch because the amount of priority debt in the form of the company's unrated credit facility will not exceed 15% of the book value of the company's assets—S&P's current guideline for lowering an unsecured issue rating by one notch relative to the corporate credit rating. The ratings on Parker reflect its participation in a highly competitive, cyclical industry; its active capital spending program; and operations in international markets and areas that can expose it to geopolitical risks. Business segment and geographic diversity partially mitigate these weaknesses. PARMALAT SPA: Judge Doubts EUR2.1 Billion Claim Against Banks ------------------------------------------------------------- Parma-based Judge Giampaolo Fabbrizzi has expressed doubts on the validity of Parmalat S.p.A.'s EUR2.1 billion damages claim against creditor banks Deutsche Bank, JP Morgan, Credit Suisse, UBS, Banca Akros and Merrill Lynch, Il Sole 24 reports. Parmalat alleged that the banks contributed to its collapse. However, Judge Fabbrizzi noted that Parmalat would find it difficult to claim damages for an occurrence to which it had itself contributed. The banks' lawyers have argued that Parmalat chief executive Enrico Bondi cannot sue for "abusive recourse to credit," citing a ruling in a separate case. The court will hear the case Nov. 26, 2008. Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Parmalat has three financing arms: Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat S.p.A. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. PIRATES' REALITY: Voluntary Chapter 11 Case Summary --------------------------------------------------- Lead Debtor: Pirates' Reality 7500 Bellaire Boulevard, Suite 201 Houston, TX 77036 Tel: (713) 777-1111 Bankruptcy Case No.: 07-36859 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Pirate's Lake, Ltd. 07-36866 Chapter 11 Petition Date: October 1, 2007 Court: Southern District of Texas (Houston) Judge: Jeff Bohm Debtors' Counsel: Gregg K. Saxe, Esq. 10101 Southwest Freeway, Suite 101 Houston, TX 77074 Tel: (713) 995-5733 Fax: (713) 995-5122 Estimated Assets Estimated Debts ---------------- --------------- Pirates' Reality $1 Million to $1 Million to $100 Million $100 Million Pirate's Lake, Ltd. $1 Million to $1 Million to $100 Million $100 Million The Debtors did not file lists of their 20 largest unsecured creditors. PORTELLA MANUFACTURING: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Portella Manufacturing, LLC 21430 North 15th Lane, Suite 126 Phoenix, AZ 85027 Tel: (512) 470-0712 Bankruptcy Case No.: 07-05055 Type of Business: The Debtor manufactures wooden doors. Chapter 11 Petition Date: October 1, 2007 Court: District of Arizona (Phoenix) Judge: Charles G. Case II Debtor's Counsel: Robert J. Berens, Esq. Mann, Berens, & Wisner, LLP 3300 North Central Avenue, Suite 2400 Phoenix, AZ 85012 Tel: (602) 258-6200 Fax: (602) 258-6212 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. PRA INTERNATIONAL: Moody's Places Corporate Family Rating at B3 --------------------------------------------------------------- Moody's Investors Service assigned a B3 Corporate Family Rating to PRA International. Moody's also assigned a B1 rating to the "first-out" portion of the proposed senior secured credit facility, including the revolver, and a B3 rating to the "last- out" portion of the credit facility. The outlook for the ratings is stable. This is the first time Moody's has assigned ratings to PRA. The ratings are principally constrained by: 1. the significant levels of leverage and resulting weak credit metrics; 2. the potential for near-term operating volatility as a result of the company's on-going turnaround as well as cancellation risk inherent in the global contract research organization industry; 3. the limited track record of free cash flow generation and 4. the company's small scale and relatively modest competitive position against several much larger companies. The ratings are also constrained by Moody's concerns about the company's liquidity profile as well as the expectation for limited recoverability of assets in a bankruptcy scenario. Despite the above concerns, Moody's acknowledges several positive trends at the company. These include: 1) a new management team with solid industry and turnaround experience; 2) good opportunities for growth and margin expansion upon successful execution of the strategy; 3) positive industry growth trends and 4) early signs of positive momentum in the company's turnaround. All ratings are subject to review of final documentation. Ratings assigned: PRA International: -- $30 million senior secured revolving credit facility due 2013; B1, LGD3, 35% -- $55 million senior secured first-out term loan due 2014; B1, LGD3, 35% -- $85 million senior secured last-out term loan due 2014; B3, LGD5, 71% -- Corporate Family Rating; B3 -- Probability of Default Rating; B2 Pharmaceutical Research Associates Group BV: -- $10 million senior secured revolving credit facility due 2013; B1, LGD3, 35% -- $115 million senior secured first-out term loan due 2014; B1, LGD3, 35% The outlook for the ratings is stable. PRA is a global contract research organization that assists pharmaceutical and biotechnology companies in developing drug compounds, biologics, and drug delivery devices and gaining necessary regulatory approvals. The company generated gross revenues of about $382 million (including $43 million of reimbursed expenses) for the twelve months ended June 30, 2007. PRA INTERNATIONAL: S&P Assigns 'B' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to pharmaceutical contract research organization PRA International Inc. The outlook is stable. At the same time, Standard & Poor's Ratings Services assigned its bank loan and recovery ratings to PRA's secured financing. The company's proposed first-out credit facilities are rated 'BB-', with a recovery rating of '1', indicating the expectations for very high (90%-100%) recovery in the event of a payment default. PRA is the borrower for the first-out credit facilities, consisting of a $30 million revolving credit facility and a $55 million term loan. Pharmaceutical Research Associates Group BV is the borrower for the other first-out credit facilities, consisting of a $10 million euro-denominated revolving credit facility, a $60 million euro-denominated term loan, and a $55 million term loan. S&P also assigned its 'CCC+' bank loan rating to the company's $85 million last-out term loan, for which PRA is the borrower. The recovery rating of '6' indicates the expectation for negligible (0%-10%) recovery in the event of a payment default. At the same time, S&P assigned its 'CCC+' rating to PRA's $170 million senior subordinated notes. The proceeds of the term loans and notes are being used in conjunction with approximately $390 million of common equity to finance the buyout of the company by sponsor Genstar Capital LLC. The buyout values the company at about $750 million, which represents a multiple of about 13x pro forma adjusted EBITDA from the past 12 months. "The rating reflects PRA's highly leveraged capital structure, risks related to its continuing turnaround efforts, a somewhat concentrated customer base, and the potential for earnings volatility," said Standard & Poor's credit analyst Alain Pelanne. "These factors are offset partially by PRA's recently improving results, its global footprint and therapeutic expertise, and trends that support strong growth for the industry." PRECISION OPTICS: Vitale Caturano Raises Going Concern Doubt ------------------------------------------------------------ Boston, Mass.-based Vitale, Caturano and Company, Ltd., raised substantial doubt about Precision Optics Corporation, Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended June 30, 2007, and 2006. The auditing firm pointed to the company's recurring net losses and negative cash flows from operations. For the year ended June 30, 2007, Brendan Technologies reported a $2,889,829 net loss on $2,477,469 of revenues, as compared with a $2,272,473 net loss on $2,149,564 of revenues for the year ended June 30, 2006. At June 30, 2007, Brendan Technologies' balance sheet showed $3,035,597 in total assets, $718,387 in total liabilities, and $2,317,210 in total stockholders' equity. The company had $2,639,897 in total stockholders' equity at June 30, 2006. The company's net cash used in operating activities was $3,334,918 for the year ended June 30, 2007, as compared with $2,272,177 cash used for the year ended June 30, 2006. Gardner, Mass.-based Precision Optics Corporation, Inc. -- http://www.poci.com/-- designs, develops, manufactures and sells advanced optical instruments since 1982. It produces high-quality medical instruments, optical thin film coatings, micro-optics with characteristic dimensions less than 1 mm, and other advanced optical systems. The company's medical instrumentation line includes laparoscopes, arthroscopes and endocouplers and a line of world-class 3-D endoscopes for use in minimally invasive surgical procedures. It is a certified ISO company. PRIDE INTERNATIONAL: Earns $146.1 Million in Qtr. Ended June 30 --------------------------------------------------------------- Pride International Inc. reported a 115% improvement in net income for the second quarter of 2007, to $146.1 million, compared to net income of $67.8 million for the corresponding three months in 2006. Second quarter 2007 results included gains totaling $8.8 million resulting primarily from the sale of a land rig located in Russia. Revenues for the second quarter of 2007 totaled $791.2 million, compared to revenues of $616.5 million during the second quarter of 2006. For the six months ended June 30, 2007, net income was $247.8 million, on revenues of $1.50 billion. The results compared to net income of $138.3 million, on revenues of $1.18 billion for the comparable six months in 2006. Results for the six months ended June 30, 2006, include after-tax gains totaling $19.0 million relating to the sale of assets. Louis A. Raspino, president and chief executive officer of Pride International Inc., stated, "Our record second quarter results were driven by strong operating performance with our fleet of deepwater and midwater floaters combined with continued average daily revenue improvements from contract rollovers. Following the excellent operating results of first quarter 2007, we continued in the second quarter with excellent utilization, uptime, cost control, and shipyard performance, while achieving 21% and 36% average daily revenue increases in our deepwater and midwater fleets, respectively." Raspino added, "Partially offsetting these results was our U.S. Gulf jackup fleet, which experienced lower utilization and lower average daily revenues in the quarter due to reduced activity, combined with an increase in out-of-service time as we prepared to relocate the Pride Oklahoma and Pride Mississippi to the stronger market in Mexico. "From a macro perspective, strong global demand for energy is fueling our customers' continued growth in E&P spending, particularly in the deepwater. As part of our stated strategy to further grow our significant deepwater presence, we recently committed to the construction of an ultra-deepwater drillship and acquired a second ultra-deepwater drillship in the early stages of construction. When combined with the acquisitions of our partners' interest in two deepwater joint ventures, we have now invested or committed over $2 billion toward our deepwater growth strategy. We are confident that the favorable conditions in the deepwater sector will persist for quite some time, producing attractive opportunities for deepwater drilling rigs, especially ultra-deepwater rigs of the caliber we are adding to our fleet," said Raspino. Capital expenditures for the six months ended June 30, 2007, were $207 million. Since the close of the second quarter, the company made initial capital expenditures of approximately $210 million related to the commitment to construct an ultra-deepwater drillship and the acquisition of another ultra-deepwater drillship in the early stages of construction. As a result of these drillship projects, the company has revised its expected 2007 capital expenditures to an estimated $790 million. Total debt at June 30, 2007 was $1.29 billion, resulting in a debt-to-total- capitalization ratio of approximately 31%. At June 30, 2007, the company's consolidated balance sheet showed $5.30 in total assets, $2.03 billion in total liabilities, $333.2 million in deferred income taxes, $30.7 million in minority interest, and $2.91 billion 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?23ec About Pride International Headquartered in Houston, Pride International Inc. (NYSE: PDE) -- http://www.prideinternational.com/-- provides onshore and offshore drilling and related services in more than 25 countries, operating a diverse fleet of 280 rigs, including two ultra- deepwater drillships, 12 semisubmersible rigs, 28 jackups, 16 tender-assisted, barge and platform rigs, five managed and 217 land rigs. The company also has two ultra-deepwater drillships under construction with expected deliveries in 2010. * * * As reported in the Troubled Company Reporter on Sept. 4, 2007, Fitch Ratings affirmed Pride International Inc.'s Issuer Default Rating at 'BB'. The Rating Outlook is Stable. PW LLC: Judge Bluedbond Converts Chapter 11 Case ------------------------------------------------ The Honorable Sheri Bluebond of the United States Bankrutpcy Court for the Central District of California converted PW LLC's Chapter 11 case into a Chapter 7 liquidation proceeding. As reported in the Troubled Company Reporter on Aug. 22, 2007, Nancy Knufer, the appointed Chapter 11 Trustee in the Debtor's case, asks the Court to convert the Debtor's case. The Trustee told the Court that the Debtor has insufficient assets and resources to fund a plan of reorganization. The Trustee said that it has liquidated all known tangible assets of the Debtor's estate. Headquartered in Santa Monica, California, PW LLC filed for Chapter 11 protection on November 20, 2006 (Bankr. C.D. Calif. Case No. 06-16059). Martin J. Brill, Esq. of Levene, Neale, Bender, Rankin & Brill LLP represents the Debtor in its restructuring efforts. No Official Creditors Committee was appointed in this case. In its schedules filed with the Court, the Debtor disclosed total assets of $55,500,000 and total liabilities of $49,197,639. On Dec. 27, 2006, Nancy Knupfer was appointed as the Debtor's chapter 11 trustee. John N. Tedford, Esq., at Danning, Gill, Diamond & Kollitz, represents the chapter 11 trustee. QUEST TRUST: S&P Junks Ratings on Class M-3 Certificates -------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class M-2 and M-3 asset-backed certificates issued by Quest Trust 2004-X1 and removed them from CreditWatch with negative implications. At the same time, S&P affirmed its ratings on the remaining two classes from this transaction. The downgrade of classes M-2 and M-3 reflect a reduction in credit enhancement caused by monthly realized losses, as well as a high amount of severe delinquencies (90-plus-days, foreclosures, and REOs). Currently, the transaction has $9,116,664 in severe delinquencies. Monthly realized losses have exceeded excess interest during the past six months. As of the Sept. 25, 2007, remittance date, monthly losses had exceeded excess spread by an average of 4.8x over the past six months. Overcollateralization has been completely depleted; however, an unrated class with a balance of $1,219,092 supports class M-3. The affirmations reflect sufficient credit enhancement for the current ratings. The classes with affirmed ratings have actual and projected credit support percentages that are in line with the original levels. Subordination, overcollateralization, and excess spread provide credit support for this transaction. The collateral for this series consists of one- to four-family, fixed- and adjustable- rate, first- and junior-lien mortgage loans with terms to maturity of no more than 30 years. Ratings Lowered and Removed from Creditwatch Negative Quest Trust 2004-X1 Asset-backed certificates series 2004-X1 Rating ------ Class To From ----- -- ---- M-2 B BB/Watch Neg M-3 CCC B/Watch Neg Ratings Affirmed Quest Trust 2004-X1 Asset-backed certificates series 2004-X1 Class Rating ----- ------ A AAA M-1 A RELIANT ENERGY: Panel Taps Pepper Hamilton as Bankrupty Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors in Reliant Energy Channelview LP and debtor-affiliates' chapter 11 cases, asks the United States Bankruptcy Court for the District of Delaware, for permission to retain Pepper Hamilton LLP as their counsel, nunc pro tunc to Aug. 30, 2007. Pepper Hamilton will: a) advise the Committee with respect to its rights, duties and powers in these cases; b) assist and advise the Committee in its consultations with the Debtors relating to the administration of these cases; b) assist the Committee in analyzing the claims of the Debtors, creditors and the Debtors' capital structure and in negotiating with the holders of claims and, if appropriate, equity interests; d) assist the Committee's investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors and other parties involved with the Debtors, and of the operation of the Debtors' businesses; e) assist the Committee in analyzing intercompany transactions; f) assist the Committee in its analysis of, and negotiations with the Debtors or any other third party concerning matters related to, among other things, the assumption or rejection of certain leases of non-residential real property and executory contracts, asset dispositions, financing of other transactions and the terms of a plan of reorganization or liquidation for the Debtors; g) assist and advise the Committee as to its communications, if any, to the general creditor body regarding significant matters in these cases; h) represent the Committee at all hearings and other proceedings; i) review, analyze and advise the Committee with respect to all applications, orders, statements of operations and schedules filed with the Court; j) assist the Committee in preparing pleadings and applications as may be necessary in furtherance of the Committee's interests and objectives; and k) perform such other services as may be required and are deemed to be in the interests of the Committee in accordance with the Committee's powers and duties as set for in the Bankruptcy Code. The firm's professionals compensation rates are: Designation Hourly Rates ----------- ------------ Partners $400 - $690 Associates $250 - $320 Paraprofessionals $175 David B. Stratton, Esq., a partner at Pepper Hamilton, assures the Court that the firm does not hold any interest adverse to the Debtors and their estate. Mr. Stratton can be reached at: David B. Stratton, Esq. Pepper Hamilton LLP Hercules Plaza, Suite 5100 1313 Market Street P.O. Box 1709 Wilmington, Delaware, 19899-1709 Tel.: (302) 777-6500 Fax.: (302) 421-8390 http://pepperlaw.com/ Based in Houston, Reliant Energy Channelview L.P. owns a power plant located near Houston, and is an indirect wholly owned subsidiary of Reliant Energy Inc. -- http://www.reliant.com/-- The company and its three affiliates, Reliant Energy Channelview (Texas) LLC, Reliant Energy Channelview (Delaware) LLC, and Reliant Energy Services Channelview LLC filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Del. Lead Case No. 07-11160). Mark D. Collins, Esq., Paul N. Heath, Esq., and Jason Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtors filed for protection from their creditors, they listed total assets of $362,000,000 and total debts of $342,000,000. RH DONNELLEY: Moody's Rates Proposed $500MM Senior Notes at B3 -------------------------------------------------------------- Moody's Investors Service has assigned a B3 rating to R.H. Donnelley Corporation's proposed $500 million of additional series A-4 senior notes due 2017, and a Ba1 rating to Dex Media East LLC's proposed $1.2 billion senior secured credit facilities. Moody's also affirmed R.H. Donnelley Corporation's B1 Corporate Family rating. Details of the rating action are: Ratings assigned: R.H. Donnelley Corporation -- $500 million additional series A-4 senior unsecured notes due 2017 -- B3, LGD5, 84% Dex Media East LLC -- $100 million senior secured revolving credit facility due 2013 -- Ba1, LGD2, 15% -- $750 million senior secured delayed draw term loan A due 2013 -- Ba1, LGD2, 15% -- $350 million senior secured delayed draw term loan B due 2014 -- Ba1, LGD2, 15% Ratings affirmed: R.H. Donnelley Corporation -- Corporate Family rating - B1 -- PDR: B1 -- Speculative Grade Liquidity rating -- SGL -- 1 -- 8.875% series A-4 senior notes due 2017 -- B3, LGD5, 84% -- 6.875% senior notes due 2013 -- B3, LGD5, 84% -- 6.875% Series A-1 senior discount notes due 2013 -- B3, LGD5, 84% -- 8.875% Series A-3 senior notes due 2016 -- B3, LGD5, 84% -- 6.875% Series A-2 senior discount notes due 2013 -- B3, LGD5, 84% R.H. Donnelley Inc. -- Senior secured revolving credit facility due 2009 -- Ba1, LGD2, 15% -- Senior secured term loan A due 2009 -- Ba1, LGD2, 15% -- Senior secured term loan D due 2011 -- Ba1, LGD2, 15% Dex Media West LLC -- Senior secured revolving credit facility due 2009 -- Ba1, LGD2, 15% -- Senior secured term loan A due 2009 -- Ba1, LGD2, 15% -- Senior secured term loan B due 2010 -- Ba1, LGD2, 15% -- Senior secured term loan B-1 due 2010 -- Ba1, LGD2, 15% -- 8.5% senior unsecured notes due 2010 -- Ba3, LGD3, 41% -- 5.875% senior unsecured notes due 2011 -- Ba3, LGD3, 41% -- 9.875% senior subordinated notes due 2013 -- B1, LGD3, 49% Dex Media, Inc. -- 8% senior unsecured global notes due 2013 -- B2, LGD4, 61% -- 9% senior discount global notes due 2013 -- B2, LGD4, 61% Ratings affirmed, subject to withdrawal at closing: R.H. Donnelley Inc. -- 10.875% senior subordinated notes due 2012 Dex Media East LLC -- Senior secured revolving secured credit facility due 2008 -- Senior secured term loan A due 2008 -- Senior secured term loan B due 2009 -- 9.875% global senior unsecured notes due 2009 -- 12.125% senior subordinated notes due 2012 The rating outlook is stable. The ratings reflect the company's high leverage (about 7 times debt to EBITDA at closing), the risk of further acquisition activity, the limited growth prospects of the directory publishing business, the increasing threat posed by competing directory publishers and web-based directory service providers in virtually all Donnelley's markets, and the recent decline experienced by the company's print product sales. However, the ratings are supported by Donnelley's scale, the strong market position conferred by its exclusive publishing agreements with Embarq Corporation, Qwest Communications, and AT&T Inc. as the "official" yellow pages directory within a number of their incumbent markets. In addition the ratings reflect Donnelley's very good liquidity profile, its diversified customer and geographic market base; and its strong cash flow generation which provides the opportunity for significant debt and leverage reduction, absent further acquisitions or the payment of dividends. The stable outlook incorporates the relative predictability of R.H. Donnelley's revenues and the resilience of the yellow page publishing segment to economic downturns. Donnelley plans to use the proceeds of the proposed senior unsecured notes and senior secured credit facilities to repay Dex Media East LLC's existing senior secured credit facilities, to repay a portion of R.H. Donnelley Inc.'s senior secured term loans, to redeem Dex Media East LLC's senior notes and senior subordinated notes, as well as pay call premiums and transaction expenses. Moody's has not reviewed documentation for Dex Media East LLC's proposed $1.2 billion senior secured credit facilities. Accordingly, the ratings of these facilities are subject to satisfactory review of documentation, the terms and conditions of which Moody's has been advised will be no more onerous than those of Dex Media East LLC's existing facilities. Headquartered in Cary, North Carolina, R.H. Donnelley is one of the largest US yellow page directory publishing companies. The company reported revenues of $2.5 Billion for the LTM period ended June 30, 2007. RH DONNELLEY: Proposed $500MM Add-On Cues S&P to Hold B Rating -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' rating on R.H. Donnelley Corp.'s 8.875% senior notes due 2017 following the company's proposed $500 million add-on. The notes will be sold privately under Rule 144A of the Securities Act of 1933, and will include registration rights. Proceeds from this issue will be used to repay portions of Dex Media East Inc.'s and R.H. Donnelley Inc.'s senior secured debt, and to pay for related fees and expenses. The corporate credit rating on RHD is 'BB-', and the rating outlook is stable. The rating reflects substantial consolidated debt levels due to major acquisitions over the past several years. This is somewhat mitigated by RHD's incumbent market positions, predictable sales and cash flow generation, and geographic and customer diversity. Notwithstanding recent revisions by management to its advertising sales guidance, management is affirming its 2007 EBITDA and free cash flow guidance from its second-quarter earnings call on July 26, 2007. Given the minimal forecasted decline in sales growth and S&P's expectations for continued solid EBITDA generation, S&P expect credit measures to remain in line with the current rating. Ratings List R.H. Donnelley Corp. Corporate Credit Rating BB-/Stable/-- Rating Affirmed R.H. Donnelley Corp. 8.875% Sr Nts Due 2017 B RURAL/METRO: Special Stockholder Meeting Scheduled on Oct. 10 ------------------------------------------------------------- Rural/Metro Corporation's board of directors and Accipiter Capital Management LLC, a significant stockholder, have agreed to meet on Oct. 10, 2007. "In an effort to be responsive to stockholders' requests, we look forward to meeting with Accipiter to discuss long-term stockholder value,” Jack Brucker, president and chief executive officer, said. “Our priority is to enhance stockholder value, and the board and management are committed to doing what is best for all shareholders in this regard." Headquartered in Scottsdale, Arizona, Rural/Metro Corporation (Nasdaq:RURL) -- http://www.ruralmetro.com/-- provides emergency and non-emergency medical transportation, fire protection, and other safety services in 23 states and approximately 400 communities throughout the United States. * * * As reported in the Troubled Company Reporter on Sept. 21, 2007, Standard & Poor's Ratings Services revised its outlook on Rural/Metro Corp. to negative from stable. S&P also affirmed the ratings on Rural/Metro, including the 'B' corporate credit rating. The outlook revision reflects S&P's increased concern with the company's limited liquidity. SABEE PRODUCTS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Sabee Products, Inc. 1843 West Reeve Street Appleton, WI 54914 Bankruptcy Case No.: 07-27812 Type of business: The Debtor manufactures and sells disposable physician supplies and incontinence products. See http://www.sabeeproducts.com/ Chapter 11 Petition Date: October 2, 2007 Court: Eastern District of Wisconsin (Milwaukee) Debtor's Counsel: Paul G. Swanson, Esq. Steinhilber, Swanson, Mares, Marone & McDermott 107 Church Avenue, P.O. Box 617 Oshkosh, WI 54903-0617 Tel: (920) 426-0456 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Covermat Corporation trade payable $480,183 45 North Station Plaza Great Neck, NY 11021 Crystal Printing trade payable $593,547 P.O. Box 733 Appleton, WI 54912 Michael Sabee trade debt $1,986,684 3033 West Shady Lane Neenah, WI 54956 Great Northern Corporation trade payable $816,849 Drawer 582 Milwaukee, WI 53278 Hansen Paper Company trade payable $731,881 13 East Central Avenue Paoli, PA 19301 Target Marketing Worldwide trade payable $430,950 P.O. Box 847329 Boston, MA 02284 Great Lakes Tissue trade payable $302,247 3529 Paysphere Circle Chicago, IL 60674 Avgol, Ltd./Cleaver trade payable $208,123 Association, Inc. Polymer Group, Inc. trade payable $191,011 Gill & Gill trade debt $165,086 International Paper trade payable $152,882 Streco Fibres, Inc. trade payable $146,750 Dwight Sabee trade debt $145,000 Bema Polytech, Inc. trade payable $144,733 Green Meadow Recycling, Inc. trade payable $139,831 American Industrial Leasing trade debt $126,869 Penny Sabee trade debt $121,377 City of Appleton trade payable $108,480 Finance Dept City Hall First Insurance Funding Corp trade payable $80,356 Fox Cities Insurance Agency Town of Grand Chute trade payable $76,714 SALTON INC: Inks Agreement to Acquire Applica --------------------------------------------- Salton, Inc. has entered into a definitive merger agreement with APN Holding Company, Inc., the parent company of Applica Incorporated, pursuant to which Applica will become a wholly-owned subsidiary of Salton. APN Holding Company is owned by Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. As reported in the Troubled Company Reporter on Aug. 7, 2007, Salton Inc. received from APN Holding Company Inc. a written notice of termination of the merger agreement dated Feb. 7, 2007, between Salton and APN Holdco. Salton argues that the termination confirms Salton's belief that APN Holdco has, for some time, not acted in good faith and that the company intends to vigorously pursue its claims and remedies against APN Holdco, its affiliates and representatives. As a result of the proposed merger and the related transactions, Harbinger Capital Partners will beneficially own 92% of the outstanding common stock of Salton, and existing holders of Salton's Series A Voting Convertible Preferred Stock (excluding Harbinger Capital Partners), Series C Nonconvertible (NonVoting) Preferred Stock (excluding Harbinger Capital Partners) and common stock (excluding Harbinger Capital Partners) would own approximately 3%, 3% and 2%, respectively, of the outstanding common stock of Salton immediately following the merger and related transactions. In addition to the merger, the definitive merger agreement contemplates the consummation of these transactions simultaneously with the closing of the merger: (1) the mandatory conversion of all outstanding shares of Salton's Series A Voting Convertible Preferred Stock, including those held by Harbinger Capital Partners, into shares of Salton's common stock; (2) the mandatory conversion of all outstanding shares of Salton's Series C Nonconvertible (NonVoting) Preferred Stock, including those held by Harbinger Capital Partners, into shares of Salton's common stock; and (3) the exchange by Harbinger Capital Partners of approximately $90 million principal amount of Salton's second lien notes and approximately $15 million principal amount of Salton's 2008 senior subordinates notes, for shares of a new series of non-convertible (non voting) preferred stock of Salton, bearing a 16% cumulative preferred dividend. The combination of Salton and Applica is expected to create one of the largest U.S. public companies focused on the household small appliance industry, with the scale and customer relationships to provide category leadership and efficiencies. The combined company will have a broad portfolio of well recognized brand names such as Salton(R), George Foreman(R), Black & Decker(R), Westinghouse(TM), Toastmaster(R), Melitta(R), Russell Hobbs(R), Windmere(R), LitterMaid(R) and Farberware(R). Salton and its subsidiaries after the merger will continue to design, service, market and distribute a wide range of products under these brand names, including small kitchen and home appliances, electronics for home, lighting products, and personal care and wellness products. The combination of Salton and Applica is expected to provide enhanced scale which should enable the combined company to reduce costs; attract new and expand existing customer relationships; capitalize on organic and external growth opportunities more effectively than either company could have on a stand alone basis; improve cost of goods through larger volume purchasing; and benefit from improved capital structure flexibility. In addition, Salton and Applica have complementary geographic strengths that can be utilized to enhance the distribution of each company's products outside the United States. In particular, Salton's business is well established in Europe, Australia and Brazil (with additional distribution in Southeast Asia, Middle East and South Africa), while Applica's business is well established in Mexico, South America and Canada. The executive leadership of the combined companies after the merger is expected to consist of members of both Salton's and Applica's existing management teams as well as new management personnel. "We believe that this transaction is the best strategic alternative available to enhance stockholder value,” William Lutz, Interim Chief Executive Officer of Salton, said. “The combination of Salton and Applica is expected to create the opportunity for significant future value enhancement for Salton stockholders, as well as benefit customers and suppliers, as a result of the expanded brand portfolios, strengthened international presence and improved capital structure flexibility of the combined companies. The combined company can operate more efficiently than either Applica or Salton on a stand alone basis, and will benefit significantly from cost and revenue synergies." "The combined company will be well positioned as a leading provider of quality, innovative consumer appliances around the world,” Terry Polistina, Chief Operating Officer and Chief Financial Officer of Applica, added. “The company will be able to leverage brands, products and geographies, as well as provide the scale to drive organic growth. In addition, we believe the combined company will be a compelling platform for future expansion in our industry." The companies intend to complete this transaction within the next three to four months. The consummation of the merger and related transactions is subject to various conditions, including the approval by the Company's stockholders and the absence of legal impediments. The merger and related transactions are not subject to any financing condition. Houlihan Lokey Howard & Zukin acted as financial advisor and Sonnenschein Nath & Rosenthal LLP acted as legal advisor to Salton. Lazard Freres & Co. LLC acted as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to Harbinger Capital Partners and APN Holding Company. About Applica Applica Inc. (NYSE: APN) -- http://www.applicainc.com/-- is a marketer and distributor of a range of branded small household appliances in five categories: kitchen products, home products, pest control products, pet care products and personal care products. About Salton Inc. Headquartered in Lake Forest, Illinois, Salton Inc. (NYSE:SFP) -- http://www.saltoninc.com/-- designs, markets and distributes branded, high-quality small appliances, home decor and personal care products. Its product mix includes a range of small kitchen and home appliances, electronics for the home, time products, lighting products, picture frames and personal care and wellness products. * * * Moody's Investors Service assigned its Ca rating to Salton Inc.'s 12-1/4% senior subordinated notes due April 15, 2008. SATINDER TAMBER: Case Summary & Four Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Satinder Singh Tamber 104 B. Hoxsie Court Folsom, CA 95630 Bankruptcy Case No.: 07-28101 Chapter 11 Petition Date: October 1, 2007 Court: Eastern District of California (Sacramento) Judge: Robert S. Bardwil Debtor's Counsel: Charles H. Briggs, III, Esq. Law Office of Charles H. Briggs, III 1912 I Street, Suite 102 Sacramento, CA 95814 Tel: (916) 446-4692 Estimated Assets: $100,000 to $1 Million Estimated Debts: $100 Million to $100 Million Debtor's list of its Four Largest Unsecured Creditors: Entity Claim Amount ------ ------------ AT&T Unknown P.O. Box 6413 The Lakes, NV 88901-6413 Bank of America Unknown P.O. Box 15713 Wilmington, DE 19886-5713 CITI Unknown P.O. Box 6407 The Lakes, NV 88901-6401 Specialized Loan Services, LLC Unknown P.O. Box 105219 Atlanta, GA 30348-4757 SCO GROUP: Taps Berger Singerman as General Counsel --------------------------------------------------- The SCO Group Inc. and SCO Operations Inc. ask the United States Bankruptcy Court for the District of Delaware for authority to employ Berger Singerman P.A. as their general counsel, nunc pro tunc to Sept 14, 2007. Debtors selected the firm because the firm's attorneys are qualified to practice in this Court and are qualified to advise the Debtors on their relations with, and responsibilities to, the creditors and other interested parties. As the Debtors' general counsel, Berger Singerman will: a) advise the Debtors with respect to its powers and duties as debtors-in-possession and the continued management of their business operations; b) advise the Debtors with respect to their responsibilities in complying with the United States Trustee's Operating Guidelines and Reporting requirements and with the rules of the Court; c) prepare motions, pleadings, orders, applications, adversary proceedings, and other legal documents necessary in the administration of the cases; d) protect the interests of the Debtors in all matters pending before the Court; and e) represent the Debtors in negotiations with their creditors and in the preparation of a plan. The firm's professionals billing rate are: Professional Hourly Rate ------------ ----------- Paul Steven Singerman, Esq. $475 Arthur J. Spector, Esq. $450 Associate Attorneys $250 - $370 Legal Assistants/Paralegals $75 - $160 The firm disclosed that on Sept. 4, 2007, and Sept. 12, 2007, Berger Singerman received retainers of $50,000 and $375,000, respectively, in connection with Debtors' chapter 11 cases. Arthur J. Spector, Esq., a shareholder of the firm, assures the Court that the firm does not hold any interest adverse to the Debtors and their estate, and that the firm is a "disinterested person" as that term is defined under Section 101(14) of the Bankruptcy Code. Mr. Spector can be reached at: Arthur J. Spector, Esq. Berger Singerman P.A. 350 E. Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 Tel.: (954) 713-7511 http://www.bergersingerman.com/ Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq: SCOX) fka Caldera International Inc. -- http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. The company and its affiliate filed for Chapter 11 protection on Sept. 14, 2007, (Bankr. D. Del. Lead Case No. 07-11337). As of Sept. 10, 2007, the Debtors' reported total assets of $14,800,000 and total debts of $7,500,000. SCO GROUP: Promotes Sandy Gupta to President of SCO Operations -------------------------------------------------------------- The SCO Group, Inc. has promoted Sandy Gupta to President of SCO Operations Inc., effective immediately. Mr. Gupta will continue to report to Darl McBride, President and CEO of The SCO Group. "With Sandy's extensive UNIX technical background and vision for our SCO Mobile products, he will be able to laser-focus on product deliverables and customer needs," Mr. McBride said. "We have a number of key technologies coming out in the next couple of quarters that will drive value for our customers; Sandy's focus will be a win-win for them. Those expanding their IT infrastructure into the mobile space will see a solid solution in SCO Mobile Server, with its UNIX technology backbone. Customers simply needing updated core SCO UNIX technology will have greater capabilities as well as future mobile plug and play functionality." The SCO Group entered the high-growth mobile market several years ago and according to IDC's 2007 Worldwide Mobile Middleware Forecast* it has recently moved into the leadership quadrant with other mobile technology leaders. Most recently, Sandy Gupta was Chief Technology Officer and General Manager for The SCO Group. Prior to that, he held a number of senior positions, including VP of SCO Engineering and Senior Director of UNIX Engineering while working for the SCO Murray Hill office in New Jersey. Mr. Gupta joined SCO in 1996 with the ISV engineering group. During this time, Mr. Gupta worked with strategic ISV partners -- including Progress, Oracle, Computer Associates and others -- on their ports to SCO UNIX platforms. Mr. Gupta then moved to the SCO UK escalations group and led the 24x7 enterprise escalations engineering team. He also led the SCO eCommerce and Web Services initiative in 2003. Before joining SCO, Mr. Gupta worked for Fujitsu ICL in the United Kingdom. During this engagement, Mr. Gupta contributed tremendous effort to the core kernel team at ICL that oversaw the reference port and device driver development of UNIX System V on the SPARC platform. Prior to this experience, Gupta started his career as an intern scientist at Indian Space and Research Organization. "After having worked at SCO for over a decade, I am thrilled to better serve our customers and partners in this new capacity," Mr. Gupta said. "As our primary focus, we will strengthen and expand our UNIX product offerings to our partners and reinvigorate our channels in doing so. The SCO UNIX partner and customer ecosystem has also represented a great channel to launch SCO Mobile products and services complementary to the core UNIX products." Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq: SCOX) fka Caldera International Inc. -- http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. The company and its affiliate filed for Chapter 11 protection on Sept. 14, 2007, (Bankr. D. Del. Lead Case No. 07-11337). As of Sept. 10, 2007, the Debtors' reported total assets of $14,800,000 and total debts of $7,500,000. SOLECTRON CORP: Flextronics Deal Cues Fitch to Withdraw Ratings --------------------------------------------------------------- Fitch Ratings has upgraded and withdrawn these Solectron Corporation ratings following its acquisition by Flextronics International Ltd. (Flextronics; rated 'BB+'): -- Issuer Default Rating to 'BB+' from 'BB-'; -- Senior unsecured debt to 'BB+' from 'BB-'; -- Subordinated debt to 'BB-' from 'B+'. The rating action resolves Solectron's Rating Watch Positive status. Fitch has withdrawn all of the ratings for Solectron, including its senior secured bank facility rating which was previously affirmed at 'BB+', based on the expectation that Flextronics will redeem all outstanding obligations of Solectron following the close of its acquisition which occurred on Oct. 1, 2007. The final ratings for Solectron reflect the equivalent ratings for Flextronics. STEEL DYNAMICS: Moody's Affirms Ba1 Corporate Family Rating ----------------------------------------------------------- Moody's Investors Service affirmed Steel Dynamics, Inc.'s Ba1 corporate family rating, Ba1 probability of default rating, the Ba2 rating on its $500 million 6.75% senior unsecured notes due 2015, and the Ba2 rating on its 4% senior subordinated convertible notes due 2012. The rating affirmation follows the company's announcement that it has entered into a definitive agreement to acquire OmniSource Corporation, one of North America's largest processors and distributors of scrap metal, for about $1 billion. The acquisition remains subject to regulatory approvals. The rating outlook is stable. SDI intends to finance roughly half of the acquisition through common stock, with the remainder through cash on hand and debt. On a pro forma basis, inclusive of debt at OmniSource (about $210 million net debt at closing), as well as the Techs and OmniSource acquisitions, SDI's Debt/EBITDA is expected to be about 1.6x, using Moody's standard adjustments. OmniSource will be a domestic subsidiary of SDI and provide a guarantee for SDI's existing unsecured notes. While Moody's believes that SDI has sufficient cushion in its credit metrics to accommodate a transaction of this magnitude without compromising its credit profile, flexibility for continued debt financed acquisitions at this rating level is lessened following this acquisition and The Techs acquisition and the corollary increase in debt (pro-forma to roughly $1.6 billion from $439 million at FYE 2006). Moody's views the acquisition of OmniSource as consistent with SDI's strategy to increase self sufficiency in ferrous resources, and believes that OmniSource will benefit SDI by improving both the availability and cost of raw materials. Additionally, given OmniSource's complimentary geographic footprint, position as one of SDI largest scrap suppliers, and the long standing relationship between the two companies, Moody's does not expect integration risk to be a major factor. SDI's Ba1 corporate family rating reflects the company's low cost mini-mill operating structure, which contributes to its strong earnings power, its growing production capabilities, and its improving product mix, which is shifting more toward higher value- added steel and specialty alloys. In addition, the robust steel price environment in recent years has enabled the company to significantly uptier its performance and fundamentally improve its financial profile. Overall, SDI's steelmaking process requires only 0.3 man-hours to produce a hot band ton in the flat roll division; Moody's believes that SDI is among the most profitable steel producers in the United States on a per ton basis. Given this fundamental improvement in performance over recent years and SDI's business strategy, which includes both organic growth and growth by acquisition, the company has an acceptable cushion at the Ba1 rating level for a more normalized "through the cycle" earnings scenario. Additionally, SDI benefits from flexible labor arrangements, the absence of a defined benefit pension program, and manageable environmental liabilities. Factors limiting the rating include the company's modest size relative to investment grade steel producers, the secured nature of its credit facility and the company's acquisition-driven growth strategy. The stable outlook captures Moody's expectations that SDI will continue to exhibit solid earnings and cash generation over the next twelve months reflective of its low cost position and continued acceptable business environment in key markets served, commercial construction in particular. The outlook also anticipates that given the recent acquisition activity and increased debt levels, SDI will look to balance cash generation uses among debt reduction, expansion and share repurchases. Considering SDI's growth initiatives, and the corollary impact on spending requirements, we do not see the company sustaining the financial leverage and coverage ratios appropriate for an investment grade company. In addition, the company continues to have a secured credit facility, recently increased to $750 million, which remains an impediment to achieving an investment grade rating. Moody's previous action for SDI was on July 12, 2007, when its ratings outlook was revised to stable from positive. Headquartered in Fort Wayne, Indiana, Steel Dynamics had total consolidated steel shipments of about 4.7 million tons and generated revenues of $3.2 billion in 2006. Pro-forma for The Techs acquisition, 2006 revenues would have been $4 billion. Based in Fort Wayne, Indiana, OmniSource is a privately owned scrap processor and distributor that operates 42 facilities in the United States and Canada. The company processed 5.7 million tons of ferrous scrap and 800 million pounds of non-ferrous metals in 2006, generating revenues of about $2.3 billion. SULTAN INC: Case Summary & 15 Largest Unsecured Creditors --------------------------------------------------------- Lead Debtor: Sultan, Inc. 6065 Fairmont Parkway, Suite A Pasadena, TX 77505-4022 Bankruptcy Case No.: 07-36822 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Sultan H. Abdullah & Shameen B. Abdullah 07-36833 Chapter 11 Petition Date: October 1, 2007 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtors' Counsel: J. Craig Cowgill, Esq. 2211 Norfolk, Suite 1190 Houston, TX 77098 Tel: (713) 956-0254 Fax: (713) 956-6284 Assets Debts --------------- ------------ Sultan, Inc. $100,000 to $1 Million to $1 Million $100 Million Sultan H. Abdullah & $92,000 $1,131,681 Shameen B. Abdullah A. Sultan, Inc's Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ AlanTown Enterprises, Inc. bank loan $37,332 2238 South Lane Stafford, TX 77477 Noor Ali Hussain bank loan $18,666 12670 Jebbia Lane Stafford, TX 77477-3302 Oconnor bank loan $3,568 Commercial Property Tax Division 2200 North Loop West, Suite 200 Houston, TX 77018-8009 Egly, Holcombe & Peebles bank loan $3,170 Texas Commisssion bank loan $1,500 On Environmental Quality Waste Management bank loan $235 Daniel Snooks bank loan Contingent $1 Pankaj R. Parmar bank loan Contingent $1 Linebarger Goggan L. David Smith bank loan Contingent $1 B. Sultan H. Abdullah & Shameen B. Abdullah's Six Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ MetroBank, N.A. $1,000,300 Attention: Manson Tsai 9600 Bellaire Boulevard, Suite 252 Houston, TX 77036-4520 Bank Of America $11,665 P.O. Box 15726 Wilmington, DE 19886 Worldpoints $5,707 P.O. Box 15721 Wilmington, DE 19886 Discover Card $4,097 Home Depot $2,172 Lowes $738 SWEET TRADITIONS: Panel Wants DIP Financing Terms Clarified ----------------------------------------------------------- The Official Committee of Unsecured Creditors in Sweet Traditions LLC and Sweet Traditions of Illinois LLC's chapter 11 cases opposes entry of an order granting final approval of the Debtors' motion to obtain $700,000 in postpetition financing from Allied Capital Corporation and use of Allied's cash collateral. On Sept. 6, 2007, the U.S. Bankruptcy Court for the Eastern District of Illinois granted the Debtors' request on an interim basis. According to the Committee, the postpetition financing agreement lacks clear and detailed explanation of some basic terms like nature of the facility as a revolving line or single advance, applicable interest rates, repayment of the facility, and maturity date. Other than a DIP lender, Allied is also the Debtors' prepetition lender pursuant to a loan agreement dated Aug. 11, 2006, granting the Debtors $40,120,000 in financing. The prepetition debt is secured by certain of the Debtors' assets, including a lien upon the Debtors' interests in various parcels of real estate in Missouri, Illinois, and Indiana. Additionally, the credit agreement prohibits the Debtors from engaging in any merger or consolidation with any entity, which provision, the Committee contends, would eliminate some potential options of the Debtors to reorganize the bankruptcy estate. The Committee also notes that section 7.1(i) of the credit agreement establishes as an event of default the entry of "any order of the Bankruptcy Court not approved by the [DIP] lender". "Even in the typically one-sided arena of post-petition financing, this provision seems far too overreaching as it sets up the DIP lender as the overseer of all orders entered by the Court and, correspondingly, the ultimate arbiter of the course and direction of the bankruptcy proceeding," counsel for the Committee Jonathan A. Margolies, Esq., at Shughart Thomson & Kilroy P.C. argues. Further, the Committee tells the Court that the carve-out for professionals establishes a limitation of $25,000 for its legal fees. Given the size and potential complexity of the Debtors' jointly administered chapter 11 proceeding, the Committee believes that the case is likely to engender legal fees for the Committee considerably in excess of the $25,000 ceiling. The Committee also believes that its professionals should be treated similar to other estate professionals who will undoubtedly generate fees substantially greater than $25,000 as well. "The constituency of unsecured creditors should not be singled out for that limited protection of its interests," Mr. Margolies says. About Sweet Traditions Saint Louis, Missouri-based Sweet Traditions, L.L.C. -- http://www.sweettraditions.com/-- and its debtor-affiliate, Sweet Traditions of Illinois, L.L.C., are franchisees of Krispy Kreme Doughnuts, Inc, which owns, operates and franchises specialty retail stores offering doughnuts. The Debtors filed for Chapter 11 bankruptcy protection on Sept. 4, 2007 (E.D. Missouri Case Nos. 07-45787 and 07-45789). David A. Warfield, Esq. and Laura Toledo, Esq. at Blackwell Sanders, L.L.P. represent the Debtors in their restructuring efforts. Jonathan Margolies, Esq. at Shughart Thomson & Kilroy, PC is counsel to the Debtors' Official Joint Committee of Unsecured Creditors. The Debtors' schedules disclose total assets of $9,391,175 and total liabilities of $51,552,132. SWEET TRADITIONS: Wants Guilfoil Petzall as Special Counsel ----------------------------------------------------------- Sweet Traditions LLC and Sweet Traditions of Illinois LLC ask the U.S. Bankruptcy Court for the Eastern District of Missouri for permission to employ Guilfoil, Petzall & Shoemake, LLC as their special counsel. Prior to the bankruptcy filing, Guilfoil was counsel to Sweet Traditions of Illinois in a lawsuit against Harris Realty Inc. instituted in Circuit Court of DuPage County, Illinois. A judgment was entered June 8, 2007, formalized in June 12, and Sweet Traditions of Illinois filed its appeal from the June 8 judgment on July 6. The appeal is currently pending at the Second District of Illinois Court of Appeals. The firm continues to represent the Debtor in the pending appeal. At postpetition date, the firm will: a. advise and represent the Debtors and the Debtors' bankruptcy counsel with respect to legal issues associated with the DuPage Appeal, and draft documents relating to the appeal; and b. advise and represent the Debtors and the Debtor's bankruptcy counsel with respect to Real Estate Transactions, and draft documents relating to the transactions. For services rendered in connection with the DuPage Appeal, the firm will bill the Debtors, pursuant to a fee agreement dated June 14, 2007, at $225 per hour for an estimated 85 hours of total services rendered, resulting in a total bill of $19,125. Under the fee agreement, the firm's total fee for the appeal is limited to $19,125. Under the fee agreement, if the appeal does not result in a reversal of the DuPage County Circuit Court's June 8, 2007 decision, the firm will not be entitled to collect fees from the Debtors. A reversal of the circuit court's decision will entitle the firm to collect fees for its expenditure of time but not to exceed 85 hours. If the appellate court reverses the circuit court's decision and remand the matter to the trial court, the firm will receive legal fees regardless of the outcome of any subsequent proceedings at the trial court level after the remand. Regarding the Real Estate Transactions, the firm will apply to the Court for allowance of compensation in accordance with applicable provisions of the Bankruptcy Code. Guilfoil's current hourly rate is $225. The Debtors believe that the firm is well qualified to act as their special counsel and has extensive experience and knowledge of the Debtors' businesses and financial affairs, specifically in the DuPage Action and Appeal and the pending Real Estate Transactions of the Debtors. To the best of the Debtors' knowledge, the firm does not hold or represent any interest adverse to the Debtors or their estates. The firm can be reached at: Jim J. Shoemake, Esq. Guilfoil Petzall & Shoemake LLC Suite 500, 100 South Fourth Street St. Louis, Missouri 63102 Tel: (314) 241-6890 Fax: (314) 241-2389 http://www.gpslegal.com/ Saint Louis, Missouri-based Sweet Traditions, L.L.C. -- http://www.sweettraditions.com/-- and its debtor-affiliate, Sweet Traditions of Illinois, L.L.C., are franchisees of Krispy Kreme Doughnuts, Inc, which owns, operates and franchises specialty retail stores offering doughnuts. The Debtors filed for Chapter 11 bankruptcy protection on Sept. 4, 2007 (E.D. Missouri Case Nos. 07-45787 and 07-45789). David A. Warfield, Esq. and Laura Toledo, Esq. at Blackwell Sanders, L.L.P. represent the Debtors in their restructuring efforts. Jonathan Margolies, Esq. at Shughart Thomson & Kilroy, PC is counsel to the Debtors' Official Joint Committee of Unsecured Creditors. The Debtors' schedules disclose total assets of $9,391,175 and total liabilities of $51,552,132. TERRENCE HAVANEC: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Terrence Havanec P.O. Box 700965 Kapolei, HI 96709 Bankruptcy Case No.: 07-01030 Chapter 11 Petition Date: October 2, 2007 Court: District of Hawaii (Honolulu) Judge: Robert J. Faris Debtor's Counsel: Ted N. Pettit, Esq. Case Lombardi & Pettit 737 Bishop Street, Suite 2600 Honolulu, HI 96813 Tel: (808) 547-5400 Fax: (808) 523-1888 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. TESORO CORP: Earns $443 Million in Second Quarter Ended June 30 --------------------------------------------------------------- Tesoro Corporation, formerly known as Tesoro Petroleum Corp., reported second quarter net income of $443 million, compared to $326 million in the second quarter of 2006. Year-to-date net income totaled $559 million, compared to net income of $369 million for the first six months ended June 30, 2006. Revenues rose to $5.60 billion in the second quarter of 2007, compared to revenues of $4.93 billion in the same period last year. Year-to-date revenues likewise increased to $9.48 billion, from $8.81 billion in 2006. Year-to-date refinery operating income totaled $1.05 billion dollars compared to $718 million in the same period last year. The improvement is primarily attributable to increases in throughput and clean product margins. The company achieved 91% utilization rates for the second quarter, excluding results from the Los Angeles refinery. "While the addition of the Los Angeles refinery positively impacts our year over year comparisons, approximately 90% of our second quarter earnings growth was from our existing system," said Bruce Smith, Tesoro's chairman, president and chief executive officer. "It was a busy quarter for the company. We successfully integrated the new Shell and USA retail assets, integrated the Los Angeles refinery and completed two turnarounds at the facility. Now that Los Angeles has finished its scheduled maintenance for the year, we expect the refinery to run at higher throughput rates and to capture a greater percentage of the available margin than we recorded in the second quarter," said Smith. Capital expenditures for the year are expected to remain at $900 million. In 2007, the company completed the Amorco wharf crude oil blending project at Golden Eagle, installed the new diesel desulphurization unit in Alaska, and upgraded the catalytic cracker unit at Salt Lake City. The company said that it expects to increase the sulfur handling capabilities of the Anacortes refinery in the third quarter, thereby increasing the amount of sour crude the refinery can process. The Golden Eagle coker modification project is expected to be completed in the first quarter of 2008. At the end of June, the company's debt to capitalization was 37%. By August 3rd the company repaid all outstanding borrowings on its revolving line of credit. Including the debt repayments subsequent to the quarter, pro-forma debt to capitalization ratio would have been 33% at June 30, 2007. "One of our main goals this year was to reduce our debt-to-capitalization ratio to below 40% by year end, which we achieved almost six months early. The company does not have additional debt that can be repaid, so cash flow will now be directed towards organic capital projects. We believe these programs offer the opportunity to continue to substantially increase shareholder value," said Smith. At June 30, 2007, the company's consolidated balance sheet showed $8.22 billion in total assets, $5.14 billion in total liabilities, and $3.08 billion 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?23ed About Tesoro Corp. Headquartered in San Antonio, Texas, Tesoro Corporation (NYSE: TSO) -- http://www.tsocorp.com/-- is an independent refiner and marketer of petroleum products. Tesoro, through its subsidiaries, operates seven refineries in the western United States with a combined capacity of approximately 660,000 barrels per day. Tesoro's retail-marketing system includes over 890 branded retail stations, of which over 450 are company operated under the Tesoro(R), Shell(R), Mirastar(R) and USA(R) brands. The company dislosed on Nov. 8, 2004, the change of the company's name from Tesoro Petroleum Corp. to Tesoro Corporation, effective immediately. * * * As reported in the Troubled Company Reporter on Sept. 4, 2007, Fitch Ratings upgraded the Tesoro Petroleum Corp.'s Issuer Default Rating to 'BB+' from 'BB'. The Rating Outlook is Stable. TORONTO-DOMINION: Moody's Holds B+ Financial Strength Rating ------------------------------------------------------------ Moody's Investors Service affirmed its ratings on Toronto-Dominion Bank (TD, bank financial strength at B+, long-term deposits at Aaa) and TD Banknorth Inc. (TD Banknorth, senior debt at Aa3; lead bank financial strength at B- and long-term deposits at Aa2). This affirmation follows the announcement by TD that it reached an agreement to acquire 100% of Commerce Bancorp Inc. for CDN$8.5 billion in a 75% / 25% stock / cash transaction. With regards to Commerce's ratings, Moody's affirmed the B- bank financial strength ratings of lead bank, Commerce Bank N.A., and the P-1 short-term ratings of both Commerce and Commerce Bank. The rating agency also place on review for upgrade Commerce's A2 long-term issuer rating and Commerce Bank's A1 long-term deposit and senior debt ratings. According to senior credit officer, Peter Routledge, "the affirmation is based on the long-term improvement in TD's U.S. retail banking franchise which offsets the short-term impact of lower capital ratios. Mr. Routledge went on to note that "in 2008, this transaction will put a moderate strain on TD's capital ratio. Moreover, unanticipated events -- such as the possibility that TD is compelled to take the Asset-Backed Commercial Paper conduits that it sponsors on balance sheet -- could further strain capital. That said, Moody's believes TD has ample levers at its disposal to maintain adequate capitalization at its current rating level." Moody's based its decision to place Commerce's deposits and senior debt ratings on review for upgrade on the implied support from its soon-to-be parent, Toronto-Dominion Bank. With this acquisition, TD will double the size of its retail banking franchise in the United States largely within its existing geographic footprint -- that is, New England and the Mid-Atlantic states. Given that this is largely an in-market merger, the likelihood that a combined TD Banknorth / Commerce entity will improve risk-adjusted profitability is an additional positive to the merger, in Moody's view. Mr. Routledge noted, however, that "Moody's does not believe the incremental improvement in TD's franchise value in the U.S. warrants a change in the financial strength ratings of TD Banknorth and Commerce. There are three reasons for this. First, both TD Banknorth and Commerce suffer from relatively weak risk-adjusted profitability relative to peers and the merger synergies, if achieved, will not dramatically alter this condition in the medium term. Second, TD's constrained capital warrants additional prudence in evaluating the combined TD Banknorth / Commerce entity. And, thirdly, TD will have to manage through a period of heightened integration risk as it proceeds to integrate Commerce into its U.S. operations and to embed its enterprise risk management disciplines into that organization." Turning to the subject of what could change TD's ratings in the future, Mr. Routledge noted that "TD's financial strength rating is unlikely to move up in the foreseeable future given its constrained capital position. Moody's could adjust TD's ratings or outlook down if its capital ratios deteriorate materially from current levels for a sustained period. We also note that the integration of two similarly sized institutions with very different business models will result in an elevated level of business risk in 2008. Any incremental rise in business risk could also precipitate negative rating pressure." Moody's expects that TD's capital ratio (i.e., tangible common equity as a percent of risk-weighted plus securitized assets) will remain near 6% through most of 2008. At the completion of the Commerce acquisition, the bank's capital ratio could fall below 6%. Incorporated within TD's current ratings and outlook is an expectation that such a scenario would last at most two to three quarters. Moody's also points out that its capital ratio calculation incorporates a sizable measure of conservatism for TD's other large U.S. holding, TD Ameritrade Holding Corporation (AMTD, senior secured bank credit facility rated Ba1). Moody's applies a haircut to TD's tangible common equity to offset the risk of its substantial investment in AMTD. The haircut Moody's applies is 50% of the current value of the AMTD investment on TD's consolidated balance sheet. Moody's made these rating actions: On Review for Possible Upgrade: Issuer: Commerce Bancorp, Inc. -- Issuer Rating, Placed on Review for Possible Upgrade, currently A2 Issuer: Commerce Bank, N.A. -- Issuer Rating, Placed on Review for Possible Upgrade, currently A1 -- OSO Senior Unsecured OSO Rating, Placed on Review for Possible Upgrade, currently A1 -- Senior Unsecured Deposit Rating, Placed on Review for Possible Upgrade, currently A1 Outlook Actions: Issuer: Commerce Bancorp, Inc. -- Outlook, Changed To Rating Under Review From Stable Issuer: Commerce Bank, N.A. -- Outlook, Changed To Rating Under Review From Stable Toronto-Dominion Bank, headquartered in Toronto, Canada, reported total assets of CDN$404 billion as of July 31, 2007. Commerce Bancorp Inc., headquartered in Cherry Hill, New Jersey, reported total assets of $48.2 billion as of June 30, 2007. US CONCRETE: Completes Acquisition of Architectural Precast ----------------------------------------------------------- U.S. Concrete Inc. has completed the acquisition of Architectural Precast LLC. Terms of the acquisition were not disclosed. The company used borrowings under its revolving credit facility to fund the purchase price. "The combination of API's architectural and structural pre-cast products with our existing ready-mixed concrete products will allow us to provide our customers in our Atlantic Region with a full range of products and services," Michael W. Harlan, U.S. Concrete's president and chief executive officer, said. "We are very pleased that we have been able to retain the current management team at API, which has significant experience and expertise, to continue to run this operation." Due to the revenue growth and expanding geographical footprint of the company's pre-cast concrete operations, the company also disclosed that it has reorganized its Western Pre-Cast Region into the Pre-Cast Division. The API acquisition represents the company's third acquisition of a pre-cast company in the last year and a half, and it expects to explore additional opportunities to grow its Pre-Cast Division. In connection with the new division, Douglas W. McLaughlin has been appointed as vice president -- U.S. Concrete Precast Division. Prior to the appointment, Mr. McLaughlin had been serving as the regional vice president for the company's Southwest Precast operations. >From 1975 to 1999 Mr. McLaughlin served in various positions at San Diego Precast Concrete Inc., a company that was acquired by U.S. Concrete in 1999 and has served as the platform business for the Western Pre-Cast Region. "The pre-cast concrete industry represents a significant potential growth opportunity for the Company, as well as an opportunity to expand our presence into historically higher margin business lines,” Mr. Harlan said. “Doug's 32 years of experience in this industry, and proven track record in our Western Pre-Cast Region, makes him the ideal person to lead U.S. Concrete's Pre-Cast Division." About Architectural Precast LLC Located in Middleburg, Pennsylvania, Architectural Precast LLC –- http://www.apiprecast.com/-- is a designer and manufacturer of premium quality architectural and structural pre-cast concrete products serving the Mid-Atlantic region. About U.S. Concrete Headquartered in Houston, Texas, U.S. Concrete Inc. (NASDAQ: RMIX) -- http://www.us-concrete.com/-- services the construction industry in several markets in the United States through its two business segments: ready-mixed concrete and concrete-related products; and pre-cast concrete. The company has 150 fixed and nine portable ready-mixed concrete plants, 9 pre-cast concrete plants, three concrete block plants and eight aggregates facilities. During 2006, these facilities produced approximately 9.1 million cubic yards of ready-mixed concrete, 4 million eight- inch equivalent block units and 4.6 million tons of aggregates. * * * In September 2006, Moody's Investor Services placed U.S. Concrete Inc.'s long term corporate family and probability of default ratings at 'B1', which still hold to date. The outlook is stable. US ENERGY: Lenders Extend Credit to Meet Capital Deficiencies ------------------------------------------------------------- U.S. Energy Systems, Inc., disclosed arrangements with lenders, deferring obligations, and provided an update on its restructuring plans. Lender Arrangements The company disclosed that it has now successfully entered into arrangements with its lenders to fund short-term operating and capital requirements and to defer certain obligations. One of the company's senior lenders has extended additional credit to USEY to enable the company to meet certain working capital deficiencies. In addition, the company's existing lenders have now agreed to allow the company to draw down funds from restricted reserves to pay for certain operational and capital expenditures approved by the lenders in connection with the UK operations. The company's lenders have now made funds available to allow the company to perform scheduled maintenance at the Knapton power plant and to undertake repairs at one of the UK gas wells. As previously reported, one of the producing wells did not return to production after it was shut down for collection system repairs. As a result of this shortfall in the production of gas, the power plant is producing at approximately 20% below its generating capacity, causing a reduction in revenues of approximately $13,000 per day. A workover of the well is needed to bring the well back into production. As previously disclosed, management estimates that this workover will cost approximately $1,000,000 and take 6 to 8 weeks from commencement to complete. There can be no assurance that the initial workover will be successful. If it is not successful, more expensive procedures may be required to bring the well back to production. The company's lenders have also made funds available to allow the company to continue a 3D seismic study of its UK gas reserve structures. The field work for the seismic study is expected to be completed shortly, and analysis of the field data is expected to be completed by January 2008. When complete, the 3D seismic study will provide the company's management with additional guidance regarding the optimal location of additional wells needed to monetize the gas identified in the reserve reports, which are expected to be updated before the end of the year. In addition, the company's lenders have given USEY relief from capital contribution requirements under the UK financing arrangements. The company previously reported in the Troubled Company Reporter on Sept. 5, 2007, that it had insufficient funds to make certain required payments that were due beginning in September 2007. Under a recent amendment to the UK financing documents, the company's lenders have permitted the company to defer these capital contributions so that they are not due until Nov. 30, 2007. Because the Company continues to be in non- monetary default under the UK financing arrangements however, it is required to pay interest at the default rate under the UK financing arrangements. This results in an additional monthly interest payment equal to approximately $220,000, of which approximately $92,000 is rolled up into principal under the terms of the UK financing documents. Notwithstanding the stabilizing steps disclosed, the company has a continuing requirement to effect a refinancing or other financial restructuring, which may require sales of assets or raising additional capital which could be significantly dilutive to existing shareholders. In addition, the company's continuing non- compliance with certain of its non-monetary obligations under the UK financing arrangements permits the financing parties to declare a default and accelerate the indebtedness and foreclose on the collateral; as such, additional defaults could occur in the future. The failure to obtain additional financing or to restructure the existing indebtedness could result in the lenders foreclosing on the assets securing the indebtedness and/or bankruptcy or insolvency proceedings. Personnel Appointments The company disclosed the appointment of Joseph P. Reynolds as Chief Executive Officer and President of USEY and as Chief Executive Officer of the company's UK subsidiary (UKES). Mr. Reynolds, who has over 30 years of experience in the energy industry, has held operations and management positions with Occidental Petroleum, Tenneco Gas/El Paso, Enron and Unocal. During his long and distinguished career in the energy sector, Mr. Reynolds has developed and managed international midstream and downstream oil and gas facilities, as well as LNG, chemical, and power generation projects, including renewable energy projects. He has been responsible for overseeing the development, financing and management of greenfield facilities and acquisitions, and the development of new technology, including heavy oil extraction, shale oil, ethanol and biomass. He holds an MBA from Durham University UK and a BS from the University of Alabama in petroleum/chemical processing. Mr. Reynolds also attended Teesside University (Polytechnic) UK, studying Electrical/Control Engineering. He is a registered professional engineer in Europe, a Chartered Chemical Engineer and a Chartered Scientist in the UK. The company also reported senior level management promotions in its U.S. Energy Biogas (USEB) subsidiary. Richard J. Augustine, who has been serving as President of USEB, was appointed the subsidiary's Chief Executive Officer. Mr. Augustine will also retain his position as Vice President at USEY. Steven Laliberty, currently serving as Vice President of Operations for USEB, succeeds Mr. Augustine as President of USEB. With a combined 35 years of experience in the landfill gas sector, Messrs. Augustine and Laliberty have expertise in all aspects of the business, including operations, development and financings, as well as the monetization of tax credits and the sale of carbon credits and renewable energy credits. Restructuring Update The company noted that these new appointments come as USEY moves on to the next stage in its restructuring process. At UKES Mr. Reynolds succeeds Grant Emms, who has resigned as CEO. Mr. Emms is working with potential investors who are engaged in discussions with the Company regarding a purchase of the company's UK assets. At USEY Mr. Reynolds succeeds Richard Nevins, who had been serving as interim Chief Executive Officer. Under Mr. Nevins' leadership the Company has been in discussions with its lenders to stabilize its position through restructuring existing indebtedness and accessing restricted cash reserves and cash available from subsidiaries that is currently restricted by the financing arrangements of the subsidiaries. Review of Strategic Alternatives "With our progress over the past few weeks and the cooperation we have earned from our lenders, we believe USEY now has the opportunity to improve the value of our assets and move forward in evaluating all of the Company's strategic alternatives," the Board of Directors stated. The Board is currently assessing how best to maximize the enterprise value of the company for the benefit of shareholders. As previously reported, it entered into a Letter of Intent for the sale of USEB and is now evaluating additional proposals with respect to USEB. The Board also is exploring a range of strategic alternatives for the company's UK assets. It is in discussions with investors and strategic partners who could provide USEY with capital, expertise and resources to further develop the UK assets, and it also is engaged in discussions regarding the sale or partial sale of the UK assets. Additionally, the Board is analyzing a number of recapitalization and merger proposals at the parent level. Although the company can furnish no assurance that it will be able to restructure existing indebtedness, raise additional capital or otherwise obtain funding for future operations and capital expenditure requirements, the Board said that it will continue to review all of USEY's long-term strategic options. Nasdaq Listing Status The company also disclosed that it failed to file its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2007 and June 30, 2007 by the deadlines of Sept. 21 and 28, 2007 as required by the terms of a decision by the NASDAQ Listing Qualifications Panel. USEY has submitted a request to the NASDAQ Panel for a further extension of time to file these reports. There can be no assurance that the NASDAQ Panel will grant any further extension and consequently that the company's shares of common stock will remain listed on The NASDAQ Stock Market. In addition, USEY disclosed that on Oct. 1, 2007, it received a letter from the NASDAQ Stock Market notifying the company of its non-compliance with Marketplace Rule 4310(c)(4), because for 30 consecutive business days, the bid price of the company's common stock had closed below the minimum $1.00 per share requirement for continued listing. In accordance with Marketplace Rule 4310(c)(8)(D), the company has been provided 180 calendar days, or until March 31, 2008, to regain compliance. If, at anytime before March 31, 2008, the bid price of the company's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will provide written notification that USEY complies with the Rule. If compliance with this Rule cannot be demonstrated by March 31, 2008, Nasdaq will determine whether 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 it meets the initial listing criteria, Nasdaq will notify the company that it has been granted an additional 180 calendar day compliance period. If the Company is not eligible for an additional compliance period, Nasdaq will provide written notification that the company's securities will be delisted. At that time, the company may appeal Nasdaq's determination to delist its securities to a Listing Qualifications Panel. About U.S. Energy Systems U.S. Energy Systems, Inc. -- http://www.useyinc.com/-- (Nasdaq: USEY) owns of green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production. The company has a 100% interest in U.S. Energy Biogas Corp., which owns and operates 23 landfill gas to energy projects in the United States, 20 of which produce electricity and three of which sell landfill gas as an alternative to natural gas. The company also has a 100% interest in Plymouth Envirosystems, Inc., which owns a 50% interest in Plymouth Cogeneration Limited Partnership. Plymouth Cogeneration Limited Partnership owns and operates a combined heat and power plant in Massachusetts that produces 1.2MWs of electricity and 7 MWs of heat. The company further has a 79% interest in GBGH, LLC, which owns energy assets and mineral rights in the United Kingdom including a 42MW gas-fired power plant and gas licenses for approximately 100,000 acres of onshore natural gas properties and mineral rights in North Yorkshire, England. GBGH is the parent company of UK Energy Systems, LTD. Bankruptcy Warning As reported in the Troubled Company Reporter on Sept. 5, 2007, U.S. Energy Systems, Inc., on June 25, 2007, said that, absent a refinancing, the raising of additional capital or other financial restructuring, the company would be unable, as early as August 2007, to meet operating requirements and certain contractual obligations as they become due. In addition, the company further indicated that it had insufficient funds to make certain required capital contributions required under the UK financing arrangements between September and December of 2007. The failure to obtain such funds is likely to result in USEY filing for protection in the U.S. under Chapter 11 of the Bankruptcy Code and its UK subsidiaries being forced to enter bankruptcy administration in the UK. * 22 McKissock & Hoffman Attorneys to Join Eckert Seamans --------------------------------------------------------- Eckert Seamans Cherin and Mellott LLC is forming a Professional Liability practice with the addition of 22 attorneys from McKissock & Hoffman including name partner Peter Hoffman. The group will join the firm in the continued expansion of Eckert Seamans' Philadelphia and Harrisburg offices and create a new Eckert Seamans office in West Chester, Pennsylvania, effective October 1st. The group will consist of 9 firm members, and 13 associates and will be led by Peter Hoffman, who is known and respected in the defense of professional liability cases. Mr. Hoffman will reside in Eckert Seamans' Philadelphia office. In his new role at Eckert Seamans, Mr. Hoffman will serve as member and chairman of the professional liability practice. In addition to Mr. Hoffman, moving to Eckert Seamans as members are: -- Donald J. Brooks Jr. -- Timothy J. Burke -- John A. Filoreto -- Maureen P. Fitzgerald -- Eileen Lampe -- Jeffrey P. Lewis -- Edwin A. D. Schwartz -- Christopher Thomson Joining the firm as associates are: -- Ryan N. Boland -- Lauren M. Burnette -- Ann B. Cairns -- Joseph V. Conroy -- Melissa B. Gorsline -- Gregory L. Kallet -- Richard Kim -- Steven E. McCord -- Richard J. Mosback, Jr. -- Joan D. Plump -- David J. Schertz -- David M. Schwadron -- Shannon B. Stewart. "We are extremely pleased that Peter and his group will be joining our firm in Philadelphia," Tim Ryan, chief executive officer of Eckert Seamans, said. "In addition to this group's track record of high performance in professional liability defense, they are a diverse group of attorneys steeped with experience and broad understanding of business law and litigation." "These are some of the most respected attorneys in the Delaware Valley," Albert Bixler, member-in-charge of Eckert Seamans' Philadelphia office, added. "We are very fortunate to be able to offer the resources of this group, which includes seasoned counselors and trial lawyers to our clients." "As we looked toward the future for our people and our clients, Eckert Seamans made a great deal of sense as a platform for development and a place where we could provide our clients with the best service possible for the long term," Mr. Hoffman said. "The firm has made a true commitment to growth, to its people and to the greater Philadelphia region. We're confident that we'll be better positioned to meet client needs from within our practice and provide them with access to more extensive legal resources from throughout the firm." Mr. Hoffman's practice includes complex cases such as antitrust, securities, class action, creditor's rights, commercial litigation, ERISA and real estate litigation. A substantial portion of his practice is devoted to professional liability, primarily medical and legal malpractice, commercial litigation, construction, products liability, toxic torts and insurance coverage. Nationally recognized for his work in professional liability, Mr. Hoffman was awarded the 1989 Fred H. Sievert Outstanding Defense Bar Leader Award by the Defense Research Institute, and he has received numerous honors from the bar and other independent regional and national professional organizations. He received his law degree from Temple University School of Law. He earned his master's degree from the Graduate School of Public Affairs, State University of New York, and he received his bachelor's degree from Washington & Jefferson College. He is a Fellow of the American College of Trial Lawyers, International Academy of Trial Lawyers and American Board of Trial Advocates. With the addition of this new group, Eckert Seamans will now have 63 attorneys in its Philadelphia office. About Eckert Seamans Cherin & Mellott Headquartered in Pittsburgh, Pennsylvania, Eckert Seamans Cherin & Mellott LLC – http://www.eckertseamans.com/-- is a national law firm with ten offices throughout the eastern United States, that provides a full range of legal services nationwide to businesses of all sizes, institutions, municipalities, colleges and universities, government agencies and individuals. Its practice areas encompass litigation, including mass tort and products liability litigation, corporate and business law, intellectual property law, labor and employment relations, aviation & aerospace law, bankruptcy and creditors' rights, employee benefits, environmental law, construction law, municipal finance, real estate, and tax and estate law. Eckert Seamans has offices in Pittsburgh, Harrisburg, Philadelphia, Southpointe and West Chester, Pennsylvania; Wilmington, Delaware; Morgantown, West Virginia; Boston, Massachusetts, Washington, D.C. and White Plains, New York. * 34 Bankruptcy Lawyers Join Lavery de Billy -------------------------------------------- Thirty-four lawyers specializing in business law, commercial litigation and bankruptcy and insolvency, together with some forty translators, paralegals and legal and administrative support staff from the Montreal office of Desjardins Ducharme have joined the Lavery de Billy team as of Oct. 1, 2007. Lavery de Billy now has a combined force of 175 lawyers, with 80 lawyers specializing in business law and 95 lawyers specializing in virtually every other area of the law. "With the addition of these professionals, we will provide our clients with access to 80 business lawyers who have expertise and leading-edge skills in all practice areas required to meet the needs of the business world, including corporate finance, securities, mergers and acquisitions, taxation, real estate, commercial and class action litigation, and bankruptcy and insolvency" Richard Dolan, managing partner of the firm, said. "Our clients can also count on the know-how and resourcefulness of another 95 lawyers specializing in other areas of the law including labour and employment, civil and professional liability, environmental, information and privacy, construction, transportation, intellectual property, criminal and family law" Michel Yergeau, the firm's chairman, added. "This combination of forces will be beneficial to all our clients since it will allow us to continue to serve them well while providing them with access to a broader range of services and increased depth of expertise" Gerard Coulombe, noted. About Lavery de Billy Lavery de Billy –- http://www.laverydebilly.com/-- is an independent and multidisciplinary law firm with 175 lawyers serving national and international clients in all areas of law. It has offices in Montreal, Quebec City, Laval and Ottawa. Lavery, de Billy is a member of the World Services Group -- http://www.worldservicesgroup.com/-- an international network of service firms present in 135 countries. * Cohen & Grisby Adds Five New Attorneys to Pittsburgh Offices -------------------------------------------------------------- Cohen & Grigsby appointed five new attorneys who will be based in the firm's Pittsburgh offices: * Jonathan P. Altman joins Cohen & Grigsby as an associate in the firm's Business Practice Group, where he will focus on general corporate matters. He received his B.B.A. in finance and business pre-law from the Ohio University College of Business and his J.D. from the University of Pittsburgh School of Law. Mr. Altman lives in Pittsburgh. * Scott C. Graham joins the firm as an associate in the Business Practice Group. He will concentrate his practice on general corporate matters. Mr. Graham received his B.S. in finance from the Pennsylvania State University and his J.D. from the University of Pittsburgh School of Law. Mr. Graham is a resident of Pittsburgh. * Jessi D. Herman joins Cohen & Grigsby as an associate in the Labor & Employment Practice Group, where she will focus on representing and counseling employers on a wide range of employment-related matters. She received her B.A. in history from Eastern University, an MTS from Candler School of Theology, and a J.D. from Emory University School of Law. Ms. Herman lives in Pittsburgh. * Andrea Kern joins the firm's Business Practice Group as an associate where she will focus on general corporate matters. She received her B.S.B.A. in accounting from Bucknell University and her J.D. from the University of Pittsburgh School of Law. Ms. Kern lives in Cranberry Township. * Devin B. O'Neill joins Cohen & Grigsby's Immigration Practice Group as an associate, where she will focus on employment- based immigration, including temporary and permanent visas, family-based immigration and naturalization. Prior to joining Cohen & Grigsby, Mr. O'Neill was an immigration associate at Harter Secrest & Emery LLP in Rochester, New York and the sole staff attorney at VIVE, Inc., a refugee shelter in Buffalo, New York. Mr. O'Neill received a B.A. in Government/International Relations from Smith College in Northhampton, MA; a Masters of Public Health in International Health and Epidemiology from the University of Michigan School of Public Health; and a J.D. from the University of Michigan School of Law. Mr. O’Neill lives in Pittsburgh. * Marie I. Rivera-Johnson joins the firm as an associate in the Labor & Employment Practice Group, where she will also focus on representing and counseling employers on a wide range of employment-related matters. She received a B.A. in sociology from Duquesne University and a J.D. from Yale Law School. Prior to joining Cohen & Grigsby, Rivera-Johnson was a law clerk for the Honorable Gary L. Lancaster, U.S. District Court for the Western District of Pennsylvania. Ms. Rivera- Johnson lives in Pittsburgh. About Cohen & Grigsby Cohen & Grigsby -- http://www.cohenlaw.com/-- offers legal services to private and publicly held businesses, nonprofits, multinational corporations, individuals and emerging companies. It has experience in bankruptcy, business, tax, employee benefits, estates, trusts, immigration, intellectual property, international business, litigation, labor and employment, and real estate. The firm is headquartered in Pittsburgh, Pennsylvania and has offices in Bonita Springs, Florida and Naples, Florida. * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent Chapter 11 cases filed with assets and liabilities below $1,000,000: In Re Patrick S. Burnett Bankr. S.D. Ohio Case No. 07-14574 Chapter 11 Petition filed September 25, 2007 See http://bankrupt.com/misc/ohsb07-14574.pdf In Re D.N. Staffing, Inc. Bankr. W.D. Penn. Case No. 07-26015 Chapter 11 Petition filed September 25, 2007 See http://bankrupt.com/misc/pawb07-26015.pdf In Re Urban Retreat of Houston, Inc. Bankr. S.D. Tex. Case No. 07-36506 Chapter 11 Petition filed September 25, 2007 See http://bankrupt.com/misc/txsb07-36506.pdf In Re Joe D. Worley Bankr. N.D. Ala. Case No. 07-82521 Chapter 11 Petition filed September 26, 2007 See http://bankrupt.com/misc/alnb07-82521.pdf In Re Hilltop Sports Club, L.L.C. Bankr. E.D. Calif. Case No. 07-27870 Chapter 11 Petition filed September 26, 2007 See http://bankrupt.com/misc/caeb07-27870.pdf In Re Robert Isaac Icho Bankr. N.D. Calif. Case No. 07-31238 Chapter 11 Petition filed September 26, 2007 See http://bankrupt.com/misc/canb07-31238.pdf In Re O'Laker's Moving, Inc. Bankr. M.D. Fla. Case No. 07-08850 Chapter 11 Petition filed September 26, 2007 See http://bankrupt.com/misc/flmb07-08850.pdf In Re Sunset Weapons Systems, Inc. Bankr. S.D. Ind. Case No. 07-09337 Chapter 11 Petition filed September 26, 2007 See http://bankrupt.com/misc/insb07-09337.pdf In Re Tire Recycling, Inc. Bankr. W.D. Ky. Case No. 07-41036 Chapter 11 Petition filed September 26, 2007 See http://bankrupt.com/misc/kywb07-41036.pdf In Re Gwynedd Development Co., Inc. Bankr. E.D. Penn. Case No. 07-15595 Chapter 11 Petition filed September 26, 2007 See http://bankrupt.com/misc/paeb07-15595.pdf In Re Goddess66, L.L.C. Bankr. D. Conn. Case No. 07-21332 Chapter 11 Petition filed September 26, 2007 Filed as Pro Se In Re Antonio G. Correia Bankr. D. Mass. Case No. 07-16096 Chapter 11 Petition filed September 26, 2007 Filed as Pro Se In Re Olga Larrea Nogues Bankr. E.D. Calif. Case No. 07-27879 Chapter 11 Petition filed September 26, 2007 Filed as Pro Se In Re Ronald Segala Bankr. E.D. N.Y. Case No. 07-73758 Chapter 11 Petition filed September 26, 2007 Filed as Pro Se In Re Willie Douglas Boulware, Sr. Bankr. D. S.C. Case No. 07-05148 Chapter 11 Petition filed September 26, 2007 See http://bankrupt.com/misc/scb07-05148.pdf In Re David Kingry Construction, Inc. Bankr. S.D. W.V. Case No. 07-20976 Chapter 11 Petition filed September 26, 2007 See http://bankrupt.com/misc/vasb07-20976.pdf In Re William Lee Edwards Bankr. S.D. Ind. Case No. 07-09422 Chapter 11 Petition filed September 27, 2007 See http://bankrupt.com/misc/insb07-09422.pdf In Re M.J.M. Aviation, Inc. Bankr. S.D. Miss. Case No. 07-03031 Chapter 11 Petition filed September 27, 2007 See http://bankrupt.com/misc/mssb07-03031.pdf In Re House of Vacuums, Inc. Bankr. M.D. N.C. Case No. 07-11379 Chapter 11 Petition filed September 27, 2007 See http://bankrupt.com/misc/ncmb07-11379.pdf In Re 86-92 Hamilton Realty, L.L.C. Bankr. D. Mass. Case No. 07-16132 Chapter 11 Petition filed September 27, 2007 Filed as Pro Se In Re Island Pacific Homes, Inc. Bankr. C.D. Calif. Case No. 07-13071 Chapter 11 Petition filed September 27, 2007 Filed as Pro Se In Re Standing Rock Holdings, L.L.C. Bankr. D. Ariz. Case No. 07-04965 Chapter 11 Petition filed September 27, 2007 Filed as Pro Se In Re Delta Transitional Home Bankr. E.D. Ark. Case No. 07-15384 Chapter 11 Petition filed September 28, 2007 See http://bankrupt.com/misc/areb07-15384.pdf In Re Juno Bay Investments, Inc. Bankr. S.D. Fla. Case No. 07-18136 Chapter 11 Petition filed September 28, 2007 See http://bankrupt.com/misc/flsb07-18136.pdf In Re Earth Friends Recycling, Inc. Bankr. W.D. La. Case No. 07-31368 Chapter 11 Petition filed September 28, 2007 Filed as Pro Se In Re America Medical Office Partners, L.P. Bankr. N.D. Tex. Case No. 07-34718 Chapter 11 Petition filed September 28, 2007 See http://bankrupt.com/misc/txnb07-34718.pdf In Re Robert Edward Hilburger Bankr. W.D. N.Y. Case No. 07-03958 Chapter 11 Petition filed September 29, 2007 See http://bankrupt.com/misc/nywb07-03958.pdf In Re Brandon Scott Ellis Bankr. N.D. Ga. Case No. 07-42435 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/ganb07-42435.pdf In Re Lithonia Lofts, L.L.C. Bankr. N.D. Ga. Case No. 07-76206 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/ganb07-76206.pdf In Re Hold This, L.L.C. Bankr. M.D. La. Case No. 07-11371 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/lamb07-11371.pdf In Re T.C.C. Developers, L.L.C. Bankr. E.D. N.Y. Case No. 07-73853 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/nyeb07-73853.pdf In Re Suburban Plumbing and Heating, Inc. Bankr. E.D. Penn. Case No. 07-21699 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/paeb07-21699.pdf In Re H2OFront Hodlings, L.L.C. Bankr. D. Ariz. Case No. 07-05039 Chapter 11 Petition filed October 1, 2007 Filed as Pro Se In Re In-Systcom, Inc. Bankr. N.D. Ga. Case No. 07-22030 Chapter 11 Petition filed October 1, 2007 Filed as Pro Se In Re Stanley Edward Cornelius Bankr. N.D. Calif. Case No. 07-43211 Chapter 11 Petition filed October 1, 2007 Filed as Pro Se In Re Gatsby Properties, Inc. Bankr. N.D. Tex. Case No. 07-34850 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/txnb07-34850.pdf In Re Pauline Roe Holland Bankr. S.D. Tex. Case No. 07-36748 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/txsb07-36748.pdf In Re J. D. Manufacturing, Inc. Bankr. S.D. Tex. Case No. 07-36751 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/txsb07-36751.pdf In Re Armando Xavier Lopez Bankr. S.D. Tex. Case No. 07-50216 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/txsb07-50216.pdf In Re Roosevelt Thomas Bankr. W.D. Tex. Case No. 07-11821 Chapter 11 Petition filed October 1, 2007 See http://bankrupt.com/misc/txwb07-11821.pdf In Re K. Noble Associates, L.L.C. Bankr. D. Conn. Case No. 07-32260 Chapter 11 Petition filed October 2, 2007 See http://bankrupt.com/misc/ctb07-32260.pdf In Re Mahlon Z. Horst Bankr. E.D. Penn. Case No. 07-21702 Chapter 11 Petition filed October 2, 2007 See http://bankrupt.com/misc/paeb07-21702.pdf In Re H.L.H. Properties, Inc. Bankr. M.D. Fla. Case No. 07-04712 Chapter 11 Petition filed October 2, 2007 Filed as Pro Se In Re Kenneth B. Zamvil Bankr. N.D. Calif. Case No. 07-11253 Chapter 11 Petition filed October 2, 2007 Filed as Pro Se In Re G.R.A., Inc. Bankr. M.D. Fla. Case No. 07-04711 Chapter 11 Petition filed October 2, 2007 Filed as Pro Se In Re Anita Kramer Meshkatai Bankr. D. Ariz. Case No. 07-05071 Chapter 11 Petition filed October 2, 2007 Filed as Pro Se In Re Delbert L. Alsop Bankr. D. Alaska Case No. 07-00506 Chapter 11 Petition filed October 2, 2007 Filed as Pro Se In Re Collin Dwayne Porterfield Bankr. N.D. Tex. Case No. 07-34898 Chapter 11 Petition filed October 2, 2007 Filed as Pro Se In Re Henry M. Proveaux Bankr. D. S.C. Case No. 07-05384 Chapter 11 Petition filed October 2, 2007 See http://bankrupt.com/misc/scb07-05384.pdf In Re Soil Works of Dallas, Inc. Bankr. N.D. Tex. Case No. 07-34902 Chapter 11 Petition filed October 2, 2007 See http://bankrupt.com/misc/txnb07-34902.pdf In Re Henley's Aviation Investments, Inc. Bankr. N.D. Tex. Case No. 07-34905 Chapter 11 Petition filed October 2, 2007 See http://bankrupt.com/misc/txnb07-34905.pdf In Re Financial City, L.L.C. Bankr. S.D. Tex. Case No. 07-70442 Chapter 11 Petition filed October 2, 2007 See http://bankrupt.com/misc/txsb07-70442.pdf In Re Buy-Design General Contracting, L.L.C. Bankr. W.D. Wash. Case No. 07-14689 Chapter 11 Petition filed October 2, 2007 See http://bankrupt.com/misc/wawb07-14689.pdf ********* 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 Medel 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 ***