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 carrier