/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/071029.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, October 29, 2007, Vol. 11, No. 256 Headlines 1031 TAX GROUP: Judge Glenn Appoints McHale as Chap. 11 Trustee 1031 TAX GROUP: Asset Transfer Pact with Edward Okun Approved ABFC TRUST: S&P Junks Ratings on Three Loan Classes ACA ABS: Moody's Junks Rating on $33 Million Class B-1L Notes ALLIANT HOLDINGS: Moody's Rates $265 Mil. Senior Notes at Caa1 AURELIUS CAPITAL: Moody's Rates $13.5 Mil. Class E Notes at Ba2 AVNET INC: Earns $105.5 Million in First Quarter Ended Sept. 29 B&G FOODS: Net Income Ups $40.7% in Third Quarter Ended Sept. 29 BANC OF AMERICA: Fitch Junks Rating on Class B5 Certificates BEAR STEARNS: Fitch Affirms Low-B Ratings on Six Cert. Classes BEAR STEARNS: Fitch Cuts Ratings on $13.9 Million Certificates BEAR STEARNS: Fitch Holds Low-B Ratings on Six Cert. Classes BEAR STEARNS: Fitch Junks Rating on Class M-7 Certificates BLAKE MCDONALD: Voluntary Chapter 11 Case Summary BROTMAN MEDICAL: Files Chapter 11 Bankruptcy in Los Angeles BROTMAN MEDICAL: Case Summary & 20 Largest Unsecured Creditors BROTMAN MEDICAL: Faces Suit versus Brown Family Over Negligence CABLEVISION SYSTEMS: Fitch Holds B+ Issuer Default Rating CAITHNESS COSO: Extends Pricing of Tender Offer to November 13 CELESTICA INC: Earns $51.5 Mil. in 3rd Quarter Ended Sept. 30 CENTAUR LLC: Moody's Affirms B3 Corporate Family Rating CENTAUR LLC: S&P Lifts Rating on Senior Term Loan to B- CENTERPOINT ENERGY: Completes $500 Mil. Senior Notes Offerings CENTERPOINT ENERGY: Elects Sherman Wolff to Board of Directors CITIGROUP MORTGAGE: Fitch Holds BB+ Rating on Class M10 Certs. CLAIRE'S STORES: S&P Lifts Rating on $1.65BB Facilities to B+ COFFEYVILLE RESOURCES: IPO Cues S&P to Revise Outlook to Positive COLONIAL PROPERTIES: Earns $1.7 Million in Quarter Ended Sept. 30 COMCAST CORP: Earns $560 Mil. in Third Quarter Ended Sept. 30 COMMERCIAL MORTGAGE: Fitch Holds Low-B Ratings on Two Certs. CORUS ENTERTAINMENT: Earns CDN$21.2 Mil. in Qtr. Ended Aug. 31 COTT CORP: Weak Performance Prompts S&P to Cut Rating to B COUNTRYWIDE FINANCIAL: Henry Cisneros Resigns as Board Member CREDIT SUISSE: Moody's Lifts Class H Certificate's Rating to B2 CREDIT SUISSE: S&P Puts Default Ratings on Two Loan Classes DELTA AIR: Five Investment Firms File Suit Against Comair EIRLES SERIES: Moody's Cuts Rating on Series 258 Notes to Ba1 EIRLES SERIES: Moody's Cuts Rating on Series 264 Notes to Ba2 EIRLES SERIES: Moody's Cuts Rating on Series 265 Notes to Ba1 EIRLES SERIES: Moody's Cuts Rating on Series 266 Notes to B1 EMC MORTGAGE: Poor Performance Cues S&P's Ratings Downgrades EQUIFIRST MORTGAGE: Fitch Cuts Class M-3 Cert.'s Rating to B EUROPEAN AMERICAN: Can Hire Burr & Forman as Special Counsel FAIRFAX FINANCIAL: S&P Holds 'BB' Rating and Revises Outlook FEDERAL-MOGUL: Earns $14 Million in Quarter Ended September 30 FIDELITY NATIONAL: Board OKs Spin-off of Lender Processing Div. FIDELITY NATIONAL: Spin-off Plan Cues Moody's Ratings' Review FIDELITY NATIONAL: Spin-off Plans Cue S&P's Negative Watch FIELDSTONE MORTGAGE: Delinquencies Cue S&P to Junk Rating FIRST FRANKLIN: Moody's Junks Ratings on Three Cert. Classes FIRST FRANKLIN: Realized Losses Cues S&P to Lower Ratings FNBA MORTGAGE: S&P Places 'BB' Rating Under Negative Watch FREMONT HOME: S&P Lowers Ratings on Nine Certificate Classes GATEHOUSE MEDIA: Morris Deal Cues Moody's Negative Outlook GREENPARK GROUP: Disclosure Statement Hearing Set on November 8 GSC ABS: Moody's Junks Ratings on Three Note Classes GENERICS INT'L.: Moody's Places Corporate Family Rating at B2 GLACIER FUNDING: Moody's Junks Rating on $4 Mil. Class E Notes GSAMP TRUST: Moody's Lowers Class B-2 Certificate's Rating to Ba1 GUARDIAN ENTERTAINMENT: Case Summary & Largest Unsecured Creditor HELEN PAPPAS: Voluntary Chapter 11 Case Summary HILLMAN COMPANIES: Moody's Revises Outlook to Negative HILTON CORP: Moody's Lowers Corporate Family Rating to B3 HILTON HOTELS: Blackstone Merger Cues S&P to Withdraw Ratings HILTON HOTELS: Merger Closing Cues Fitch to Withdraw Ratings HOMEBANC CORP: Court Approves FTI Consulting as Financial Advisor HOMEBANC CORP: Panel Hires Otterbourg Steindler as Lead Counsel HOMEBANC CORP: Court OKs Mesirow as Committee's Financial Advisor HYDRO SPA: Can Employ GrayRobinson as General Bankruptcy Counsel HYDRO SPA: Court Fixes November 30 as Claims Bar Date HYDRO SPA: U.S. Trustee Appoints Seven-Member Creditors Committee IKON OFFICE: Earns $28 Million in Fourth Quarter Ended Sept. 30 JAYS FOODS: Wants Court Approval on Asset Sale Bidding Procedures JAYS FOODS: Court Approves Kurtzman Carson as Claims Agent JAYS FOODS: Court OKs Retention of Keystone as Financial Advisor LINENS 'N THINGS: Inks New $700 Mil. Credit Agreement with GE LKQ CORP: Earns $14.6 Million in Third Quarter Ended Sept. 30 MAJESTIC STAR: Poor Liquidity Cues S&P to Lower Rating to B- MANOR CARE: Moody's Places Corporate Family Rating at B2 MARICOPA COUNTY: Moody's Holds Ba1 Rating on $10.9 Mil. Bonds MASSEY ENERGY: Earns $21.4 Mil. in Third Quarter Ended Sept. 30 MEDFORD CROSSINGS: Voluntary Chapter 11 Case Summary MESA 2002-3: Moody's Junks Rating on Class B-2 Certificates MLCC MORTGAGE: Moody's Lowers Class B Certificate's Rating to B2 MOVIE GALLERY: Can Employ Kirkland & Ellis as Lead Counsel MOVIE GALLERY: Inks Lock Up Pact w/ Sopris & Consenting Lenders MOVIE GALLERY: Section 341(a) Creditors Meeting on December 13 NAVISTAR INT'L: In Talks to Acquire GM's Medium Truck Business NAVISTAR INT'L: Releases Restated 2003-2005 Financial Data NAVISTAR INTERNATIONAL: S&P Retains Negative Watch on Ratings NEW YORK RACING: Wants Exclusive Plan-Filing Period Extended NY RACING: New York State to Provide $75 Million Under Plan OWNIT MORTGAGE: Fitch Junks Ratings on Two Certificate Classes PANOLAM INDUSTRIES: Commences Exchange Offer for 10-3/4% Notes PERKINELMER INC: Earns $30.7 Million in Quarter Ended Sept. 30 PHARMED GROUP: Case Summary & 46 Largest Unsecured Creditors QUALITEST PHARMACEUTICALS: S&P Assigns 'B' Corp. Credit Rating REDDY ICE: Earns $16.6 Million in Third Quarter Ended Sept. 30 REYNOLDS AMERICAN: Earns $358 Mil. in 3rd Quarter Ended Sept. 30 RF MICRO: Earns $14.5 Million in Fiscal Quarter Ended Sept. 29 SACO I: Moody's Downgrades Ratings on Two Certificate Classes SAMSONITE CORP: Completes $1.7 Bil. Merger w/ CVC Capital Units SIX LOTS: Voluntary Chapter 11 Case Summary SHONO INC: Case Summary & 19 Largest Unsecured Creditors SOLO CUP: Fitch Holds B- Issuer Default Rating SPECIALTY UNDERWRITING: S&P Puts Default Rating on Class B-2 STANDARD PACIFIC: Posts $119.7 Million Net Loss in 3rd Quarter STELCO INC: Sept. 30 Balance Sheet Upside-Down by $64 Million TEXAS COMPETITIVE: Reports Selected Preliminary Nine-Month Results THEATER CONSULTING: Case Summary & 20 Largest Unsecured Creditors TIMKEN COMPANY: Completes $200 Million Acquisition of Purdy TIMKEN COMPANY: Earns $41.2 Million in Quarter Ended Sept. 30 TOUSA INC: Fitch Downgrades Issuer Default Rating to CC TRAVIS COUNTY: Moody's Holds Ba3 Rating on Series 2002A Bonds TRIBUNE COMPANY: Earns $152.7 Million in FY 2007 Third Quarter TRUE NORTH: Appoints Alan McMillan as Chief Executive Officer URS CORP: Expects 2007 Third Quarter Net Income at $38.7 Million US DRY: Inks $2.15 Million Merger Agreement with Robinson US INVESTIGATION: Moody's Rates New $290 Mil. Sr. Notes at Caa2 VERTICAL ABS: Moody's Lowers Ratings on Two Note Classes VERTICAL ABS: Moody's Junks Ratings on Five Note Classes VICTOR GROUP: Case Summary & 20 Largest Unsecured Creditors VORRIECE WHITTEN: Case Summary & Four Largest Unsec. Creditors WACHOVIA BANK: Fitch Holds Low-B Ratings on Six Cert. Classes WELLCARE HEALTH: Says Probe Has "No Impact" on Operations WELLCARE HEALTH: Board Establishes Special Committee WELLCARE HEALTH: Probe Cues Moody's to Place Ratings Under Review WELLCARE HEALTH: FBI Investigations Cue S&P's Negative Watch WELLS FARGO: Fitch Assigns Low-B Ratings on Two Cert. Classes WENDY'S INT'L: Earns $29.9 Mil. in 3rd Quarter Ended Sept. 30 WILTON PRODUCTS: Moody's Holds B3 Corporate Family Rating WR GRACE: Earns $16.7 Million in Quarter Ended September 30 XEROX CORP: Moody's Reviews Ba1 Rating and May Upgrade XM SATELLITE: Sept. 30 Balance Sheet Upside-Down by $789.6 Mil. * BOND PRICING: For the Week of Oct. 22 - Oct. 26 2007 ********* 1031 TAX GROUP: Judge Glenn Appoints McHale as Chap. 11 Trustee --------------------------------------------------------------- The Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York has appointed Gerard A. McHale, Jr. as trustee in The 1031 Tax Group LLC and its debtor-affiliates' chapter 11 cases. Mr. McHale's appointment sets the Court's approval of the renewed request by the United States Trustee for Region 2 for an appointment of a chapter 11 trustee in the Debtors' cases. In her motion, Diana G. Adams, the U.S. Trustee, told the Court that no confirmable plan of reorganization had been presented by the Debtors and the Official Committee of Unsecured Creditors despite ample opportunities given to them. The Debtors supported the U.S. Trustee's request, saying they do not believe they can file a confirmable plan given the extremely difficult circumstances their cases currently face. According to the Debtors, their assets have regularly suffered from varying degrees of financial distress, including multiple threats of foreclosure by pre-existing secured creditors. Furthermore, the Debtors told the Court that the ongoing U.S. Attorney's investigation into Edward H. Okun's dealings with the Debtors, coupled with the pre-petition seizure by the federal government of corporate documents held by the Debtors as well as by the companies Mr. Okun owns or controls, created an entirely separate set of challenges. Mr. Okun is the owner of The 1031 Tax Group LLC. The Creditors' Committee confirmed the current circumstances affecting the Debtors' cases and said that appointment of chapter 11 trustee is proper. Previous Request Denied The U.S. Trustee first sought appointment of a chapter 11 trustee in July 2007 but was denied by the Court based on Mr. Okun's promise to fund the Debtors' cases through disposition of his non-debtor companies. In his Aug. 13 memorandum opinion, Judge Glenn concluded that where a case has an active creditors committee functioning effectively and working well with the debtors, there is little benefit in appointing a trustee. Judge Glenn went on to say that as the Debtors' cases have unfolded, real progress has been made through the joint efforts of the Debtors' new management and the Committee. To the extent that the U.S. Trustee challenged the Debtors' ability to rehabilitate, Judge Glenn noted that the Debtors have worked diligently with the Committee to file a proposed joint disclosure statement and a plan that could provide creditors with close to full recovery of their claims. "This belies the assertion that the Debtors cannot reorganize," Judge Glenn opined. Court's Amended Opinion In approving the U.S. Trustee's renewed request for chapter 11 trustee, Judge Glenn emphasized that the factors that weighed heavily in denying the earlier motion either no longer apply at all or are now greatly attenuated. Judge Glenn opined that any hope for a prompt exit from chapter 11 has seemingly vanished noting that Mr. Okun "has proven that he is unreliable (or worse) in delivering in any timely way on the promises he made at the start of these cases and many times since." He went on to say that the level of distrust between the Debtors and the objecting, already high earlier in the case, has only increased, evidenced by resignations from the Creditors Committee. He also pointed out that the objecting creditors now hold more in aggregate claims than the members of the Creditors Committee, and that aome of the objecting creditors' counsel have seemed intent on objecting to anything the Debtors or Creditors Committee propose, without regard to the possible benefits to the estate. "While that should not dictate the result on the Trustee Motions, it highlights an issue the U.S. Trustee faces in selecting a chapter 11 trustee," Judge Glenn said. About The 1031 Tax Group Headquartered in Richmond, Virginia, The 1031 Tax Group LLC -- http://www.ixg1031.com/-- is a privately held consolidated group of qualified intermediaries created to service real property exchanges under Section 1031 of the Internal Revenue Code. The company and 15 of its affiliates filed for Chapter 11 protection on May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through 07-11462). Paul Traub, Esq., Norman N. Kinel, Esq., and Steven E. Fox, Esq., at Dreier LLP, represent the Debtors in their restructuring efforts. Thomas J. Weber, Esq., Melanie L. Cyganowski, Esq., and Allen G. Kadish, Esq., at Greenberg Traurig, LLP, represent the Official Committee of Unsecured Creditors. The Debtors' operating report for the month ended Sept. 30, 2007, showed net loss of $67,903 on $0 revenues. As of Sept. 30, 2007, the Debtors had total assets of $164,231,012 and total liabilities of $168,126,294, resulting in a total stockholders' deficit of $3,895,282. 1031 TAX GROUP: Asset Transfer Pact with Edward Okun Approved ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved an agreement entered into by the The 1031 Tax Group LLC and its debtor-affiliates, the Official Committee of Unsecured Creditors, and Edward H. Okun, the owner of The 1031 Tax Group. The agreement, dated Oct. 11, 2007, provides for the transfer of al of Mr. Okun's assets to the Debtors. As reported in the Troubled Company Reporter on Oct. 25, 2007, under the agreement, the assets will be transferred either to the Debtors' chief restructuring officer, Huron Consulting Services LLC, or through a nominee entity designated by Huron. However, with the appointment of Gerard A. McHale, Jr., as the Debtors' chapter 11 trustee, under the agreement, Mr. McHale will become successor to the Debtors and the CRO. In addition, the Court ruled that Mr. McHale is not required to designate an asset manager, and if ever he does not designate one, the rights, powers, role, duties and obligations of an asset manager will be vested in him as Chapter 11 Trustee. In the event that the Chap. 11 Trustee wishes to designate an asset manager, he, subject to approval of the Court, may select an asset manager other than Abacus Advisors LLC, the firm suggested in the agreement as asset manager. Under the agreement, the assets to be transferred won't include: -- two automobiles retained for Mr. Okun's personal use; -- Mr. Okun's residence at 394 South Hibiscus Drive in Miami, Florida; -- Mr. Okun's residence at 39 and 49 Aaron Road in Wolfeboro, New Hampshire; and -- customary and usual contents of Mr. Okun's residences (but excluding any property not of a personal nature). The assets subject of the transfer are tied to a series of unsecured promissory notes Mr. Okun had issued to the Debtors during the course of the Debtors' business. The aggregate principal amount of the notes is approximately $130 million with approximately $18.8 million in accrued, unpaid interest as of Sept. 30, 2007, which interest amount increases at the approximate rate of $1.5 million per month. According to the Debtors, the notes are among the few remaining assets in their estate. The Debtors contended that the agreement is the most efficient way to achieve maximum creditor recovery and contemplate that the operation and eventual liquidation of the assets would form the structural underpinning of a plan of liquidation they may file later. Headquartered in Richmond, Virginia, The 1031 Tax Group LLC -- http://www.ixg1031.com/-- is a privately held consolidated group of qualified intermediaries created to service real property exchanges under Section 1031 of the Internal Revenue Code. The company and 15 of its affiliates filed for Chapter 11 protection on May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through 07-11462). Paul Traub, Esq., Norman N. Kinel, Esq., and Steven E. Fox, Esq., at Dreier LLP, represent the Debtors in their restructuring efforts. Thomas J. Weber, Esq., Melanie L. Cyganowski, Esq., and Allen G. Kadish, Esq., at Greenberg Traurig, LLP, represent the Official Committee of Unsecured Creditors. The Debtors' operating report for the month ended Sept. 30, 2007, showed net loss of $67,903 on $0 revenues. As of Sept. 30, 2007, the Debtors had total assets of $164,231,012 and total liabilities of $168,126,294, resulting in a total stockholders' deficit of $3,895,282. ABFC TRUST: S&P Junks Ratings on Three Loan Classes --------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of asset-backed certificates issued by ABFC Trust's series 2002-SB1 and 2003-WF1. Of the four lowered ratings, S&P removed three from CreditWatch with negative implications. Concurrently, S&P affirmed its ratings on the remaining five classes from these two series. The downgrades of classes M-2 and M-3 from series 2002-SB1 and classes M-3 and M-4 from series 2003-WF1 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). During the past 12 months, monthly realized losses have outpaced excess spread by approximately 2.7x for series 2002- SB1 and by 2.2x for series 2003-WF1. As of the Oct. 25, 2007, remittance date, there were $6,427,741 and $1,383,999 in severe delinquencies for series 2002-SB1 and series 2003-WF1, respectively; subordination for the M-2 class from series 2002-SB1 was $4,267,720 and subordination and overcollateralization for the M-3 class from series 2003-WF1 was $685,635. Overcollateralization, originally 50 basis points of each transaction's original pool balance, has already been depleted in series 2002-SB1 as the B class is taking principal write downs and is currently 20 bps for series 2003-WF1. S&P removed three ratings from CreditWatch because they were lowered 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. Subordination, overcollateralization, and excess spread provide credit support for these transactions. The collateral supporting these series consists primarily of conventional, fixed- and adjustable-rate, fully amortizing, first- and second-lien residential mortgage loans. Ratings Lowered and Removed from Creditwatch Negative ABFC Trust Asset-backed certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-SB1 M-3 CCC BB/Watch Neg 2003-WF1 M-3 CCC BBB/Watch Neg 2003-WF1 M-4 CCC BBB-/Watch Neg Rating Lowered ABFC Trust Asset-backed certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-SB1 M-2 BB AA+ Ratings Affirmed ABFC Trust Asset-backed certificates Series Class Rating ------ ----- ------ 2002-SB1 AII-1, M-1 AAA 2003-WF1 A-2 AAA 2003-WF1 M-1 AA+ 2003-WF1 M-2 A+ ACA ABS: Moody's Junks Rating on $33 Million Class B-1L Notes ------------------------------------------------------------- Moody's Investors Service placed these notes issued by ACA ABS 2006-1 Ltd. on review for possible downgrade: -- Class Description: $450,000,000 Class A-1LA Floating Rate Notes Due June 2041 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade In addition Moody's also announced that it has downgraded and left on review for possible downgrade these notes: -- Class Description: $40,000,000 Class A-3L Deferrable Floating Rate Notes Due June 2041 Prior Rating: A2, on review for possible downgrade Current Rating: B1, on review for possible downgrade -- Class Description: $33,000,000 Class B-1L Floating Rate Notes Due June 2041 Prior Rating: Baa2, on review for possible downgrade Current Rating: Caa3, on review for possible downgrade According to Moody's, the rating actions the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of RMBS assets. ALLIANT HOLDINGS: Moody's Rates $265 Mil. Senior Notes at Caa1 -------------------------------------------------------------- Moody's Investors Service assigned a Caa1 rating to the $265 million of senior unsecured notes being issued by Alliant Holdings I Inc. The notes are being offered only to qualified institutional buyers under Rule 144A of the Securities Act of 1933. Moody's has also affirmed Alliant's B3 corporate family rating as well as the B2 ratings on its senior secured credit facilities. The rating outlook for Alliant is stable. Net proceeds from the note issuance, along with incremental borrowing under the senior secured term loan facility, will be used to repay a $290 million senior unsecured bridge loan facility. The notes will form part of the financing for the acquisition of Alliant by The Blackstone Group in partnership with Alliant's management and employees. The acquisition closed on Aug. 21, 2007. Upon completion of the note issuance, the acquisition financing arrangement will include a $60 million senior secured revolver (rated B2), a $385 million senior secured term loan (rated B2) and $265 million of senior unsecured notes (rated Caa1). These borrowings, along with new and retained equity plus cash on hand, have been used to fund the equity purchase price of approximately $815 million, to repay about $345 million of previously existing debt, and to pay related fees and expenses. According to Moody's, the current ratings reflect Alliant's well established position as a specialty broker and program manager, with expertise in serving public entities, Indian Nations, law firms and other industry groups. Alliant has generated strong organic growth and operating margins and has successfully integrated several acquisitions over the past six years. These strengths are tempered by the company's substantial financial leverage and modest interest coverage on a pro forma basis following the acquisition, with the adjusted debt-to-EBITDA ratio increasing to nearly seven times. Such leverage leaves little margin for error, particularly in light of the widespread softening of rates in the property & casualty insurance market. Moody's cited these factors that could lead to an upgrade of Alliant's ratings: (i) adjusted (EBITDA - capex) coverage of interest exceeding 2 times, (ii) free-cash-flow-to-debt ratio exceeding 5%, and (iii) adjusted debt-to-EBITDA ratio below 5.5 times. Moody's cited these factors that could lead to a downgrade of the ratings: (i) adjusted (EBITDA - capex) coverage of interest below 1.5 times, (ii) adjusted debt-to-EBITDA ratio exceeding 7 times, or (iii) a prolonged period with no organic growth. Moody's last rating action on Alliant took place on July 12, 2007, when the rating agency assigned the B3 corporate family rating as well as the B2 ratings on the senior secured credit facilities. Alliant, based in Newport Beach, California, ranks among the 15 largest US insurance brokers. Pro forma revenues for 2006, giving effect to the acquisition of the US retail operations of London- based Jardine Lloyd Thompson Group plc. (completed during the fall of 2006) were just under $300 million. AURELIUS CAPITAL: Moody's Rates $13.5 Mil. Class E Notes at Ba2 --------------------------------------------------------------- Moody's Investors Service assigned these ratings to Notes issued by Aurelius Capital CDO 2007-1 Limited: -- Aaa to the $240,300,000 Class A Loan due 2052; -- A2 to the $15,200,000 Class C Secured Floating Rate Deferrable Interest Notes due 2052; -- Baa2 to the $18,000,000 Class D Secured Floating Rate Deferrable Interest Notes due 2052; and -- Ba2 to the $13,500,000 Class E Secured Floating Rate Deferrable Interest Notes due 2052. The Moody's ratings of the notes address the ultimate cash receipt of all required interest and principal payments, as provided by the notes' governing documents, and are based on the expected loss posed to noteholders, relative to the promise of receiving the present value of such payments. The ratings reflect the risks due to the diminishment of cash flow from the underlying portfolio consisting of CLOs, the transaction's legal structure and the characteristics of the underlying assets. Aurelius Capital Management GmbH will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. AVNET INC: Earns $105.5 Million in First Quarter Ended Sept. 29 --------------------------------------------------------------- Avnet Inc. reported net income of $105.5 million for first quarter fiscal 2008 as compared with net income of $64.1 million for the first quarter last year. Revenue was $4.10 billion for first quarter fiscal 2008, ended Sept. 29, 2007, representing an increase of 12.3% over first quarter fiscal 2007. Operating income for first quarter fiscal 2008 was $165.2 million, up 14.0% as compared with operating income of $145 million in the year ago quarter. As of Sept. 29, 2007, the the company reported total assets of $7.4 billion, total liabilities of $3.8 billion, and total stockholders' equity of $3.6 billion. Full-text copies of the company's financials are available for free at http://ResearchArchives.com/t/s?248f. Roy Vallee, chairman and chief executive officer, commented, "Once again, our highly diversified revenue base contributed to our solid performance as better than expected growth from the Asia region offset weaker sales in the Americas. While year-over-year organic revenue growth slowed to 2.3% this quarter, positive contributions from acquisitions contributed to continued year over year improvement in key quarterly financial metrics including operating income, EPS and return on capital employed. With another $700+ million of annual revenue from acquisitions completed or announced in the current quarter, our acquisition strategy continues to broaden our revenue base, create cross selling opportunities and add further operating leverage to our business model going forward." Cash Flow During the first quarter of fiscal 2008, the company used $34 million of free cash flow, excluding cash used for acquisitions. As a result, the company ended the quarter with $521 million of cash and cash equivalents and net debt (total debt less cash and cash equivalents) of $702 million. Ray Sadowski, chief financial officer, stated, "The continued improvement in our credit statistics allowed us to negotiate a new five-year credit facility with a bank group that includes 18 lenders. The facility not only contains better terms and conditions than the one it supersedes, but also extends those terms an additional two years. With over $500 million in cash on hand and $950 million of standby lines of credit, we are in a strong position to continue pursuing growth opportunities that create additional shareholder value." Outlook For Avnet's second quarter fiscal 2008, management expects normal seasonality at both operating groups with sales at EM to be in the range of $2.40 billion to $2.50 billion and anticipates sales for TS to be between $2.05 billion and $2.15 billion. Therefore, Avnet's consolidated sales are forecasted to be between $4.45 billion and $4.65 billion for the second quarter of fiscal 2008. Management expects the second quarter earnings to be in the range of $0.83 to $0.87 per share, up 24% - 30% as compared with last year's second quarter. The EPS guidance does not include the amortization of intangibles or integration charges related to the acquisitions that have closed or will close in the December quarter. About Avnet Inc Phoenix, Arizona-based, Avnet, Inc. -- http://www.avnet.com/-- distributes electronic components and computer products, primarily for industrial customers. It has operations in the following countries: Australia, Belgium, China, Germany, Hong Kong, India, Indonesia, Italy, Japan, Malaysia, New Zealand, Philippines, Singapore, and Sweden, Brazil, Mexico and Puerto Rico. * * * Moody's Investors Service affirmed Avnet's Ba1 corporate family long-term debt ratings in March 2007. The outlook is positive. B&G FOODS: Net Income Ups $40.7% in Third Quarter Ended Sept. 29 ---------------------------------------------------------------- B&G Foods Inc. reported financial results for the third quarter of 2007 ended Sept. 29, 2007 and the first three quarters of 2007 ended Sept. 29, 2007. As of Sept. 29, 2007, the company reported total assets of $846.2 million, total liabilities of $668.1 million, and total stockholders' equity of $178.1 million. Full-text copies of the company's financials are available for free at http://ResearchArchives.com/t/s?2490. Financial Results for the Third Quarter of 2007 Net income increased 40.7% to $4.8 million for the third quarter of 2007 compared to $3.4 million for the third quarter of 2006. Net sales for the third quarter of 2007 increased 14.9% to $117 million from $101.9 million for the third quarter of 2006. Gross profit for the third quarter of 2007 increased 30.4% to $38.3 million from $29.4 million in the third quarter of 2006. David L. Wenner, chief executive officer of B&G Foods, stated, "Our third quarter results reflect the successful integration of Cream of Wheat into the B&G Foods portfolio of products. Cream of Wheat continues to perform well and has contributed meaningfully to our top and bottom line growth. Our base business has been stable in the face of a challenging cost environment and we continue to evaluate pricing actions to counter foreseeable cost increases as we review our product lines for the balance of 2007 and 2008." Financial Results for the First Three Quarters of 2007 Net sales for the first three quarters of 2007 increased 13% to $339 million from $300.1 million in the comparable period of fiscal 2006. Gross profit for the first three quarters of 2007 increased 26.5% to $108.3 million from $85.6 million in the comparable period of last year. Net income increased 45.4% to $12.7 million for the first three quarters of 2007 compared to $8.7 million for the comparable period of fiscal 2006. Liquidity and Capital Resources Cash provided by operating activities increased $3 million to $21.2 million for the first three quarters of 2007 from $18.2 million for the first three quarters of 2006. Working capital at Sept. 29, 2007 was $117.4 million, an increase of $14.4 million over working capital at Dec. 30, 2006 of $103 million. Net cash used in investing activities for the first three quarters of 2007 was $211.8 million as compared to $34.6 million for the first three quarters of 2006. Net cash provided by financing activities for the first three quarters of 2007 was $195.5 million as compared to $11.9 million for the first three quarters of 2006. Recent Acquisitions On Jan. 10, 2006, the company acquired the Grandma's molasses business for about $30.1 million in cash, including transaction costs, from Mott's LLP, a Cadbury Schweppes Americas Beverages company. Effective Feb. 25, 2007, the company completed the acquisition of the Cream of Wheat and Cream of Rice business for about $200.9 million in cash, including transaction costs, from Kraft Foods Global Inc. About B&G Foods Based in Parsippany, New Jersey, B&G Foods Inc. (AMEX: BGF) -- http://www.bgfoods.com/-- and its subsidiaries manufacture, sell and distribute a diversified portfolio of high-quality, shelf- stable foods across the United States, Canada and Puerto Rico. B&G Foods' products include jams, jellies and fruit spreads, canned meats and beans, spices, seasonings, marinades, hot sauces, wine vinegar, maple syrup, molasses, salad dressings, Mexican- style sauces, taco shells and kits, salsas, pickles and peppers and other specialty food products. * * * In August 2007, Moody's placed the company's long-term corporate family rating, senior unsecured debt rating, and probability of default rating at B2, bank loan debt rating at Ba2, and senior subordinate rating at Caa1. These ratings still hold to date. The outlook is stable. Standard & Poor's placed the company's long-term foreign and local issuer credits at B which still hold to date. The outlook is stable. BANC OF AMERICA: Fitch Junks Rating on Class B5 Certificates ------------------------------------------------------------ Fitch Ratings took rating actions on these Banc of America Alternative Loan Trust mortgage pass-through certificates: Series ALT 2006-6: -- Classes CB-1 to CB-11, CB-R, 2-A-1 to 2-A16, 2-IO, CB-IO and X-PO affirmed at 'AAA'; -- Class M affirmed at 'AA+'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 downgraded to 'BB' from 'BBB'; -- Class B4 downgraded to 'B' from 'BB'; -- Class B5 downgraded to 'C/DR5' from 'B'. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect about $379 million in outstanding certificates as of the September 2007 distribution date. The classes downgraded total about $4.3 million and reflect the deterioration of CE relative to future expected losses. The underlying collateral in this transaction consists of fully amortizing mortgage loans secured by first liens on one- to four- family residential properties. Bank of America N.A., currently rated 'RPS1' by Fitch for Prime & ALT-A transactions, is the servicer for these loans. This transaction is 15 months seasoned. The pool factor (i.e. current mortgage loans outstanding as a percentage of the initial pool) is 80%. The current CE for the class B3 is 1.30% versus the original CE of 1.10%. The current CE for the class B4 is 0.74% versus the original CE of 0.65%. The current CE for the class B5 is 0.31% versus the original CE of 0.30%. The 90+ delinquencies are 1.87% of current collateral balance and included in these are foreclosures of 0.66% and real estate owned of 0.15%. The cumulative loss on this pool is 0.05% of the original collateral balance. BEAR STEARNS: Fitch Affirms Low-B Ratings on Six Cert. Classes -------------------------------------------------------------- Fitch rates Bear Stearns Commercial Mortgage Securities Trust 2007-TOP28, commercial mortgage pass-through certificates as: -- $78,500,000 class A-1 'AAA'; -- $63,150,000 class A-2 'AAA'; -- $79,800,000 class A-3 'AAA'; -- $76,420,000 class A-AB 'AAA'; -- $841,681,000 class A-4 'AAA'; -- $146,141,000 class A-1A 'AAA'; -- $176,122,000 class A-M 'AAA'; -- $114,480,000 class A-J 'AAA'; -- *$1,761,222,527 class X-1 'AAA'; -- *$1,727,073,000 class X-2 'AAA'; -- $30,821,000 class B 'AA'; -- $15,411,000 class C 'AA-'; -- $28,620,000 class D 'A'; -- $22,015,000 class E 'A-'; -- $17,612,000 class F 'BBB+'; -- $19,814,000 class G 'BBB'; -- $15,411,000 class H 'BBB-'; -- $2,201,000 class J 'BB+'; -- $2,202,000 class K 'BB'; -- $2,201,000 class L 'BB-'; -- $4,403,000 class M 'B+'; -- $4,403,000 class N 'B'; -- $2,202,000 class O 'B-'; -- $17,612,527 Class P 'NR'. *Notional Amount Classes A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, and A-J are offered publicly while classes X-1, X-2, B, C, D, E, F, G, H, J, K, L, M, N, O, P are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 209 fixed loans having an aggregate principal balance of about $1,761,222,527, as of the cutoff date. BEAR STEARNS: Fitch Cuts Ratings on $13.9 Million Certificates -------------------------------------------------------------- Fitch Ratings took these rating actions on Bear Stearns Asset- Backed Securities 2005-AQ1 mortgage pass-through certificates. Affirmations total $76.2 million and downgrades total $13.9 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: BSABS 2005-AQ1 -- $24.9 million class A affirmed at 'AAA' (BL: 83.77, LCR: 4.15); -- $22.8 million class M-1 affirmed at 'AA' (BL: 61.29, LCR: 3.04); -- $15.7 million class M-2 affirmed at 'A' (BL: 45.66, LCR: 2.26); -- $4.1 million class M-3 affirmed at 'A-' (BL: 41.46, LCR: 2.06); -- $4.2 million class M-4 affirmed at 'BBB+' (BL: 36.99, LCR: 1.83); -- $4.2 million class M-5 affirmed at 'BBB' (BL: 32.57, LCR: 1.62); -- $4.4 million class M-6 downgraded to 'BB+' from 'BBB-' (BL: 20.99, LCR: 1.04); -- $4.2 million class M-7 downgraded to 'BB-' from 'BB+' (BL: 18.87, LCR: 0.94); -- $5.2 million class M-8 downgraded to 'B+' from 'BB' (BL: 17.10, LCR: 0.85); Deal Summary -- Originators: 100% Ameriquest Mortgage Company -- 60+ day Delinquency: 27.68%; -- Realized Losses to date (% of Original Balance): 1.80%; -- Expected Remaining Losses (% of Current Balance): 20.16%; -- Cumulative Expected Losses (% of Original Balance): 8.27%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness. -- 'Downgrade Criteria for Recent Vintage U.S. Subprime RMBS' (Aug. 8, 2007); -- 'U.S. Subprime RMBS/HEL Upgrade/Downgrade Criteria' (June 12 ,2007). BEAR STEARNS: Fitch Holds Low-B Ratings on Six Cert. Classes ------------------------------------------------------------ Fitch Ratings affirmed Bear Stearns commercial mortgage pass- through certificates, series 2003-TOP10 as: -- $174.6 million class A-1 at 'AAA'; -- $749.2 million class A-2 at 'AAA'; -- $34.8 million class B at 'AA+'. -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $37.9 million class C at 'A'; -- $12.1 million class D at 'A-'; -- $15.2 million class E at 'BBB+'; -- $9.1 million class F at 'BBB'; -- $7.6 million class G at 'BBB-'; -- $10.6 million class H at 'BB+'; -- $4.5 million class J at 'BB'; -- $6.1 million class K at 'BB-'; -- $4.5 million class L at 'B+'; -- $3 million class M at 'B'; -- $3 million class N at 'B-'. Fitch does not rate the $12.1 million class O. The rating affirmations are due to the stable performance of the remaining pool. As of the October 2007 distribution date, the pool's aggregate principal balance has decreased 10.7% to $1.08 billion from $1.21 billion at issuance. Twenty-one loans (13.3%) are defeased. There are currently no specially serviced loans. Seven loans (26.7%) maintain investment grade shadow ratings, one of which is defeased. Fitch reviewed YE 2006 operating statement analysis reports and other performance information provided by the master servicer. North Shore Towers (6.7%) is secured by 208 shares in a 1,844 unit cooperative apartment complex in Floral Park, Queens, New York. Occupancy as of June 2007 has remained stable since issuance at 100%. 1290 Avenue of the Americas (6.4%) is secured by a 43-story class A office building totaling 1.9 million square feet, located in midtown Manhattan, New York. The whole loan was divided into four pari passu notes and a subordinate B-note. The $70 million A-4 note serves as collateral in the subject transaction. Occupancy as of June 2007 is 100% compared to 98.7% at issuance. 575 Broadway (2.4%) is secured by a 152,299 sf office building, with basement and ground floor retail space, located in the Soho neighborhood of New York City. In January 2006, the six story building was engulfed by a fire. The property underwent a period of renovation and as of October 2007, all tenants have moved back in and are paying rent. As of June 2007, occupancy was 100%. The remaining three non-defeased shadow rated loans, Federal Center Plaza (6.2%), One Canal Place (2.6%), and Towne Mall (1.3%) have performed in-line with or above underwriting. BEAR STEARNS: Fitch Junks Rating on Class M-7 Certificates ---------------------------------------------------------- Fitch took rating actions on these Bear Stearns Asset Backed Securities mortgage pass-through certificates: Bear Stearns Asset Backed Securities Trust, Series 2004-2 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 downgraded to 'BBB+' from 'A'; -- Class M-3 downgraded to 'BB' from 'BBB'; -- Class B downgraded to 'B' from 'BBB-'. Bear Stearns Asset Backed Securities Trust, Series 2005-2 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 downgraded to 'BBB+' from 'A-'; -- Class M-4 downgraded to 'BBB-' from 'BBB+'; -- Class M-5 downgraded to 'BBB-' from 'BBB'; -- Class M-6 downgraded to 'BB' from 'BBB-'; -- Class M-7 downgraded to 'C/DR4' from 'BB'. The collateral in the aforementioned transactions consists primarily of fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties. The loans for the transactions were seasoned in addition to some being contractually delinquent (reperforming/subperforming). The affirmations reflect a stable relationship between credit enhancement and future expected losses and affect about $149.5 million in outstanding certificates. The downgrades reflect deterioration in the relationship between CE and future expected losses and affect about $54.1 million in outstanding certificates. For more than the past year, the overcollateralization of both series has been consistently below the target amount. The OC deficiency caused by monthly realized losses exceeding excess spread has put negative pressure up the capital structure for both trusts. Furthermore, the impending OC release for Series 2004-2 will cause additional stress up the structure as the CE provided by the OC will be reduced. The master servicer for this transaction, EMC Mortgage Corp., is a wholly owned subsidiary of The Bear Stearns Companies Inc. and is rated 'RPS1' for prime, Alt-A, and subprime products, rated 'RSS1' as a special servicer by Fitch, and rated 'RMS3' from master servicing. BLAKE MCDONALD: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Blake Hurley McDonald Elsie Botilda McDonald 47 Encina Drive Carmel Valley, CA 93924 Bankruptcy Case No.: 07-53443 Chapter 11 Petition Date: October 25, 2007 Court: Northern District of California (San Jose) Judge: Arthur S. Weissbrodt Debtor's Counsel: Scott L. Goodsell, Esq. Campeau, Goodsell & Smith, L.C. 440 North 1st Street, Suite 100 San Jose, CA 95112 Tel: (408) 295-9555 Total Assets: $4,539,500 Total Debts: $2,717,031 The Debtor did not file a list of its 20 largest unsecured creditors. BROTMAN MEDICAL: Files Chapter 11 Bankruptcy in Los Angeles ----------------------------------------------------------- Brotman Medical Center said Friday that it has filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Central District of California in Los Angeles. The center suffered increasing losses since 2001, and recorded about $15 million net loss in 2005 after Tenet Healthcare Corp. sold the center, Daniel Costello of Los Angeles Times reports. In connection with the filing, Brotman Medical Center is in the process of finalizing a new debtor-in-possession revolver in the amount of approximately $19.6 million to be provided by its prepetition secured lender, which is subject to final agreement and Court approval. The DIP financing facility is designed to permit the hospital to fund its working capital needs during the chapter 11 case, including obligations to its employees, trade vendors, suppliers and service providers. As part of the chapter 11 filing, the hospital is also seeking Court approval of certain operating, cash management and employee motions, which are commonplace in chapter 11 filings. Brotman Medical Center affirmed it will continue to serve physicians and their patients in Culver City, West Los Angeles and the surrounding community. The hospital anticipates no changes in emergency room operations. All professional and technical staff will continue to work regular shifts and hours. In connection with the filing, the hospital has retained Michael Lane of Navigant Consulting Inc. as its interim chief executive officer. Mr. Lane has worked with Brotman in a consulting capacity for the past year. Mr. Lane affirmed that "the new DIP financing, upon approval by the Court, will ensure that Brotman Medical Center has the resources to continue providing care in Culver City and West Los Angeles. The hospital's suppliers, employees and physician partners should see little or no disruption. "We have been working to meet the many challenges that characterize today's health care environment. We are refining services in order to continue critical care facilities, seeking maximum cost-efficiencies, and finding new ways to make doctors and nurses more successful while maintaining the level of health care our patients and the community have come to expect. However, the level of the hospital's debt and the need to address operational issues necessitated that we complete our restructuring work under the protection of chapter 11. Under chapter 11, we will continue to operate the hospital, respond to patients' needs, and obtain necessary supplies and equipment while we pursue a viable foundation to support Brotman Medical Center," continued Mr. Lane. Brotman is being represented in the chapter 11 case by its bankruptcy counsel, Klee, Tuchin, Bogdanoff & Stern. About Brotman Medical Center Brotman Medical Center in Culver City, California -- http://www.brotmanmedicalcenter.com/-- is a privately held, 420- bed medical center serving the West Los Angeles area. It recently received recognition for its efforts from the Joint Commission on the Accreditation of Healthcare Organizations. The center offers inpatient and outpatient services as well as rehabilitation, psychiatric care and chemical dependency. It also offers a 24- hour emergency room staffed by board certified emergency physicians and nurse specialists. The hospital employs about 800 full and part-time people at its facilities in Culver City. BROTMAN MEDICAL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Brotman Medical Center, Inc. fka Brotman Medical Partners 3828 Delmas Terrace Culver City, CA 90232 Tel: (310) 836-7000 Bankruptcy Case No.: 07-19705 Type of Business: The Debtor provides range of inpatient and outpatient services, as well as rehabilitation, psychiatric care and chemical dependency. It also offers a 24-hour emergency room staffed by emergency physicians and nurse specialists. See http://www.brotmanmedicalcenter.com/ Chapter 11 Petition Date: October 25, 2007 Court: Central District Of California (Los Angeles) Judge: Sheri Bluebond Debtor's Counsel: Courtney E. Pozmantier, Esq. Klee, Tuchin, Bogdanoff & Stern, L.L.P. 2121 Avenue of the Stars, 33rd floor Los Angeles, CA 90067 Tel: (310) 407-4071 Fax : (310) 407-9090 -- and -- Stacia A. Neeley, Esq. Klee, Tuchin, Bogdanoff & Stern, L.L.P. 1999 Avenue of the Stars, 39th Floor Los Angeles, CA 90067 Tel: (310) 407-4000 Fax: (310) 407-9090 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ian I.T. Armstrong M.D., Inc. Trade debt $1,823,388 3831 Hughes Avenue, Suite 105 Culver City, CA 90232-0000 Sodexho Inc. & Affiliates Trade debt $1,559,908 Department 43283 3002 Dow Avenue, Suite 110 Tustin, CA 92780 Perot Systems Trade debt $1,507,645 2300 West Plano Parkway, Treasury Department Plano, TX 75075-0000 Herta and Paul Amir Family Promissory Note $1,219,000 Trust 8730 Wilshire Boulevard, Suite 300 Beverly Hills, CA 90211 Rehabcare Corp. Trade debt $1,157,915 P.O. Box 502096 St. Louis, MO 63150-2096 Owens & Minor, Inc. Trade debt $566,479 P.O. Box 841420 Dallas, TX 45284-1420 Medtronic Xomed Trade debt $477,854 4642 Collection Center Drive Chicago, IL 60693-0000 Exodus Management Services, Management fees $420,491 Inc. 8095 West Sahara Avenue Las Vegas, NV 89117-1958 St. Jude Medical S.C., Inc. Trade debt $396,339 22400 Network Place Chicago, IL 60673-1224 Nuvasive, Inc. Trade debt $325,912 File 50678, Los Angeles, CA 90074-0678 Theodora, Oringher, Miller Professional fees $253,330 & Richman 2029 Century Park East, 6th Floor Los Angeles, CA 90067-2907 Professional Hospital Supply Trade debt $244,386 Adexelite Medical Staffing, Trade debt $227,840 L.L.C. Howmedica Osteonics Corp. Trade debt $197,872 Boston Scientific Corp. Trade debt $173,724 Western Radiologic Medical Trade debt $163,320 Group Philips Medical System, Inc. Trade debt $157,762 Angelica Textile Services Trade debt $153,955 Ernst & Young, L.L.P. Professional Fees $150,000 Managed Resources, Inc. Trade debt $138,868 BROTMAN MEDICAL: Faces Suit versus Brown Family Over Negligence --------------------------------------------------------------- Brotman Medical Center has a pending lawsuit filed by the family of the late Linda Sue Brown, who allegedly died at the center due to the "series of medical mistakes" committed by the center's professionals, Daniel Costello of Los Angeles Times reports. In September 2007, the California health inspectors disclosed findings of their several months of investigation indicating that the center's negligence lead to the death of Linda Brown who also had mental problems. The inspectors found that Brotman's doctors subjected Linda Brown to a risky emergency operation for no clear cause and had failed to read signs of Brown's heart failure, Mr Costello relates. In addition, inspectors said that nurses at the center appeared to have made Linda Brown sign consent agreements which she couldn't understand, according to the report. However, officers at Brotman denied the allegations saying there was nothing the doctors and nurses could do to correct Linda Brown's heart problem, the report says. The center, according to the report, had said last week that it expected to file for bankruptcy protection to give time for management to resolve financial problems due to lower revenues. Brotman intends to restructure its debt, which the hospital estimates to be more than $50 million, the report adds. About Brotman Medical Center Brotman Medical Center in Culver City, California -- http://www.brotmanmedicalcenter.com/-- is a privately held, 420- bed medical center serving the West Los Angeles area. It recently received recognition for its efforts from the Joint Commission on the Accreditation of Healthcare Organizations. The center offers inpatient and outpatient services as well as rehabilitation, psychiatric care and chemical dependency. It also offers a 24- hour emergency room staffed by board certified emergency physicians and nurse specialists. The hospital employs about 800 full and part-time people at its facilities in Culver City. CABLEVISION SYSTEMS: Fitch Holds B+ Issuer Default Rating --------------------------------------------------------- Fitch Ratings affirmed the 'B+' Issuer Default Rating assigned to Cablevision Systems Corporation and its wholly owned subsidiary CSC Holdings Inc., and has removed CVC and CSC from Rating Watch Negative, where the ratings were placed on May 2, 2007. In addition, Fitch affirmed specific issue ratings and recovery ratings assigned to CVC and CSC, as well as removed these ratings from Rating Watch Negative. About $12.4 billion of debt as of June 30, 2007 is affected by Fitch's action. Fitch has assigned a Negative Rating Outlook to all of the company's ratings. Fitch's rating action follows CVC's announcement that the company did not receive sufficient shareholder votes to approve a proposed merger between CVC and entities created by CVC's controlling shareholder the Dolan family. The Negative Outlook reflects the ongoing uncertainty surrounding CVC's financial policies including its capital structure and the potential for the company to continue to place greater priority on returning capital to shareholders at the expense of bondholders. From an operational perspective, CVC's cable segment ranks among the highest in the industry; however, Fitch believes that event risk related to potential shareholder-friendly initiatives will create an overhang on its credit profile until the company articulates its financial strategy going forward. Cablevision's capital structure and financial policy have been in a state of flux since the Dolan family initiated proposals to take CVC private. Fitch expects the company to generate meaningful levels of free cash flow over the ratings horizon and that there will be increased pressure on the company to return value to shareholders. While Fitch expects that a portion of potential shareholder initiatives will be funded internally, in the past the company has funded shareholder-friendly actions with increased debt. In addition, the Negative Outlook incorporates the impact that the growing competitive threat posed by Verizon Communications, Inc., as well as the persistent competition for subscribers from direct broadcast satellite providers will have on the company's operating profile and credit metrics. Fitch continues to believe that over the near term, CVC's service bundling strategy provides a strong competitive position. However, as VZ's video platform gains scale (as of the end of second-quarter 2007 FiOS passed about 750,000 homes within CVC's service foot print) the increased competitive pressure will certainly slow the company's RGU growth and have a negative impact on CVC's operating profile. Overall, Fitch's ratings for CVC continue to reflect the company's strong competitive position and operating profile as well as the operating and cost efficiencies derived from CVC's tightly clustered subscriber base. Fitch believes that CVC's unique system clustering provides the company a competitive advantage by positioning it to drive operating leverage through its cable plant, while controlling operating costs in an environment that Fitch expects will become increasingly competitive. Fitch's ratings incorporate the cash flow growth potential attributable to the emergence of CVC's triple play offering and the growing penetration of advanced services that drive strong operating margins within the cable business. Fitch placed CVC's ratings on Rating Watch Negative following the company's announcement that it entered into a definitive merger agreement with an entity created by the Dolan family group to purchase the publicly held shares of CVC for $36.26 a share. If the privatization proposal was accepted by CVC's shareholders, the increased debt associated with funding the transaction would in Fitch's view materially increase CVC's financial risk and significantly erode the company's credit profile. Factors that would lead to a revision of the Rating Outlook include an assessment of the company's financial and capital structure strategy and a determination that the company's credit profile has sufficient financial flexibility relative to the rating category to potentially accommodate such strategies in a credit neutral manner. Fitch affirmed these CVC ratings: -- Issuer Default Rating 'B+'; -- Senior unsecured debt 'CCC+/RR6'. Fitch affirmed these CSC ratings: -- Issuer Default Rating 'B+'; -- Senior secured bank facility 'BB/RR1'; -- Senior unsecured debt 'BB-/RR3'. CAITHNESS COSO: Extends Pricing of Tender Offer to November 13 -------------------------------------------------------------- Caithness Coso Funding Corp. has extended the pricing determination from 2:00 p.m. New York City time on Oct. 25, 2007, to 2:00 p.m. New York City time on Nov. 13, 2007, of the company's tender offers and consent solicitations for its: * $90 million original principal amount of 6.263% Subordinated Secured Notes due 2014 (CUSIP Nos. 128017AK6 and U12295AD0) And * $375 million original principal amount of 5.489% Senior Secured Bonds due 2019 (CUSIP Nos. 128017AG5 and U12295AC2). The company has also extended the date the tender offer is scheduled to expire from 9:00 a.m. New York City time on Nov. 1, 2007, to 9:00 a.m. New York City time on Nov. 27, 2007. Each of the Price Determination Date and the Expiration Time may be further extended by the company. The tender offers are subject to the satisfaction of certain conditions, including the receipt of specified financing, the consummation of the Acquisitions and certain other customary conditions. The company has received on Oct. 11, 2007, pursuant to its tender offers and consent solicitations for any and all of its outstanding Notes, the requisite consents to adopt the proposed amendments and the proposed waivers to the Notes and the indentures governing the Notes. The tender offers and related consent solicitations were conducted in connection with the agreement between Caithness Energy L.L.C., certain owners of Caithness Energy, certain subsidiaries of Caithness Energy and ArcLight Renewco Holdings LLC, dated July 9, 2007, pursuant to which Renewco has agreed to acquire a 100% direct ownership interest in certain affiliates of the company. The company may, in its sole discretion, accept for payment and pay for Notes tendered on an initial settlement date prior to the Expiration Time. The company disclosed that as of 5:00 p.m., New York City time, on Oct. 24, 2007, these principal amount of Notes had been validly tendered and not withdrawn: -- $90,000,000 million original principal amount of the 2014 Notes, representing 100% of the outstanding original principal amount of such Notes; and -- $355,000,000 million original principal amount of the 2019 Bonds, representing 94.67% of the outstanding original principal amount of such Bonds. The company and the trustee have executed supplemental indentures giving effect to the proposed amendments and the proposed waivers. Such supplemental indentures and waivers will only become operative, however, concurrently with the Acquisitions, provided that all validly tendered Notes are accepted for purchase pursuant to the tender offers. The company has retained Citi to act as sole Dealer Manager for the tender offers and as the Solicitation Agent for the consent solicitations. Citi can be contacted at (212) 723-6106 (collect) or at (800) 558-3745 (toll free). Global Bondholder Services Corporation is the Information Agent and Depositary for the tender offers and can be contacted at (212) 430-3774 (collect) or at (866) 470-4200 (toll free). Copies of the Offer Documents and other related documents may be obtained from the Information Agent. About Caithness Coso Funding Corp. Based in New York City, Caithness Coso Funding Corp. is a single- purpose Delaware corporation formed to finance the business and operations of Navy I Partnership, BLM Partnership, and Navy II Partnership. The company has no material assets, other than the loans it has made and will make to the Partnerships and certain accounts created in connection with the offering of the notes, and does not conduct any business, other than issuing the notes and making the loans to the partnerships, and activities directly related thereto. * * * Moody's Investor Services assigned a Ba1 rating on Caithness Coso Funding Corp.'s subordinate debt. The outlook is stable. The rating was placed in January 2007 and still holds to date. Fitch placed the company's subordinate debt at BB+ in January 2007. CELESTICA INC: Earns $51.5 Mil. in 3rd Quarter Ended Sept. 30 ------------------------------------------------------------- Celestica Inc. disclosed results for its third quarter ended Sept. 30, 2007. Net earnings on a GAAP basis for the third quarter were $51.5 million, compared to GAAP net loss of $42.1 million for the same period last year. Included in the third quarter 2007 earnings are restructuring charges of $2.7 million compared to restructuring charges of $82.4 million in the third quarter last year. Revenue was $2.081 billion, down 13% from $2.392 billion in the third quarter of 2006. Adjusted net earnings for the quarter were $29.3 million compared to adjusted net earnings of $40.5 million for the same period last year. The term adjusted net earnings is defined as net earnings before amortization of intangible assets, gains or losses on the repurchase of shares and debt, integration costs related to acquisitions, option expense, option exchange costs and other charges, net of tax and significant deferred tax write-offs or recovery. For the nine months ended Sept. 30, 2007, revenue was $5.860 billion compared to $6.550 billion for the same period in 2006. Net loss on a GAAP basis was $2.0 million compared to net loss of $89.8 million last year. Adjusted net earnings for the first nine months of 2007 were $25.1 million compared to adjusted net earnings of $87.0 million for the same period in 2006. "Our third quarter results reflect the significant progress we are making with respect to the turnaround plans we put in place at the beginning of this year," said Craig Muhlhauser, president and chief executive officer, Celestica. "On a sequential basis, revenue grew 7%, operating margins almost doubled, inventory turns improved to 8.3x and we generated more than $200 million in free cash flow. We are encouraged by our progress to date and believe that significant opportunity remains throughout the business. Although we continue to manage through nearer-term volatility as we complete our turnaround plans, our entire team remains confident in our ability to drive further improvements as we strive to build a solid foundation for Celestica's future growth and profitability." At Sept. 30, 2007, the company's consolidated balance sheet showed $4.51 billion in total assets, $2.39 billion in total liabilities, and $2.12 billion in total shareholders' equity. About Celestica Inc. Headquartered in Toronto, Celestica Inc. (NYSE:CLS) -- http://www.celestica.com/-- provides innovative electronics manufacturing services to companies in the computing, communications, consumer, industrial, and aerospace and defense end markets. * * * As reported in the Troubled Company Reporter on May 4, 2007, Moody's Investors Service downgraded Celestica Inc.'s corporate family rating to B1 from Ba3 and the senior subordinated note ratings to B3 from B2. Simultaneously, Moody's lowered the company's speculative grade liquidity rating to SGL-2 from SGL-1. CENTAUR LLC: Moody's Affirms B3 Corporate Family Rating ------------------------------------------------------- Centaur LLC's B3 corporate family rating, B3 probability of default rating, and stable outlook were affirmed following the company's recently announced changes to its proposed capital structure. Although the proposed changes will result in a $15 million increase in total pro forma debt, Moody's believes that this increase will not materially impair Centaur's ability to reach debt/EBITDA at or below 5 times by the end of 2010, the first full year the company's Pennsylvania and Indiana racinos will be operating, and a key assumption supporting the rating that was initially assigned on Oct. 8, 2007. At the same time, Moody's affirmed the B1 rating on Centaur's first lien senior senior secured credit facilities although its LGD assessment improved to LGD-2, 27% from LGD-3, 30%. Moody's also affirmed the Caa1 rating on Centaur's second lien credit facilities, but the LGD assessment changed slightly to LGD-5, 72% from LGD-5, 75%. The B1(LGD-3, 30%) rating on the $50 million 3- month first lien senior secured delayed draw credit facility was withdrawn. The proposed capital structure changes include a $15 million increase in the company's 5-year first lien senior secured term loan and cancellation of its $50 million 3-month first lien delayed draw term loan. The second lien facility was increased by $50 million to $180 million. The first and second lien secured facilities along with $200 participating PIK subordinated notes (unrated) will be used to fund the development of racino facilities in greater Indianapolis, Indianapolis and Western, Pennsylvania. Centaur LLC, is a wholly owned subsidiary of Centaur Gaming, LLC which, in turn, is a wholly-owned subsidiary of Centaur, Inc. Centaur Inc. owns Hoosier Park LP, Centaur Colorado LLC, and Valley View Downs LP. CENTAUR LLC: S&P Lifts Rating on Senior Term Loan to B- ------------------------------------------------------- Standard & Poor's Ratings Services revised its issue-level and recovery ratings on Centaur LLC's planned senior secured second- lien term loan as a result of changes to the previously announced debt structure. The company is reducing its senior secured first-lien credit facilities by a total of $35 million, to $595 million, and increasing the second-lien term loan by $50 million, to $180 million. The issue rating on the second-lien term loan was raised to 'B-' from 'CCC+'. The recovery rating on this debt was revised to '5', indicating that lenders can expect modest (10% to 30%) recovery in the event of a payment default, from '6'. At the same time, the issue-level rating on the first-lien credit facilities was affirmed at 'BB-' and the recovery rating was unchanged at '1', indicating that lenders can expect very high (90% to 100%) recovery in the event of a payment default. Proceeds from the credit facilities will be used for the development, construction, and operation of the company's proposed gaming facilities in Indiana and Pennsylvania, as well as for general corporate purposes. Centaur LLC will be the borrower under the credit facilities, which will be guaranteed by the company's subsidiaries. The collateral package will consist of substantially all the assets of Centaur and the subsidiary guarantors. Only the first-lien term loans will have required amortization. There will be maintenance financial covenants on both the first-lien and second-lien facilities. The corporate credit rating on Centaur is 'B' and the rating outlook is stable. The 'B' rating reflects the company's pro forma high debt leverage, driven, in part, by very high licensing fees, anticipated heavy interest burden, construction and start-up risks associated with its planned slot operations, and a high level of competition in existing and proposed markets. Also, the high licensing fees reduce the investments that Centaur is able to make in its new properties. These factors are partially tempered by adequate construction-related contingencies, a satisfactory interest reserve account, and anticipated unused revolver availability, as well as the relatively good locations of its proposed facilities. Ratings List Centaur LLC Corporate Credit Rating B/Stable/-- Secured First-Lien BB- Recovery Rating 1 Ratings Revised Centaur LLC To From -- ---- Secured Second-Lien B- CCC+ Recovery Rating 5 6 CENTERPOINT ENERGY: Completes $500 Mil. Senior Notes Offerings -------------------------------------------------------------- CenterPoint Energy Resources Corp. closed on $250 million of 6.125% senior unsecured notes due Nov. 1, 2017, and $250 million of 6.625% senior unsecured notes due Nov. 1, 2037. On Oct. 18, 2007, CERC entered into an underwriting agreement with Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated, UBS Securities LLC, Comerica Securities Inc., HSBC Securities (USA) Inc., Scotia Capital (USA) Inc., SunTrust Robinson Humphrey Inc., Wachovia Capital Markets LLC and The Williams Capital Group L.P., relating to the public offering of CERC's senior notes offering. The offering was made pursuant to Feb. 28, 1998, indenture between CERC and the Bank of New York Trust Company, National Association, as Trustee. Net proceeds will be used for general corporate purposes, including the repayment or refinancing of $300 million of 6.50% debentures due Feb. 1, 2008. Copies of the prospectus may be obtained by calling Citigroup Global Markets Inc. at 1-877-858-5401, Morgan Stanley & Co. Incorporated at 1-866-718-1649 or UBS Securities LLC at 1-888-722-9555, ext. 1088. About CenterPoint Energy Resources Corp. Based in Houston, Texas, Centerpoint Energy Resources Corp. -- http://www.centerpointenergy.com/-- owns gas distribution systems serving approximately three million customers in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas. Through its wholly owned subsidiaries, the company also owns two interstate natural gas pipelines and gas gathering systems, provide various ancillary services, and offer variable and fixed- price physical natural gas supplies to commercial and industrial customers and natural gas distributors. The company's business segments include Natural Gas Distribution, Pipelines and Gathering and other operations. It is an indirect wholly owned subsidiary of CenterPoint Energy Inc. * * * Moody's Investor Services placed CenterPoint Energy Resources Corp.'s Subordianted debt rating at 'Ba1' in July 2005. The rating still holds to date with a stable outlook. CENTERPOINT ENERGY: Elects Sherman Wolff to Board of Directors -------------------------------------------------------------- CenterPoint Energy Inc.'s board of directors elected Sherman M. Wolff to the company's board, effective Oct. 25, 2007, and declared a regular quarterly cash dividend of $0.17 per share of common stock. The dividend is payable on Dec. 10, 2007, to shareholders of record as of the close of business on Nov. 16, 2007. Prior to his retirement in 2006, Mr. Wolff served as executive vice president and chief operating officer of Health Care Service Corporation, which provides health and life insurance products and related services as Blue Cross Blue Shield of Texas, Illinois, New Mexico and Oklahoma. He held various positions with that company from 1991 until his retirement. He is currently a director of Fort Dearborn Life Insurance Company. Mr. Wolff is expected to stand for election by the shareholders at the CenterPoint Energy 2008 annual meeting and will serve on the board's audit, compensation and finance committees. He joins current board members Milton Carroll (chairman), Donald R. Campbell, Derrill Cody, O. Holcombe Crosswell, Janiece Longoria, Thomas F. Madison, David M. McClanahan, Robert T. O'Connell, Michael E. Shannon, and Peter S. Wareing. About CenterPoint Energy Inc. Headquartered in Houston, Texas, CenterPoint Energy Inc. (NYSE:CNP) -- http://www.CenterPointEnergy.com/-- is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, and interstate pipeline and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. With about 8,600 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. * * * Moody's Invetor Service placed CenterPoint Energy Inc.'s issuer, bank loan debt and senior unsecured debt ratings at 'Ba1' in July 2005. These ratings still hold to date with a stable outlook. CITIGROUP MORTGAGE: Fitch Holds BB+ Rating on Class M10 Certs. -------------------------------------------------------------- Fitch Ratings took these rating actions on one Citigroup mortgage pass-through certificate. Affirmations total $161.9 million. Break Loss percentages and Loss Coverage Ratios for each class are included, where applicable, with the rating actions as: Citigroup Mortgage Loan Trust 2005-OPT1 -- $20.7 million class A affirmed at 'AAA' (BL:93.22, LCR:9.77); -- $29.7 million class M1 affirmed at 'AA+' (BL:77.36, LCR:8.11); -- $24 million class M2 affirmed at 'AA' (BL:64.25, LCR:6.73); -- $15.4 million class M3 affirmed at 'AA-' (BL:34.14, LCR:3.58); -- $13.4 million class M4 affirmed at 'A+' (BL:22.91, LCR:2.4); -- $13 million class M5 affirmed at 'A' (BL:19.89, LCR:2.08); -- $11.8 million class M6 affirmed at 'A-' (BL:17.11, LCR:1.79); -- $10.1 million class M7 affirmed at 'BBB+' (BL:14.69, LCR:1.54); -- $6.5 million class M8 affirmed at 'BBB' (BL:13.15, LCR:1.38); -- $8.1 million class M9 affirmed at 'BBB-' (BL:11.34, LCR:1.19); -- $8.9 million class M10 affirmed at 'BB+' (BL:10.01, LCR:1.05); Deal Summary -- Originators: 100% Option One Mortgage Corporation; -- 60+ day Delinquency: 22.14%; -- Realized Losses to date (% of Original Balance): 0.51%; -- Expected Remaining Losses (% of Current Balance): 9.54%; -- Cumulative Expected Losses (% of Original Balance): 2.60%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness. -- 'Downgrade Criteria for Recent Vintage U.S. Subprime RMBS' (Aug. 8, 2007); -- 'U.S. Subprime RMBS/HEL Upgrade/Downgrade Criteria' (June 12, 2007). CLAIRE'S STORES: S&P Lifts Rating on $1.65BB Facilities to B+ ------------------------------------------------------------- Standard & Poor's Ratings Services revised its bank loan and recovery rating on Pembroke Pines, Florida-based Claire's Stores Inc.'s $1.65 billion senior secured credit facilities. S&P raised the loan rating to 'B+' (one notch higher than the 'B' corporate credit rating) from 'B' and revised the recovery rating to '2' from '3'. The '2' recovery rating indicates that lenders can expect substantial (70%-90%) recovery in the event of a payment default. The rating revision reflects the final structure which resulted in a higher enterprise value. The facilities include a $200 million revolving credit facility maturing in 2013 and a $1.45 billion term loan B maturing in 2014. COFFEYVILLE RESOURCES: IPO Cues S&P to Revise Outlook to Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch implications on the Coffeyville Resources LLC ratings to positive from negative. S&P placed the ratings on Coffeyville on CreditWatch with negative implications on July 3, 2007. The positive CreditWatch listing follows Coffeyville's successful IPO on Oct. 19, 2007, and S&P's expectation that proceeds will be used to reduce company debt. The negative CreditWatch listing reflected the need for short-term liquidity at Coffeyville's petroleum refinery and nitrogen fertilizer facility, when the refinery was not operational due to the effects of a June flood, and when the credit markets were in turmoil. The company addressed that liquidity need through additional borrowing, and the refinery and the nitrogen facility are now operating at or above pre-flood levels. "The CreditWatch listing will be resolved as soon as we receive a clear indication of the new capital structure and review the company's financial forecast," said Standard & Poor's credit analyst Chinelo Chidozie. COLONIAL PROPERTIES: Earns $1.7 Million in Quarter Ended Sept. 30 ----------------------------------------------------------------- Colonial Properties Trust reported net income available to common shareholders of $1.7 million for the third quarter ended Sept. 30, 2007, compared with $14.7 million for the same period in 2006, including a non-cash impairment charge of $43.3 million ($26.8 million net of tax), related to certain of the company's for-sale residential development projects. Net income for the nine months ended Sept. 30, 2007 was $338.9 million compared with $48.7 million for the same period in 2006. Funds from operations for the third quarter 2007 were $1.7 million compared with $44.2 million in the same period a year ago. FFO in the third quarter of 2007 includes $0.47 per diluted share, or $26.8 million, net of tax, for an impairment charges related the company's for-sale residential developments, as previously discussed. The decrease in FFO per share, excluding the impact of the for- sale residential impairment charges, was primarily due to the net disposition of assets resulting from the company's strategic initiative to focus on its multifamily business, and a reduction in gains recognized from for-sale residential activities in the prior year. As of Sept. 30, 2007, the the company reported total assets of $3.3 billion, total liabilities of $1.8 billion, and total stockholders' equity of $1.5 billion. Full-text copies of the company's financials are available for free at http://ResearchArchives.com/t/s?2493. Multifamily Operating Performance Net operating income for the third quarter 2007 increased 5.3% compared with the third quarter 2006, for the 24,060 apartment homes included in the consolidated same-property results. This increase represents the 16th consecutive quarter of year-over-year same-property NOI growth for the company's multifamily operations. Multifamily revenues increased 4.7% and expenses increased 4% compared with the third quarter of 2006. "The key markets of Austin, Texas, Charlotte North Carolina, Fort Worth, Texas, Raleigh, North Craolina and Richmond, Virginia, which account for almost 36% of our multifamily portfolio, continue to demonstrate strong fundamentals and led the way for our third quarter operating performance," said Reynolds Thompson, chief executive officer of Colonial Properties Trust. "The steady growth from our existing multifamily portfolio is complemented by our multifamily development projects underway, as well as our commercial development activity." "We are pleased with the execution of our strategic initiatives to focus primarily on our multifamily business, not withstanding the issues experienced in the single family housing market," stated Mr. Thompson. "While our multifamily same property NOI growth is projected to moderate in 2008, we are excited about the long-term prospects of our multifamily business and the growth associated with our development pipeline." About Colonial Properties Headquartered in Birmingham, Alabama, Colonial Properties Trust (NYSE:CLP) -- http://www.colonialprop.com/-- is a diversified REIT that, through its subsidiaries, owns a portfolio of multifamily, office and retail properties where you live, work and shop in Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Virginia, Tennessee, Texas, Arizona, Nevada and New Mexico. Colonial Properties Trust performs development, acquisition, management, leasing and brokerage services for its portfolio and properties owned by third parties. * * * As reported in the Troubled Company Reporter on Sep. 26, 2007, Moody's Investors Service affirmed the ratings of Colonial Realty Limited Partnership (senior debt at Baa3) and revised the outlook to negative, from stable. In January 2005, Moody's also placed the company's preferred stock rating at Ba1 which still holds to date. The outlook is negative. Fitch placed the company's preferred stock rating at BB+ in September 2001, which still holds to date. COMCAST CORP: Earns $560 Mil. in Third Quarter Ended Sept. 30 ------------------------------------------------------------- Comcast Corporation reported results for the quarter ended Sept. 30, 2007. Net Income decreased 54% to $560 million on revenue of $7.78 billion in the third quarter of 2007, compared to net income of $1.2 billion on revenue of $6.43 billion in the third quarter of 2006. The third quarter of 2007 includes a $55 million expense related to the anticipated cost and settlement of previously disclosed At Home litigation. Included in the third quarter of 2006 was an one-time gain, included in investment income, of $694 million related to the Adelphia/Time Warner transactions and a one-time gain of $234 million, net of tax, on discontinued operations related to the transfer of cable systems to Time Warner. Excluding these gains, adjusted net income for the third quarter of 2007 increased to $560 million, compared to $548 million or $0.17 per share in 2006. Year to date Sept. 30, 2007, net income decreased 7% to $2.0 billion compared to net income of $2.1 billion in the prior year. As noted above, the third quarter of 2007 includes an expense related to the anticipated cost and settlement of previously disclosed At Home litigation. In addition to strong operating results at Comcast Cable, year-to-date 2007 net income includes a one-time gain, included in other income, of $500 million related to the dissolution of the company's Texas/Kansas City Cable Partnership in the first quarter of 2007. Year-to-date net income for 2006 includes the one-time gains recorded in the third quarter of 2006 described above. Excluding these gains, adjusted net income for the first nine months of 2007 increased to $1.7 billion, compared to $1.5 billion in the same period a year ago. Brian L. Roberts, chairman and chief executive officer of Comcast Corporation, said, "Our business continues to perform well both operationally and financially. We once again posted double-digit growth in revenue and operating cash flow, our two most important metrics. In addition, continued strong demand for our products powered our ability to reach 56 million RGUs at the end of the third quarter. "We have transformed our company from a one-product provider of video to become the only company in the world able to offer video, high-speed Internet and phone services to over 40 million households. This provides us with a competitive advantage and will fuel our growth well into the future. "Reflecting our strong confidence in the cash flow generation of our business, our Board of Directors has authorized a $7 billion increase to our stock repurchase program, bringing the total available to $8.2 billion. Our buyback program reflects our continuing commitment to returning capital to shareholders while preserving our financial flexibility and putting us in the best possible position to achieve our strategic and financial goals." Operating income increased 14% to $1.4 billion in the third quarter of 2007 from $1.2 billion in 2006, reflecting strong results at Comcast Cable and the impact of cable system acquisitions. Similarly, consolidated operating income increased 21% to $4.1 billion for the nine months ended Sept. 30, 2007, from $3.4 billion in 2006. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $113.171 billion in total assets, $71.018 billion in total liabilities, $265 million in minority interest, and $41.888 billion in total stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $5.397 billion in total current assets available to pay $6.704 billion in total current liabilities. Free Cash Flow Net cash provided by operating activities increased to $6.1 billion for the nine months ended Sept. 30, 2007, from $5.2 billion in 2006 due primarily to strong year-to-date operating results and $603 million related to the proceeds from sales of trading securities in 2007. Free cash flow totaled $524 million for the quarter and $1.3 billion for the nine months ended Sept. 30, 2007, as compared to $1.0 billion and $2.3 billion, respectively, in the same periods of 2006. Free cash flow reflects growth in consolidated operating cash flow offset by increased capital expenditures driven by the record-setting 4.8 million RGUs added in the first nine months of 2007. Share Repurchase Program Comcast's Board of Directors has authorized a $7 billion addition to the existing share repurchase program. As a result, availability under the company's share repurchase program is $8.2 billion. Comcast repurchased $600 million of its Class A Special Common Stock, or 22.9 million shares, during the third quarter of 2007. Year to date through Sept. 30, 2007, Comcast repurchased $1.85 billion of its common stock or 69.6 million shares. Since the inception of the repurchase program in December 2003, the company has invested $9.2 billion in its common stock and related securities, reducing the number of shares outstanding by 13%. These investments include repurchasing $7.8 billion or 373.0 million shares of its common stock and paying $1.4 billion to redeem several debt issues exchangeable into 70.9 million shares of Comcast common stock. About Comcast Corporation Headquartered in Philadelphia, Comcast Corp.(Nasdaq: CMCSA, CMCSK) -- http://www.comcast.com/-- provides cable, entertainment and communications products and services. With 24.2 million cable customers, 12.9 million high-speed Internet customers, and 4.1 million voice customers, Comcast is principally involved in the development, management and operation of broadband cable systems and in the delivery of programming content. Comcast's content networks and investments include E! Entertainment Television, Style Network, The Golf Channel, VERSUS, G4, AZN Television, PBS KIDS Sprout, TV One, Comcast SportsNet and Comcast Interactive Media, which develops and operates Comcast's Internet business. Comcast also has a majority ownership in Comcast Spectacor, whose major holdings include the Philadelphia Flyers NHL hockey team, the Philadelphia 76ers NBA basketball team and two large multipurpose arenas in Philadelphia. * * * Moody's Investors Service assigned a Ba1 rating to Comcast Corporation's preferred stock in April 2005. COMMERCIAL MORTGAGE: Fitch Holds Low-B Ratings on Two Certs. ------------------------------------------------------------ Fitch Ratings affirmed these classes of Commercial Mortgage Acceptance Corp., commercial mortgage pass-through certificates, series 1998-C2: -- $595.3 million class A-3 at 'AAA'; -- Interest-only class X at 'AAA'; -- $144.6 million class B at 'AAA'; -- $173.5 million class C at 'AAA'; -- $173.5 million class D at 'AAA'; -- $43.4 million class E at 'AAA'; -- $21.7 million class G at 'AAA'; -- $36.1 million class H at 'A+'; -- $65.1 million class J at 'BB'; -- $21.7 million class K at 'B+'. The $14.4 million class L remains at 'CC/DR4'. Classes A-1 and A- 2 have paid in full. Fitch does not rate the $122.9 million class F certificates. Rating affirmations are due to stable performance of the remaining pool. As of the October 2007 distribution date, the pool's aggregate balance has been reduced 51.2% to $1.4 billion from $2.89 billion at issuance. Of the original 512 loans, 278 remain in the pool. Thirty-four loans (43.9%) have defeased to date, including four (27.9%) of the top five loans. Five assets (1.01%) are in special servicing, including one real estate owned (REO). The two largest specially serviced assets (0.55%) are secured by multifamily properties in Wichita, KS, and are owned by the same borrower. The assets recently transferred to the special servicer due to delinquency and the special servicer is pursuing foreclosure. The third largest specially serviced asset (0.2%) is a real estate owned retail center located in Greenwood, South Carolina. The special servicer is currently working to improve occupancy and market the asset for sale. Fitch-expected losses will be absorbed by class L. CORUS ENTERTAINMENT: Earns CDN$21.2 Mil. in Qtr. Ended Aug. 31 -------------------------------------------------------------- Corus Entertainment Inc. disclosed financial results for the fourth quarter and year ended Aug. 31, 2007. Net income for the quarter was CDN$21.2 million, compared to net income of CDN$46.6 million last year. Net income for the fourth quarter last year was positively impacted by approximately CDN$37.0 million in income tax rate changes and other income tax items. Consolidated revenues for the fourth quarter ended Aug. 31, 2007, were CDN$187.2 million, up 1% from CDN$185.0 million last year. Consolidated segment profit was CDN$50.2 million, up 13% from CDN$44.5 million last year. The fourth quarter of fiscal 2007 benefited from the reversal of an accrual of CDN$4.9 million related to certain regulatory fees. "Corus had an exceptional year in fiscal 2007," said John Cassaday, president and chief executive officer, Corus Entertainment Inc. "Our share price increased by 26%, we increased our dividend by 16% and we bought back approximately 2% of our shares. These positive outcomes for our shareholders were due to the strength of our core businesses in Radio and Television." Mr. Cassaday added, "As a result of our year end financial results and our outlook for next year, we are increasing our segment profit guidance range to CDN$255 - CDN$265 million for fiscal 2008." Consolidated revenues for the year ended Aug. 31, 2007 were CDN$768.7 million, up 6% from CDN$726.3 million last year. Consolidated segment profit was CDN$240.9 million, up 13% from CDN$214.1 million last year. Net income for the year was CDN$107.0 million, compared to CDN$35.5 million last year. The prior year included a pre-tax debt refinancing loss of CDN$132.0 million. "Corus had another excellent year," said Heather Shaw, executive chair, Corus Entertainment Inc. "We accomplished several important initiatives that position us well for the future such as securing the Cosmopolitan Television license. In addition, we gained new FM radio stations in Kitchener, Winnipeg and several cities throughout the province of Quebec. We are also excited by our new international ventures with Kidsco and qubo." At Aug. 31, 2007, the company's consolidated balance sheet showed CDN$1.94 billion in total assets, CDN$961.1 million in total liabilities, and CDN$975.9 million in total shareholders' equity. Corus has continued to purchase shares under its Normal Course Issuer Bid announced in fiscal 2006 and renewed in February 2007. In 2007, the company purchased for cancellation 769,100 Class B Non-Voting Shares at an average price of CDN$47.36 per share. In September 2007, a further 402,100 Class B Non-Voting Shares were purchased and cancelled. About Corus Entertainment Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) -- http://www.corusent.com/-- is a Canadian-based media and entertainment company. Corus is a market leader in specialty television and radio with additional assets in pay television, advertising and digital audio services, television broadcasting, children's book publishing and children's animation. The company's multimedia entertainment brands include YTV, Treehouse, W Network, Movie Central, Nelvana, Kids Can Press and radio stations including CKNW, CKOI and Q107. * * * As reported in the Troubled Company Reporter on June 16, 2005, Standard & Poor's Ratings Services revised its outlook on Corus Entertainment Inc. to stable from negative and affirmed its 'BB' long-term corporate credit rating on the company. COTT CORP: Weak Performance Prompts S&P to Cut Rating to B ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Toronto- based private label soft drink manufacturer Cott Corp. by one notch, including its long-term corporate credit rating to 'B' from 'B+'. At the same time, S&P removed the ratings from CreditWatch with negative implications, where they were placed Oct. 2, 2007. The outlook is negative. "The downgrade reflects Cott's weakened financial performance for the third quarter and year-to-date 2007, which was below our expectations," said Standard & Poor's credit analyst Lori Harris. "This poor performance included a material decline in gross margin and operating profit, volume declines in key carbonated soft drink markets, higher raw material costs, inefficient operations, and weakened credit protection measures," Ms Harris added. Cott's gross margin dropped to 11.6% for the nine months ended Sept. 30, 2007, from 13.6% for the same period the previous year. Similarly, the operating margin declined to 7.0% for the nine months ended Sept. 30, 2007, from 8.4% for the same period in 2006. Although reported revenue declined 1% in the nine months ended Sept. 30, 2007, it was down 3% excluding the impact of foreign exchange, primarily due to CSD softness in North America. In addition, Cott faces other challenges, including execution problems related to new product manufacturing and the expectation that raw material costs will remain elevated in 2008. Given the magnitude of these issues, Standard & Poor's believes that Cott will remain under pressure for some time. The ratings on Cott reflect its vulnerable business risk profile stemming from the company's internal challenges, narrow product portfolio, customer concentration, and small size in a sector dominated by companies with substantially greater financial resources and market presence. Furthermore, Cott's weak operating performance has led to an ongoing decline in operating margin since 2003. These factors are partially offset by Cott's adequate credit protection measures for the ratings and solid market position as the leading private label manufacturer and marketer of take-home CSDs in the U.S., the U.K., and Canada. Cott competes in the mature and highly competitive CSD market by securing a strong private label share. Despite this defensive operating strategy, the company is vulnerable to pricing and market share actions by its primary competitors. The negative outlook reflects S&P's concerns about the challenges the company faces given its weak operating performance. S&P could lower the ratings if Cott's operations, credit protection measures, or financial flexibility continue to deteriorate. Alternatively, S&P could revise the outlook to stable if the company improves its operating performance. COUNTRYWIDE FINANCIAL: Henry Cisneros Resigns as Board Member ------------------------------------------------------------- Henry G. Cisneros has resigned from Countrywide Financial Corporation's board of directors. Mr. Cisneros is chairman of CityView, a company that provides financing for America's urban homebuilders. "I need to focus my time and energies on putting CityView in the best position to adjust to the demands of the period ahead," Mr. Cisneros said. "I admire Countrywide's contributions toward helping American families purchase their own homes, and I have immense respect for Countrywide, its management team, its leadership and its workforce." "My respect for the Countrywide board of directors and its leader, Angelo Mozilo, is unwavering," Mr. Cisneros continued. "Countrywide is a well managed company and I have enormous confidence in the leadership that has guided Countrywide through many different mortgage cycles. Angelo's vision has benefited millions of homeowners; in particular, his mission and innovation have helped lower-income, minority and first-time homebuyers who previously had been overlooked. Angelo has long been among the most respected executives in the financial services industry and has dedicated more than four decades to providing homeownership opportunities to Americans." "On behalf of the board of directors, I would like to extend my deep gratitude to Henry for his significant contributions to Countrywide," Angelo R. Mozilo, chairman and chief executive officer, said. "His expertise, especially as it relates to the vital need to increase homeownership rates among minority and lower-income families, aligned well with Countrywide's fulfillment of our mission to lower the barriers to sustainable homeownership." Mr. Cisneros' tenure on the Countrywide Board since 2001 coincides with the company's launch of the We House America $1 Trillion Dollar Challenge, a campaign to fund $1 trillion in home loans to minorities and low-to moderate-income borrowers, and to borrowers in lower-income communities, by 2010. As of Aug. 31, 2007, the company has funded approximately $789 billion toward that goal. Countrywide has also expanded upon its financial literacy initiatives during Mr. Cisneros' tenure on the board, including development of the new Web-based H.O.M.E. mortgage education program (homebycountrywide.com), and primary sponsorship of capacity grants to communities participating in the U.S. Conference of Mayors' DollarWi$e program. The Corporate Governance and Nominating Committee has engaged a search firm to assist it in identifying one or more independent director candidates to join the company's board. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider. 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. The company was founded in 1969. Bankruptcy Speculation 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. CREDIT SUISSE: Moody's Lifts Class H Certificate's Rating to B2 --------------------------------------------------------------- Moody's Investors Service upgraded the rating of one class and affirmed the ratings of four classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 1997-C1 as: -- Class D, $12,309,317, affirmed at Aaa -- Class E, $33,906,000, affirmed at Aaa -- Class H, $27,125,000, upgraded to B2 from B3 -- Class I, $16,952,000, affirmed at Caa3 -- Class J, $7,474,170, affirmed at C As of the Oct. 22, 2007 distribution date, the transaction's aggregate certificate balance has decreased by about 87% to $176.7 million from $1.4 billion at securitization. The certificates are collateralized by 17 loans ranging in size from less than 1% to 22.3% of the pool, with the top seven conduit loans representing 32.7% of the pool. The pool includes a credit tenant lease component, which represents 30.2% of the pool. Four loans, representing 37.1% of the pool, have defeased and are collateralized with U.S. Government securities. Sixteen loans have been liquidated from the pool resulting in an aggregate realized loss of about $19.4 million. One loan, representing 1.7% of the pool, is in special servicing. Moody's is not estimating a loss from this specially serviced loan currently. Three loans, representing 26.3% of the pool, are on the master servicer's watchlist. Unrated Class K has been eliminated due to losses and Class J has experienced an aggregate loss of about $6.1 million. Moody's was provided with year-end 2006 operating results for 98.2% of the performing loans. Moody's weighted average loan to value ratio for the conduit component is 49.6%, compared to 65.6% at Moody's last full review in August 2006 and compared to 78.1% at securitization. Moody's is upgrading Class H due to increased subordination levels and improved overall pool performance. The top three loans represent 28.4% of the outstanding pool balance. The largest loan is the Hyatt Aruba Loan ($39.2 million -- 22.3%), which is secured by a 360-room luxury oceanfront resort property located in Aruba. The property is currently undergoing a $16 million renovation which is expected to be substantially complete by year-end 2007. The renovation has disrupted property operations and the property is on the master servicer's watchlist due to a decline in debt service coverage. The loan benefits from a 20-year amortization schedule and has amortized by about 27.6% since securitization. Moody's LTV is 45.3%, compared to 48.6% at last review and compared to 44.8% at securitization. The second largest loan is the Carlsbad Plaza Loan ($7.4 million -- 4.2%), which is secured by a 172,000 square foot retail center located in Carlsbad, California. The property is anchored by a Vons Grocery and CVS and was 88.5% occupied as of July 2007, essentially the same as last review. Moody's LTV is 46.3%, compared to 45.4% at last review. The third largest loan is the Genus Inc. Loan ($3.2 million -- 1.9%), which is secured by a 74,400 square foot R&D facility located in Newburyport, Massachusetts. The property is leased to Varian Inc. through June 2013. The loan fully amortizes over the loan term and has amortized by about 49.9% since securitization. Moody's LTV is 48.6%, compared to 57.7% at last review. The CTL component includes 7 loans secured by properties leased under bondable leases. The largest CTL exposures are Bank of America, National Association ($21.8 million -- 12.2%; Moody's senior unsecured rating Aaa -- stable outlook), RadioShack Corporation ($12.9 million -- 7.3%; Moody's senior unsecured rating Ba1 -- stable outlook) and Bon-Ton Stores Inc. ($12.3 million -- 6.9%; Moody's senior unsecured rating B3 -- stable outlook). CREDIT SUISSE: S&P Puts Default Ratings on Two Loan Classes ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on class C- B-5 from Credit Suisse First Boston Mortgage Securities' series 2001-11 and class D-B-6 from CSFB Mortgage-Backed Trust's series 2003-29 to 'D' from 'CCC'. Concurrently, S&P affirmed its ratings on 33 classes from Credit Suisse First Boston Mortgage Securities Corp.'s series 2001-11 and 2002-26, and CSFB Mortgage-Backed Trust's series 2003-29. The downgrades of classes C-B-5 from series 2001-11 and D-B-6 from series 2003-29 reflect principal write-downs to these classes. These classes experienced principal write-downs of $158,060 (class C-B-5 from series 2001-11) and $164,917 (class D-B-6 from series 2003-29). As a result, S&P have downgraded these classes to 'D'. 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 their original levels. Credit Suisse first Boston Mortgage Securities Corp.'s series 2001-11 and 2006-26 receive credit support in the form of subordination, overcollateralization, and excess spread, while CSFB Mortgage-Backed Trust's series 2003-29 is supported strictly by subordination. The collateral for these transactions consists primarily of fixed- and adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered Credit Suisse First Boston Mortgage Securities Corp. Rating ------ Series Class To From ------ ----- -- ---- 2001-11 C-B-5 D CCC CSFB Mortgage-Backed Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-29 D-B-6 D CCC Ratings Affirmed Credit Suisse First Boston Mortgage Securities Corp. Series Class Rating ------ ----- ------ 2001-11 III-M-1 BBB 2002-26 III-M-1 AA 2002-26 III-M-2 A+ 2002-26 III-M-3 A 2002-26 III-B CCC 2002-26 IV-A-1, IV-P AAA 2002-26 IV-X, IV-B-1 AAA 2002-26 IV-B-2 AA+ 2002-26 IV-B-3 A CSFB Mortgage-Backed Trust Series Class Rating ------ ----- ------ 2003-29 I-A-1, II-A-1, II-A-2 AAA 2003-29 II-A-3, II-A-4, III-A-1 AAA 2003-29 IV-A-1, V-A-1, VI-A-1 AAA 2003-29 VII-A-1, VIII-A-1, D-P-1 AAA 2003-29 D-P-2, D-P-3, D-X-1 AAA 2003-29 D-X-2, D-X-3 AAA 2003-29 D-B-1 AA+ 2003-29 D-B-2 A+ 2003-29 D-B-3 BBB+ 2003-29 D-B-4 BBB- 2003-29 D-B-5 BB- DELTA AIR: Five Investment Firms File Suit Against Comair --------------------------------------------------------- Five Wall Street investment firms commenced an adversary action before the United States Bankruptcy Court for the Southern District of New York against Comair, Inc., Comair Holdings, LLC, Comair Services, Inc., Delta AirElite Business Jets, Inc., and Delta Connection Academy, Inc. Investment bankers Bear Stearns Investment Products Inc., and Societe Generale S.A., and fund managers Par-Four Master Fund, Ltd., Varde Investment Partners, L.P., and Cypress Management Master LP, which hold claims against the Comair Debtors in excess of $152,000,000 in the aggregate, ask the Court to: (a) revoke confirmation of the Comair Debtors' Plan of Reorganization; (b) revoke the Comair Debtor's discharge; and (c) grant the Plaintiffs' costs and fees in bringing up the suit. Comair Altered Estimates The investment firms note that Delta Air Lines, Inc., the Comair Debtors' parent, represented in the Disclosure Statement explaining the Debtors' Plan that the best estimate of the total unsecured claims against the Comair Debtors, as of February 2007, was $800,000,000, and that the estimated total unsecured claims against the Delta Debtors was $14,200,000,000. Using the equity valuation range for the Comair Debtors, the Comair Creditors were projected to recover between 76% and 100% of the allowed amount of their claims, with a projected mid-point recovery of 91.25%. In June 2007, Delta disclosed at the Merrill Lynch Global Transportation Conference that Delta expected an aggregated allowed general unsecured claims against the Comair Debtors that is $250,000,000 greater than previously projected. According to Edward H. Bastian, Delta's Chief Financial Officer, the Comair Debtors' claim pool gained a 31.25% increase in the estimated claims and reduced the mid-point of the projected recovery of Comair unsecured creditors to approximately 69.52%, a decrease of more than 23% from the mid-point projected by the Debtors in the Disclosure Statement, and reaffirmed in successive filings with the Securities and Exchange Commission, apparently lower than the lowest end of the range previously projected, the investment firms relate. The Debtors' Reorganization Plan holds that the consolidated Delta and Comair Debtors each receive, for distribution to their unsecured creditors, a fixed allocation of New Delta Common Stock based upon the mid-point of the equity valuation range specified in the Plan and Disclosure Statement. Therefore, the investment firms note, a larger aggregate amount of claims held by the unsecured creditors of the Comair Debtors results in fewer shares of New Delta Common Stock being distributed for each dollar of claims held by those creditors. Investment Firms Cry "Fraud" Varde, et al., assert that the Comair Debtors' Confirmation order was procured by fraud, with respect to: (i) the fraudulent and repeated misstatements of the Debtors' best estimates of the Comair Debtors' claims pool, including in the Disclosure Statement and multiple SEC filings; (ii) the fraudulent omission of material increases to Debtors' estimates of the Comair Debtors' claims pool; and (iii) the undisclosed manipulation of aircraft valuations, without justification, resulting in lower recoveries for Comair creditors and a higher equity valuation of the Debtors. The investment firms allege that the Debtors knew that their estimates of $800,000,000 for the Comair Debtors' claims pool and the 91.25% projected mid-point recovery for their allowed unsecured creditors, was materially understated. Nevertheless, they misrepresented the expected claims pool and the corresponding recoveries in their SEC filing, Evan C. Hollander, Esq., at White & Case, LLP, in New York, contends. Mr. Hollander points out that Delta did not disclose that the settlement with the Air Line Pilots Association in March 2007, pursuant to which the ALPA was to receive a $82,500,000 claim against the Comair Debtors, materially altered their claim pool projections. Moreover, the Comair Debtors failed to correct or update their Disclosure Statement prior to the April 2007 deadline to cast ballots with respect to the Plan. Mr. Hollander contends that Delta controlled the Comair plan process and had a clear intent in providing an overly optimistic view of the recoveries for Comair Debtors. "Delta could only retain its equity interest in the Comair Debtors if it convinced the Comair creditors to vote in favor of the Plan. By using a mid-point estimate of 91.25% recoveries, including with the prospect that the creditors of the Comair Debtors might have a full recovery, Delta virtually assured that it received the requisite votes of Comair Debtors to approve the Plan. Had accurate forecasts been provided, the Comair Creditors would have faced a very different choice, and may well have voted against the Plan," Mr. Hollander notes. Mr. Hollander adds that as the Comair Debtors' sole shareholder, Delta has a financial interest, as reinforced in its intent to sell the Comair Debtors, in increasing the Comair Debtors' equity of value. Delta offers inflated damage claims payable in New Delta common stock in exchange for reduced going-forward obligations under the Comair Debtors' restructured aircraft finance agreements. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 2007, the Court confirmed the Debtors' plan. * * * As reported in the Troubled Company Reporter on July 16, 2007, Fitch Ratings has initiated coverage of Delta Air Lines Inc. with the assignment of these debt ratings: issuer default rating 'B'; First-lien senior secured credit facilities 'BB/RR1'; and Second-lien secured credit facility (Term Loan B) 'B/RR4' As reported in the Troubled Company Reporter on May 2, 2007, Standard & Poor's Ratings Services raised its ratings on Delta Air Lines Inc. (B/Stable/--), including raising the corporate credit rating to 'B', with a stable outlook, from 'D', following the airline's emergence from Chapter 11 bankruptcy proceedings. EIRLES SERIES: Moody's Cuts Rating on Series 258 Notes to Ba1 ------------------------------------------------------------- Moody's Investors Service downgraded and placed these notes issued by Eirles Two Limited - Series 258 on review for possible downgrade: -- Class Description: $16,000,000 Floating Rate Portfolio Credit Linked Notes due 2038 Prior Rating: A2 Current Rating: Ba1, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying reference obligations, which consists primarily of RMBS Bonds. EIRLES SERIES: Moody's Cuts Rating on Series 264 Notes to Ba2 ------------------------------------------------------------- Moody's Investors Service downgraded and placed these notes issued by Eirles Two Limited - Series 264 on review for possible downgrade: -- Class Description: $7,500,000 Floating Rate Portfolio Credit Linked Notes due 2038 Prior Rating: A3 Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying reference obligations, which consists primarily of RMBS Bonds. EIRLES SERIES: Moody's Cuts Rating on Series 265 Notes to Ba1 ------------------------------------------------------------- Moody's Investors Service downgraded and placed these notes issued by Eirles Two Limited - Series 265 on review for possible downgrade: -- Class Description: $10,000,000 Floating Rate Portfolio Credit Linked Notes due 2038 Prior Rating: A2 Current Rating: Ba1, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying reference obligations, which consists primarily of RMBS Bonds. EIRLES SERIES: Moody's Cuts Rating on Series 266 Notes to B1 ------------------------------------------------------------ Moody's Investors Service downgraded and placed these notes issued by Eirles Two Limited - Series 266 on review for possible downgrade: -- Class Description: $10,000,000 Floating Rate Portfolio Credit Linked Notes due 2038 Prior Rating: Baa2 Current Rating: B1, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying reference obligations, which consists primarily of RMBS Bonds. EMC MORTGAGE: Poor Performance Cues S&P's Ratings Downgrades ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 10 classes of certificates issued by five EMC Mortgage Loan Trust transactions. The downgraded classes include class M-2 from series 2004-A, the rating on which is lowered to 'BB' from 'A'. Concurrently, S&P affirmed its ratings on 26 classes from various EMC Mortgage Trust transactions. The downgrades reflect the deteriorating performance of the collateral pools as monthly net losses continue to outpace monthly excess interest cash flows, resulting in the erosion of overcollateralization. On average, the current O/C balances were deficient by slightly more than 23% from their target levels. Additionally, delinquencies continue to result in losses, which have caused actual and projected credit support levels to no longer support the previous ratings. As of the Sept. 25, 2007, distribution date, total delinquencies ranged from 51.50% (series 2004-A) to 74.28% (series 2005-A) of the current pool balances. Cumulative realized losses ranged from 4.24% (series 2004-B) to 7.87% (series 2003-A) of the original pool balances. Seasoning for these transactions ranges from 28 months to 52 months, and these series have outstanding pool factors of approximately 52% or less. These current loss levels indicate that current and projected credit support percentages are not sufficient at the previous rating levels. S&P will continue to closely monitor these transactions. If delinquencies continue to translate into realized losses, S&P will take further negative rating actions. The affirmations reflect loss coverage percentages that are sufficient to maintain the current ratings. Subordination, O/C, and excess spread provide credit support for these deals. Excess spread has outpaced realized losses for series 2004-C in 11 out of 12 months, or 91.67%. Excess spread has outpaced realized losses for series 2005-B in eight out of 12 months, or 66.67%. Excess spread has outpaced realized losses for series 2006-A consistently for the past 12 months, or 100%. As a result, O/C was at its target for series 2004-C and 2006-A, while O/C was only deficient by 1.17% for series 2005-B. The high delinquency levels for all of these transactions are due to the inclusion of reperforming mortgage loans, which represent most of the collateral for these transactions. Generally, the borrower of a reperforming loan has filed for bankruptcy and is making payments on the loan in accordance with a payment plan approved by a bankruptcy court. While most of these borrowers are considered delinquent under the original terms of their loans, they may be current in terms of their bankruptcy payment plans. Some of the reperforming mortgage loans that were originally acquired by EMC Mortgage and collateralized in these transactions include mortgage loans with payment plans that were approved by a bankruptcy court under Chapter 11 or Chapter 13 of the U.S. Bankruptcy Code. Other mortgage loans were performing or reperforming under the auspices of a Chapter 7 liquidation proceeding. Ratings Lowered EMC Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-A B B BBB 2003-B M-2 BBB A 2003-B B B BBB 2004-A M-1 A AA 2004-A M-2 BB A 2004-A B CCC BBB 2004-B M-2 BBB A 2004-B B CCC BBB 2005-A M-2 BB A 2005-A B B BBB Ratings Affirmed EMC Mortgage Loan Trust Series Class Rating ------ ----- ------ 2003-A A-1, A-2 AAA 2003-A M-1 AA 2003-A M-2 A 2003-B A-1, A-2 AAA 2003-B M-1 AA 2004-A A-2, A-3 AAA 2004-B A-1, A-2 AAA 2004-B M-1 AA 2004-C A AAA 2004-C M-1 AA 2004-C M-2 A 2004-C B BBB 2005-A A AAA 2005-A M-1 AA 2005-B A AAA 2005-B M-1 AA 2005-B M-2 A 2005-B B BBB 2006-A A AAA 2006-A M-1 AA 2006-A M-2 A 2006-A B BBB EQUIFIRST MORTGAGE: Fitch Cuts Class M-3 Cert.'s Rating to B ------------------------------------------------------------ Fitch Ratings took these rating actions on classes from 2 Equifirst Mortgage Loan Trust issues: Equifirst 2003-1 -- Class I-F1, II-A1 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 downgraded to 'B' from 'BBB'; Equifirst 2003-2 -- Class I-A1, II-A2, III-A3 affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB+'; -- Class M5 affirmed at 'BBB'; -- Class M6 downgraded to 'BB+' from 'BBB-' ; -- Class B1 downgraded to 'BB-' from 'BB+'. The mortgage pools consist of first lien, fixed-rate and adjustable-rate residential mortgage loans. Equifirst Corporation, a wholly owned subsidiary of Barclays originated or acquired the mortgage loans for the above trusts. The affirmations affect about $135.5 million in outstanding certificates and reflect adequate relationships of credit enhancement to future loss expectations. The downgrades reflect the deterioration in the relationship of CE to future loss expectations and affect $10.7 million in outstanding certificates. In the past months the overcollateralization percentage has decreased as a result of monthly losses exceeding excess spread, thereby adding pressure to the most subordinate bond. EUROPEAN AMERICAN: Can Hire Burr & Forman as Special Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Georgia gave European American Realty Ltd. authority to employ Burr & Forman LLP as its special litigation counsel. The firm will continue to represent the Debtor in a civil litigation styled Scott Toberman, et al. v. LaRose Limited Partnership, et al., filed prior to the bankruptcy filing in the Superior Court of Fulton County, Georgia. On Sept. 26, 2007, the civil litigation was removed to the Bankruptcy Court. Burr & Forman will provide various professional legal services necessary in connection with the pending state court action. Specifically, the firm will: a. prepare pleadings and applications and conduct examinations incidental to any related proceedings and the state court action; b. assist the Debtor's bankruptcy counsel, J. Robert Williamson, Esq. of Scroggins and Williamson, in the administration of the case; and c. perform other legal services for the Debtor as may be necessary and appropriate. Pursuant to a certain retention letter dated Sept. 21, 2007 and sent on behalf of Houston Casualty Company, Burr & Forman will be compensated by Houston. The firm charges at $190 to $450 per hour for certain senior partners and $85 to $170 per hour for paralegals, legal and project assistants. To the best of the Debtor's knowledge, Burr & Forman neither holds nor represents any interest adverse to the Debtor's estate. The Debtor believes that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Erich N. Durlacher, Esq. Burr & Forman LLP 171 Seventeenth Street, Northwest, Suite 1100 Atlanta, GA 30363 Tel: (404) 685-4313 Fax: (404) 214-7387 http://www.burr.com/ Atlanta, Georgia-based European American Realty Ltd. is engaged in the real estate business. The Debtor filed for chapter 11 bankruptcy protection on Sept. 21, 2007 (Bankr. N.D. Ga. Case No. 07-75353). J. Robert Williamson, Esq. at Scroggins and Williamson represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets and debts between $1 million and $100 million. FAIRFAX FINANCIAL: S&P Holds 'BB' Rating and Revises Outlook ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Fairfax Financial Holdings Ltd., FFH's operating insurance companies, and Crum & Forster Holdings Corp. to stable from negative. At the same time, Standard & Poor's affirmed its 'BB' counterparty credit ratings on FFH and Crum & Forster and its 'BBB' counterparty credit and financial strength ratings on Fairfax. "The stable outlook is based on the view that FFH's earnings in 2007 and 2008 will remain consistent with the rating, and may improve prospectively," said Standard & Poor's credit analyst Damien Magarelli. "The stable outlook is further supported by a good competitive position." Standard & Poor's expects FFH to improve within the areas of governance, accounting control, and ERM. Since July 2006, FFH has made some improvements in accounting risk controls and ERM, supporting Standard & Poor's view of ERM as adequate, and the remediation plan for the two outstanding material weaknesses has been implemented and is currently being tested. FFH's corporate governance, including a concentrated board of directors, has limited the effectiveness of the board in identifying and actively addressing emerging issues, and has also limited the board's focus on operational risk controls. While the ownership structure of FFH is not expected to change in the future, some actions have been taken to remediate accounting vulnerabilities and ensure prospectively that the accounting function is more reliable. A negative outlook is possible if FFH is unable to further improve its governance oversight, accounting risk controls, and overall ERM by October 2008. A positive outlook is possible if FFH meets these expectations and produces underwriting profits and a combined ratio below 100% at the consolidated continuing operations, maintains reserve charges within expectations, achieves a capital ratio above 135%, and as long as holding company cash is maintained above $250 million. FEDERAL-MOGUL: Earns $14 Million in Quarter Ended September 30 -------------------------------------------------------------- Federal-Mogul Corporation reported financial results for the three and nine-month periods ended Sept. 30, 2007. Federal-Mogul reported net income of $14 million for the quarter ended Sept. 30, 2007, compared to net income of $3 million for the third quarter of 2006. For the nine months ended Sept. 30, 2007, the company reported net income of $22 million, compared to a net loss of $83 million for the comparable period of 2006. The year- to-date results reflect an 8% increase in sales, improved gross margin and reduced selling, general and administrative expenses. Federal-Mogul reported net sales of $1.686 billion for the quarter ended Sept. 30, 2007, an increase of $137 million, or 9%, compared to the third quarter of 2006. The most significant factors impacting sales were increased volumes of $91,000,000 and favorable foreign currency of $62 million. For the nine month period ended Sept. 30, 2007, net sales increased by $384 million to $5.165 billion, of which $210 million is due to increased volumes, $51 million is due to the May 2006 acquisition of Federal-Mogul Goetze India and $178 million is due to favorable foreign currency. These favorable impacts were partially offset by customer pricing. Gross margin for the three and nine months ended Sept. 30, 2007 increased by $17,000,000 and $58 million, respectively, over the comparable periods of 2006. Improvements in gross margin resulted from a combination of the October 2006 settlement of the U.K. pension plans, productivity in excess of labor and benefits inflation, increased volumes, and favorable foreign currency. These favorable impacts were partially offset by costs associated with plant rationalizations, customer pricing and increased material costs, including commodity price inflation of $15 million and $50 million for the three and nine months ended Sept. 30, 2007, respectively. Combining cash provided from operating activities with cash used by investing activities, the company had cash outflows of $35 million for the nine months ended Sept. 30, 2007, compared with cash inflows $32 million for the comparable period of 2006. The 2007 change in free cash flow is largely driven by increased capital expenditures of $81 million in support of increased global volumes and future new business, and a voluntary contribution to the company's U.S. pension plans of $34 million made in September 2007. "The Federal-Mogul team is dedicated to our strategy for sustainable global profitable growth. The results achieved during the first three quarters of 2007 reflect the company's commitment to continuously improve performance while creating value for our customers through world-class products, services and innovative technology," said chairman, president and chief executive officer Jose Maria Alapont. "We are also hopeful that our Plan of Reorganization will be confirmed, enabling emergence from Chapter 11." About Federal-Mogul Based in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is an automotive parts company with worldwide revenue of some $6 billion. Federal-Mogul also has operations in Mexico and the Asia Pacific Region, which includes, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The confirmation hearing started on June 18, 2007 and is currently ongoing. (Federal-Mogul Bankruptcy News, Issue No. 146; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). FIDELITY NATIONAL: Board OKs Spin-off of Lender Processing Div. --------------------------------------------------------------- The board of directors of Fidelity National Information Services Inc. has approved pursuing a plan to spin-off its Lender Processing Services division into a separate publicly traded company. The company will contribute the assets of LPS into a newly formed subsidiary in exchange for 100% of Newco common stock and approximately $1.6 billion of Newco debt securities. After receipt of necessary Securities and Exchange Commission approvals and a tax-free ruling from the Internal Revenue Service, FIS will distribute 100% of Newco common stock to FIS shareholders in a tax-free spin off. Immediately after the spin-off, FIS will exchange the Newco debt securities it owns for a like amount of existing FIS debt through a debt-for-debt exchange that is tax-free to FIS. FIS would then retire the FIS debt that is exchanged for the Newco debt securities. Completion of the possible spin-off is expected to occur in mid- 2008. Management and directors of FIS and Newco have not yet been determined. FIS' Transaction Processing Services business is a provider of core processing, e-payments, item processing and card processing solutions to financial institutions. FIS' Lender Processing Services business is a provider of integrated data, servicing and technology solutions to large-scale mortgage lenders. LPS' end-to-end mortgage services include origination, automated title and settlement, processing, default, valuation, risk management, tax, flood and collateral protection solutions. "Transaction Processing Services and Lender Processing Services each have strong competitive positions, robust organic growth track records and excellent potential for future growth. However, they are distinct and unique businesses that serve different customers, operate in different markets, and attract different investors," William P. Foley, II, executive chairman of FIS, stated. "We believe the proposed separation will provide more company flexibility and dedicated management focus with respect to product development, capital investment and strategic initiatives, which should ultimately drive higher value to our customers and shareholders," Mr. Foley added. Completion of the spin-off is contingent upon the satisfaction or waiver of a variety of conditions, including final FIS board of directors approval. About Fidelity National Information Services Based in Jacksonville, Florida, Fidelity National Information Services Inc. -- http://www.fidelityinfoservices.com/-- (NYSE:FIS) is a provider of core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage-related information products; and outsourcing services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top 10. Approximately 50 percent of all U.S. residential mortgages are processed using FIS software. FIS serves more than 10,000 financial institutions in more than 80 countries worldwide. FIDELITY NATIONAL: Spin-off Plan Cues Moody's Ratings' Review ------------------------------------------------------------- Moody's Investors Service placed the ratings of Fidelity National Information Services on review for possible downgrade, following the company's announcement that its board has approved pursuing a plan to spin off its Lender Processing Services division into a separate publicly traded company. Completion of the spin-off is contingent upon certain approvals, including FIS final Board approval and a tax-free ruling from the IRS. Completion of the possible spin-off is expected to occur in mid-2008. The review will focus on the debt allocation between the two companies and their availability of internal and external liquidity sources, if the separation is approved. The review will also focus on business growth and diversification prospects at the two companies, including the potential for further acquisitions. The separation, were it to occur, would result in less business diversification for FIS. Nevertheless, in the event the separation occurs and financial leverage, as measured by debt to EBITDA, remains consistent with current FIS leverage pre-spin off, the corporate family rating of FIS would likely be confirmed. The ratings of the individual FIS securities will depend on the ultimate capital structure of the company post spin-off. Moody's expects to conclude its review once FIS obtains regulatory and Board approvals and its capital structure has been finalized. The potential separation plan, as currently contemplated, calls for FIS to contribute the assets of LPS into a newly formed subsidiary in exchange for 100% of Newco common stock and approximately $1.6 billion of Newco debt securities. Following receipt of SEC approvals and a tax-free ruling from the IRS, FIS will distribute 100% of Newco common stock to FIS shareholders in a tax-free spin off. Immediately following the spin-off, FIS will exchange the Newco debt securities it owns for a like amount of existing FIS debt through a debt-for-debt exchange that is tax- free to FIS. The executive management and board composition of FIS and Newco have not yet been determined. FIS ratings on review for possible downgrade: -- $1.6 billion First Lien Senior Secured Term Loan B Ba1 -- $2.1 billion First Lien Senior Secured Term Loan A Ba1 -- $900 million First Lien Senior Revolving Credit Facility Ba1 -- $200 million 4.75% (Certegy) notes due September 2008 Ba1 -- Corporate Family Rating Ba1 Headquartered in Jacksonville, Florida, Fidelity National Information Services Inc. provides card issuing, core bank processing, and mortgage loan processing services to financial institutions. FIDELITY NATIONAL: Spin-off Plans Cue S&P's Negative Watch ---------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'BB' corporate credit rating, on Jacksonville, Florida-based Fidelity National Information Services Inc. on CreditWatch with negative implications. The CreditWatch listing follows FIS's announcement that it plans to spin-off its lender processing division into a separate, public company. FIS will contribute the unit's assets into a new subsidiary in exchange for all of its common stock and about $1.6 billion of debt securities. Following regulatory approval, FIS will distribute all of the new company's common stock to FIS shareholders in a tax-free spin-off. Completion of the possible spin-off is expected to occur in mid-2008. The spin-off will reduce both business diversity and cash flow, as the mortgage processing business accounted for about 40% of consolidated EBITDA. "We will review the financial terms and the company's capital structure following the proposed transaction, and will evaluate its business strategies, the sustainability of current operating trends, and its financial policy, prior to resolving the CreditWatch listing," said Standard & Poor's credit analyst Phil Schrank. FIELDSTONE MORTGAGE: Delinquencies Cue S&P to Junk Rating --------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class M-7 mortgage-backed securities issued by Fieldstone Mortgage Investment Trust Series 2004-4 to 'CCC' from 'BB-' and removed it from CreditWatch with negative implications. Concurrently, S&P affirmed its ratings on the remaining five classes from this transaction. The downgrade of class M-7 reflects a high amount of severe delinquencies (90-plus days, foreclosures, and REOs) and a reduction in credit enhancement because of monthly realized losses. As of the September 2007 remittance date, the average monthly loss outpaced excess interest by an average of approximately 1.8x over the past six months. Severe delinquencies account for approximately 32.67% of the current pool balance. Overcollateralization, originally 50 basis points of the transaction's original pool balance, was depleted by $1,582,978 during the September remittance, and is currently 31 bps. The affirmations of the ratings on the remaining classes reflect sufficient credit enhancement for the current ratings. These classes 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 collateral consists primarily of conventional, adjustable-rate mortgage loans secured by first liens on real properties including single-family residences, two- to four-family dwelling units, condominiums, planned unit developments, and manufactured housing. Rating Lowered and Removed from Creditwatch Negative Fieldstone Mortgage Investment Trust Series 2004-4 Rating ------ Class To From ----- --- ---- M-7 CCC BB-/Watch Neg Ratings Affirmed Fieldstone Mortgage Investment Trust Series 2004-4 Class Rating ----- ------ M-2, M-3 AA M-4 AA- M-5 A+ M-6 A FIRST FRANKLIN: Moody's Junks Ratings on Three Cert. Classes ------------------------------------------------------------ Moody's Investors Service downgraded three certificates and placed under review for possible downgrade five certificates from two First Franklin Mortgage deals issued in 2002 and 2003. The transactions consist of subprime first-lien adjustable and fixed- rate mortgage loans. The loans are all originated or acquired by First Franklin Financial Corporation. The three subordinate certificates from the First Franklin Series 2003-FF1 transaction have been downgraded while five subordinate certificates from the First Franklin Series 2002-FF1 and 2003-FF1 transactions have been placed on review for possible downgrade. These actions have been taken because existing credit enhancement levels are low given the current projected losses on the underlying pools. All the pools in these transactions have passed their performance triggers causing erosion in credit support in the form of tranche pay down and overcollateralization being released. The pools of mortgages have seen losses in recent months and future loss could cause a more significant erosion of the OC. The pool factors on the 2002-FF1 and 2003-FF1 were 4.61% and 7.33% respectively as of the Sept. 25, 2007, reporting date. Complete rating actions are: Issuer: First Franklin Mortgage Loan Trust Downgrades: -- Series 2003-FF1; Class M-3F, downgraded to Ca from B1; -- Series 2003-FF1; Class M-3V, downgraded to Ca from B1; -- Series 2003-FF1; Class M-4, downgraded to C from B1; Review for Downgrade: -- Series 2002-FF1; Class M-1, current rating Aa2, under review for possible downgrade; -- Series 2002-FF1; Class M-2, current rating A2, under review for possible downgrade; -- Series 2002-FF1; Class M-3, current rating Baa2, under review for possible downgrade; -- Series 2003-FF1; Class M-1, current rating Aa2, under review for possible downgrade; -- Series 2003-FF1; Class M-2, current rating Baa2, under review for possible downgrade. FIRST FRANKLIN: Realized Losses Cues S&P to Lower Ratings --------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 19 classes of mortgage-backed securities issued by four First Franklin Mortgage Loan Trust transactions (series 2001-FF2, 2003-FF1, 2003-FF4 and 2003-FF5). S&P removed 11 of these ratings from CreditWatch with negative implications and placed one of the downgraded classes on CreditWatch negative. Furthermore, S&P affirmed its ratings on the remaining classes from these series. The downgrades reflect realized losses that have exceeded monthly excess interest cash flow, thereby reducing overcollateralization. For the prior six months, average realized losses have outpaced average excess interest by the following ratios: -- Series 2001-FF2: 2.87x ($97,203 average realized losses vs. $33,785 average excess interest); -- 2003-FF1: 4.29x ($275,789 vs. $64,302); -- 2003-FF4: 4.80x ($325,622 vs. $67,776); and -- 2003-FF5: 4.54x ($471,267 vs. $103,866). As a result, O/C for the transactions has fallen to these levels: -- 2001-FF2: $0; 0% (target: $1,056,775); -- 2003-FF1: $742,274; 24.6% (target: $3,015,600); -- 2003-FF4: $1,633,710; 27.3% (target: $5,994,934); and -- 2003-FF5: $2,133,577; 37.1% (target: $5,750,000). S&P's loss projections indicate that the current performance trends may further compromise credit support for these classes. Finally, these transactions have sizeable loan amounts that are severely delinquent (90-plus days, foreclosures, and REOs), which suggests that the unfavorable performance trends are likely to continue. The severe delinquencies relative to O/C are: -- 2001-FF2: $1,990,000 (11.93%) in delinquencies versus $0 in O/C; -- 2003-FF1: $6,841,000 (14.77%) in delinquencies versus $742,274 in O/C; -- 2003-FF4: $11,507,000 (15.48%) in delinquencies versus $1,633,710 in O/C; and -- 2003-FF5: $11,565,000 (10.79%) in delinquencies versus $2,133,577 in O/C. As of the September 2007 remittance report, cumulative realized losses for the downgraded deals, as a percentage of the original pool principal balances, were: -- 2001-FF2: 1.59%, $6,740,783; -- 2003-FF1: 1.34%, $8,093,210; -- 2003-FF4: 0.89%, $10,694,174; and -- 2003-FF5: 0.93%, $10,655,503. The downgrade of class M-1 from series 2001-FF2 and its negative CreditWatch placement reflects realized losses that have consistently outpaced excess interest, decreasing credit support levels for the class since it was raised to 'AAA' from 'AA' on March 8, 2004. The ratings on the subordinate M-2 and M-3 classes were lowered to 'D' and 'CCC', respectively, reflecting the decreased credit support through subordination for the M-1 class. Standard & Poor's will continue to closely monitor the performance of the transactions with ratings on CreditWatch. If monthly losses decline to a point at which they no longer outpace monthly excess interest and the level of O/C has not been further eroded, S&P will affirm the ratings and remove them from CreditWatch. Conversely, if losses continue to outpace excess interest and the levels of O/C continue to decline, S&P will take further negative rating actions. S&P removed the ratings on eight classes from the four transactions from CreditWatch negative because S&P lowered them 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. Three additional ratings were lowered and removed from CreditWatch negative because S&P believe they have credit support levels that are sufficient to maintain the new, lower ratings. The affirmations reflect credit support levels that are sufficient to maintain the current ratings. Subordination, O/C, and excess interest cash flow provide credit support for these transactions. The collateral for these series consists of 30-year subprime, fixed- or adjustable-rate mortgage loans that are secured by first liens on one- to four-family residential properties. Ratings Lowered and Placed on Creditwatch Negative First Franklin Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2001-FF2 M-1 A/Watch Neg AAA Ratings Lowered and Removed from Creditwatch Negative First Franklin Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2001-FF2 M-2 CCC B/Watch Neg 2003-FF1 M-3F, M-3V CCC BB/Watch Neg 2003-FF1 M-4 CCC BB-/Watch Neg 2003-FF4 M-3 B BBB/Watch Neg 2003-FF4 M-4 B- BBB-/Watch Neg 2003-FF4 M-5 CCC BB/Watch Neg 2003-FF4 M-6 CCC BB-/Watch Neg 2003-FF5 M-5 B- BB/Watch Neg 2003-FF5 M-6 CCC BB-/Watch Neg 2003-FF5 B CCC B/Watch Neg Ratings Lowered First Franklin Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2001-FF2 M-3 D CCC 2003-FF1 M-1 BBB AA 2003-FF1 M-2 B A 2003-FF4 M-2 BB A 2003-FF5 M-2 BB A 2003-FF5 M-3 BB- A- 2003-FF5 M-4 B BBB+ Ratings Affirmed First Franklin Mortgage Loan Trust Series Class Rating ------ ----- ------ 2001-FF2 A-1, A-2 AAA 2003-FF1 A-1, A-2 AAA 2003-FF4 M-1 AA 2003-FF5 M-1 AA FNBA MORTGAGE: S&P Places 'BB' Rating Under Negative Watch ---------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' rating on class M-3 from FNBA Mortgage Loan Trust 2004-AR1 on CreditWatch with negative implications. Additionally, S&P affirmed the ratings on the remaining five classes from the same transaction. S&P placed the rating on class M-3 on CreditWatch negative due to recent collateral performance that has eroded available credit support. While current credit support for this series is sufficient, the projected credit support percentage is below the level required at the 'BB' rating category. As of the September 2007 remittance period, the six-month average loss totaled $85,824, up from the 12-month average loss of $49,930. Credit enhancement for this transaction is provided by overcollateralization, excess interest, and subordination. This transaction is 36 months' seasoned, and O/C has been reduced by approximately $543,412 over the past 12 months. Standard & Poor's will continue to closely monitor the performance of class M-3 from this transaction. If the delinquent loans cure to a point at which monthly excess interest begins to outpace monthly net losses, thereby allowing O/C to build and provide sufficient projected credit support, S&P will affirm the rating and remove it from CreditWatch negative. Conversely, if delinquencies cause substantial realized losses in the coming months and continue to erode credit enhancement, S&P will take further negative rating action on this class. The affirmations reflect sufficient current and projected credit support percentages to maintain the current ratings, as reported during the September 2007 remittance period. The collateral consists of hybrid mortgage loans secured by first liens on one- to four-family residential properties. Of the initial loans, approximately 73.45% (by principal balance) are 60- to 120-month, interest-only loans. All of the loans were originated or purchased by FNBA Financial Corp. in accordance with guidelines that target borrowers with less-than-perfect credit histories. The guidelines are intended to assess both the borrower's ability to repay the loan and the adequacy of the value of the securing mortgaged property. Rating Placed on Creditwatch with Negative Implications FBNA Mortgage Loan Trust 2004-AR1 Rating ------ Series Class To From ------ ----- -- ---- 2004-AR1 M-3 BB/Watch Neg BB Ratings Affirmed FBNA Mortgage Loan Trust 2004-AR1 Series Class Rating ------ ----- ------ 2004-AR1 A-1, A-2, A-3 AAA 2004-AR1 M-1 AA 2004-AR1 M-2 A FREMONT HOME: S&P Lowers Ratings on Nine Certificate Classes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on nine classes of asset-backed certificates issued by four Fremont Home Loan Trust deals. At the same time, the ratings on three classes from two Fremont series remain on CreditWatch with negative implications. Lastly, S&P affirmed its ratings on 89 classes from various Fremont Home Loan Trust series. In total, S&P reviewed 14 deals. The lowered ratings reflect delinquencies that have been translating into monthly net losses during the most recent months for all of the affected deals as of the September 2007 remittance period. The steady losses have eroded available credit support to insufficient levels for the prior ratings on the downgraded classes. Subordination, overcollateralization, and excess interest provide credit support for all of the reviewed transactions. In addition, series 1999-3 has additional support in the form of bond insurance from Ambac Assurance Corp. ('AAA' financial strength rating). As of the latest remittance period, O/C is below its target for all 14 transactions. The seasoning of these deals ranges from 33 months (series 2004-4) to 96 months (series 1999-3). Cumulative losses range from 0.67% (series 2004-D) to 4.18% (series 1999-3) of the original pool balances. Serious delinquencies (90-plus days, foreclosures, and REOs) range from 6.97% (series 2004-1) to 21.63% (series 2004-3) of the current principal balances. The affirmed ratings reflect sufficient credit support percentages for the current rating levels. S&P's projections are positive for these classes as of the September 2007 remittance period. The ratings remaining on CreditWatch do not warrant a rating change as of the September 2007 period and will be monitored in the upcoming months. Each pool was initially backed by fixed- and adjustable-rate subprime mortgage loans secured by first and second liens on owner-occupied one- to four-family residential properties. Ratings Lowered Fremont Home Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-B M-4 BBB A- 2004-2 M-7 BBB BBB+ 2004-2 M-8 BB BBB+ 2004-2 M-9 B BBB 2004-2 B-1 CCC BBB- 2004-2 B-2 CCC BB+ 2004-B M-9 BB BBB- 2004-C M-8 BB BBB 2004-C M-9 B BBB- Ratings Remaining on Creditwatch Negative Fremont Home Loan Trust Series Class Rating ------ ----- ------ 2002-1 M-3 BBB/Watch Neg 2002-1 M-4 BBB-/Watch Neg 2003-A M-5 BBB/Watch Neg Ratings Affirmed Fremont Home Loan Trust Series Class Rating ------ ----- ------ 1999-3 A-1, A-2 AAA 2002-1 M-1, M-2 AAA 2002-2 M-1 AAA 2002-2 M-2A, M-2B AA 2003-1 M-1 AAA 2003-1 M-2 AA+ 2003-1 M-3 AA 2003-1 M-4 A 2003-1 M-5 BBB 2003-A M-1 AA 2003-A M-2 A 2003-A M-3 A- 2003-A M-4 BBB+ 2003-B M-1 AAA 2003-B M-2 AA 2003-B M-3 A 2003-B M-5 BB 2003-B M-6 CCC 2004-1 M-1, M-2 AAA 2004-1 M-3 AA+ 2004-1 M-4 AA- 2004-1 M-5 A+ 2004-1 M-6 A 2004-1 M-7 A- 2004-1 M-8 BBB+ 2004-1 M-9 BBB 2004-1 B BBB- 2004-2 M-1 AAA 2004-2 M-2 AA+ 2004-2 M-3 AA 2004-2 M-4 A+ 2004-2 M-5 A 2004-2 M-6 A- 2004-3 M-1, M-2, M-3, M-4 AA+ 2004-3 M-5 AA 2004-3 M-6 AA- 2004-3 M-7 A+ 2004-3 M-8 A 2004-3 M-9 A- 2004-3 M-10 B- 2004-4 M-1 AA+ 2004-4 M-2 AA 2004-4 M-3 AA- 2004-4 M-4 A+ 2004-4 M-5 A 2004-4 M-6 A- 2004-4 M-7 BBB+ 2004-4 M-8 BBB 2004-4 M-9 BB 2004-4 M-10 B 2004-4 B CCC 2004-A M-1 AAA 2004-A M-2 AA 2004-A M-3 AA- 2004-A B-1 BBB 2004-A B-2 BB 2004-A B-3 B 2004-B M-1 AA+ 2004-B M-2 AA 2004-B M-3 AA- 2004-B M-4 A+ 2004-B M-5 A 2004-B M-6 A- 2004-B M-7 BBB+ 2004-B M-8 BBB 2004-C M-1, M-2 AA+ 2004-C M-3 AA- 2004-C M-4, M-5 A+ 2004-C M-6 A 2004-C M-7 A- 2004-D M1 AA+ 2004-D M2 AA 2004-D M3 AA- 2004-D M4 A+ 2004-D M5 A 2004-D M6 A- 2004-D M7 BBB+ 2004-D M8 BBB 2004-D M9 BBB- 2004-D M10 BB+ GATEHOUSE MEDIA: Morris Deal Cues Moody's Negative Outlook ---------------------------------------------------------- Moody's Investors Service affirmed all ratings of GateHouse Media Operating Inc., but changed the rating outlook to negative. This action follows the company's announcement that it has agreed to acquire various publications from Morris Publishing Group for a purchase price of $115 million, which it intends to partly fund through the use of cash on hand and/or borrowings under existing credit facilities. Details of the rating action are: Ratings affirmed: -- Senior secured first lien revolving credit facility -- B1, LGD3, 35% -- Senior secured term loan B -- B1, LGD3, 35% -- Senior secured term loan C -- B1, LGD3, 35% -- Senior secured delayed draw term loan -- B1, LGD3, 35% -- Corporate Family rating -- B1 -- Probability of Default rating -- B2 The rating outlook is changed to negative from stable. The change in rating outlook to negative from stable reflects management's decision to use cash proceeds from the recent sale of the Huntington Herald--Dispatch to partly fund the proposed acquisition rather than to reduce debt, representing a departure from Moody's previous expectation that the full proceeds of the Herald-Dispatch sale would be used to permanently reduce GateHouse's term loan debt. In addition, the negative outlook incorporates Moody's view that GateHouse can expect pressured top line performance, continued total circulation count erosion, and soft print advertising spending, in common with the newspaper publishing segment as a whole. GateHouse's B1 Corporate Family rating continues to reflect the company's high leverage, the acquisitive nature of its management team, its vulnerability to market spending on print advertising, and the limited growth prospects of the newspaper publishing industry. The rating also reflects the company's dividend policy which is likely to continue consuming most of its free cash flow to the disadvantage of debt holders. However, the rating is supported by the company's proven ability to access the US capital markets, the importance which rural communities attach to GateHouse's reporting of local news and events, the defensibility of its hyper-local business model from more regionally-focused Internet-based advertising, the longstanding reputation of its daily newspaper titles (most of which are over 50 years old), and the barriers to entry which result from the inability of most of its small rural markets to support more than one local newspaper. Headquartered in Fairport, New York, GateHouse Media Operating, Inc. is a leading US publisher of local newspapers and related publications. Pro forma for the acquisition of the Morris assets, the company recorded sales of about $780 million for the twelve months ended June 30, 2007. GREENPARK GROUP: Disclosure Statement Hearing Set on November 8 --------------------------------------------------------------- The United States Bankruptcy Court fort the Central District of California will convene a hearing on Nov. 8, 2007, at 10:30 a.m., Courtroom 5D, 411 West Fourt Street in Santa Ana, California, to consider the adequacy of GreenPark Group LLC and its debtor- affiliates' Second Amended Disclosure Statement explaining their Second Amended Chapter 11 Plan of Liquidation. As reported in the Troubled Company Reporter on Oct. 26, 2007, the Greenpark Group disclosed that its debtor-affiliates are: * California/Nevada Development LLC * GreenPark Runkle Canyon LLC * GreenPark Las Vegas LLC * GreenPark South Las Vegas LLC * McCadden Development LLC * South Las Vegas LLC GreenPark Group told the Court that it owns McCadden and Runkle. In addition, GreenPark Group owns 85% membership interest in CND and 15% owns by Cilcorp. On the other hand, Realex Properties Inc. owns 98% membership interest in GreenPark Group and 2% owns by James R. Wheeler, GreenPark Group's senior vice president. Overview of the Plan The Plan contemplates for the payment of valid creditors from the available cash on hand of approximately $22,600,000 on the effective date, which is comprised of: $13,600,000 cash in DIP account and $9,000,000 of note receivable. The Debtors said that Runkle will collect the proceeds of the $9,000,000 note receivable, and distributes to valid creditors. The Debtors further said that in order for CND and McCadden to make distributions under the Plan, GreenPark Group will contribute $25,000 to CND and McCadden to be distributed pro rata to their creditors. Treatment of Claims Under the Plan, all Administrative and Priority Tax Claims will be paid in full on the effective date. Unsecured Creditors of GreenPark Group, totaling $3,030,428, will be paid 100% without interest on the effective date. CND's Unsecured Creditors, totaling $971,311, will receive a pro rata share of the available assets, while the Unsecured Creditors of McCadden, totaling $2,313,402, will also receive a pro rata share of the available assets under the Plan. Runkle, SLV, GPSLV and GPLV's Unsecured Creditors will be paid 100% of their respective claim on the effective date. GreenPark Group Equity Interest Realex Properties Inc.' equity interest in GreenPark will receive any assets remaining after all valid claims have been satisfied; provided that $3,000,000 will reserved to satisfy Realex's interest to the extent the interest have no been paid in accordance with a prior Court order. Runkle, SLV, GPSLV and GPLV Equity Interest Equity Interest in this class will also receive any remaining assets after all valid claims have been paid. CND and McCadden Equity Interest Equity Interest holders of both CND and McCadden will not be entitled to receive any distribution on account of their interest and will be deemed cancelled on the effective date of the Plan. Wheeler and Kiesecker Equity Interest Mr. Wheeler and Peter Kiesecker, a creditor of GreenPark Group, each will receive $1,500,000, to the extent possible that the amount has not been paid pursuant to a Court order. About GreenPark Group Headquartered in Seal Beach, California, GreenPark Group LLC, is a real estate developer and building contractor. The Company and its affiliate, California/Nevada Developments LLC, filed for chapter 11 protection on June 23, 2006 (Bankr. C.D. Calif. Case Nos. 06-10988 & 06-10989). Alan J. Friedman, Esq., at Irell & Manella, LLP, represents the Debtors. The U.S. Trustee for Region 16 has not appointed an Official Committee of Unsecured Creditors in the Debtors' bankruptcy proceedings to date. When the Debtors filed for protection from their creditors, the Debtors estimated assets and debts between $10 million and $50 million. GSC ABS: Moody's Junks Ratings on Three Note Classes ---------------------------------------------------- Moody's Investors Service placed these notes issued by GSC ABS CDO 2006-2m, Ltd. on review for possible downgrade: -- Class Description: $225,000,000 Class A-1A First Priority Senior Secured Floating Rate Notes due 2045 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- Class Description: $125,000,000 Class A-1B Second Priority Senior Secured Floating Rate Delayed Draw Notes due 2045 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- Class Description: $13,500,000 Class A-2 Third Priority Senior Secured Floating Rate Notes due 2045 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- Class Description: $56,500,000 Class B Fourth Priority Senior Secured Floating Rate Notes due 2045 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade -- Class Description: $14,500,000 Class C Fifth Priority Senior Secured Floating Rate Notes due 2045 Prior Rating: Aa3 Current Rating: Aa3, on review for possible downgrade In addition Moody's also announced that it has downgraded and left on review for possible downgrade these notes: -- Class Description: $22,500,000 Class D Sixth Priority Mezzanine Deferrable Floating Rate Notes due 2045 Prior Rating: A2 Current Rating: Ba3, on review for possible downgrade Moody's also announced that it has downgraded these notes: -- Class Description: $21,000,000 Class E Seventh Priority Mezzanine Deferrable Floating Rate Notes due 2045 Prior Rating: Baa2, on review for possible downgrade Current Rating: C -- Class Description: $5,000,000 Class F Eighth Priority Mezzanine Deferrable Floating Rate Notes due 2045 Prior Rating: Ba1, on review for possible downgrade Current Rating: C -- Class Description: $5,000,000 Class G Ninth Priority Mezzanine Deferrable Floating Rate Notes due 2045 Prior Rating: Ba2, on review for possible downgrade Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. GENERICS INT'L.: Moody's Places Corporate Family Rating at B2 ------------------------------------------------------------- Moody's Investors Service assigned a first time, B2 Corporate Family Rating to Generics International Inc., which is the parent company of QV Pharmaceuticals Inc and Vintage Pharmaceuticals LLC and each of their wholly owned subsidiaries, Qualitest Pharmaceuticals Inc. and Vintage Pharmaceuticals. Moody's also assigned a B1 rating to the first lien portion of the senior secured credit facilities, including the revolver, and a Caa1 rating to the second lien loan -- proceeds of which will be used to finance the purchase of Qualitest. The outlook for the ratings is stable. The ratings reflect principally the high leverage and associated interest expense resulting from the company's acquisition by Funds advised by Apax Partners Worldwide LLP. Moody's anticipates that in the near-term, credit metrics may deteriorate due to expenses associated with initiatives that Apax and management may undertake to upgrade the company's facilities and otherwise improve operations. There may also be the potential for business disruption as a result of these initiatives and from the acquisition. The ratings are also constrained by the company's limited scale versus its competitors and customers and Moody's concerns regarding the company's near-term liquidity profile. However, Moody's recognizes Qualitest's demonstrated track-record of steady free cash flow generation prior to the transaction and the historically stable business model. The stability of the business model should continue to be supported by the favorable fundamentals of the generic pharmaceutical industry, relatively high barriers to entry in several of Qualitest's core markets and the company's focus on niche products. In addition, Moody's believes that there is good potential for improvement in financial metrics as a result of the company's strong product pipeline and Apax's investments in the infrastructure of the company. All ratings are subject to review of final documentation. Ratings assigned: -- $75 million senior secured revolving credit facility due 2013; B1, LGD3, 36% -- $265 million senior secured first lien term loan due 2014; B1, LGD3, 36% -- $27 million senior secured delayed-draw term loan due 2014; B1, LGD3, 36% -- $140 million senior secured second lien term loan due 2014; Caa1, LGD5, 88% -- Corporate Family Rating; B2 -- Probability of Default Rating; B2 The outlook for the ratings is stable. Qualitest is a manufacturer and distributor of generic pharmaceutical products primarily to wholesalers, as well as to large chains and independent pharmacies located throughout the United States. The company manufactures predominantly prescription generic drugs in a variety of formulations including tablets, capsules, liquids, suspensions and gels. Qualitest is headquartered in Huntsville, Alabama. GLACIER FUNDING: Moody's Junks Rating on $4 Mil. Class E Notes -------------------------------------------------------------- Moody's Investors Service placed these notes issued by Glacier Funding CDO IV Ltd. on review for possible downgrade: -- Class Description: $40,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2045 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- Class Description: $23,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2045 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade -- Class Description: $14,000,000 Class C Mezzanine Secured Deferrable Floating Rate Notes Due 2045 Prior Rating: A2 Current Rating: A2, on review for possible downgrade In addition Moody's also announced that it has downgraded and left on review for possible downgrade these notes: -- Class Description: $12,000,000 Class D Mezzanine Secured Deferrable Floating Rate Notes Due 2045 Prior Rating: Baa2 Current Rating: B1, on review for possible downgrade Moody's also announced that it has downgraded these notes: -- Class Description: $4,000,000 Class E Mezzanine Secured Deferrable Floating Rate Notes Due 2045 Prior Rating: Ba1, on review for possible downgrade Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. GSAMP TRUST: Moody's Lowers Class B-2 Certificate's Rating to Ba1 ----------------------------------------------------------------- Moody's Investors Service downgraded a certificate from a deal issued by GSAMP Trust 2003-HE2. The action is based on the analysis of the credit enhancement provided by overcollateralization, excess spread and primary mortgage insurance, relative to the expected loss. The PMI providers are Mortgage Guaranty Insurance Corporation and Radian Guaranty Inc. Complete rating actions are: Downgrade: Issuer: GSAMP Trust -- 2003-HE2, Class B-2, Downgraded to Ba1 from Baa3 GUARDIAN ENTERTAINMENT: Case Summary & Largest Unsecured Creditor ----------------------------------------------------------------- Debtor: Guardian Entertainment, Ltd. 71 Fifth Avenue New York, NY 10003 Bankruptcy Case No.: 07-13372 Type of Business: The Debtor produces feature films, commercials and television properties for domestic and foreign release in all markets. See http://www.guardianltd.com/ Chapter 11 Petition Date: October 25, 2007 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtor's Counsel: Clem G. Turner, Esq. 71 Fifth Avenue, 5th Floor New York, NY 10003 Tel: (212) 727-4729 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ John K. Fulweiler legal fees $4,700 Deorchis Wiener & Partners 61 Broadway, 26th Floor New York, NY 10006-2802 HELEN PAPPAS: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Helen Pappas 17 Stonehenge Road Warwick, NY 10990 Bankruptcy Case No.: 07-36662 Chapter 11 Petition Date: October 25, 2007 Court: Southern District of New York (Poughkeepsie) Judge: Cecelia G. Morris Debtor's Counsel: Michael D. Pinsky, Esq. P.O. Box 148, 211 Main Street Goshen, NY 10924-0148 Tel: (845) 294-5123 Fax: (845) 294-9384 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million The Debtor did not file a list of her 20 largest unsecured creditors. HILLMAN COMPANIES: Moody's Revises Outlook to Negative ------------------------------------------------------ Moody's Investors Service downgraded the speculative grade liquidity rating of Hillman Companies Inc. to SGL 3 from SGL 2 and revised the company's rating outlook to negative, based on concerns that Hillman may breech a financial covenant over the next year if its operating performance were to moderate. At the same time, all of Hillman's other ratings, including its B2 corporate family rating, were affirmed. "The SGL downgrade and negative outlook principally reflects Moody's concern that the contractual tightening of a financial covenant coupled with the lack of meaningful improvement in operating profitability may necessitate a need for the company to seek revisions to its senior secured credit facility and amend its covenants" said Kevin Cassidy vice president/senior credit officer at Moody's Investors Service. "While we expect that the company will comply with its covenants in the third quarter, the step down in its required leverage covenant to 4x from 4.25x, has increased the likelihood that the company may need to amend its credit facility" said Mr. Cassidy. Hillman's ratings are supported by its leading market share in fasteners and keys/key accessories, stable industry demand, its generally stable operating performance, and its extensive distribution network, all of which help buffer against its high leverage, modest interest coverage and its modest size with revenues less than $500 million. This rating was downgraded: -- Speculative grade liquidity rating to SGL 3 from SGL 2; These ratings were affirmed: -- Corporate family rating at B2; -- Probability of default rating at B2; -- $40 million senior secured revolving credit facility at Ba3 (LGD 2, 23%) due 2012 -- $235 million senior secured term loan Ba3 (LGD 2, 23%) due 2013 Headquartered in Cincinnati, Ohio, Hillman Companies, provides hardware-related products and related merchandising services to retail markets in North America. The company reported revenue of $431 million for its twelve month ending June 30, 2007. HILTON CORP: Moody's Lowers Corporate Family Rating to B3 --------------------------------------------------------- Moody's Investors Service downgraded Hilton Corporation's CFR and senior unsecured ratings to B3 and Caa1, respectively. All of Hilton's ratings will be withdrawn because Moody's believes it lacks adequate information to maintain a rating. About 84% of Hilton's $1.675 billion senior unsecured public bonds were tendered for repayment pursuant to the company's tender offers and consent solicitations. Various supplemental indentures have been executed whereby substantially all restrictive covenants, reporting requirements and certain events of default were eliminated. The downgrade reflects the closing of the leverage buy-out that will result in weak credit metrics. Moody's estimates pro-forma adjusted debt/EBITDA of about 12 times trailing EBITDA, and EBITDA to interest marginally above 1x. The rating on the senior unsecured bonds reflects the application of Moody's Loss Given default methodology based upon the company's post LBO capital structure. Moody's last rating action occurred on July 5, 2007 when the company's ratings were placed on review for possible downgrade. Ratings downgraded: -- Corporate Family rating to B3 from Ba1 -- Probability of default to B3 from Ba1 -- Senior notes to Caa1, LGD 5, 76% -- Senior bank credit facilities that were repaid to Caa1, LGD5 76% from Ba1, LGD 4 -- Senior, subordinated and preferred shelf to (P) Caa1, LGD5, 76%, (P) Caa2, LGD6, 97%, (P) Caa2 LGD6, 97%, respectively from (P) Ba1, LGD4, (P) Ba2, LGD 6, (P) Ba2, LGD 6, respectively. Hilton Hotels Corporation owns, manages or franchises a hotel portfolio including Hilton(R), Conrad(R) Hotels & Resorts, Doubletree(R), Embassy Suites Hotels(R), Hampton Inn(R), Hampton Inn & Suites(R), Hilton Garden Inn(R), Hilton Grand Vacations(TM), Homewood Suites by Hilton(R) and The Waldorf=Astoria Collection(R). The company's portfolio includes more than 2,800 hotels and 480,000 rooms in 76 countries and territories. The Blackstone Group's real estate and corporate private equity funds acquired the company on Oct. 24, 2007 in an all-cash transaction. The Blackstone Group is a global alternative asset manager and provider of financial advisory services. Its alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds. HILTON HOTELS: Blackstone Merger Cues S&P to Withdraw Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on Hilton Hotels Corp., including the 'BB-' corporate credit rating, following the close of the company's merger with an affiliate of The Blackstone Group's real estate and corporate private equity funds. In addition, a significant amount of Hilton's outstanding rated securities have been tendered pursuant to its cash tender offers, or are expected to convert pursuant to a supplemental indenture related to the convertible securities. S&P's withdrawal of the 'BB+' rating on the company's senior unsecured issues contemplated the refinancing of these securities. Hilton does not expect to publicly file financial statements going forward. Before its withdrawal, the 'BB-' corporate credit rating was on CreditWatch; it would likely have been lowered to no higher than the 'B' category had it remained in place. Ratings List Ratings Withdrawn Hilton Hotels Corp. To From -- ---- Corporate Credit Rating NR BB-/Watch Neg/-- Senior Unsecured NR BB+/Watch Neg HILTON HOTELS: Merger Closing Cues Fitch to Withdraw Ratings ------------------------------------------------------------ Fitch Ratings affirmed and withdrew the debt ratings of Hilton Hotels Corp. The affected ratings include: -- Issuer Default Rating 'B'/Withdrawn; -- Senior credit facility 'BB+'/Withdrawn; -- Senior notes 'BB+'/Withdrawn; The Negative Rating Watch has been removed. These actions are due to the closing of Hilton's merger with affiliates of The Blackstone Group that was announced July 3, 2007. Fitch will no longer provide ratings or analytical coverage of this issuer. HOMEBANC CORP: Court Approves FTI Consulting as Financial Advisor ----------------------------------------------------------------- HomeBanc Mortgage Corporation and its debtor-affiliates obtained authority from the United States Bankruptcy Court for the District of Delaware to employ FTI Consulting, Inc., together with its wholly owned subsidiaries, agents and independent contractors, as their financial advisors, nunc pro tunc to Sept. 18, 2007. FTI is expected to provide consulting and advisory services, including: a) assistance to the Debtors in the preparation of financial- related disclosures required by the Court, including Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; b) assistance to the Debtors with information and analyses required pursuant to the Debtors' debtor-in-possession financing, including preparation for hearings regarding the use of cash collateral and DIP financing; c) assistance with the identification and implementation of short-term cash management procedures; d) advisory assistance in connection with the development and implementation of key employee retention and other critical employee benefit programs; e) assistance and advice to the Debtors with respect to the identification of core business assets and the disposition of assets or liquidation of unprofitable operations; f) assistance with the identification of executory contracts and leases and performance of cost/benefit evaluations with respect to the affirmation or rejection of each; g) analysis of creditor claims by type, entity and individual claim, including assistance with development of databases, as necessary, to track the claims; h) assistance in the evaluation and analysis of avoidance actions; i) litigation advisory services with respect to accounting and tax matters, along with expert witness testimony on case- related issues, as required by the Debtors; and j) render other general business consulting or other assistance as Debtors' management or counsel may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals in the proceeding. Mr. Barry informed the Court that FTI is not owed any amounts with respect to prepetition fees and expenses, as it was not a prepetition professional to the Debtors. The Debtors will pay the firm its customary hourly rates, which are subject to periodic adjustments, charged by FTI's professionals anticipated to be assigned to the Debtors' Chapter 11 cases. The rates are: Designations Hourly Rates ------------ ------------ Senior Managing Director $615-$675 Directors/Managing Directors $450-$590 Associates/Consultants $225-$420 Administration/Paraprofessionals $95-$180 Pursuant to the engagement letter, FTI's fees will not exceed $125,000 per month in the aggregate for the first two months of engagement, and an amount, if any, to be agreed upon as a part of a wind-down budget to be negotiated among the Debtors, their prepetition lenders and the Official Committee of Unsecured Creditors for any future months. FTI has agreed to limit its fees to a blended rate of $425 per hour on a cumulative basis from the inception of the engagement, Mr. Barry tells the Court. The Debtors and FTI have agreed, subject to Court approval of their application, on certain dispute resolution procedures: -- A dispute will be submitted to mediation by written notice to the other party or parties. In the mediation process, the parties will try to resolve their differences voluntarily with the aid of an impartial mediator, who will attempt to facilitate negotiations. The mediator will be selected by agreement of the parties. If the parties cannot agree on a mediator, a mediator will be designated by the American Arbitration Association or JAMS/Endispute at the request of a party. Any mediator designated must be acceptable to all parties; -- The parties will discuss their differences in good faith and to attempt, with the assistance of the mediator, to reach an amicable resolution of the dispute. The mediation will be treated as a settlement discussion and therefore, will be confidential. The fees and expenses of the mediator will be shared equally by the parties; and -- If a dispute has not been resolved within 90 days after the written notice beginning the mediation process, or a longer period, if the parties agree to extend the mediation, the mediation will terminate and the dispute will be settled by arbitration and judgment on the award rendered by the arbitration may be entered in any court having jurisdiction thereof. The arbitration will be conducted in accordance with the agreed procedures and the Arbitration Rules for Professional Accounting and Related Services Disputes of the AAA. Timothy J. Dragelin, senior managing director at FTI, assures the Court that the firm has no connection with the Debtors, its creditors or other parties-in-interest in the Debtors' Chapter 11 cases and that FTI does not hold any interest adverse to the Debtors' estates. Mr. Dragelin attests that FTI is a disinterested person, as the term is defined within Section 101(14) of the Bankruptcy Code. The Debtors further propose to serve on all known entities holding potential prepetition claims with a Bar Date Notice, and an Official Form No. 10. The Bar Date Notice states, among other things, that claims must be filed with Kurztman Carson Consultants LLC on or before the applicable Bar Date. 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. 10; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). HOMEBANC CORP: Panel Hires Otterbourg Steindler as Lead Counsel --------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors of HomeBanc Mortgage Corporation and certain HomeBanc's subsidiaries authority to retain Otterbourg, Steindler, Houston and Rosen, P.C., as lead co-counsel. As the Committee's counsel, OSH&R will: (a) assist and advise the committee in its consultation with the Debtors relative to the administration of these cases; (b) attend meetings and negotiate with the representatives of the Debtors and other parties in interest; (c) assist and advise the committee in its examination and analysis of the conduct of the Debtors' affairs; (d) assist the committee in the review, analysis negotiation of any plan(s) reorganization, or asset acquisition proposals that may be filed and assist the committee in the review, analysis and negotiation of the disclosure statement accompanying any plan(s) of reorganization; (e) assist the committee in the review, analysis and negotiation of any financing agreements; (f) take all necessary action to protect and preserve the interests of the committee including (i) possible prosecution of actions on its behalf, (ii) if appropriate, negotiations concerning all litigation in which the Debtors are involved, (iii) and if appropriate, review and analysis of claims filed against the Debtors' estates; (g) generally prepare on behalf of the committee all necessary motions, applications, answers, orders, reports and papers in support of positions taken by the committee; (h) appear, as appropriate, before the Court, the Appellate Courts, and the United States Trustee, and protect the interests of the committee before those courts and before the United States Trustee; and (i) perform all necessary legal services in the cases. OSH&R will charge for its legal services on an hourly basis with its customary hourly rates, and necessary out-of-pocket disbursements. Attorneys and paraprofessionals of OSH&R bill their time in one- tenth hour increments and the range of hourly rates currently charged by OSH&R, subject to adjustment, is: Designation Hourly Rate ----------- ----------- Partner/Counsel $510 - $745 Associate $245 - $555 Paralegal $150 - $205 Lorenzo Marinuzzi, member of the OSH&R, assured the Court that (i) members and associates of OSH&R do not have nay connection with the Debtors, their creditors or any other party-in-interest, and (ii) the firm represents no adverse interest to the Committee which would preclude it in acting as counsel to the Committee in matters upon which it is to be engaged. 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. 10; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). HOMEBANC CORP: Court OKs Mesirow as Committee's Financial Advisor ----------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors in HomeBanc Mortgage Corporation and its debtor-affiliates' chapter 11 cases permission to retain Mesirow Financial Consulting LLC as its financial advisors. As reported in the Troubled Company Reporter on Oct. 8, 2007, the Creditors Committee needs assistance in collecting and analyzing financial and other information in relation to the Chapter 11 cases. The Committee has selected MFC because of the firm's diverse experience and extensive knowledge in bankruptcy. Accordingly, MCF is qualified as financial advisors. As financial advisors, MFC is expected to render these services: (a) assessment of bid procedures and review and advice to the committee with respect to proposed asset dispositions; (b) assistance in review of financial information of the Debtors and analysis of motions for which Court approval is sought by the Debtors; (c) assistance in meetings and discussions with other professionals and the Debtors including other classes of creditors; (d) review of financial information of the Debtors including the Statement of Financial Affairs, Schedules of Assets and Liabilities, and Monthly Operating Reports; (e) analysis and assistance to the committee with regard to Debtors' financing, cash collateral and other liquidity liquidity measures; (f) review and assistance to the committee in evaluating any employee related programs; (g) assistance with the review and affirmation or rejection on various executory contracts and leases; (h) assistance in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers; (i) litigation advisory services and expert testimony on case related issues; and (j) other consulting, review, or assistance the committee or its counsel may deem necessary. MFC's compensation for professional services rendered to the committee will be $75,000 per month, plus hourly charges for forensic and litigation consulting services by the committee based upon the hours actually expended by each staff member at each staff member's hourly billing rate. The Committee submits that the MFC professionals working on the matter are not relatives of the United States Trustee of the District Court of Delaware or of any known employee in the office thereof, or any Unites States Bankruptcy Judge of the District of Delaware. 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 Official Committee of Unsecured Creditors selected the firm Otterbourg, Steindler, Houston and Rosen, P.C. as its counsel. 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. 10; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). HYDRO SPA: Can Employ GrayRobinson as General Bankruptcy Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida gave authority to Hydro Spa Parts and Accessories, Inc. to employ GrayRobinson, P.A. as its general counsel. GrayRobinson is expected to: a) give advice to the Debtor with respect to its powers and duties as debtor-in-possession and the continue management of its business operations; b) advise the Debtor with respect to its responsibilities in complying with the U.S. Trustee's Operating Guidelines and Reporting Requirements and with the rules of this Court; c) address the legal ramifications of business and financial issues impacting the Debtor, including labor issues, cash collateral issues, intellectual property issues, and other matters critical to maintenance of the going concern; d) prepare motions, pleadings, orders, applications, adversary proceedings, and other legal documents necessary in the administration of the case; e) continue the process of dealing with the prospective purchaser, reducing the asset purchase agreement to a document appropriate for submission to this Court, and to advance to closing; f) continue the prosecution of claims and the litigation of defenses in the context of the Gulf Coast Litigation, that be removed to this Court; g) protect the interests of the Debtor in all matters pending before the Court; h) represent the Debtor in negotiations with its creditors in preparation of a plan of reorganization and in assessing and establishing confirmability; and i) assess and address anticipated post-confirmation activities. John A. Anthony, Esq., a shareholder at GrayRobinson, tells the Court that the firm's professionals bill: Professional Hourly Rate ------------ ----------- John A. Anthony, Esq. $350 John I. Van Voris, Esq. $300 Richard M. Zabak, Esq. $300 Susan T. Spradley, Esq. $290 Stephenie M. Biernacki, Esq. $250 Scott R. Lilly, Esq. $260 Cheryl Thompson, Esq. $205 Maureen A. Vitucci $185 Robert H. Bonanno, Jr. $185 Mr. Anthony assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Mr. Anthony can be contacted at: John A. Anthony, Esq. GrayRobinson, P.A. 201 North Franklin Street, Suite 2200 Tampa, FL 33602 Tel: (813) 273-5033 Fax: (813) 273-5145 About Hydro Spa Based in St. Petersburg, Florida, Hydro Spa Parts and Accessories, Inc. -- http://www.hydrospa.com/-- sells bathroom, hot tub, and spa equipment and accessories. The Debtor filed for Chapter 11 protection on Sept. 19, 2007 (Bankr. M.D. Fla. Case No. 07-08616). John A. Anthony, Esq., John I. Van Voris, Esq., and Stephenie M. Biernacki, Esq., at GrayRobinson, P.A., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $10,659,077, and total liabilities of $13,611,578. HYDRO SPA: Court Fixes November 30 as Claims Bar Date ----------------------------------------------------- The Honorable Catherine Peek McEwen of the U.S. Bankruptcy Court for the Middle District of Florida extended, until Nov. 30, 2007, the period in which creditors of Hydro Spa Parts and Accessories, Inc. can file proofs of claim against the Debtor. Based in St. Petersburg, Florida, Hydro Spa Parts and Accessories, Inc. -- http://www.hydrospa.com/-- sells bathroom, hot tub, and spa equipment and accessories. The Debtor filed for Chapter 11 protection on Sept. 19, 2007 (Bankr. M.D. Fla. Case No. 07-08616). John A. Anthony, Esq., John I. Van Voris, Esq., and Stephenie M. Biernacki, Esq., at GrayRobinson, P.A., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $10,659,077, and total liabilities of $13,611,578. HYDRO SPA: U.S. Trustee Appoints Seven-Member Creditors Committee ----------------------------------------------------------------- The U.S. Trustee for Region 3 appointed seven members to the Official Committee of Unsecured Creditors in the Chapter 11 case of Hydro Spa Parts and Accessories, Inc. The Creditors Committee members are: (a) Waterway Plastics Attn: Patti Kirsh Vice-President of Sales and Marketing 2200 East Sturgis Road Oxnard, CA 93030 Tel: (805) 981-0262 Fax: (805) 981-9403 (b) Balboa Instruments, Inc. Attn: Dennis L. Nickel, CFO 1382 Bell Avenue Tustin, CA 92780 Tel: (714) 384-0384 ext. 6266 Fax: (714) 384-0327 (c) Custom Molded Products, Inc. Attn: William Drury, President 140 Celtic Boulevard Tyrone, GA 30290 Tel: (770) 632-7112 Fax: (770) 632-7115 (d) Regal-Beloit Electric Motors, Inc. Attn: John W. Piffer, Controller 1946 West Cook Road Fort Wayne, IN 46818 Tel: (260) 416-5671 Fax: (260) 416-5460 (e) Highwood USA, LLC Attn: John Quarmley, General Manager 87 Tide Road Tamaqua, PA 18252 Tel: (570) 668-6113 Fax: (484) 214-0182 (f) Lucite International Inc. Attn: David L. Gorglione, Senior Credit Analyst 7275 Goodlett Farms Parkway Cordova, TN 38016 Tel: (901) 381-2246 Fax: (901) 381-2248 (g) Vartek Ind. Inc. T. Starr Porter, Owner 6715 North 53rd Street Tampa, FL 33610 Tel: (727) 595-1516 Fax: (727) 593-5858 Pursuant to Section 1103 of the Bankruptcy Code, the Creditors Committee may: -- consult with the Debtors concerning the administration of the bankruptcy case; -- investigate the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' business and the desirability of the continuance of the business, and any other matter relevant to the case or to the formulation of a plan of reorganization for the Debtors; -- participate in the formulation of a plan, advise its constituents regarding the Committee's determinations as to any plan formulated, and collect and file with the Court acceptances or rejections of the plan; -- request the appointment of a trustee or examiner; and -- perform other services as are in the interest of its constituents. The Creditors Committee may retain counsel, accountants, or other agents, to represent or perform services for the group. About Hydro Spa Based in St. Petersburg, Florida, Hydro Spa Parts and Accessories, Inc. -- http://www.hydrospa.com/-- sells bathroom, hot tub, and spa equipment and accessories. The Debtor filed for Chapter 11 protection on Sept. 19, 2007 (Bankr. M.D. Fla. Case No. 07-08616). John A. Anthony, Esq., John I. Van Voris, Esq., and Stephenie M. Biernacki, Esq., at GrayRobinson, P.A., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $10,659,077, and total liabilities of $13,611,578. IKON OFFICE: Earns $28 Million in Fourth Quarter Ended Sept. 30 --------------------------------------------------------------- IKON Office Solutions reported net income of $28 million for the fourth quarter representing a 15% increase over the $0.20 in the fourth quarter of fiscal 2006, exceeding the company's previously communicated guidance of about $0.22. Total revenue for the fourth quarter of fiscal 2007 was $1.1 billion, up 0.6% year over year, including 1.4 points of currency benefit. Operating income for the fourth quarter of fiscal 2007 was $49 million, or 4.6% of revenue, compared to $44 million or 4.1% of revenue for the fourth quarter of fiscal 2006. The company's effective tax rate for the quarter was 28%. "We gained revenue momentum during the fourth quarter, as demonstrated by revenue growth in Equipment, Managed and Professional Services, and in Europe. We also made progress on our sprint-to-color strategy by successfully launching the Canon imagePRESS C7000VP, a 70 page per minute color production device. Finally, we continued to expand our sales coverage, adding over 50 selling resources in the quarter, bringing the total increase in the second half of fiscal year 2007 to over 170," said Matthew J. Espe, IKON's chairman and chief executive officer. Fiscal 2007 Highlights For fiscal year 2007, net income was $114 million representing a 15% increase over the adjusted earnings per diluted share of $0.79 in fiscal year 2006, and exceeding the company's previously communicated guidance of about $0.90. Total revenue for fiscal year 2007 was $4.2 billion, a 1.4% decline year over year, including 1.2 points of currency benefit. Operating income in fiscal year 2007 was $203 million, or 4.9% of revenue, compared with $197 million, or 4.1% of revenue in fiscal year 2006, after adjusting for a $5 million gain on the sale of Kafevend last year. The company's effective tax rate for the fiscal year was 30%. At fiscal year end, the company's U.S. migration to One Platform was two-thirds complete and on track to be finished in the second half of fiscal year 2008. Due to the success of these migrations and the process improvements and stability achieved over the past two years, the company concluded that its material weakness in billing was remediated as of Sept. 30, 2007. As of Sept. 30, 2007, the company reported total assets of $3.3 billion, total liabilities of $1.6 billion, and total stockholders' equity of $1.7 billion. Full-text copies of the company's financials are available for free at http://ResearchArchives.com/t/s?248d. Balance Sheet and Liquidity The company's cash balance was $349 million as of Sept. 30, 2007, and the company's debt-to-capital ratio remained stable from the prior year at 33%. In the fourth quarter, the company generated $159 million of cash from operations driven by over $100 million in working capital improvements, primarily from lower accounts receivable and inventory levels, as well as improved payment terms from vendors. The company ended fiscal year 2007 with $288 million in inventory, in line with the company's guidance of $275 million to $295 million, generating $29 million of cash during the quarter. For the fourth quarter of fiscal 2007, fully diluted weighted average shares were 122 million. At the end of the quarter, actual shares outstanding were 118 million, a reduction of 8% year over year, driven by the company's share repurchase program. The company purchased about 5 million shares for $75 million during the fourth quarter. In fiscal year 2007, the company returned a total of $195 million in cash to its shareholders, including $175 million in share repurchases and $20 million in dividend payments, $80 million greater than the free cash flow generated during the year. IKON's board of directors approved the company's regular quarterly cash dividend of $0.04 per common share, payable on Dec. 10, 2007 to holders of record at the close of business on Nov. 19, 2007. Outlook "Fiscal 2007 was a good year for IKON. We made significant progress towards growing revenue. We continued to lower our selling and administrative expenses, and we delivered increased earnings per share and cash flow. Our color product portfolio is stronger than ever, and we have made investments to expand and optimize our sales coverage. As a result, we are at an important point in our company's history with respect to growth, which is our main focus in fiscal 2008," said Mr. Espe. "Looking ahead to fiscal year 2008, we expect revenue growth of 2% driven by Equipment and Managed & Professional Services growth, and an operating income margin of greater than 5%. For our first quarter, we expect earnings per diluted share to range between $0.22 and $0.24. "In addition, after reviewing investment opportunities for growth for fiscal year 2008, we decided to narrow our acquisition strategy to focus only on small "tuck-in" acquisitions rather than transformational opportunities. We continue to believe share repurchases and a focus on small "tuck-in" acquisitions will increase shareholder value and improve our long-term potential for growth," continued Mr. Espe. About Ikon Office Headquartered in Malvern, Pennsylvania, IKON Office Solutions Inc. (NYSE:IKN) -- http://www.ikon.com/-- is the world's largest independent channel for copier, printer and MFP technologies. It delivers integrated document management solutions and systems, enabling customers worldwide to improve document workflow and increase efficiency. IKON has approximately 25,000 employees in over 400 locations throughout North America and Western Europe. * * * In September 2006, Moody's placed the company's long-term corporate family rating and probability of default rating at Ba2, and senior unsecured debt rating at Ba3. These ratings still hold to date. The outlook is stable. Standard & Poor's placed the company's long-term foreign and local issuer credits at BB which still hold to date in September 2006. The outlook is stable. JAYS FOODS: Wants Court Approval on Asset Sale Bidding Procedures ----------------------------------------------------------------- Jays Foods Inc. and Select Foods Inc. ask the United States Bankruptcy Court for the Northern District of Illinois to: a) schedule the date, time and place for the hearing on the proposed motion for the sale of substantially all of the Debtors' assets, b) approve the form and manner of the notice of the of the notice thereof; and c) approve the bidding procedures and break up fees. Prior to Oct. 11, 2007, Debtors contacted certain potential purchasers in an attempt to market substantially all of their assets. Debtors told the Court that this has resulted in the execution of an asset purchase agreement between the Debtors and Jay's Acquisition. As reported in the Troubled Company Reporter on Oct. 25, 2007, the Debtors asked the Court to approve an asset and purchase agreement entered with Jay's Acquisition Inc. Under the agreement, the Debtors will sell substantially all of their assets to Jay's Acquisition for $24,850,000, subject to an auction and upon Court approval. The Debtors also asked the Court for authority to assume and assign leases and contracts in connection with the sale. The parties have also agreed that $1,650,000 of the purchase price will be paid to satisfy claims asserted against the Debtors' estates, exclusive of claims asserted by LaSalle Business Credit LLC, which has waived its right to the proceeds. In addition, the asset purchase agreement provides a due diligence investigation period which expires on Nov. 9, 2007. Debtors propose that the Court set the bid deadline not later than four calendar days prior to the date scheduled by the Court for the sale hearing. Debtors also propose that the auction date be held one business day prior to the date scheduled by the Court for the Sale hearing or such later time or other place as the Debtors shall notify all qualified bidders who have submitted qualified bids. About Jays Foods Chicago-based Jays Foods Inc. -- http://www.jaysfoods.com/-- wholesales confectionery products and manufactures snack chip products. Jays Foods leases real property, and owns certain equipment, in Chicago, Illinois where it operates a manufacturing facility that makes snacks mostly under the Jays, O-KE-DOKE and Krunchers brand names. Jays is 100% owned by Jays Holding Company, Inc. The company, then known as Jays Food LLC, first filed for chapter 11 protection on March 5, 2004 (Bankr. N.D. Ill. Case No. 04- 08681). David Missner, Esq., Marc I. Fenton, Esq. and Thomas Zwartz, Esq. at Piper Rudnick LLP were counsels to the Debtor. In the March 2004 case, a Section 363 sale took place and most of the assets of former Jays Foods were sold to Jays Foods Acquisition Inc., predecessor to Jays Foods Inc. The March 2004 case was closed on or about March 9, 2007. Select Snacks Inc., on the other hand, owns real property, improvements and equipment in Jeffersonville, Indiana where it operates a manufacturing facility that makes private label and co- manufactured snacks for its customers. Select Snacks is 100% owned by Select Snacks Holdings Company, Inc. Both Select Holding and Jays Holding are 100% owned by Ubiquity Brands LLC. As of the Oct. 11, 2007, the Debtors had approximately 943 employees of which Select has 262 (211 union employees and, 51 non-union employees) and Jays has 681 total employees (236 union employees and 445 non-union employees). Jays Foods and Select Snacks filed voluntary chapter 11 petitions on Oct. 11, 2007 (Bankr. N.D. Ill. Case Nos. 07-18768 and 07-18769). Mark K. Thomas, Esq., Brian I. Swett, Esq., Jeremy T. Stillings, Esq., Myja K. Kjaer, Esq., at Winston & Strawn LLP, represent the Debtors. When they sought protection from their creditors, they listed assets and debts between $10 million and $50 million. JAYS FOODS: Court Approves Kurtzman Carson as Claims Agent ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois gave Jays Foods Inc. and Select Snacks Inc. permission to employ Kurtzman Carson Consultants LLC as their notice, claims and balloting agent. Kurtzman Carson will act as the notice, claims and balloting agent in the Debtors' cases. The firm will maintain the list of the Debtors' creditors and will serve the required notices in the chapter 11 cases and will prepare the related certificate or affidavit of service. Specifically, the firm will: (a) prepare and serve required notices in these chapter 11 cases, which may include: (i) notice of the commencement of these chapter 11 cases and the initial meeting of creditors pursuant to section 341(a) of the Bankruptcy Code; (ii) notice of the claims bar date, if any; (iii) notice of objections to claims; (iv) notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; (v) other miscellaneous notices to any entities, as the Debtors or the Court may deem necessary or appropriate for an orderly administration of the chapter 11 cases; and (vi) provide assistance with publication of required notices, as necessary; (b) after the mailing of a particular notice, prepare for filing with the Clerk's Office a certificate or affidavit of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was mailed and the date and manner of mailing; (c) receive and record proofs of claim and proofs of interest filed; (d) create and maintain official claims registers, including, among other things, these information for each proof of claim or proof of interest: (i) the applicable Debtor; (ii) the name and address of the claimant and any agent thereof, if the proof of claim or proof of interest was filed by an agent; (iii) the date received; (iv) the claim number assigned; and (v) the asserted amount and classification of the claim; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) transmit to the Clerk's Office a copy of the claims registers upon request and at agreed upon intervals; (g) act as balloting agent which will include these services: (i) print ballots including the printing of color-coded, creditor- and shareholder-specific ballots; (ii) prepare voting reports by plan class, creditor or shareholder and amount for review and approval by the Debtors and their counsel; (iii) coordinate mailing of ballots, disclosure statement and plan of reorganization or other appropriate materials to all voting and non-voting parties and provide affidavit of service; and (iv) receive and tabulate ballots, inspect ballots for conformity to voting procedures, date stamp and number ballots consecutively, provide computerized balloting database services and certify the tabulation results; (h) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list shall be available upon request of a party in interest or the Clerk's Office; (i) provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours; (j) create and maintain a public access website setting forth pertinent case information and allowing access to electronic copies of proofs of claim or proofs of interest; (k) record all transfers of claims pursuant to rule 3001(e) of the Federal Rules of Bankruptcy Procedure and provide notice of the transfers as required by Bankruptcy Rule 3001(e); (l) comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders and other requirements; (m) provide temporary employees to process claims, as necessary; (n) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and (o) perform the other administrative and support services related noticing, claims, docketing, solicitation and distribution as the Debtors or the Clerk's Office may request. In addition, the firm will assist the Debtors with, among other things: (a) the reconciliation and resolution of claims; (b) preparation of schedules of assets and liabilities and statements of financial affairs; and (c) the preparation, mailing and tabulation of ballots for the purpose of voting to accept or reject any plans of reorganization proposed by the Debtors in these cases. Prior to the bankruptcy filing, the Debtors paid the firm a $20,000 "evergreen retainer". To the best of the Debtors' knowledge, Kurtzman Carson is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code, and does not hold or represent an interest adverse to the Debtors' estates. The firm can be reached at: Sheryl Betance, Director Kurtzman Carson Consultants LLC 2335 Alaska Avenue El Segundo, CA 90066 Tel: (866) 381.9100 Fax: (310) 823.9133 http://www.kccllc.com/ Chicago-based Jays Foods Inc. -- http://www.jaysfoods.com/-- wholesales confectionery products and manufactures snack chip products. Jays Foods leases real property, and owns certain equipment, in Chicago, Illinois where it operates a manufacturing facility that makes snacks mostly under the Jays, O-KE-DOKE and Krunchers brand names. Jays is 100% owned by Jays Holding Company, Inc. The company, then known as Jays Food LLC, first filed for chapter 11 protection on March 5, 2004 (Bankr. N.D. Ill. Case No. 04- 08681). David Missner, Esq., Marc I. Fenton, Esq. and Thomas Zwartz, Esq. at Piper Rudnick LLP were counsels to the Debtor. In the March 2004 case, a Section 363 sale took place and most of the assets of former Jays Foods were sold to Jays Foods Acquisition Inc., predecessor to Jays Foods Inc. The March 2004 case was closed on or about March 9, 2007. Select Snacks Inc., on the other hand, owns real property, improvements and equipment in Jeffersonville, Indiana where it operates a manufacturing facility that makes private label and co- manufactured snacks for its customers. Select Snacks is 100% owned by Select Snacks Holdings Company, Inc. Both Select Holding and Jays Holding are 100% owned by Ubiquity Brands LLC. As of the Oct. 11, 2007, the Debtors had approximately 943 employees of which Select has 262 (211 union employees and, 51 non-union employees) and Jays has 681 total employees (236 union employees and 445 non-union employees). Jays Foods and Select Snacks filed voluntary chapter 11 petitions on Oct. 11, 2007 (Bankr. N.D. Ill. Case Nos. 07-18768 and 07-18769). Mark K. Thomas, Esq., Brian I. Swett, Esq., Jeremy T. Stillings, Esq., Myja K. Kjaer, Esq., at Winston & Strawn LLP, represent the Debtors. When they sought protection from their creditors, they listed assets and debts between $10 million and $50 million. JAYS FOODS: Court OKs Retention of Keystone as Financial Advisor ---------------------------------------------------------------- The United States Bankruptcy Court for the Northern District of Illinois has granted permission to Jays Foods Inc. and Select Snacks Inc. to employ Keystone Consulting Group LLC as their financial advisor, effective as of Oct. 11, 2007. Debtors selected Keystone as their financial advisor because of the firm's diverse experience, knowledge and reputation in the financial and operational restructuring field, previous working relationship with the Debtors, and because the Debtors believe that Keystone possesses the relationships, resources and qualifications to provide the financial advisory services that will be required in this matter. Keystone Consulting is expected to: a) advise the Debtors with respect to planning and managing of cash flow; b) advise the Debtors with respect to financial restructuring options; and c) assist the Debtors in the forumulation and implementation of a going-concern sale or sales of substantially all of their assets or a financial restructuring plan; The compensation rates of the firm's professionals are: Designation Hourly Rate ----------- ----------- Directors $600 - $650 Principals $350 - $450 Staff $100 - $200 Prior to the Petition Date, the Debtors paid Keystone $221,000 for advisory fees and expense reimbursement. In addition, the Debtors provided Keystone with a retainer in the amount of $4,000, which remains unapplied. The Debtors do not owe Keystone any amount for services performed or expenses incurred prior to the Petition Date, and Keystone is consequently not a prepetition creditor of the Debtors. Keystone will earn a success fee based upon a target fee of $200,000, which amount will be increased or decreased pro rata with the percentage return LaSalle Business Credit LLC receives on its secured claim from the proceeds of any sale of the Debtors' assets. Mr. Andrew J. Rolfe, a managing director of Keystone Consulting Group LLC, assured the Court that the firm does not hold any interest adverse to the Debtors' estate, and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Rolfe can be reached at: Andrew J. Rolfe Keystone Consulting Grou LLC 191 North Wacker Drive Suite 1650 Chicago, Illinois 60606 About Jays Foods Chicago-based Jays Foods Inc. -- http://www.jaysfoods.com/-- wholesales confectionery products and manufactures snack chip products. Jays Foods leases real property, and owns certain equipment, in Chicago, Illinois where it operates a manufacturing facility that makes snacks mostly under the Jays, O-KE-DOKE and Krunchers brand names. Jays is 100% owned by Jays Holding Company, Inc. The company, then known as Jays Food LLC, first filed for chapter 11 protection on March 5, 2004 (Bankr. N.D. Ill. Case No. 04- 08681). David Missner, Esq., Marc I. Fenton, Esq. and Thomas Zwartz, Esq. at Piper Rudnick LLP were counsels to the Debtor. In the March 2004 case, a Section 363 sale took place and most of the assets of former Jays Foods were sold to Jays Foods Acquisition Inc., predecessor to Jays Foods Inc. The March 2004 case was closed on or about March 9, 2007. Select Snacks Inc., on the other hand, owns real property, improvements and equipment in Jeffersonville, Indiana where it operates a manufacturing facility that makes private label and co- manufactured snacks for its customers. Select Snacks is 100% owned by Select Snacks Holdings Company, Inc. Both Select Holding and Jays Holding are 100% owned by Ubiquity Brands LLC. As of the Oct. 11, 2007, the Debtors had approximately 943 employees of which Select has 262 (211 union employees and, 51 non-union employees) and Jays has 681 total employees (236 union employees and 445 non-union employees). Jays Foods and Select Snacks filed voluntary chapter 11 petitions on Oct. 11, 2007 (Bankr. N.D. Ill. Case Nos. 07-18768 and 07-18769). Mark K. Thomas, Esq., Brian I. Swett, Esq., Jeremy T. Stillings, Esq., Myja K. Kjaer, Esq., at Winston & Strawn LLP, represent the Debtors. When they sought protection from their creditors, they listed assets and debts between $10 million and $50 million. LINENS 'N THINGS: Inks New $700 Mil. Credit Agreement with GE ------------------------------------------------------------- Linens Holding Co. reported that its wholly-owned subsidiaries, Linens 'n Things Inc., Linens 'n Things Center, Inc., and Linens 'n Things Canada Corp., have entered into a new $700 million credit agreement with GE Capital Markets Inc. as arranger and bookmanager. The existing $700 million credit facility with affiliates of UBS Securities LLC has been replaced in its entirety by this new credit facility. Early in the third quarter, GE Capital (GE - Global Sponsor Finance) approached the company and proposed a new asset-based credit facility with materially improved terms relative to the former credit facility and, in August 2007, the company obtained an underwriting commitment related to the entire facility from GE Capital (GE - Global Sponsor Finance). The new facility is beneficial to the company compared to its prior credit facility in several respects. Among other things, the company has obtained increases in its advance rates on inventory and accounts receivable for its borrowing base computation as well as the elimination of all financial maintenance covenants. As a result of entering into this facility, the company's liquidity position will be significantly enhanced compared to its existing credit facility. All of the agent banks in the company's former credit facility continue to be participants in the new credit facility. The new credit agreement will be filed as an exhibit to a Form 8-K that will be filed by the company with the SEC. General Electric Capital Corporation will act as U.S. Administrative Agent and U.S. Collateral Agent and GE Canada Finance Holding Company will act as Canadian Administrative Agent and Canadian Collateral Agent. About Linens 'n Things Headquartered in Clifton, New Jersey, Linens N Things Inc., is a nationwide specialty retailer of home textiles, housewares, and home accessories that operates approximately 571 stores in 47 states and six Canadian provinces as of Dec. 30, 2006. Revenues for the period ended Dec. 30, 2006 were about $2.8 billion. * * * As reported in the Troubled Company Reporter on Oct 17, 2007, Standard & Poor's Ratings Services lowered its corporate credit rating on Linens 'n Things Inc. to 'B-' from 'B' and removed the ratings from CreditWatch, where they had been placed with negative implications on Nov. 17, 2006. In September 2006, Moody's placed the company's long-term corporate family rating, senior unsecured debt rating, and probability of default rating at B3. These ratings still hold to date. The outlook is negative. Fitch placed the company's long-term issuer default rating at CCC, senior secured debt rating at CCC-, and bank loan debt rating at B- in October 2007. These ratings still hold to date. The outlook is stable. LKQ CORP: Earns $14.6 Million in Third Quarter Ended Sept. 30 ------------------------------------------------------------- LKQ Corporation disclosed financial results for its third quarter ended Sept. 30, 2007. Net income for the quarter increased 39.2% to $14.6 million compared with $10.5 million for the third quarter of 2006. For the third quarter of 2007, revenue increased 23.2% to $243.5 million compared with $197.7 million for the third quarter of 2006. Organic revenue growth for the quarter was 15.9%. "We exceeded our previously issued earnings estimates for the third quarter. We reported record revenue along with the continued expansion of our operating income margin to 10.5% compared to 9.0% in the third quarter of 2006," said Joseph M. Holsten, president and chief executive officer. "In addition we had robust organic revenue growth of almost 16% for the quarter." "Another significant achievement this quarter was a very successful public equity offering towards the end of the quarter, followed by our acquisition of Keystone Automotive Industries Inc.," said Mr. Holsten. "This acquisition creates an alternative replacement parts business with over $1.6 billion of trailing annual revenue. Keystone's aftermarket product line is a perfect complement to LKQ's leading presence in the recycled parts marketplace. We now have an expanded national network of nearly 300 facilities that allow us to offer readily available, high quality recycled, refurbished and aftermarket collision repair parts to our customers." For the nine months ended Sept. 30, 2007, revenue increased 21.8% to $712.1 million compared with $584.8 million for the same period in 2006. This included organic revenue growth of 12.1%. For the nine months ended Sept. 30, 2007, net income increased 29.7% to $44.4 million compared with $34.2 million for the same period in 2006. At Sept. 30, 2007, the company's consolidated balance sheet showed $906.0 million in total assets, $87.2 million in total liabilities, and $818.8 million in total shareholders' equity. On Sept. 25, 2007, the company completed its public offering of 13.8 million shares of its common stock at a price per share to the public of $31.00. The offering included 11.8 million shares sold by the company and 2.0 million shares sold by selling stockholders. The shares sold by the company included 1.8 million shares sold pursuant to the exercise of the underwriters' over- allotment option. The company received approximately $349.5 million in net proceeds from the sale of the shares by the in the offering, after deducting discounts and commissions and the estimated expenses of the offering. The company obtained a senior secured debt financing facility from Lehman Brothers Inc. and Deutsche Bank Securities Inc. on October 12 to fund a portion of the Keystone acquisition. This facility consists of approximately $750 million of borrowing capacity. It is made up of a six year $610 million term loan, a six year CDN$40 million Canadian term loan, a six year $15 million dual currency (Canadian dollars and U.S. dollars) revolving credit facility and a six year $85 million revolving credit facility. As of Oct. 25, 2007, the company had outstanding debt under its new debt facility of $650.0 million. About LKQ Corporation Based in Chicago, Illinois, LKQ Corporation (NASDAQ:LKQX) -- http://www.lkqcorp.com/-- is a provider of recycled light vehicle original equipment manufacturer products and related services. The company is also a provider of aftermarket collision replacement products and refurbished wheels. LKQ Corporation operates over 100 facilities offering its customers a range of replacement systems, components and parts to repair light vehicles. It participates in the market for recycled OEM products, well as the market for collision repair aftermarket products. LKQ Corporation obtains aftermarket products and salvage vehicles from a variety of sources. * * * As reported in the Troubled Company Reporter on Sept. 28, 2007, Moody's Investors Service assigned these ratings to LKQ Corporation: (i) corporate family rating, Ba3; (ii) senior secured revolving credit, Ba3; (iii) senior secured term loan, Ba3; and (iv) speculative liquidity rating, SGL-2. Additionally, as reported Troubled Company Reporter on Oct. 1, 2007, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to LKQ Corp. The outlook is stable. MAJESTIC STAR: Poor Liquidity Cues S&P to Lower Rating to B- ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas-based Majestic Star Casino LLC to 'B-' from 'B'. This and other ratings on the company were removed from CreditWatch, where they were placed Sept. 10, 2007 with negative implications. The rating outlook is negative. At the same time, Standard & Poor's lowered its issue-level rating on Majestic Star's $80 million senior secured revolving credit facility to 'B+' from 'BB-'. The recovery rating on this debt remains at '1', indicating the expectation for very high (90% to 100%) recovery in the event of a payment default. In addition, the rating on Majestic Star's 9.75% senior unsecured notes and parent holding company Majestic Holdco LLC's senior discount notes was lowered to 'CCC' from 'CCC+'. The rating on the company's 9.5% senior secured notes was affirmed at 'B+' to reflect Standard & Poor's revisions to its recovery rating scale and issue-level rating framework, which were announced earlier this year. The recovery rating on this secured debt also remains at '1'. "The rating downgrade follows increased deterioration in Majestic Star's liquidity position and weakening credit measures, due to continued negative operating trends," said Standard & Poor's credit analyst Guido DeAscanis. "The company's weak cash flow generation is principally due to meaningful declines in operating margins during the past four quarters, which resulted from intensifying competition in all markets leading to a higher level of promotional spending. This downward momentum has resulted in tight cushions relative to financial covenants. Given the company's portfolio of largely second-tier properties and our expectation for competition to escalate throughout the markets in which Majestic Star operates, we believe these trends will continue." The 'B-' rating reflects the company's substantial debt levels, its limited market position within highly competitive markets, second-tier properties, and moderate-size cash flow base. Majestic Star owns and operates the Majestic Star Casino and the adjacent Majestic Star Casino II, both of which are based in Gary, Indiana. The company also owns two Fitzgeralds-branded casinos-- one in Tunica, Mississippi and the other in Black Hawk, Colorado. The Fitzgeralds Las Vegas is an affiliated company rather than a direct subsidiary within the Majestic Star family of companies. Majestic Star's credit measures as of June 30, 2007 remain weak. Debt leverage (as measured by debt to EBITDA, adjusted for operating leases and including the senior discount notes issued at Majestic Star Holdco LLC) was 8.7x. In addition, adjusted EBITDA coverage of interest has continued to decline to just 1.1x (S&P's calculation is different than that used to determine bank covenant compliance). MANOR CARE: Moody's Places Corporate Family Rating at B2 -------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating to HCR Healthcare LLC, which is expected to be a newly formed entity that will house the operations of Manor Care Inc. The real estate assets of Manor Care, Inc. will be transferred to a separate entity. Both HCR Healthcare LLC and PropCo will be wholly owned subsidiaries of Manor Care Inc. Moody's also assigned a Ba3 rating to HCR Healthcare's proposed senior secured credit facilities, consisting of a $200 million revolver and a $700 million term loan. The outlook for the ratings is stable. The proceeds of the $700 million term loan, along with a $4.6 billion CMBS financing that will be raised at PropCo and about $1.3 billion of contributed equity are expected to be used to complete the acquisition of Manor Care Inc. by The Carlyle Group for about $6.3 billion, including about $950 million of existing debt. Moody's expects to conclude the review and withdraw the current ratings of Manor Care Inc. at the close of the transaction. Moody's understands that the transaction is expected to close on or about Nov. 7, 2007. The B2 Corporate Family Rating reflects the considerable amount of adjusted leverage that will result from the transaction. The organizational structure formed by the proposed transaction results in HCR Healthcare continuing as the operator of the long- term care facilities while PropCo will hold title to the majority of the existing real estate. As a tenant of the facilities, HCR Healthcare will be required to pay a significant amount of rent to PropCo. Therefore, while HCR Healthcare has a conservative amount of funded debt at the operating company level, adjusted leverage, which has been calculated on a consolidated basis giving consideration to the $4.6 billion of CMBS financing at PropCo, will be significant. The ratings also reflect the significant decline in adjusted interest coverage and cash flow coverage of debt metrics when compared to the investment grade level metrics of the predecessor company, Manor Care Inc. (currently rated Baa3). Moody's expects free cash flow metrics to improve in future periods as growth capital spending moderates from current levels. Further, while the company is geographically diverse, operating long term care facilities in 30 states, there is a concentration of facilities in certain states. Over 30% of the company's facilities are located in Pennsylvania and Ohio and over 60% of facilities are concentrated in Pennsylvania, Ohio, Florida, Illinois and Michigan. Supporting the rating is the company's position as the largest provider of long-term care services. The company has also been an industry leader in the adoption of strategies to improve payor mix by focusing on the provision of services to high acuity, shorter stay patients. Services provided to these patients tend to have the most favorable reimbursement rates and this has been reflected in the company's financial performance. Quality mix (the percentage of non-Medicaid revenue) has long been a positive factor in the differentiation of the company from its peers. That mix continues to be enhanced by the company's initiatives to focus on intensive rehabilitation services that might have previously been performed in other settings. Moody's believes this will continue to be a distinguishing factor for the company in support of the rating and aid in the growth of the company. Moody's believes HCR Healthcare will have good liquidity over the four quarters following the transaction. At the close of the proposed transaction, the company is expected to have $140 million available under the $200 million revolver (after $60 million in letters of credit) and about $20 million in unrestricted cash. However, Moody's notes that cash flow could be pressured if a significant reduction in growth and acquisition capital expenditures from historic levels is not achieved or if working capital investment continues at historic levels. The stable ratings outlook reflects our expectation of a continuation of the company's successful strategy of focusing on higher acuity, shorter stay patients following the transaction. Moody's also anticipates further growth in other services provided by the company, including the hospice and homecare service line. Also considered is the expectation that the company will continue to adequately invest in its facilities to further its strategy. Ratings are subject to review of final documentation. These ratings were assigned: HCR Healthcare LLC: -- $200 million senior secured revolving credit facility due 2013, Ba3 (LGD2, 18%) -- $700 million senior secured term loan due 2014, Ba3 (LGD2, 18%) -- Corporate Family Rating, B2 -- Probability of Default Rating, B3 This rating remains under review for possible downgrade and is expected to be withdrawn at the close of the transaction: Manor Care Inc.: -- Baa3 senior unsecured notes Headquartered in Toledo, Ohio, Manor Care is the largest (by revenue and number of facilities managed) long-term care provider in the sector. The company also operates assisted living facilities and provides rehabilitation, hospice and home healthcare services. Moody's estimates that Manor Care recognized revenue of about $3.8 billion for the twelve months ended June 30, 2007. MARICOPA COUNTY: Moody's Holds Ba1 Rating on $10.9 Mil. Bonds ------------------------------------------------------------- Moody's Investors Service affirmed the Ba1 rating on $10.9 million Maricopa County (Arizona) Industrial Development Authority Multifamily Housing Revenue Bonds (Sun King Apartments Project) Series 2000 A & B. About $3.9 million in Multifamily Housing Revenue Bonds (Sun King Apartments Project) Subordinate Series 2000C remains unrated by Moody's. Legal Security The bonds are secured by revenues derived from operations of the Sun King and Casa Castillo projects, 375 affordable units in total, located in Scottsdale and Phoenix, Arizona. The bonds are further secured by other funds pledged under the indenture. Strengths According to our review of 2007 audited financial statements for both apartment projects, debt service coverage has improved somewhat from 1.30 to about 1.41 times. This is up materially from the 2005 DSC ratio of 1.20. The improvement in financial performance stems mainly from a decrease in vacancy and concessions, boosting revenue during 2007. There have been no taps to debt service reserves. The Replacement & Reserve account has a balance of $246,737, or $658 per unit, which is up $200 per unit from the 2006 year end balance. The Loan to Value for this project is only 58% and value is about five times NOI. Challenges Although vacancy has decreased considerably over the past year, more time is needed in order to identify this as a trend for the project. While management seems to have the ability to keep expenses relatively stable, vacancy has been perceptibly volatile over the past five years. According to MoodysEconomy.com, the Phoenix single family market is significantly overpriced and oversupplied. While this could lead to increased demand for affordable housing in the short term, it could also lead to longer term volatility in the Phoenix market generally with possible adverse effects for multifamily units. Both Sun King and Casa Castillo are relatively older properties, built in 1973 and 1968, respectively. Outlook The outlook on the bonds has been moved to stable from negative. The financial position of the project has improved, and Moody's believes that the project can maintain Ba1-level coverage ratios in the near term despite some projected volatility for the Phoenix/Scottsdale housing markets. However, Moody's would like to see further evidence of financial improvement for this property, sustained high occupancy rates, and stability in expenses before considering a positive outlook or upgrade from the current rating level. What could change the rating - Up? Several periods of substantial debt service coverage growth, especially as a result of stable occupancy and low concession levels, coupled with evidence of stabilization in the housing submarket. What could change the rating - Down? Increase in expenses or volatility in revenue that leads to a deterioration of the debt service coverage level. MASSEY ENERGY: Earns $21.4 Mil. in Third Quarter Ended Sept. 30 --------------------------------------------------------------- Massey Energy Company reported third quarter 2007 net income of $21.4 million. These results compare to the third quarter 2006 net income of $24.2 million which included a $30 million pre-tax gain on the sale of reserves. The third quarter earnings were generated on produced coal revenue of $521.9 million which increased 13% compared to the same period last year as a result of higher total sales volume overall, and significantly higher sales of metallurgical and industrial coal. EBITDA in the third quarter of 2007 was $96.2 million compared to $104.2 million in the third quarter of 2006. Massey's third quarter operating cash margin of $7.49 per ton represented an increase of 10% compared to the operating cash margin of $6.79 per ton reported in the third quarter of 2006. The increase was driven largely by improved product mix. Sales of metallurgical and industrial coal were particularly strong with a 23% and 20% increase in tons sold respectively compared to the third quarter of 2006. "We are pleased with the solid results we were able to achieve in the quarter and in the first nine months of the year," said Don Blankenship, Massey's chairman and chief executive officer. "Our cash costs remain among the lowest of all Central Appalachia coal producers and we continue to leverage the quality and diversity of our reserves to take advantage of new and increasing opportunities in the metallurgical coal market. We are on pace to have a record year in terms of revenue, EBITDA and earnings per share." The company's third quarter 2007 income tax expense includes a tax benefit of $4.6 million for the release of a valuation allowance previously recorded against a deferred tax asset. The valuation allowance was released after the completion of an IRS audit in which it was determined that a net operating loss could be realized by carrying back to a prior year. At Sept. 30, 2007, the company's consolidated balance sheet showed $2.84 billion in total assets, $2.08 billion in total liabilities, and $762.8 million in total shareholders' equity. Liquidity and Capital Resources Massey ended the month of September 2007 with available liquidity of $450.7 million, an increase of $15.1 million over June 30, 2007, available liquidity. Available liquidity at Sept. 30, 2007, included $114.0 million available on its asset-based revolving credit facility and $336.7 million in cash. Total debt at Sept. 30, 2007 was $1.104 billion. During the third quarter, Massey repurchased 1,575,800 shares of its stock in the open market at an average price of $19.01 per share. In total, $30 million was returned to shareholders through stock repurchase in the quarter. Since the share repurchase plan was approved by the Board of Directors in November of 2005, Massey has repurchased 2.9 million shares representing approximately 3.5% of its outstanding shares. After deducting available cash of $336.7 million and restricted cash of $105.1 million, which supports letters of credit, net debt totaled $662.6 million. Capital expenditures totaled $60.1 million in the third quarter of 2007 compared to $76.9 million in the third quarter of 2006 and $196.8 million in the first nine months of 2007 compared to $238.5 million in the first nine months of 2006. Litigation Update Subsequent to the third quarter, Massey resolved a legal dispute with Virginia Electric and Power Company. Terms and conditions of the resolution were not disclosed. The financial impact was included in the third quarter 2007 financial results. Massey is continuing the process in the appeal of the jury decision and awarded damages in the Wheeling-Pittsburgh Steel lawsuit. In order to preserve its appeal position, Massey posted an appeal bond with the court in the amount of $50 million on Oct. 25, 2007. The timing for an appeal hearing of the case by the West Virginia Supreme Court of Appeals or possible final resolution is uncertain. About Massey Energy Headquartered in Richmond, Virginia, Massey Energy Company (NYSE: MEE) -- http://www.masseyenergyco.com/-- is a coal producer with operations in West Virginia, Kentucky and Virginia. * * * As reported in the Troubled Company Reporter on June 25, 2007, Standard & Poor's Ratings Services revised its outlook on Massey Energy Co. to stable from developing and affirmed its 'B+' corporate credit and other ratings on the company. MEDFORD CROSSINGS: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Lead Debtor: Medford Crossings North L.L.C., 201-A Berlin Road Cherry Hill, NJ 08034 Bankruptcy Case No.: 07-25115 Debtor-affiliates filing separate Chapter 11 petitions on Oct. 25, 2007: Entity Case No. ------ -------- Medford Crossings North Urban Renewal, LLC 07-25587 Medford Crossings South Urban Renewal, LLC 07-25591 L.L.C. Debtor-affiliates filing separate Chapter 11 petitions on October 17, 2007: Entity Case No. ------ -------- Medford Crossings South, L.L.C. 07-25121 Purple Tree One, L.L.C. 07-25124 Purple Tree Two, L.L.C. 07-25125 Purple Tree Three, L.L.C. 07-25126 Purple Tree Four, L.L.C. 07-25127 Purple Tree Five, L.L.C. 07-25129 Purple Tree Ten, L.L.C. 07-25131 Purple Tree Investments, L.L.C. 07-25133 F.C. Medford Residential, L.L.C. 07-25135 Chapter 11 Petition Date: October 17, 2007 Court: District of New Jersey (Camden) Debtors' Counsel: Edmond M. George, Esq. Obermayer, Rebmann, Maxwell & Hippel, L.L.P. 1617 J.F.K. Boulevard, Suite 1900 Philadelphia, PA 19103 Tel: (215) 665-3140 Fax: (215) 665-3165 Financial condition of debtor-affiliates filing separate Chapter 11 petitions on October 25, 2007: Estimated Assets Estimated Debts ---------------- --------------- Medford Crossings North $100,000 to $1 Million to Urban Renewal, L.L.C. $1 Million $100 Million Medford Crossings South $100,000 to $1 Million to Urban Renewal, L.L.C. $1 Million $100 Million Financial condition of Debtors filing separate Chapter 11 petitions on October 17, 2007: Estimated Assets Estimated Debts ---------------- --------------- Medford Crossings North, $100,000 to $1 Million to L.L.C. $1 Million $100 Million Medford Crossings South, $100,000 to $1 Million to L.L.C. $1 Million $100 Million Purple Tree One, L.L.C. $100,000 to $1 Million to $1 Million $100 Million Purple Tree Two, L.L.C. $100,000 to $1 Million to $1 Million $100 Million Purple Tree Three, L.L.C. $100,000 to $1 Million to $1 Million $100 Million Purple Tree Four, L.L.C. $100,000 to $1 Million to $1 Million $100 Million Purple Tree Five, L.L.C. $100,000 to $1 Million to $1 Million $100 Million Purple Tree Ten, L.L.C. $100,000 to $1 Million to $1 Million $100 Million Purple Tree Investments, $100,000 to $1 Million to L.L.C. $1 Million $100 Million F.C. Medford Residential, $100,000 to $1 Million to L.L.C. $1 Million $100 Million The Debtors did not file lists of their 20 largest unsecured creditors. MESA 2002-3: Moody's Junks Rating on Class B-2 Certificates ----------------------------------------------------------- Moody's Investors Service downgraded a certificate from a deal issued by MESA 2002-3 Global Issuance Company. The action is based on the analysis of the credit enhancement provided by subordination, overcollateralization, and excess spread, relative to the expected loss. Complete rating actions are: Downgrade: Issuer: MESA 2002-3 Global Issuance Company -- Class B-2, Downgraded to Caa1 from Ba2 MLCC MORTGAGE: Moody's Lowers Class B Certificate's Rating to B2 ---------------------------------------------------------------- Moody's Investors Service downgraded one certificate from MLCC Mortgage Investors Inc., Series 1999-A. The transaction is backed by first-lien adjustable-rate jumbo mortgage loans. The subordinate class from the transaction has been downgraded because existing credit enhancement levels may be low given the current projected losses on the underlying pool. Moody's complete rating actions are: Issuer: MLCC Mortgage Investors, Inc. Downgrade: -- Series 1999-A; Class B, downgraded to B2 from Ba2. MOVIE GALLERY: Can Employ Kirkland & Ellis as Lead Counsel ---------------------------------------------------------- Movie Gallery, Inc., and its debtor affiliates obtained permission from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Kirkland & Ellis, LLP, as their lead counsel. Kirkland & Ellis is expected to: (a) advise the Debtors-In-Possession with respect to their powers and duties in the continued management and operation of their business and properties; (b) advise and consult on the conduct, including all legal and administrative requirements of operating of the Chapter 11 cases; (c) attend meetings and negotiate with creditors' representatives and other parties-in-interest; (d) take all necessary action to protect and preserve the Debtors' estates, including (i) prosecute actions on the Debtors' behalf, (ii) defend any action commenced the Debtors, (iii) represent the Debtors' interests in negotiations concerning all litigation, including objections to claims filed against the Debtors' estates; (e) prepare all pleadings, including motions, applications, answers, orders, reports, and papers necessary or otherwise beneficial to the administration of the Debtors' estates; (f) represent the Debtors in connection with obtaining postpetition financing; (g) advise the Debtors on any potential sale of assets; (h) appear before the Court and any appellate courts to represent the Debtors' interests; (i) consult with the Debtors regarding tax matters; (j) take necessary action on the Debtors' behalf, to negotiate, prepare and obtain a Chapter 11 Plan and all its related documents; (k) perform all other necessary or otherwise beneficial legal services including: * analyzing the Debtors' leases and contracts, and corresponding assumptions, rejections or assignments; * analyzing the validity of liens against the Debtors; and * advising the Debtors on corporate and litigation matters. Anup P. Sathy, Esq., a partner at Kirkland & Ellis, said that the firm's professionals will be paid based on its standard hourly rates: Designation Hourly Rate ----------- ----------- Partners US$500 - US$975 Of Counsel US$380 - US$870 Associates US$275 - US$595 Paraprofessionals US$120 - US$260 Kirkland professionals expected to assume primary responsibility and provide primary services to the Debtors are: (1) Richard M. Cieri (2) Anup Sathy, P.C. (3) Marc J. Carmel Mr. Sathy disclosed that the firm received payments from the Debtors before the Petition Date: -- retainer fee of US$100,000 in November 2006; -- retainer fee of US$1,000,000 in June 2007. Pursuant to the parties' engagement letter, the Debtors have agreed to pay the firm $100,000 as advanced payment retainer. The Debtors have been required under the engagement to waive any conflict of interest in any matter not substantially related to Kirkland's work for Movie Gallery in which the firm represents another client. The engagement also provided that with respect to Musicland, conflicts counsel for Musicland will represent the company with respect to Movie Gallery's claims against it. Mr. Sathy assured the Court that his firm is a "disinterested person" as that term is defined is Section 101(14) of the Bankruptcy Code, and does not hold any adverse interest to the Debtors' estate. About Movie Gallery Based in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is a home entertainment specialty retailer. The company owns and operates 4,600 retail stores that rent and sell DVDs, videocassettes and video games. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853. Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. The U.S. Trustee for Region 4 appointed an Official Committee of Unsecured Creditors in the Debtors' bankruptcy proceedings on Oct. 18, 2007. When the Debtors' filed for protection from their creditors, they listed total assets of $891,993,000 and total liabilities of $1,419,215,000. (Movie Gallery Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) MOVIE GALLERY: Inks Lock Up Pact w/ Sopris & Consenting Lenders --------------------------------------------------------------- Movie Gallery, Inc. and its debtor-affiliates have entered into an agreement with its consenting lenders to secure the lenders' votes on the Debtors' Plan of Reorganization. The Debtors entered into a Lock Up, Voting and Consent Agreement on Oct. 14, 2007, with: (i) Sopris Capital Advisors LLC, holder of a majority of Movie Gallery, Inc.'s $325,000,000 11% senior notes and approximately $72,000,000 of the Company's $175,000,000 second lien indebtedness; and (ii) a majority of the holders of the Company's Second Lien Debt. The Lock Up Agreement obligates the Consenting Holders to, among other things, vote to support a plan of reorganization consistent with the terms set forth in the Lock Up Agreement and the Debtors' proposed restructuring term sheet, William C. Kosturos, managing director at Alvarez & Marsal North America LLC, and chief restructuring officer of Movie Gallery, Inc., disclosed in an affidavit. Through the Lock Up Agreement, holders of a majority of the 11% Senior Notes and lenders holding a majority of the debt under the Existing Second Lien Credit Agreement have committed to vote in favor of the Plan, consistent with the terms of the Plan Term Sheet. The Debtors are in negotiations with the Existing First Lien Lenders regarding the terms of an amended and restated first lien credit agreement, and the Debtors hope to reach an agreement with the Existing First Lien Lenders in the short term. The Plan Term Sheet provides, among things, that: (a) the Debtors will enter into an amended and restated first lien credit agreement; (b) the Existing Second Lien Credit Agreement will be amended to reset interest rates and modify PIK interest options and conditions according to the terms and conditions set forth on the Plan Term Sheet; (c) Sopris will convert $72,000,000 plus accrued interest in claims under the Existing Second Lien Credit Agreement into equity in the reorganized Company; (d) the Debtors' $325,000,000 11% Senior Notes will be converted into equity in the reorganized Company; and (e) Sopris will backstop a $50,000,000 rights offering to be made available pro rata to the holders of the 11% Senior Notes, the terms of which backstop commitment are set forth in a Rights Offering Term Sheet, attached to the Lock Up Agreement. Overall, the proposed Plan would (i) reduce the Debtors' total indebtedness by roughly $400,000,000, (ii) be expected to improve cash flows by significantly reducing on-going interest expense, and (iii) provide additional capital to facilitate the implementation of the Debtors' business plan, Mr. Kosturos explained. As a condition to the Lock Up Agreement, the Debtors have committed to file a plan and a disclosure statement within 30 days after the Petition Date. A full-text copy of the Lock Up Agreement is available for free at http://researcharchives.com/t/s?248a About Movie Gallery Based in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is a home entertainment specialty retailer. The company owns and operates 4,600 retail stores that rent and sell DVDs, videocassettes and video games. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853. Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kurtzman Carson Consultants LLC. The U.S. Trustee for Region 4 appointed an Official Committee of Unsecured Creditors in the Debtors' bankruptcy proceedings on October 18. When the Debtors' filed for protection from their creditors, they listed total assets of $891,993,000 and total liabilities of $1,419,215,000. (Movie Gallery Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) MOVIE GALLERY: Section 341(a) Creditors Meeting on December 13 -------------------------------------------------------------- The U.S. Trustee for Region 4, W. Clarkson McDow, Jr., will convene a meeting of creditors in the Chapter 11 cases of Movie Gallery, Inc., Hollywood Entertainment Corporation, M.G. Digital, LLC, M.G.A. Realty I, LLC, MG Automation LLC, and Movie Gallery US, LLC, on Dec. 13, 2007, at 2:00 p.m. The meeting will be held at 600 East Main Street, Suite 120, in Richmond, Virginia. This is the first meeting of creditors required under 11 U.S.C. Section 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtors under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About Movie Gallery Based in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is a home entertainment specialty retailer. The company owns and operates 4,600 retail stores that rent and sell DVDs, videocassettes and video games. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853. Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. The U.S. Trustee for Region 4 appointed an Official Committee of Unsecured Creditors in the Debtors' bankruptcy proceedings on Oct. 18, 2007. When the Debtors' filed for protection from their creditors, they listed total assets of $891,993,000 and total liabilities of $1,419,215,000. (Movie Gallery Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) NAVISTAR INT'L: In Talks to Acquire GM's Medium Truck Business -------------------------------------------------------------- Navistar International Corp. is in discussions with General Motors Corp. about a plan for Navistar to acquire GM's medium-duty truck business, including the rights to manufacture GMC and Chevrolet brand trucks. Under this proposal, Navistar would sell a competitive line of Chevrolet and GMC medium trucks and service parts through GM's proprietary dealer network in the United States and Canada. This agreement would leverage Navistar's strengths in commercial trucks and engines, and advance its strategy to build scale and reduce costs. "An agreement with GM could become an important part of our growth strategy as we leverage our core strengths in commercial trucks and engines," Daniel C. Ustian, Navistar chairman, president and chief executive officer, said. "General Motors would entrust Navistar to support two of its most important brands because of the depth of our experience and success in the medium truck business." Headquartered in Warrenville, Illinois, Navistar International Corporation (Other OTC: NAVZ) -- http://www.Navistar.com/-- is a holding company whose wholly owned subsidiaries produce International(R) brand commercial trucks, MaxxForce brand diesel engines, IC brand school and commercial buses, and Workhorse brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service. Another wholly owned subsidiary offers financing services. * * * As reported in the Troubled Company Reporter on Sept. 11, 2007, Standard & Poor's Ratings Services said that its 'BB-' corporate credit ratings on North American truck and diesel engine producer Navistar International Corp. and subsidiary Navistar Financial Corp. remain on CreditWatch with negative implications, where they were placed on Jan. 17, 2006. NAVISTAR INT'L: Releases Restated 2003-2005 Financial Data ---------------------------------------------------------- Navistar International Corp. released summary preliminary and unaudited results for fiscal years ended Oct. 31, 2003, 2004 and 2005, marking progress toward becoming a current filer with the Securities and Exchange Commission. Navistar's senior management also provided the company's third quarter 2007 operating metrics and reaffirmed its commitment to 2009 growth and pro forma segment margin targets. "We've reached the point in our restatement process where we can review many of our key financial indicators with investors and analysts," Daniel C. Ustian, Navistar chairman, president and chief executive officer, said. "This is a significant milestone toward becoming current in our SEC filings and toward the relisting of our stock on a major exchange. We are committed to thorough and accurate financial reporting for our shareholders and investment community and to guide our business decisions." Mr. Ustian emphasized the company's commitment to its 2009 financial targets: $15 billion in revenue and $1.5 billion pro forma segment margins. "Our unwavering focus is on producing great products, improving the competitiveness of our cost structure and generating profitable growth for our shareholders," he said. "Nothing in the restatement effects will hinder us from maintaining that focus and delivering on our targets." The company's pre-tax restatement adjustments total negative $1.12 billion during the restatement period of 2003 and prior, 2004 and the first three quarters of 2005. In addition, the company recorded $874 million in income tax adjustments, including a full valuation allowance for deferred tax assets. Included in the $1.12 billion are warranty reserve increases of $321 million, representing the largest change to operational results. During an investor and analyst meeting, Mr. Ustian detailed recent warranty performance improvements and committed to report the company's warranty expense progress on a quarterly basis. Navistar Strengthens Financial Control Environment Management has assessed the effectiveness of Navistar's internal controls over financial reporting and identified a number of material weaknesses. This assessment determined a need to establish stronger awareness regarding consistent application of highly ethical standards across all areas of the company, the importance of internal controls over financial reporting and strict adherence to generally accepted accounting principles. To address these issues, the company has developed a broad and aggressive plan to reinforce within its culture the importance of ethics, integrity and working in a manner consistent with the company's seven core values, including accountability and communication. "Our leadership team is committed to strengthening our control environment and reemphasizing the importance of operating within our values and guiding behaviors, which are grounded in simply doing the right thing," Mr. Ustian said. "We are actively engaged in implementing comprehensive remediation efforts to address these control deficiencies." "We are continuing to strengthen our company's financial reporting and internal control environment," Bill Caton, executive vice president and chief financial officer, said. "Navistar's reputation is one of its greatest assets and is the basis upon which we build the trust of our shareholders, our customers, our business partners and our employees. We have taken significant measures to rebuild an effective internal control environment, and we expect to continue to aggressively invest in this area in the coming years." Among actions taken to strengthen its financial processes, the company has: * hired more than 50 additional accounting employees; * strengthened its finance and accounting leadership; * realigned its finance and accounting reporting structure; and * hired a new vice president of internal audit, a new chief accounting officer and a new chief information officer. Additionally, Navistar has enhanced company-wide communication regarding the importance of accurate financial reporting and a robust control environment. In addition to management's own assessment, a thorough investigation has been conducted by an independent law firm. Initiated by an independent committee of Navistar's board of directors, the investigation echoed the findings of management regarding the internal control environment and determined that most of the errors corrected in the restatement were due to lack of proper accounting knowledge, which resulted in the misapplication of GAAP. The independent investigation also identified instances of intentional misconduct that resulted in some of the company's smaller, but in some cases material, restatement adjustments. Most of the individuals who were involved in instances of misconduct are no longer employed by the company. In other instances, the independent committee of the board has implemented appropriate remediation plans. Non-Traditional Business Drives Growth Mr. Ustian also detailed the company's third quarter 2007 operating results in an extremely weak North American truck market. The company expects industry volumes of 316,000 medium and heavy trucks and school buses sold in the U.S. and Canada for its fiscal year ending Oct. 31, 2007, a 30% overall decline from the record 454,500 units shipped in fiscal 2006. Navistar's worldwide shipments of school buses, Class 6-7 medium trucks and Class 8 heavy trucks and non-traditional vehicles for the third quarter 2007 were 23,700 units, down 39.5% from the 39,200 units delivered in the corresponding quarter one year ago. Importantly, Navistar's non-traditional new business is providing a lift to the company's revenues. Expansion market shipments in the third quarter totaled 10,000 units, a gain of 22% over year earlier shipments of 7,900 units. Since May 2007, the company has secured more than $1.6 billion in contracts with the U.S. Armed Services for military vehicles and parts support. Last week, the U.S. Marine Corp awarded Navistar a contract for an additional 1,000 International(R) MaxxPro(TM) mine-resistant ambush-protected vehicles, bringing Navistar's total MRAP orders to 2,971 since first awarded a contract in May 2007. In just two full months of production, Navistar has delivered 188 MaxxPros to the military (77 in August and 111 in September) and is on track to achieve its production goal of 500 a month in February 2008. About Navistar International Corporation Headquartered in Warrenville, Illinois, Navistar International Corporation (Other OTC: NAVZ) -- http://www.Navistar.com/-- is a holding company whose wholly owned subsidiaries produce International(R) brand commercial trucks, MaxxForce brand diesel engines, IC brand school and commercial buses, and Workhorse brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service. Another wholly owned subsidiary offers financing services. * * * As reported in the Troubled Company Reporter on Sept. 11, 2007, Standard & Poor's Ratings Services said that its 'BB-' corporate credit ratings on North American truck and diesel engine producer Navistar International Corp. and subsidiary Navistar Financial Corp. remain on CreditWatch with negative implications, where they were placed on Jan. 17, 2006. NAVISTAR INTERNATIONAL: S&P Retains Negative Watch on Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services said that its 'BB-' corporate credit ratings on North American truck and diesel engine producer Navistar International Corp. and subsidiary Navistar Financial Corp. remain on CreditWatch with negative implications, where they were placed on Jan. 17, 2006. S&P placed the ratings on CreditWatch because of delays in the company's filing of audited financial statements. The CreditWatch update follows a number of developments at Navistar this week, notably: * A strike by the United Auto Workers at nine Navistar plants; * The company's announcement that it is in talks to acquire General Motors Corp.'s (GM; B/Stable/B-3) medium-duty truck business; and * The company's release of preliminary unaudited restated results for fiscal 2003-2005 and operating measures for its fiscal third quarter ended July 31, 2007. While Navistar carries out its restatement process and attempts to address its internal control material weaknesses, Standard & Poor's will continue to monitor the company's liquidity and other developments--including the commercial truck downturn, UAW strike, and potential GM acquisition--and will evaluate their impact on the ratings. "We expect that the ratings will remain on CreditWatch until Navistar is current with all SEC financial reporting requirements," said Standard & Poor's credit analyst Gregg Lemos Stein. "We expect to affirm the ratings once this occurs and if Navistar's prospects are not materially different from expectations. However, we could lower the ratings if new accounting issues come to light that hurt Navistar's liquidity or differ from our expectations, or if financial results deteriorate materially as a result of an extended downturn in the commercial truck market." NEW YORK RACING: Wants Exclusive Plan-Filing Period Extended ------------------------------------------------------------ The New York Racing Association Inc. asks the Honorable James M. Peck of the United States Bankruptcy Court for the Southern District of New York for permission to further extend the exclusive periods to: a. file a Chapter 11 plan until March. 14, 2008; and b. solicict acceptances of that plan until May 13, 2008. As reported in the Troubled Company Reporter of Aug. 8, 2007, Judge Peck shortened the Debtor's request for extension of its exclusive periods to file a plan of reorganization, until Nov. 15, 2007, instead of Jan. 15, 2008. The Debtor tells the Court that it has an urgent to resolve certain settlement issues with the State of New York, which are incorporated in the Debtor's disclosure statement explaining its Chapter 11 plan dated Oct. 23, 2007, before it can proceed with the formulation and confirmation of a plan. The Debtor said in a court document filing that New York State Governor Eliot Spitzer recommends to the New York State Legislature on Sept. 4, 2007, that the Debtor should be awarded the franchise for an additional 30 years. In connection with Governer Spitzer's recommendation, the Debtor and the State signed a memorandum of understanding, which outlines the major terms of the agreement under which the Debtor will retain the franchise. The Debtor said that the current franchise to operate racing at its racetrack is scheduled to expire on Dec. 31, 2007. Judge Peck set Nov. 20, 2007, at 10:00 a.m., Courtroom 601 to consider the Debtor's request. About New York Racing Based in Jamaica, New York, The New York Racing Association Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in Aqueduct, Belmont Park and Saratoga. The company filed for chapter 11 protection on Nov. 2, 2006 (Bankr. S.D.N.Y. Case No. 06-12618). Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, Henry C. Collins, Esq., at Cooper, Erving & Savage LLP, and Irena M. Goldstein, Esq., at Dewey Ballantine LLP represent the Debtor in its restructuring efforts. Jeffrey S. Stein of The Garden City Group Inc. serves as the Debtor's claims and noticing agent. The U.S. Trustee for Region 2 appointed an Official Committee of Unsecured Creditors and Edward M. Fox, Esq., Eric T. Moser, Esq., and Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Preston Gates Ellis LLP, represent the Committee. When the Debtor sought protection from its creditors, it listed more than $100 million in total assets and total debts. NY RACING: New York State to Provide $75 Million Under Plan ----------------------------------------------------------- The New York Racing Association Inc. delivered to the United States Bankruptcy Court for the Southern District of New York its Chapter 11 Plan of Reorganization and Disclosure Statement describing that Plan. Overview of the Plan The Plan incorporates a proposed compromise and settlement of these issues disputed between the Debtor and the State of New York including, among others: a. State's motion to dismiss the Debtor's bankruptcy case; b. adversary litigation; and c. proofs of claims filed by the State against the Debtor's estate. Salient provisions of the settlement agreement: i. The State and the Debtor will enter into the franchise agreement that provides the Debtor with franchise from Jan. 1, 2008 to Dec. 31, 2037. ii. The adversary litigation will be dismissed with prejudice. iii. The State's request to dismiss will be withdrawn. iv. The Debtor will transfer all of its right, title and interest in the racetracks to the State. v. The State will provide up to $75,000,000 to allow the Debtor to satisfy all valid claims. Treatment of Claims Under the Plan, Administrative, Priority Tax and Priority Non-Tax Claims will be paid in cash in full. On the effective date, each holder of Secured Claim will be entitled to receive, either: a) cash payment in full; b) sale proceeds of the property securing its claim; c) surrender of the property securing its claim; or d) other distribution necessary to satisfy the requirments of the Bankruptcy Code. Each holder of General Unsecured Claims will be entitled to receive an amount equal to the holder's pro rata share of the cash available for distribution. Holders are expected to recover 100% under the Plan. Subject to certain exceptions, the Debtor tells the Court that the Unsecured Creditors whose allowed claim is more than $10,000, has the option to reduce the amount to at least $10,000 and entitled to receive cash in equal to the amount of the allowed convenience claim on the effective date. Holders of Insured Litigation Claims will be entitled to proceed with the liquidation of their claim, including any litigation pending as of the Debtor's bankruptcy filing. Pension Benefit Guaranty Corporation's claim will be withdrawn on the effective date upon the payment of approximately $17,400,000 into the pension benefit plan, and in turn, the Debtor will assume the benefit plan and obligation of contributing sponsor under ERISA. Holders of Convenience Claims will be entitled to receive cash in an amount equal to the amount of its claim. In the alternative, each holders may elect to be treated as General Unsecured Claim and receive its pro rata share of the cash available for distribution. Penalty Claims will receive its pro rata share of cash available for distribution under the Plan. Equity Interest and State Claim holders will not be entitled to receive or retain any property under the Plan. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=071026012415 A full-texy copy of the Chapter 11 Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=071026012643 About New York Racing Based in Jamaica, New York, The New York Racing Association Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in Aqueduct, Belmont Park and Saratoga. The company filed for chapter 11 protection on Nov. 2, 2006 (Bankr. S.D.N.Y. Case No. 06-12618). Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, Henry C. Collins, Esq., at Cooper, Erving & Savage LLP, and Irena M. Goldstein, Esq., at Dewey Ballantine LLP represent the Debtor in its restructuring efforts. Jeffrey S. Stein of The Garden City Group Inc. serves as the Debtor's claims and noticing agent. The U.S. Trustee for Region 2 appointed an Official Committee of Unsecured Creditors and Edward M. Fox, Esq., Eric T. Moser, Esq., and Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Preston Gates Ellis LLP, represent the Committee. When the Debtor sought protection from its creditors, it listed more than $100 million in total assets and total debts. OWNIT MORTGAGE: Fitch Junks Ratings on Two Certificate Classes -------------------------------------------------------------- Fitch Ratings took these rating actions on Ownit Mortgage Loan Trust series 2005-2. Affirmations total $231.3 million and downgrades total $84.1 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: OWNIT 2005-2 -- $86.6 million class A affirmed at 'AAA' (BL: 86.45, LCR: 5.37); -- $42.9 million class M-1 affirmed at 'AA+' (BL: 68.64, LCR: 4.26); -- $37.6 million class M-2 affirmed at 'AA+' (BL: 56.49, LCR: 3.51); -- $22.9 million class M-3 affirmed at 'AA' (BL: 50.28, LCR: 3.12); -- $21.7 million class M-4 affirmed at 'AA' (BL: 43.76, LCR: 2.72); -- $19.4 million class M-5 affirmed at 'AA-' (BL: 37.94, LCR: 2.36); -- $19.4 million class M-6 downgraded to 'BBB' from 'A+' (BL: 19.39, LCR: 1.2); -- $16.4 million class B-1 downgraded to 'BB+' from 'A' (BL: 17.04, LCR: 1.06); -- $15.2 million class B-2 downgraded to 'BB-' from 'A-' (BL: 14.86, LCR: 0.92); -- $12.9 million class B-3 downgraded to 'B' from 'BBB+' (BL: 13.01, LCR: 0.81); -- $8.2 million class B-4 downgraded to 'CC/DR2' from 'BBB+' (BL: 11.91, LCR: 0.74); -- $11.7 million class B-5 downgraded to 'CC/DR3' from 'BBB' (BL: 10.78, LCR: 0.67) Deal Summary -- Originators: 100% Ownit Mortgage -- 60+ day Delinquency: 23.65%; -- Realized Losses to date (% of Original Balance): 1.27%; -- Expected Remaining Losses (% of Current Balance): 16.09% -- Cumulative Expected Losses (% of Original Balance): 5.76% The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2006 and late 2005 with regard to continued poor loan performance and home price weakness. -- 'Downgrade Criteria for Recent Vintage U.S. Subprime RMBS' (Aug. 8, 2007); -- 'U.S. Subprime RMBS/HEL Upgrade/Downgrade Criteria' (June 12 ,2007). PANOLAM INDUSTRIES: Commences Exchange Offer for 10-3/4% Notes -------------------------------------------------------------- Panolam Industries International Inc. has commenced an exchange offer for all of its outstanding 10-3/4% Senior Subordinated Notes due 2013, for the same aggregate principal amount of registered 10-3/4% Senior Subordinated Notes due 2013, pursuant to an effective registration statement on Form S-4 filed with the Securities and Exchange Commission. The exchange offer will expire at 5:00 p.m., New York City Time, on Nov. 23, 2007, unless extended. Tenders of the old notes must be made before the exchange offer expires and may be withdrawn at any time before the exchange offer expires. Documents describing the terms of the exchange offer, including the prospectus and transmittal materials for making tenders, can be obtained from the exchange agent: Wells Fargo Bank N.A. Corporate Trust Operations Sixth and Marquette, MAC N9303-121 Minneapolis, MN 55479 Tel (800) 344-5128 About Panolam Industries International Inc. Based in Shelton, Connecticut, Panolam Industries International Inc. -- http://www.panolam.com/-- is a designer, manufacturer and distributor of decorative laminates used in a variety of commercial and residential indoor surfacing applications in the United States and Canada. In addition to decorative laminates, the company also manufactures and distributes industrial laminate products and specialty resins for industrial uses. * * * Moody's Investor Service placed Panolam Industries International Inc.'s senior subordinate rating at 'Caa1' in August 2005. The rating still holds to date with a negative outlook. PERKINELMER INC: Earns $30.7 Million in Quarter Ended Sept. 30 -------------------------------------------------------------- PerkinElmer Inc. reported net income of $30.7 million for the third quarter ended Sept. 30, 2007. For the third quarter 2007, the company reported earnings per share from continuing operations of $0.26. Revenue for the third quarter 2007 was $435.7 million, an increase of 13% versus the third quarter 2006. Revenue growth was 13% in Life and Analytical Sciences and 13% in Optoelectronics, compared to the same period last year. Operating profit was $45.8 million for the third quarter of 2007, compared to $36.5 million for the same period a year ago. The company generated cash flow from operations of $23.4 million in the third quarter 2007. Capital expenditures were $10.5 million in the third quarter 2007, an increase of 10% over the same period of 2006. In addition, the company repurchased 1.1 million shares of its common stock for a cost of about $28.9 million in the third quarter 2007. This leaves about 2.9 million shares remaining of the company's stock repurchase program. At Sept. 30, 2007, the company had cash and cash equivalents of $160.9 million and net debt (defined as long term debt plus short term debt, less cash and cash equivalents) of $86.1 million. As of Sept. 30, 2007, the company reported total assets of $2.6 billion, total liabilities of $1.1 billion, and total stockholders' equity of $1.5 billion. Full-text copies of the company's financials are available for free at http://ResearchArchives.com/t/s?2494. "We are very pleased with our revenue growth and margin expansion for the quarter. Our investments in new products, services and geographic expansion continue to yield attractive results. Additionally, we announced our pending acquisition of ViaCell, which we believe should further strengthen our genetic screening business by expanding our capabilities in neonatal health," said Gregory L. Summe, chairman and CEO of PerkinElmer Inc. "We expect our positive operational and financial momentum to continue through the balance of 2007." Financial Guidance For the fourth quarter 2007, the company projects revenue to increase in the mid teens with acquisitions and changes in foreign exchange rates contributing about 7%. The company expects to earn GAAP earnings per share of between $0.36 and $0.38, and on a non- GAAP basis, which is expected to include the adjustments noted in the attached reconciliation, adjusted earnings per share in the range of $0.43 and $0.45. In addition, assuming a mid-November closing of the pending ViaCell acquisition, the transaction is expected to contribute in the fourth quarter an incremental 200 basis points to the company's revenue growth and $0.01 dilution, resulting in non-GAAP adjusted combined earnings per share of between $0.42 and $0.44. The non-GAAP adjusted combined earnings per share is expected to include the adjustments noted in the attached reconciliation. About PerkinElmer Inc Headquartered in Waltham, Massachussetts, PerkinElmer Inc. (NYSE:PKI) -- http://www.perkinelmer.com/-- is a provider of scientific instruments, consumables and services to the pharmaceutical, biomedical, environmental testing and general industrial markets, commonly referred to as the health sciences and photonics markets. The company designs, manufactures, markets and services products and systems within two business segments: Life and Analytical Sciences and Optoelectronics. The health sciences markets include all of the businesses in the company's Life and Analytical Sciences segment and the medical imaging business, as well as elements of the medical sensors and lighting businesses in the company's Optoelectronics segment. The photonics markets include the remaining businesses in the company's Optoelectronics segment. * * * In November 2005, Moody's placed the company's subordinate debt rating at Ba1 which still hold to date. The outlook is stable. PHARMED GROUP: Case Summary & 46 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Pharmed Group Holdings, Inc. 3075 Northwest 107th Avenue Miami, FL 33172 Bankruptcy Case No.: 07-19187 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Pharmed Services Corp. 07-19188 Pharmed Group Corp. 07-19189 Pharmed International Corp. 07-19190 P.A.L. Laboratories, Inc. 07-19191 Type of Business: The Debtors send drugs and medical supplies on Caribbean cruises. They distribute medical, rehabilitative, and surgical supplies throughout the southeastern U.S., as well as Caribbean, and Central and South American countries. They deliver products made by the likes of Dynatronics, Welch Allyn, and Smith & Nephew. In addition to their distribution businesses, they make and distribute vitamins, minerals, nutraceuticals, and dietary supplements. See http://www.pharmed.com/ Chapter 11 Petition Date: October 26, 2007 Court: Southern District of Florida Judge: Robert A. Mark Debtors' Counsel: Paul Steven Singerman, Esq. Berger Singerman, P.A. 200 South Biscayne Boulevard, Suite 1000 Miami, FL 33131 Tel: (305) 755-9500 Estimated Assets Estimated Debts ---------------- --------------- Pharmed Group Holdings, $1 Million to More than Inc. $100 Million $100 Million Pharmed Services Corp. Less than Less than $10,000 $10,000 Pharmed Group Corp. $1 Million to More than $100 Million $100 Million Pharmed International $1 Million to $1 Million to Corp. $100 Million $100 Million P.A.L. Laboratories, Inc. $1 Million to $1 Million to $100 Million $100 Million A. Pharmed Group Holdings, Inc's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Distribution R. & F. $82,669 Avenue Laurel 3 R 4 Lomas Verde Bayamon, PR 00956 B. Pharmed Services Corp. does not have any creditors who are not insiders. C. Pharmed Group Corp's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ United States Surgical Corp. $2,960,823 150 Glover Avenue Norwalk, CT 06856 Arjo, Inc. $1,432,426 50 North Gary Avenue Rosells, IL 60172 Baxter D.M.G. $1,339,747 21179 Network Place Chicago, IL 60673-1211 Medline $1,162,202 1 Medline Place Mundelein, IL 60060-4486 Sammons Preston, Inc. $878,826 1000 Remington Road, Suite 210 Bolingbrook, IL 60440 Energizer/Eveready Battery Co. $470,875 P.O. Box 537 Neenah, WI 54957-0537 Mallinckrodt Medical $431,559 Respiratory Division St. Louis, MO 63042 Steris Corp. $369,808 5960 Heisley Road Mentor, OH 44060 Huntleigh Healthcare $338,293 40 Christopher Way Eatontown, NJ 07724-3327 Kendall Healthcare Products $266,281 15 Hampshire Street Mansfield, MA 02048 Becton-Dickinson Medical $251,300 One Becton Drive Franklin Lakes, NJ 07417 C.R. Bard/C-O Wachovia $251,263 10301 David Taylor Drive Charlotte, NC 28262 Liko North America $228,640 E.M.P.I., Inc. $209,995 Lionville Systems, Inc. $205,711 Medgluv, Inc. $201,886 Deroyal Industries, Inc. $198,185 Vital Signs, Inc. $190,219 Gambro, Inc. $186,096 Allegiance/Cardinal Health $183,894 Division D. Pharmed International Corp's Four Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Desmond Wallace $3,315 215 St. Vincent Avenue Nassau Crowley Logistics, Inc. $303 9950 Northwest 17th Street Miami, FL 33172 D.H.L. Airways, Inc. $146 P.O. Box 78016 Phoenix, AZ 85062-8016 D.H.L. Worldwide Express $27 E. P.A.L. Laboratories, Inc's 21 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ I.M.A. North America, Inc. $639,489 211 Sinclair Street Bristol, PA 19007 Banner Pharmacaps $282,094 6060 Paysphere Circle Chicago, IL 60674 Tricorbraun $172,234 12462 Collections Center Chicago, IL 60674 International Labs, Inc. $157,936 Wakunaga of America, Co., $146,438 Ltd. Cardinal Distribution $125,320 A to Z Nutrition $111,947 International Generic Pharmaceutical S.E. $97,468 Shanghai Freeman Americas $92,700 Qingdao Huayan Fine Bio. $83,475 Wright Enrichment, Inc. $71,450 Advanced Botanical Consul. $68,768 A.I.D.P., Inc. $68,706 Contract Coating, Inc. $66,166 Gourmet Mushrooms, Inc. $63,253 Mediafarm Productions $53,306 Florida Power and Light $50,991 General Mail Facility Premier Health Concepts $45,150 Unigen $41,250 All American Containers I $39,000 QUALITEST PHARMACEUTICALS: S&P Assigns 'B' Corp. Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Qualitest Pharmaceuticals. The outlook is stable. The ratings on Huntsville, Alabama-based generic drug maker Qualitest reflect the company's limited size and scale, narrow product portfolio, and high initial debt leverage. "The company's niche position in the highly profitable generic pain medications segment partially offsets these negative factors," explained Standard & Poor's credit analyst Arthur Wong. At the same time, Standard & Poor's assigned its loan and recovery ratings to Generics International Inc.'s first-lien secured financing, consisting of a $75 million revolver maturing in 2013, a $27 million delayed draw term loan maturing in 2014, and a $265 million term loan maturing in 2014. The first-lien debt is rated 'B+' with a recovery rating of '2', indicating expectation of substantial (70%-90%) recovery in the event of a payment default. S&P also assigned loan and recovery ratings to Generic International's $140 million second-lien term loan maturing in 2014. The senior secured debt is rated 'CCC+' with a recovery rating of '6', indicating expectation of negligible (0%-10%) recovery in the event of a payment default. Generics International is the holding company of Qualitest. Proceeds from the facilities will be used to finance the buyout of Qualitest Pharmaceuticals by funds advised by equity sponsor Apax Partners; to fund capital expenditures, permitted acquisitions, and exceptionals associated with restructuring; and to fund working capital and other general corporate purposes. The sponsor is also contributing over $508 million in equity, mainly in the form of preferred stock. REDDY ICE: Earns $16.6 Million in Third Quarter Ended Sept. 30 -------------------------------------------------------------- Reddy Ice Holdings Inc. reported financial results for the third quarter and nine months ended Sept. 30, 2007. Net income was $16.6 million in the third quarter of 2007 versus $15.1 million in 2006. Revenues for the third quarter of 2007 were $125.7 million, compared to $123.3 million in the same quarter of 2006. The company's income from continuing operations was $15.6 million in the third quarter of 2007, compared to $17.0 million in the same quarter of 2006. Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization, and the effects of certain other items, was $44.0 million in the third quarter of 2007, compared to $42.5 million in the third quarter of 2006. Adjusted EBITDA from continuing operations was $43.5 million in the third quarter of 2007 versus $41.9 million in 2006. Available Cash was $28.3 million for the third quarter of 2007, compared to $34.5 million in the third quarter of 2006. "Weather conditions returned to more typical patterns in the second half of the third quarter. As a result of these improvements and the effects of acquisitions, we were able to post a modest increase in results as compared to the third quarter of 2006. Although weather conditions and results in September were better than 2006, they did not fully meet our expectations, which necessitates a further reduction in our full year 2007 guidance," commented chief executive officer Jimmy C. Weaver. "We continue to believe that the fundamentals of the business remain solid and that we are well positioned to take advantage of improving weather trends and our ongoing internal operating initiatives." Nine Month Results Revenues in the first nine months of 2007 were $274.8 million, compared to $275.7 million in 2006. The company's income from continuing operations was $16.1 million in the first nine months of 2007, compared to $20.8 million in 2006. Net income in the first nine months of 2007 was $17.0 million, compared to $19.5 million in 2006. Adjusted EBITDA was $76.8 million in the first nine months of 2007, compared to $80.3 million in the first nine months of 2006. Adjusted EBITDA from continuing operations was $75.8 million in the first nine months of 2007 versus $78.1 million in 2006. Available Cash for the first nine months of 2007 was $42.6 million, compared to $53.5 million in the first nine months of 2006. Acquisitions In connection with its ongoing acquisition strategy, the company completed four acquisitions during the third quarter of 2007, bringing the year-to-date total to seventeen. These seventeen acquisitions had an aggregate acquisition cost of approximately $21.8 million. Annual revenues and adjusted EBITDA associated with these acquisitions are approximately $14.7 million and $4 million, respectively. Sale of Bottled Water Business The company sold its bottled water business and substantially all of its cold storage business during the third quarter of 2007 for total gross cash proceeds of $20.3 million and a total gain of $1.4 million. The historical results of these businesses are now presented as "Discontinued Operations". About Reddy Ice Headquartered in Dallas, Texas, Reddy Ice Holdings Inc. (NYSE: FRZ) -- http://www.reddyice.com/-- is a manufacturer and distributor of packaged ice in the United States. With over 2,000 year-round employees, the company sells its products primarily under the widely known Reddy Ice(R) brand to approximately 82,000 locations in 31 states and the District of Columbia. * * * As reported in the Troubled Company Reporter on July 5, 2007, Moody's Investors Service placed these ratings under review for possible downgrade: (i) corporate family rating, rated B1; (ii) PDR, rated B1; and (iii) $151MM, 10.5% Sr. Disc. Notes due 2012, rated B3 (LGD5, 89%). REYNOLDS AMERICAN: Earns $358 Mil. in 3rd Quarter Ended Sept. 30 ---------------------------------------------------------------- Reynolds American Inc. reported results for its third quarter and nine months ended Sept. 30, 2007. The company reported net income of $358 million on net sales of $2.297 billion for the third quarter ended Sept. 30, 2007, compared with net income of $309 million on net sales of $2.190 billion for the same period last year. For the nine-month period, net income was $1.011 billion on net sales of $6.793 billion, compared with net income of $1.030 billion on net sales of $6.441 billion in the same period last year. Driving this decrease was a prior-year tax favorability of $74 million. On an adjusted basis, net income was $1.010 billion in the nine months ended Sept. 30, 2007, compared with adjusted net income of $959 million in the same period last year, with pricing and productivity gains at R.J. Reynolds and the inclusion of Conwood's strong results. "Reynolds American's third-quarter and nine-month 2007 earnings demonstrate our commitment to deliver responsible growth through innovation," said Susan M. Ivey, RAI's chairman and chief executive officer. "With operating companies that compete in virtually every tobacco category, Reynolds American is well positioned to drive and benefit from evolving consumer trends." During the quarter, R.J. Reynolds continued to strengthen its operating profits and deliver gains in total growth-brand market share. Conwood again delivered significant volume, profit and margin improvement on the strength of its Grizzly brand. "We're seeing solid performance from all of our operating companies, and we're building momentum for strong earnings growth," Ivey said. "While regulatory and competitive challenges remain, recent pricing improvement will help us achieve double- digit earnings growth for the year." At Sept. 30, 2007, the company's consolidated balance sheet showed $18.639 billion in total assets, $11.306 billion in total liabilities, and $7.333 billion in total shareholders' equity. About Reynolds American Inc. Headquartered in Winston-Salem, North Carolina, Reynolds American Inc. (NYSE: RAI) -- http://www.ReynoldsAmerican.com/-- is the parent company of R.J. Reynolds Tobacco Company; Conwood Company LLC; Santa Fe Natural Tobacco Company Inc.; and R.J. Reynolds Global Products Inc. R.J. Reynolds Tobacco Company is a U.S. tobacco company. The company's brands include six of the 10 best-selling U.S. brands: Camel, Kool, Pall Mall, Winston, Salem and Doral. Conwood Company LLC is a manufacturer of smokeless tobacco products. Its leading brands are Kodiak, Grizzly and Levi Garrett. Conwood also sells and distributes a variety of tobacco products manufactured by Lane, Limited, including Winchester and Captain Black little cigars, and Bugler roll-your-own tobacco. Santa Fe Natural Tobacco Company Inc. manufactures Natural American Spirit cigarettes and other additive-free tobacco products. R.J. Reynolds Global Products Inc. manufactures, sells and distributes American-blend cigarettes and other tobacco products to a variety of customers worldwide. * * * As reported in the Troubled Company Reporter on June 22, 2007, Moody's Investors Service affirmed Reynolds American Inc.'s Ba1 corporate family rating and its' speculative grade liquidity rating of SGL-2. The rating outlook is positive. In addition, Standard & Poor's Ratings Services assigned Reynolds American Inc.'s corporate credit rating at 'BB+', which reflects the company's participation in the contracting domestic cigarette industry, its declining shipment volumes and market share, and significant litigation risk partly offset by relatively moderate financial policies. The outlook is positive. RF MICRO: Earns $14.5 Million in Fiscal Quarter Ended Sept. 29 -------------------------------------------------------------- RF Micro Devices, Inc. reported financial results for its fiscal 2008 second quarter ended Sept. 29, 2007. The company reported net income of $14.5 million for the fiscal 2008 second quarter ended Sept. 29, 2007, compared with net income of $191.7 million for the 2007 second quarter ended Sept. 30, 2006. Quarterly revenue increased approximately 3.6% year-over-year and approximately 21% sequentially to $255.8 million. Operating income totaled approximately $8.1 million on a GAAP basis and approximately $17.2 million on a non-GAAP basis. RFMD's September 2007 quarterly performance reflected growth in all three of its business units. Revenue in the December 2007 quarter is currently expected to be in the range of $265.0 million to $280.0 million Comments From Management Bob Bruggeworth, president and chief executive officer of RF Micro Devices, said, "RFMD's record September quarterly revenue performance was driven by share gains, new product cycles, a strong customer base and a robust overall handset market. Our sequential revenue growth of approximately 21% demonstrates we are on a growth trajectory, and our growth in operating income illustrates our earnings power. "In the cellular handset market, RFMD enjoyed sequential growth during the September quarter with the leading handset manufacturers. We commenced high volume shipments of our POLARIS 3 RF solution and expanded our POLARIS customer base to include an additional top-tier handset manufacturer. We also grew sequentially in 3G front ends and extended our product leadership in 3G multimode devices. Beyond cellular, we increased shipments of wireless LAN front ends for handsets, MP3 players, gaming devices and other applications. At Sept. 29, 2007, the company's consolidated balance sheet showed $1.52 billion in total assets, $735.4 million in total liabilities, and $780.6 million in total shareholders' equity. About RFMD Headquartered in Greensboro, North Carolina, RF Micro Devices Inc. (Nasdaq: RFMD) -- http://www.rfmd.com/-- designs and manufactures radio systems and solutions for mobile communication applications. * * * Standard and Poor's assigned its B+ long term foreign and local issuer credit ratings to RF Micro Devices Inc. in 2003. The ratings still hold to date. SACO I: Moody's Downgrades Ratings on Two Certificate Classes ------------------------------------------------------------- Moody's Investors Service downgraded two classes of certificates from a deal issued by SACO I Trust 2005-GP1. The transaction is backed by Home Equity Line-Of Credit second lien loans originated by GreenPoint Mortgage Funding Inc. The projected pipeline has been continuously increasing over the past a few months and is likely to affect the credit support for these certificates. Furthermore, many underlying first lien loans are likely to have pending interest rate resets, which may cause an increase in delinquencies and defaults on the second lien loans in the pool. The certificates are being downgraded based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers at the current rating level. Complete rating actions are: Issuer: SACO I Trust 2005-GP1 -- Cl. M-2, Downgraded to B1 from Baa3 -- Cl. B-1, Downgraded to B3 from Ba1 SAMSONITE CORP: Completes $1.7 Bil. Merger w/ CVC Capital Units --------------------------------------------------------------- Samsonite Corporation completed its merger with an affiliate of funds managed and advised by CVC Capital Partners for a transaction value of approximately $1.7 billion. On July 5, 2007, an affiliate of funds managed and advised by CVC entered into a merger agreement with Samsonite to acquire Samsonite. Under the terms of the agreement, Samsonite's stockholders are entitled to receive $1.49 in cash, without interest, for each share of Samsonite's common stock. The transaction was unanimously approved by the board of directors of Samsonite. Entities controlled by Ares Management LLC, Bain Capital Partners, LLC and Teachers' Private Capital, the private investment arm of Ontario Teachers' Pension Plan, who collectively own approximately 85% of Samsonite's common stock, approved the transaction pursuant to a written consent and voting agreement with CVC. As a result of the transaction, Samsonite's common stock will cease to be quoted or traded on Nasdaq's Over The Counter Bulletin Board or other over-the-counter markets. Samsonite's stockholders who hold shares of Samsonite's common stock through a bank or broker will not have to take any action to have their shares converted into cash, since these conversions will be handled by the bank or broker. Soon as practicable, Computershare Inc., the paying agent appointed for the transaction, will send information to all Samsonite stockholders of record, explaining how they can surrender their shares of Samsonite's common stock in exchange for $1.49 per share in cash, without interest. Stockholders of record should wait to receive this information before surrendering their shares. "I am excited to continue Samsonite's successful journey to create the world's leading travel lifestyle brand together with CVC Capital Partners," Marcello Bottoli, CEO of Samsonite, said. "CVC Capital Partners is very pleased to have completed the acquisition of Samsonite, the world's leading travel lifestyle brand. We look forward to working with Marcello Bottoli and his team to realize the full potential of the business," Hardy McLain and Luigi Lanari of CVC stated. About CVC Capital Partners Headquartered in London, CVC Capital Partners - http://www.cvc.com/-- is a private equity and investment advisory firm founded in 1981. The company specializes in buyouts of firms in the UK, Western Europe, and Southeast Asia. Its portfolio of nearly 40 companies consists mainly of manufacturing and service firms, including such diverse holdings as makers of sausage casings, fishing lures, and specialty paper. The company has a network of 18 Offices and 175 employees throughout Europe, Asia and the United States. About Samsonite Corporation Based in Mansfield, Massachusetts, Samsonite Corporation (OTC Bulletin Board: SAMC.OB) -- http://www.samsonite.com/-- manufactures, markets and distributes luggage and travel-related products. The company's owned and licensed brands, including Samsonite, American Tourister, Trunk & Co, Sammies, Hedgren, Lacoste and Timberland, are sold globally through external retailers and 284 company-owned stores. Executive offices are located in London, England. The company has global locations in Aruba, Australia, Costa Rica, Indonesia, India, Japan, and the United States among others. As reported in the Troubled Company Reporter on Sept. 20, 2007, Samsonite reported total assets of $759.7 million and total liabilities of $35.6 million, resulting in $223.6 million stockholders' deficit as of July 31, 2007. The company disclosed revenue of $292.9 million, operating income of $16.8 million and net loss to common stockholders of $7 million for the quarter ended July 31, 2007. SIX LOTS: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: The Six Lots, L.L.C. 4505 Las Virgenes Road, Suite 210 Calabasas, CA 91302 Bankruptcy Case No.: 07-14064 Chapter 11 Petition Date: October 24, 2007 Court: Central District Of California (San Fernando Valley) Judge: Kathleen Thompson Debtor's Counsel: Lewis R. Landau, Esq. 23564 Calabasas Road, Suite 104 Calabasas, CA 91302 Tel: (888) 822-4340 Fax: (888) 822-4340 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. SHONO INC: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Shono, Inc. dba Specialty Hospital of New Orleans 14500 Hayne Boulevard New Orleans, LA 70128 Bankruptcy Case No.: 07-12066 Type of Business: The Debtor operates a hospital and medical center. See http://shono.org/ Chapter 11 Petition Date: October 25, 2007 Court: Eastern District of Louisiana (New Orleans) Debtor's Counsel: Gary K. McKenzie, Esq. Steffes, Vingiello & McKenzie, LLC 13702 Coursey Boulevard, Building 3 Baton Rouge, LA 70817 Tel: (225) 751-1751 Fax: (225) 751-1998 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's list of its 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Para Med Solutions, LLC $310,454 3619 18th Street Metairie, LA 70002 Prestige Care $299,534 14500 Hayne Boulevard New Orleans, LA 70128 Gulf South Medical Supplies $58,089 P.O. Box 841968 Dallas, TX 75284-1968 C&C Drugs $56,537 Triton Healthcare, Inc. $52,682 Advanced Clinical Laboratory $48,852 KCI USA $48,423 St. Bernard Drugs $41,445 Respiratory Services, Inc. $25,201 Ray Tech of New Orleans, Inc. $21,347 Jani-King of New Orleans $20,134 National Infusion Services $15,300 BMA of Metairie $15,300 Acadian Ambulance $9,474 Advantage Nursing Services, Inc. $8,558 Axis Medical, LLC $8,263 United Nursing International $7,718 Sullivan Stolier & Resor $7,073 National Pharmacy Acquisition $3,872 SOLO CUP: Fitch Holds B- Issuer Default Rating ---------------------------------------------- Fitch Ratings upgraded Solo Cup Company's bank debt and subordinated notes ratings and affirmed the IDR as: -- Issuer default rating affirmed at 'B-'; -- Senior secured first lien term loan upgraded to 'BB-/RR1' from 'B+/RR2'; -- Senior secured revolving credit facility upgraded to 'BB- /RR1' from 'B+/RR2'; -- Senior subordinated notes upgraded to 'CCC+/RR5' from 'CCC/RR6'. The Rating Outlook is revised to Stable from Negative. About $820 million of debt is covered by the ratings. The company's Canadian bank debt is excluded from the ratings. The ratings upgrades within the capital structure reflect improved expected recoveries in a distressed scenario driven by the company's substantial reduction in funded debt since the beginning of the year. Including the recent sale of the paper plate assets, the Hoffmaster business line, and pro-forma for the Japanese subsidiaries, Solo will have paid down over $370 million of senior secured debt so far this year. As a result, the senior leverage ratio test contained in the bank credit agreement has been eliminated which gives the company further financial flexibility. The meaningful debt reduction has improved estimated recoveries for the bank debt class (term loan and revolver) to the 'RR1' band (91%-100%) and for the subordinated notes to the 'RR5' band (11%-30%). As a result, the ratings have been upgraded one notch for each obligation. The Outlook revision reflects the company's demonstrated ability to execute asset sales to materially reduce leverage, and the improving operating trend resulting from the ongoing performance improvement program. The company is benefiting from a fully staffed and seasoned management team as its turn-around progresses. The ratings recognize Solo's leading market share across its product categories; strong brand recognition; diversified raw materials mix; diverse, stable customer base; and modest near-term debt maturities. Concerns remain about the company's weak (although improving) cash flows; high leverage; margin pressure due to intense competition and higher resin and energy prices; and low unit volume growth. There are also a few outstanding material weaknesses in accounting controls. Higher raw materials prices are likely to be an ongoing headwind for Solo, but the company is seeking to mitigate this risk through its resin sourcing and product mix management, as well as continuing efforts to improve pricing relative to costs. A few issues pertaining to the Sweetheart acquisition remain outstanding, but clear progress has been made. This along with the overall operational gains should continue to have a positive impact on financial results. Fitch expects fewer asset sales going forward but operating and free cash flows should continue to improve, making additional deleveraging possible through earnings growth, if not through large additional debt repayments over the next few quarters. Fitch expects the company will be able to meet tightening consolidated leverage ratio requirements over the same timeframe. While some earnings potential will be lost due to the asset sales, improved efficiencies and better product mix management are likely to more than offset these losses. Certain cash expenses will increase in the near term stemming from asset sales, facility realignments, and management compensation. Fitch anticipates improved profitability over the near term, and credit metrics could show substantial improvement over the next one to three quarters as cash flows are expected to trend higher, LTM earnings benefit from the roll-off of an unusually weak 1Q07, and consulting fees are reduced or eliminated. SPECIALTY UNDERWRITING: S&P Puts Default Rating on Class B-2 ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on three classes of mortgage loan asset-backed certificates from Specialty Underwriting and Residential Finance Trust's series 2003-BC2 and 2003-BC3. S&P removed the rating on class M-2 from series 2003- BC2 from CreditWatch with negative implications. Furthermore, S&P affirmed its ratings on the remaining classes from these two series. The downgrades of class B-2 from series 2003-BC2 and class B-1 from series 2003-BC3 reflect deterioration in available credit support. During the previous six remittance periods, monthly losses have exceeded excess interest by approximately 6.65x for series 2003-BC2 and 2.65x for series 2003-BC3. The failure of excess interest to cover monthly losses caused an erosion of overcollateralization. As of the September 2007 distribution date, O/C was approximately $631,403 for series 2003-BC3 (1.29% of the current balance), and O/C had been completely eroded for series 2003-BC2. The downgrade of the class B-2 certificates from series 2003-BC2 reflects a principal write-down of $260,906. Cumulative losses were 1.56% (series 2003-BC3) and 2.39% (series 2003-BC2) of the original pool balances. In addition, 90-plus-day delinquencies (including REOs and foreclosures) were 11.76% (series 2003-BC3) and 13.14% (series 2003-BC2) of the current pool balances. The affirmations are based on loss coverage percentages that are sufficient to maintain the current ratings. Subordination, O/C, and excess spread provide credit support for these transactions. The collateral for these series consists of fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties. Ratings Lowered Specialty Underwriting and Residential Finance Trust Mortgage loan asset-backed certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-BC2 B-2 D CCC 2003-BC3 B-1 BB BBB+ Rating Lowered and Removed from Creditwatch Negative Specialty Underwriting and Residential Finance Trust Mortgage loan asset-backed certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-BC2 M-2 B BBB/Watch Neg Ratings Affirmed Specialty Underwriting and Residential Finance Trust Mortgage loan asset-backed certificates Series Class Rating ------ ----- ------ 2003-BC2 S AAA 2003-BC2 M-1 AAA 2003-BC3 A AAA 2003-BC3 S AAA 2003-BC3 M-1 AAA 2003-BC3 M-2 AA 2003-BC3 M-3 A 2003-BC3 B-2 B Other Outstanding Ratings Specialty Underwriting and Residential Finance Trust Mortgage loan asset-backed certificates Series Class Rating ------ ----- ------ 2003-BC2 B-1 CCC 2003-BC3 B-3 CCC STANDARD PACIFIC: Posts $119.7 Million Net Loss in 3rd Quarter -------------------------------------------------------------- Standard Pacific Corp. reported unaudited 2007 third quarter operating results. The net loss for the quarter ended Sept. 30, 2007, was $119.7 million, compared to net income of $30.8 million in the year earlier period. The company's results for the 2007 third quarter include non-cash pretax impairment charges of $223.5 million, of which $175.2 million related to consolidated real estate inventories, $41.8 million related to the company's share of joint venture inventory impairment charges, and $6.5 million related to land deposit and capitalized preacquisition cost write-offs for abandoned projects. Homebuilding revenues for the 2007 third quarter were $675.5 million versus $834.1 million last year. The 19% decrease in homebuilding revenues for the 2007 third quarter was primarily attributable to a 25% decrease in new home deliveries (exclusive of joint ventures) and, to a lesser extent, a 1% decrease in the company's consolidated average home price to $364,000. These decreases were partially offset by a $51.5 million year-over-year increase in land sale revenues. Land sale revenues totaled $57.3 million for the 2007 third quarter and represented the disposition of approximately 1,500 lots. Homebuilding Joint Ventures The company recognized a $38.7 million loss from unconsolidated joint ventures during the 2007 third quarter compared to income of $5.2 million in the year earlier period. The loss in the 2007 third quarter reflected a $41.8 million pretax charge related to the company's share of joint venture inventory impairments related to 12 projects located primarily in California. Excluding the impairment charges, the company generated joint venture income of $3.1 million for the 2007 third quarter of which approximately $600,000 was generated from profits related to land sales to other builders while approximately $2.5 million was generated from new home deliveries. Deliveries from the company's unconsolidated homebuilding joint ventures totaled 118 new homes in the 2007 third quarter versus 40 last year. Stephen J. Scarborough, chairman, chief executive officer and president of the company said, "Conditions across most of the country's major housing markets continued to weaken during the company's most recent fiscal quarter. High levels of unsold new and existing homes, decreasing home prices, tenuous homebuyer confidence and further erosion of mortgage credit liquidity during the quarter combined to undermine any stability within the markets. These forces continued to weigh heavily on the minds of our prospective homebuyers during the third quarter, putting added pressure on home prices, which resulted in soft sales absorption rates, higher levels of buyer cancellations and additional inventory impairment charges for the company." Management's Comments "As we manage our business through these challenging times, we continue to be focused on reducing our level of consolidated inventories, generating cash flow and paying down debt. Over the last twelve months, we have reduced our level of consolidated unsecured homebuilding debt by over $265 million and expect to continue to be cash flow positive as we look to the balance of this year and for calendar 2008 taken as a whole. It is our goal to pay off a substantial portion of our revolving credit facility and reduce our absolute homebuilding debt levels by the end of 2007. In addition, we expect to generate net cash next year even after retiring our $150 million of senior notes maturing in October 2008." Mr. Scarborough continued, "During the third quarter, we took steps to improve our liquidity including providing the company with added flexibility under the covenants of our revolving credit facility. We amended our bank revolver, Term Loan A and Term Loan B facilities to, among other things, reduce the level of required consolidated tangible net worth and provide greater flexibility under our interest coverage ratio covenant." "In exchange for these adjustments, the company agreed to an immediate reduction of the leverage covenant and an additional tightening of the leverage covenant over time and a reduction in the revolving credit facility commitment from $1.1 billion to $900 million, a level commensurate with our projected capital requirements looking forward," Mr. Scarborough added. "In addition, to create additional liquidity under the facility's borrowing base provision, the company issued $100 million of senior subordinated convertible notes. The company's cushion under its borrowing base, which stood at over $300 million at Sept. 30, 2007, increased nearly $47 million from the end of the second quarter." Balance Sheet As Sept. 30, 2007, the company's consolidated balance sheet showed $3.98 billion in total assets, $2.51 billion in total liabilities, $44.3 million in minority interests, and $1.43 billion in total shareholders' equity. About Standard Pacific Headquartered in Irvine, California, Standard Pacific Corp. (NYSE:SPF) -- http://www.standardpacifichomes.com/-- is a homebuilder. The company operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado, Nevada and Illinois. The company provides mortgage financing and title services to its homebuyers through its subsidiaries and joint ventures, Standard Pacific Mortgage, Inc., Home First Funding, SPH Home Mortgage, Universal Land Title of South Florida and SPH Title. * * * As reported in the Troubled Company Reporter on Sept. 27, 2007, Standard & Poor's Ratings Services assigned its 'B+' rating to the $100 million 6% convertible senior subordinated notes due 2012 issued by Standard Pacific Corp. STELCO INC: Sept. 30 Balance Sheet Upside-Down by $64 Million ------------------------------------------------------------- Stelco Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $2.657 billion in total assets and $2.721 billion in total liabilities, resulting in a $64 million total shareholders' deficit. The company reported net income of $38 million for the quarter ended Sept. 30, 2007, compared to a net loss of $41 million for the second quarter of 2007 and a loss of $25 million in the third quarter of 2006. Net income for the third quarter of 2007 included workforce reduction costs of $5 million and foreign exchange gains of $36 million. EBITDA increased to $67 million for the third quarter ended Sept. 30, 2007, an improvement of $14 million over the second quarter of 2007. The improvement in EBITDA was largely driven by a significant improvement in the cost structure resulting from the strategic and operational restructuring initiatives over the past 18 months plus lower input costs, offset by lower selling prices. Proposed Acquisition of Stelco by US Steel Corp. On Aug. 26, 2007, Stelco and US Steel Corporation entered into an arrangement agreement providing for a subsidiary of US Steel to acquire all of the outstanding common shares of Stelco for $38.50 in cash per common share and Stelco will become an indirect wholly-owned subsidiary of US Steel under a plan of arrangement pursuant to the provisions of applicable corporate legislation. As part of the acquisition, holders of warrants to purchase common shares will receive, for each warrant held, a cash payment from Stelco equal to $27.50 (being the difference between $38.50 and the exercise price of the warrants) and holders of options to purchase common shares will receive, for each option held, a cash payment from Stelco equal to the difference between $38.50 and the exercise price of such option. In connection with the acquisition, it is anticipated that the floating rate notes will be redeemed and Stelco's secured term and asset based loans, as well as a term loan made by a subsidiary of Stelco will be retired. Completion of the acquisition is subject to customary conditions, including Stelco shareholder approval, court approval and receipt of certain regulatory approvals. About Stelco Headquartered in Hamilton, Ontario, Stelco Inc. (TSX: STE) -- http://www.stelco.ca/ -- is one of Canada's largest steel companies. It is focused on its two Ontario-based integrated steel businesses located in Hamilton and in Nanticoke. These operations produce hot rolled, cold rolled, coated sheet and bar products. On April 1, 2006, Stelco Inc. emerged from CCAA restructuring. TEXAS COMPETITIVE: Reports Selected Preliminary Nine-Month Results ------------------------------------------------------------------ Texas Competitive Electric Holdings LLC reported on Oct. 23, 2007, selected preliminary unaudited consolidated financial results of Energy Future Competitive Holdings Company, Texas Competitive Electric Holdings Company LLC's direct parent, and for TCEH for the nine months ended Sept. 30, 2007. EFC Holdings Property, plant and equipment, net as of Sept. 30, 2007, is expected to increase by approximately $500 million, or approximately 5%, to approximately $10.4 billion compared to $9.9 billion at Dec. 31, 2006. This increase is driven by ongoing investment spending in existing generation operations, partially offset by depreciation expense for the period. Operating revenues are expected to decrease by between approximately $1.2 to $1.4 billion, or 16% to 18%, to between approximately $6.2 and $6.4 billion compared to $7.6 billion in the same period in 2006. This decline primarily reflects lower retail electricity revenues and net losses in 2007 from risk management and trading activities (compared to net gains in 2006 from these activities). Net income is expected to decrease by between approximately $550 to $650 million, or 27% to 32%, to between approximately $1.35 to $1.45 billion compared to $2.0 billion in the same period in 2006. This decrease is driven by the factors affecting operating revenues discussed immediately above. Other contributing factors to the net income performance include the effects of a planned nuclear generation unit outage in early 2007 and higher lignite mining costs resulting from weather-related inefficiencies and increased selling, general and administrative costs in the retail operations. Adjusted EBITDA is expected to decrease by between approximately $500 million to $700 million, or 15% to 21%, to between approximately $2.7 to $2.9 billion compared to $3.4 billion in the same period in 2006. This decrease is driven by the lower average retail pricing and the decline in retail sales volumes referred to in the discussion of operating revenues above and also reflects the other contributing factors cited in the discussion of net income immediately above. TCEH Net income is expected to decrease by between approximately $500 to $600 million, or 26% to 31%, to between approximately $1.35 to $1.45 billion compared to $1.95 billion in the same period in 2006. This decrease is driven by the factors affecting operating revenues discussed above. Other contributing factors to the net income performance include the effects of a planned nuclear generation unit outage in early 2007 and higher lignite mining costs resulting from weather-related inefficiencies and increased selling, general and administrative costs in the retail operations. Adjusted EBITDA is expected to decrease by between approximately $550 million to $750 million, or 16% to 22%, to between approximately $2.65 to $2.85 billion compared to $3.4 billion in the same period in 2006. This decrease is driven by the lower average retail pricing and the decline in retail sales volumes referred to in the discussion of operating revenues above and also reflects the other contributing factors cited in the discussion of net income immediately above. About Texas Competitive Headquartered in Dallas, Texas Competitive Electric Holdings Company LLC is the holding company for TXU Corp.'s competitive businesses, Luminant and TXU Energy, and was formerly known as TXU Energy Company LLC. * * * Texas Competitive Electric Holdings Company LLC carries Standard & Poors' 'B-' long term foreign issuer and long term local issuer credit ratings which were placed on Oct. 9, 2007. Outlook is stable. THEATER CONSULTING: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Theater Consulting and Management Company, LLC fdba Theater Consulting and Management Company, Inc. 929 Old Highway 8, Suite 200 New Brighton, MN 55112 Bankruptcy Case No.: 07-34043 Chapter 11 Petition Date: October 25, 2007 Court: District of Minnesota (St. Paul) Judge: Dennis D. O'Brien Debtor's Counsel: Will R. Tansey, Esq. Ravich Meyer Kirkman McGrath & Nauman P.A. 4545 IDS Center 80 South Eighth Street Minneapolis, MN 55402 Tel: (612) 317-4760 Fax: (612) 332-8302 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's list of its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Schechter Dokken & Kanter Goods & Services $48,000 100 Washington Avenue South, Suite 1600 Minneapolis, MN 55402 William Goldetsky Movie Theater $45,600 1830 Eagle Ridge Drive Lease - St. Croix Suite 1011 Falls, Wisconsin St. Paul, MN 55118-4200 Developers Diversified Realty Movie Theater $38,525 3300 Enterprise Parkway Lease - Worthington Beachwood, OH 44122 MN, and Watertown, SD Fairmont Cinemas L.P. Movie Theater Lease $24,229 Clark Products Goods and Services $18,376 Westridge Mall L.P. Movie Theater Lease $17,212 Lions Gate Entertainment Goods and Services $16,762 Buena Vista Pictures Goods and Services $14,675 Sony Pictures Goods and Services $8,486 Metro Goldwyn Mayer Goods and Services $8,122 Schoenberg Finkel Newman and Movie Theater Lease $6,128 Rosenberg LLC Trust Account Universal Film Exchange Goods and Services $6,058 Brightstar Systems Corp. Goods and Services $5,007 Paramount Pictures Goods and Services $4,240 Twentieth Century Fox Goods and Services $3,487 Siegel Brill Greupner Goods and Services $3,470 Duffy & Forster P.A. Gopher Express Goods and Services $3,414 Focus Features Goods and Services $3,007 Health Partners Goods and Services $2,647 Warner Bros. Goods and Services $2,161 TIMKEN COMPANY: Completes $200 Million Acquisition of Purdy ----------------------------------------------------------- The Timken Company completed its acquisition of The Purdy Corp., a precision manufacturer and systems integrator for military and commercial aviation customers, for $200 million. Both parties entered into an agreement on Sept. 17, 2007, adding new power- transmission products and capabilities to Timken's rapidly growing aerospace business. The Purdy Corp.'s expertise includes design, manufacturing, testing, overhaul and repair of transmissions, gears, rotor-head systems and other high-complexity components for helicopter and fixed-wing aircraft platforms. Founded in 1946, Purdy is based in Manchester, Connecticut, employs more than 200 people and had 2006 sales of approximately $87 million. Timken will operate the business as Timken Aerospace Transmissions, LLC, from its current location in Manchester, Connecticut. Timken will continue to make investments in its ability to meet the power-transmission needs of its growing customer base in the commercial and military aviation industries. "Customers have the opportunity to benefit from the strength of a company that is a leader in friction-management technology with growing capabilities in power transmission," J. Ron Menning, president - aerospace and defense, said. "We believe that the increasing breadth of our portfolio is a distinct advantage, and Timken is rapidly developing the kind of complete aerospace systems expertise and portfolio that will create exceptional customer and shareholder value." Timken offers a comprehensive line of aerospace quality bearings, along with a select range of turbine engine components and MRO services. Known for consistent, critical performance and backed by stringent quality standards, Timken aerospace products are found in aircraft engines, gearboxes, helicopter transmissions, auxiliary power units, landing wheels, airframes and instrumentation. Headquartered in Canton, Ohio, The Timken Company (NYSE: TKR) -- http://www.timken.com/-- is a manufacturer of highly engineered bearings and alloy steels. It also provides related components and services such as bearing refurbishment for the aerospace, medical, industrial and railroad industries. The company has operations in Argentina, Australia, Belgium, Brazil, Canada, China, Czech Republic, England, France, Germany, Hungary, India, Italy, Japan, Korea, Mexico, Netherlands, Poland, Romania, Russia, Singapore, South America, Spain, Taiwan, Turkey, UnitedStates, and Venezuela and employs 27,000 employees. * * * The Timken Company carries Moody's Ba1 Long-Term Corporate Family, Senior Unsecured Debt and Probability-of-Default Ratings. Moody's said the outlook was stable. TIMKEN COMPANY: Earns $41.2 Million in Quarter Ended Sept. 30 ------------------------------------------------------------- The Timken Company reported net income of $41.2 million for the third quarter 2007, compared to a net income of $46.5 million for the same quarter last year. The company reported sales of $1.26 billion in the third quarter of 2007, an increase of 6% over the same period a year ago. Strong sales in industrial markets were partially offset by the strategic divestment of the company's automotive steering and European steel tube manufacturing operations in prior periods. The company achieved third-quarter income from continuing operations of $41.2 million, up from $38.7 million in last year's third quarter. "While Timken's third-quarter performance exceeded what we achieved last year, our results still fell short of what we had expected to deliver," James W. Griffith, Timken's president and chief executive officer, said. "As we move forward with our strategic initiatives, we have intensified our efforts to drive better execution across the company during a period of strong demand in multiple market sectors." For the first nine months of 2007, sales were $3.89 billion, an increase of 4% from the same period in the prior year, driven by strong industrial markets. The company's performance benefited from higher volume and improved pricing, which were partially offset by higher raw-material, manufacturing and logistics costs. Total debt was $601.4 million as of Sept. 30, 2007, or 25.5% of capital. Net debt at Sept. 30, 2007, was $513.6 million, or 22.6% of capital, compared to $496.8 million, or 25.2%, as of Dec. 31, 2006. Year-to-date, the increase in net debt was primarily due to higher working capital requirements, driven by strong demand, and increased capital expenditures in support of growth initiatives. At Sept. 30, 2007, the company's balance sheet totat assets of $4.1 billion and total liabilities of $2.4 billion, resulting in $1.7 billion. Equity at Dec. 31, 2006, was $1.4 million. Outlook Timken anticipates strong global industrial demand, while automotive demand is expected to remain stable. The combination of strong industrial markets, capacity additions and operating improvements is expected to drive stronger performance. About Timken Company Headquartered in Canton, Ohio, The Timken Company (NYSE: TKR) -- http://www.timken.com/-- is a manufacturer of highly engineered bearings and alloy steels. It also provides related components and services such as bearing refurbishment for the aerospace, medical, industrial and railroad industries. The company has operations in Argentina, Australia, Belgium, Brazil, Canada, China, Czech Republic, England, France, Germany, Hungary, India, Italy, Japan, Korea, Mexico, Netherlands, Poland, Romania, Russia, Singapore, South America, Spain, Taiwan, Turkey, United States, and Venezuela and employs 27,000 employees. * * * The Timken Company carries Moody's Ba1 Long-Term Corporate Family, Senior Unsecured Debt and Probability-of-Default Ratings. Moody's said the outlook was stable. TOUSA INC: Fitch Downgrades Issuer Default Rating to CC ------------------------------------------------------- Fitch Ratings downgraded the Issuer Default Rating and debt ratings for TOUSA Inc. and subsequently put them on Rating Watch Negative, as: -- IDR to 'CC' from 'CCC'; -- Secured revolving credit facility to 'CCC/RR2' from 'B-'; -- First lien secured term loan to 'CCC/RR2' from 'B-'; -- Second lien secured term loan to 'C/RR5' from 'CCC-'; -- Senior unsecured notes to 'C/RR6' from 'CC'; -- Senior subordinated notes to 'C/RR6' from 'CC'; -- Preferred stock to 'C/RR6' from 'CC'. Fitch's 'RR2' Recovery Rating on TOUSA's $700 million secured revolving credit facility and $200 million secured first lien term loan indicates superior (70%-90%) recovery prospects for holders of this debt issue. Fitch's 'RR5' Recovery Rating on TOUSA's $300 million secured second lien term loan indicates below average recovery prospects (10%-30%) in a default scenario. Fitch's 'RR6' Recovery Rating on TOUSA's senior unsecured notes, senior subordinated notes and preferred stock issuance indicates poor (0%-10%) recovery prospects. Fitch applied a liquidation value analysis for these recovery ratings. TOUSA announced previously that in response to deteriorating market conditions during the third quarter, the company is exercising its right to abandon a number of land option contracts. As a result, TOUSA anticipates that it will incur significant deposit write-offs and abandonment charges in the third quarter. Additionally, TOUSA also expects to record significant asset impairment charges in the third quarter. As a result of these charges, the company may breach one or more of the covenants under its revolving and first lien loan credit agreements. TOUSA has requested amendments from the lenders to its revolving line credit and first lien term loan facilities. The downgrade of TOUSA's IDR reflects challenging housing conditions in most of the company's markets and Fitch's expectation that a turn-around in the near term is unlikely. The completion of the Transeastern JV global settlement left TOUSA in a highly leveraged position at a time when housing market conditions are extremely depressed. The downgrade also reflects the uncertain liquidity position of the company and that proposed amendments (if consents are successfully obtained from the lenders) may provide only short term relief. TOUSA's ratings remain on Rating Watch Negative for the possibility of further actions. The Rating Watch will in part be resolved by the successful solicitation of consents for the proposed amendments from the lenders of the company's revolving line of credit and first lien term loan facilities. Future ratings and Outlooks will be influenced by broad housing market trends as well as company specific activity, such as land and development spending, general inventory levels, speculative inventory activity (including the impact of high cancellation rates on such activity), gross and net new order activity and free cash flow trends. TRAVIS COUNTY: Moody's Holds Ba3 Rating on Series 2002A Bonds ------------------------------------------------------------- Moody's Investors Service affirmed the rating on Travis County Housing Finance Corporation Multifamily Housing Revenue Bonds (Park at Wells Branch Apartments Project) Series 2002A at Ba3 and the rating on Subordinate Series 2002C at Ca. The outlook on both series remains stable. The rating affirmation is based on stabilizing debt service coverage ratios on both series of bonds, continuing contributions to property maintenance funds and preserving the Series 2002A Debt Service Reserve Fund. The Series 2002B bonds have matured and the Junior Subordinate Series 2002D bonds are not rated. The Series 2002A bonds continue to be insured by MBIA and carry MBIA's financial strength rating of Aaa. The Subordinate Series 2002C bonds are not insured. Park at Wells Branch is a 304 unit apartment complex composed of 18 apartment buildings, and is located in the northern section of the Austin metropolitan area in Travis County, Texas. The property has been experiencing financial difficulties since 2003, largely due to the weakness of the Austin multifamily rental market. Occupancy rates fell during that time and the property offered substantial concessions to tenants. The ensuing reduction in rental revenues caused the property's financial performance to deteriorate. The Series 2002C bonds first defaulted in June 2005, and subsequent debt service payments were missed on the subordinate series. Legal Security The bonds are limited obligations payable solely from the revenues, receipts and security pledged in the Trust Indenture. Funds are pledged first to the payment of the principal and interest due on the Series 2002A bonds, then to the principal and interest due on the Series 2002C bonds, and last, to the principal and interest due on the Series 2002D bonds. The Indenture provides for a Debt Service Reserve Fund for each series of bonds. As of Aug. 31, 2007, the Trustee reports that only the Debt Service Reserve Fund for Series 2002A bonds remains fully funded at the maximum annual debt service on the Series 2002A bonds. The 2002C Debt Service Reserve Fund has been depleted. Interest rate derivatives: none Credit Strengths *Stabilizing debt service coverage ratios: Based on FY 2006 audited financial statements, Moody's has calculated 1.12x debt service coverage for Series 2002A bonds and .92x debt service coverage for Series 2002C bonds. The subordinate series coverage ratio was calculated net of the MBIA insurance fee. These debt service coverage levels show improved financial performance since 2004. The Series 2002A bonds had coverage levels of 1.06x in 2005 and .92x in 2004. The Series 2002C bonds had coverage levels of .86x in 2005 and .73x in 2004. The improved debt service coverage ratios may be attributed to rental revenue growth due to increasing occupancy rates and lower concession charges. Management reports the current occupancy rate is 97%, representing a substantial improvement over the 80% occupancy rate of August 2003. *Commitment from Community Housing Corporation of America Inc., the owner of the property, has continued its commitment to the property by contributing substantial amounts in 2006. The contribution augmented rental revenues and funded portions of debt service payments made on the Series 2002C bonds. CHC has made contributions to the property since 2003. *Capital Replacement Reserve: Despite financial difficulties, the property continues to meet a sizable capital replacement reserve funding requirement. Moody's believes that this is important for the property's long-term viability. The property was constructed in 1987 and will require capital improvements to remain competitive in the Austin rental market. *Series 2002A Reserves: Fund balances provided to Moody's by the property Trustee show the Series 2002A Debt Service Reserve Fund remains fully funded. Credit Challenges *Series 2002C Reserves: Fund balances provided to Moody's by the property Trustee show that the Series 2002C Debt Service Reserve Fund is significantly under-funded. *Local Multifamily Rental Market: Though the demand for affordable multifamily housing has strengthened in the Austin market since 2005, the future performance of the property remains linked to the strength of the market. Strong market demand and high occupancy rates are necessary for the property to regain financial solvency. Recent Developments Park at Wells Branch has been experiencing financial difficulties since 2003. In 2004, the Series 2002C Debt Service Reserve Fund was tapped to make the June 2004 debt service payment on Series 2002C bonds. The Series 2002C bonds have defaulted on each interest payment date since June 2005. On June 22, 2007 the Trustee made the interest payment that would have been due on Dec. 1, 2005. This follows a similar payment made on Aug. 12, 2005, when the Trustee made the missed June 2005 debt service payment on the subordinate bonds. Outlook The outlook on the bonds remains stable. The stable outlook reflects the stabilizing occupancy of the property and debt service coverage levels on the bonds. What could change the rating - Up *Consistent debt service payments on the Series 2002C bonds *Replenishing the Series 2002C Debt Service Reserve Fund What could change the rating - Down *Drawing on the Series 2002A Debt Service Reserve Fund *Low occupancy rates resulting in debt service coverage deterioration TRIBUNE COMPANY: Earns $152.7 Million in FY 2007 Third Quarter -------------------------------------------------------------- Tribune Company reported financial results for the third quarter of 2007. For the third quarter 2007, the company reported net income of $152.7 million on $1.2 billion operating revenues, compared with a net income of $164.3 million on $1.3 billion operating revenues for the same quarter last year. "Our third quarter results reflect a combination of better revenue trends, strong expense controls and an increase in equity income," Dennis FitzSimons, Tribune chairman, president and chief executive officer, said. "Publishing revenue trends improved slightly in the third quarter despite the impact of the housing slump on our Florida and California newspapers. We are also encouraged by positive national advertising trends, led by improved Tribune Media Net sales." Tribune's 2007 third quarter operating revenues decreased 4%, or $55 million, to $1.28 billion. Consolidated cash operating expenses were down 4%, or $46 million, in the third quarter of 2007 primarily due to a $25 million decrease in newsprint and ink expense and a $21 million decrease in compensation. Cash operating expenses in the third quarters of 2007 and 2006 included severance charges of $3.2 million and $2.2 million, respectively. Operating cash flow was down 3% to $285 million from $295 million, while operating profit declined 4% to $229 million from $238 million. Publishing's third quarter operating revenues were $871 million, down 7%, or $69 million. Publishing cash operating expenses decreased $48 million, or 6%, to $705 million. Publishing operating cash flow was $166 million, an 11% decline from $187 million in 2006. Publishing operating profit decreased 15% to $123 million, from $144 million in 2006. Broadcasting and entertainment's third quarter operating revenues increased 3%, or $13 million, to $406 million. Group cash operating expenses increased 2%, or $4 million, to $276 million. Operating cash flow was $130 million, up 8% from $121 million, and operating profit increased 9% to $118 million from $108 million in 2006. Television's third quarter operating revenues increased 4% to $288 million in 2007, primarily due to higher cable copyright royalties. Television cash operating expenses were down 1%, or $1 million, to $190 million. Television operating cash flow was $98 million, up 14% from $86 million in 2006, while operating profit increased 18% to $87 million, up from $74 million. Net equity income was $27 million in the third quarter of 2007, compared with $19 million in the third quarter of 2006. The increase primarily reflects higher equity income for Comcast SportsNet Chicago and CareerBuilder. Headquartered in Chicago, Tribune Company (NYSE: TRB) -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting. It reaches more than 80% of U.S. households and is the only media organization with newspapers, television stations and websites in the nation's top three markets. In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, Newsday (Long Island, New York), The Sun (Baltimore), South Florida Sun-Sentinel, Orlando Sentinel and Hartford Courant. The company's broadcasting group operates 23 television stations, Superstation WGN on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team. * * * Moody's Investor Services placed Ba3 on Tribune Company's long term family rating and probability of default on April 2007. Standard and Poor's rated B+ its long term foreign and local issuer credit on July 2007. TRUE NORTH: Appoints Alan McMillan as Chief Executive Officer ------------------------------------------------------------- Alan McMillan will be assumes the role of chief executive officer of True North Corporation, effective immediately. In addition, it is expected that Mr. McMillan will also become a member of the company's board of directors. Rick Camilleri, the current chief executive officer of the company will immediately step down from his current position and will be working with Mr. McMillan during this transitional period. The board of directors would like to thank Mr. Camilleri for his many contributions to True North since becoming chief executive officer 18 months ago and looks forward to continuing a productive partnership with Mr. Camilleri. Mr. McMillan comes to True North with related industry experience. He has been in the technology business for 20 years and in the internet industry since its inception. Mr. McMillan has been the chief executive officer and founder of several internet companies in Toronto, Silicon Valley and Hong Kong where he brought leadership expertise in the development and commercialization of internet based web applications. Prior to 1995 he spent 5 years with Digital Equipment Corporation based in Hong Kong where he managed a new business unit that grew to $200 million operating in 10 countries. He has an honors degree in Business majoring in International Marketing and is a certified corporate director. "This is a great Web 2.0 opportunity that will combine the current strengths of True North and my experience in this field, I am very excited about the future of this company," Mr. McMillan commented. About True North Headquartered in Mississauga, Ontario, True North Corporation (TSX: TN) -- http://www.truenorthcorp.ca/-- is an integrated marketing services company. TNC delivers services through two focus areas: Marketing Services & Sales Channel Support. At June 30, 2007, the company's balance sheet showed total assets of $5,887,121 and total liabilities of $10,661,201, resulting to a shareholders' deficit of $4,774,080. URS CORP: Expects 2007 Third Quarter Net Income at $38.7 Million ---------------------------------------------------------------- URS Corporation disclosed preliminary unaudited financial results for its third quarter ended Sept. 28, 2007. URS expects third quarter 2007 revenues to be $1.302 billion, an increase of 20% compared with revenues of $1.085 billion for the third quarter of 2006. Net income for the third quarter of 2007 is expected to be $38.7 million, an increase of 29% from net income of $29.9 million for the comparable period in 2006. The preliminary results are being disclosed to provide stockholders of URS and Washington Group International with additional financial information regarding URS prior to upcoming stockholder meetings. Washington Group stockholders are scheduled to meet on Oct. 30, 2007 to vote upon the proposed acquisition of Washington Group by URS. A Special Meeting of URS Stockholders also is scheduled to be held on Oct. 30, 2007 to vote on the issuance of shares in conjunction with the transaction. In conjunction with the announcement of preliminary third quarter results, the Company issued the following statement: "A key component of the transaction value for Washington Group stockholders is the URS shares they will receive if the acquisition is approved. The Company believes it is important that Washington Group stockholders have this additional financial information before their vote scheduled for Oct. 30, 2007. URS continues to perform very well, and our results for the quarter reflect good growth across each of our four key market sectors, the federal sector, the state and local government sector, the private sector and international." "URS believes that the combination with Washington Group offers a compelling value for Washington Group stockholders, including the potential upside of owning almost one-third of the combined company, which we expect will be better positioned to capture opportunities in high-growth markets." URS will release its full financial results for the third quarter on Nov. 7, 2007, after the market close, and will update its guidance for fiscal 2007 at that time. The preliminary unaudited financial results are estimates and are subject to further review and analysis by the company's management as part of the normal quarterly closing process currently under way. About URS Corporation Headquartered in San Francisco, California, URS Corporation (NYSE:URS)-- http://www.urscorp.com/-- is an engineering design services firm and a United States federal government contractor for systems engineering and technical assistance and operations and maintenance services. The company's business focuses primarily on providing fee-based professional and technical services in the engineering and construction services and defense markets, although the company performs some limited construction work. It operates through two divisions: the URS Division and the EG&G Division. * * * As reported in the Troubled Company Reporter on Sept. 21, 2007, Standard & Poor's Ratings Services assigned its 'BB+' bank loan rating and '2' recovery rating to URS Corp.'s proposed $2.1 billion senior secured credit facilities, indicating expectations of substantial recovery in the event of a payment default. The facilities are rated the same as the corporate credit rating on the company. As reported in the Troubled Company Reporter on Sept. 20, 2007, Moody's Investors Service assigned a provisional rating of (P)Ba1 to the proposed $2.1 million senior secured credit facility of URS Corporation, which will be used to finance its pending acquisition of Washington Group International Inc. US DRY: Inks $2.15 Million Merger Agreement with Robinson --------------------------------------------------------- U.S. Dry Cleaning Corporation has signed an agreement and plan of merger with Robinson Corp. Under the agreement and plan of merger, U.S. Dry Cleaning would acquire Robinson Corp. for $2,153,000 in cash, convertible and assumed debt, and shares of common stock of U.S. Dry Cleaning. When concluded, the acquisition would add more than $2,256,000 to U.S. Dry Cleaning's existing $10 million annualized run rate and increase the expected revenue for the company's Hawaiian operations by 40%. Together with the pending acquisition of Central California's dry cleaning business, with revenues of $6.5 million, this transaction is expected to bring U.S. Dry Cleaning's annualized revenue run rate to more than $18.7 million. Thurston John "Jack" Robinson is retiring after 35 years of building his business. Theresa Paulette, who has been general manager for 18 years, will stay on to manage and expand the operation. "U.S. Dry Cleaning is extremely pleased to acquire Caesars Cleaners, a premier profitable company with a reputation for excellence throughout the Honolulu area for 35 years," Michael E. Drace, COO and president of U.S. Dry Cleaning Inc. and head of operations in Hawaii, said. "The acquisition will expand our market share in Hawaii, and is expected to increase revenues to more than $7.6 million. The dry cleaning industry has been a stable market since its inception, and it is poised for growth in an era where personal service is valued at a premium." "Mr. Robinson has built a highly successful business over 35 years, and U.S. Dry Cleaning offers the next step for growth through the opportunities provided by a public company," added Mr. Drace. "We are delighted that Theresa Paulette has agreed to stay on to help expand the business and integrate the company into our strategy to become the first national chain of premier dry cleaning businesses." "I'm proud to have grown my company to the $2 million business it is," Mr. Robinson said. "I am confident I am leaving it in good hands and that my employees will be well cared for. I will remain invested in the company and I look forward to its future success." It is expected that the transaction will be completed before the end of 2007, after customary closing conditions. About Robinson Corp. Based in Honolulu, Robinson Corp. dba Caesars Cleaners is a dry cleaning business comprising of four stores and a central operating plant. Caesars Cleaners, the brand name of Robinson Corp., was owned and operated by Thurston John Robinson since 1972. About US Dry Cleaning Headquartered in Palm Springs, California, US Dry Cleaning Corporation (OTC:UDRY) fka First Virtual Communications Inc. -- http://www.usdrycleaning.com/-- is engaged in laundry and dry cleaning business and operates in Honolulu and Palm Springs. Incorporated in October 1993, U.S. Dry Cleaning is focused on acquiring profitable businesses that hold a leading share in their individual markets. Going Concern Doubt On Nov. 14, 2006, Squar Milner Miranda & Williamson LLP, in Newport Beach, California, expressed substantial doubt about US Dry Cleaning Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2006. The auditors pointed to the company's recurring losses from operations and an accumulated deficit of approximately $6.9 million. US INVESTIGATION: Moody's Rates New $290 Mil. Sr. Notes at Caa2 --------------------------------------------------------------- Moody's Investors Service assigned a Caa2 rating to US Investigation Services Inc.'s new $290 million senior unsecured notes and $150 million senior subordinated notes, which replaced its $250 million senior unsecured bridge facility and $190 million senior subordinated bridge facility. Concurrently, Moody's withdrew the ratings assigned to the bridge facilities and affirmed all other ratings. The rating outlook is stable. Moody's took these rating actions: -- Assigned $290 million senior unsecured notes due 2015, Caa2 (LGD5, 80%) -- Assigned $150 million senior subordinated notes due 2016, Caa2 (LGD6, 94%) -- Withdrew $250 million senior unsecured bridge facility, Caa1 (LGD5, 78%) -- Withdrew $190 million senior subordinated bridge facility, Caa2 (LGD6, 93%) -- Affirmed $90 million senior secured first lien revolver due 2013, B1 (LGD3, 30%) -- Affirmed $725 million senior secured first lien term loan B due 2015, B1 (LGD3, 30%) -- Affirmed the Corporate Family Rating, B3 -- Affirmed the Probability of Default Rating, B3 US Investigations Services Inc., with corporate headquarters in Falls Church, Virginia, is a leading provider of security- clearance background investigation and employment screening services to government agencies and commercial customers in the United States. Total revenues for the twelve months ended June 30, 2007 were about $817 million. VERTICAL ABS: Moody's Lowers Ratings on Two Note Classes -------------------------------------------------------- Moody's Investors Service placed these notes issued by Vertical ABS CDO 2006-2 Ltd. on review for possible downgrade: -- Class Description: $52,000,000 Class A1 Senior Secured Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- Class Description: $41,000,000 Class A2 Senior Secured Floating Rate Notes Due 2046 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade In addition Moody's also announced that it has downgraded and left on review for possible downgrade these notes: -- Class Description: $26,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2046 Prior Rating: A2 Current Rating: Baa2, on review for possible downgrade -- Class Description: $21,000,000 Class B Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2046 Prior Rating: Baa2 Current Rating: Ba2, on review for possible downgrade -- Class Description: $5,000,000 Class C Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2046 Prior Rating: Ba1 Current Rating: B1, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. VERTICAL ABS: Moody's Junks Ratings on Five Note Classes -------------------------------------------------------- Moody's Investors Service downgraded and placed on review for further possible downgrade these classes of notes issued by Vertical ABS CDO 2007-1 Ltd.: -- $873,000,000 Class A1S Variable Funding Senior Secured Floating Rate Notes Due 2047 Prior Rating: Aaa Current Rating: Ba1, on review for possible downgrade -- $229,000,000 Class A1J Senior Secured Floating Rate Notes Due 2047 Prior Rating: Aaa Current Rating: B2, on review for possible downgrade -- $157,000,000 Class A2 Senior Secured Floating Rate Notes Due 2047 Prior Rating: Aa2, on review for possible downgrade Current Rating: Caa1, on review for possible downgrade -- $57,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2047 Prior Rating: A2, on review for possible downgrade Current Rating: Caa3, on review for possible downgrade -- $70,000,000 Class B1 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 Prior Rating: Baa2, on review for possible downgrade Current Rating: Ca -- $32,000,000 Class B2 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 Prior Rating: Baa3, on review for possible downgrade Current Rating: Ca -- $22,000,000 Class C Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 Prior Rating: Ba2, on review for possible downgrade Current Rating: Ca -- $42,000,000 Class X Senior Secured Fixed Rate Notes Due 2013 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade The rating actions reflect severe deterioration in the credit quality of the underlying portfolio, as well as the occurrence on Oct. 17, 2007 of an event of default caused by a failure of the senior credit test per Section 5.1(h) of the Indenture, dated April 10, 2007. Vertical ABS CDO 2007-1 Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities, CMBS securities and synthetic securities in the form of credit default swaps. Reference obligations for the credit default swaps are RMBS securities, CMBS securities and CDO securities. The senior credit test requires that the net outstanding portfolio collateral balance adjusted for ratings-based haircuts equal or exceed the sum of the outstanding Class A1S Notes (including all unfunded commitments) and the Class A1J Notes. A high number of recent ratings downgrades on the underlying portfolio magnified the impact of the ratings-based haircuts, causing the senior credit test failure. On Oct. 11, 2007, 74% of the underlying portfolio was downgraded or placed on review for possible downgrade by Moody's. Under an event of default in this transaction, a majority of the controlling class will be entitled to determine the remedies to be exercised under the indenture. The controlling class consists solely of the Class A1S Notes. Liquidation of the underlying portfolio is one possible remedy; however, it is not clear at this time whether the controlling class will choose to exercise this option. The rating downgrades taken today reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The expected losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by the controlling class. Because of this uncertainty, the Class X, the Class A1S Notes, the Class A1J Notes, the Class A2 Notes and the Class A3 Notes remain on review for possible downgrade pending the receipt of definitive information. VICTOR GROUP: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: The Victor Group II, Inc. dba First Machine and Manufacturing, Inc. 1651 East 12th Street Erie, PA 16511 Bankruptcy Case No.: 07-11723 Chapter 11 Petition Date: October 25, 2007 Court: Western District of Pennsylvania (Erie) Debtor's Counsel: Guy C. Fustine, Esq. Knox McLaughlin Gornall & Sennett, P.C. 120 West Tenth Street Erie, PA 16501 Tel: (814) 459-2800 Fax: (814) 453-4530 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's list of its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Copper and Brass Sales Trade Debt $12,001 5755 Grant Avenue Cleveland, OH 44105 Perry Mill Supply Trade Debt $4,345 1115 West 12th Street Erie, PA 16501 James H. Cross Co. Trade Debt $3,806 3602 West 23rd Street Erie, PA 16512 J&L Industrial Supply Trade Debt $3,455 Carlson's Industrial Grinding Trade Debt $3,135 Browne & Sharpe Division Trade Debt $2,475 American Stainless Corporation Trade Debt $2,368 Advanced Placement Services Services Provided $2,209 Erie Concrete and Supply Trade Debt $1,448 D.B. Roberts Company Trade Debt $1,442 Hy-Tech Automation Repair Services Provided $1,358 LNS America, Inc. Trade Debt $1,294 Earle M. Jorgenson Company Trade Debt $1,164 Environmental Coordination Services Provided $1,140 Services and Recycling Boldt Machinery, Inc. Trade Debt $1,109 Microcentric Trade Debt $1,019 Harry E. Mueller Services Provided $831 Erie Bearings Company Trade Debt $827 Progress For Industry, Inc. Trade Debt $645 Unifirst Corporation Services Provided $645 VORRIECE WHITTEN: Case Summary & Four Largest Unsec. Creditors -------------------------------------------------------------- Debtor: Vorriece Nathaniel Whitten dba Keypoint Properties P.O. Box 66944 Burien, WA 98168 Bankruptcy Case No.: 07-15068 Chapter 11 Petition Date: October 25, 2007 Court: Western District of Washington (Seattle) Judge: Thomas T. Glover Debtor's Counsel: Larry B. Feinstein, Esq. Vortman & Feinstein 500 Union Street, Suite 500 Seattle, WA 98101 Tel: (206) 223-9595 Estimated Assets: $1,868,700 Estimated Debts: $1,607,088 Debtor's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Litton Loan Servicing value of collateral: $390,000 P.O. Box 4387 $349,000 Houston, TX 77210-4387 Boeing Employee's $6,000 Credit Union P.O. Box 97050 Seattle, WA 98124 Best Buy $2,137 Retail Services P.O. Box 60148 City of Industry, CA 91716-0148 H.S.B.C. Card Services $1,952 WACHOVIA BANK: Fitch Holds Low-B Ratings on Six Cert. Classes ------------------------------------------------------------- Fitch Ratings affirms Wachovia Bank Commercial Mortgage Securities Trust, series 2006-C28, as: -- $33.3 million class A-1 at 'AAA'; -- $418.7 million class A-2 at 'AAA'; -- $168.4 million class A-PB at 'AAA'; -- $215 million class A-3 at 'AAA'; -- $802.2 million class A-4 at 'AAA'; -- $250 million class A-4FL at 'AAA'; -- $621.7 million class A-1A at 'AAA'; -- Interest-only class IO at 'AAA'; -- $359.5 million class A-M at 'AAA'; -- $278.6 million class A-J at 'AAA'; -- $22.5 million class B at 'AA+'; -- $58.4 million class C at 'AA'; -- $31.5 million class D at 'AA-'; -- $49.4 million class E at 'A'; -- $40.4 million class F at 'A-'; -- $40.4 million class G at 'BBB+'; -- $40.4 million class H at 'BBB'; -- $44.9 million class J at 'BBB-'; -- $17.9 million class K at 'BB+'; -- $8.9 million class L at 'BB'; -- $13.4 million class M at 'BB-'; -- $4.5 million class N at 'B+'; -- $8.9 million class O at 'B'; -- $8.9 million class P at 'B-'; Fitch does not rate the $49.4 million class Q or the $8 million class FS. WELLCARE HEALTH: Says Probe Has "No Impact" on Operations --------------------------------------------------------- WellCare Health Plans Inc. said it is taking actions in response to the search warrant executed by federal and state agencies at the company's headquarters on October 24, 2007. "We are responding to . . . developments in a direct, prompt and orderly manner," said Todd Farha, chairman and chief executive officer. "We are committed to cooperating with the government throughout this process." Consistent with the statement of the U.S. Attorney's Office, the company states that the investigation has not impacted its ability to serve the best interest of its members, providers and business partners. Actions Taken Simultaneous with its efforts to ensure that the business continues to operate smoothly, the Company has undertaken a series of actions to respond to the government investigation. Specifically, the company has: * Been in direct contact with its Board of Directors, including members of the audit committee; * Committed to cooperating with the federal and state authorities involved in the investigation; * Retained the law firms of King & Spalding and Greenburg Traurig to assist the Company with responding to the investigation; * Engaged with the Company's auditors, Deloitte & Touche LLP; * Been in contact with key constituents, including state and federal regulators in each of the Company's markets. "Our primary focus is to make sure that our operations are running smoothly and that we are continuing to pay provider claims timely, answer our customers' calls and provide access to covered health care services for our members," said Mr. Farha. Statistics The company also disclosed in a separate press release recent operational statistics regarding the company's continued uninterrupted business operations: * WellCare is financially sound, with over $1 billion in cash and cash equivalents; * Approximately 140,000 prescriptions were filled for WellCare's members; * WellCare's pharmaceutical care team interacted with over 5,000 patients and/or their physicians to discuss drug therapies; * WellCare has processed approximately 6,000 authorization requests; * WellCare has processed over 75,000 claims totaling over $8 million and continues to maintain industry leading claims turn around times; and * WellCare handled over 10,000 calls with an enterprise-wide service level of 98% and an average speed of answer of two seconds. Wellcare also noted that neither the company nor any officer or employee is charged with any crime. "These operational statistics point to the strength and stability of our underlying business operations. We intend to continue providing uninterrupted, high-quality service to our members, providers and other business partners," said Mr. Farha. About WellCare Health Plans Headquartered in Tampa, Florida, WellCare Health Plans Inc. (NYSE: WCG) -- http://www.wellcare.com/-- provides managed care services exclusively for government-sponsored healthcare programs, focusing on Medicaid and Medicare. WellCare offers a variety of health plans for families, children, the aged, blind and disabled and prescription drug plans, currently serving more than 2.3 million members nationwide. WELLCARE HEALTH: Board Establishes Special Committee ---------------------------------------------------- WellCare Health Plans Inc.'s Board of Directors has formed a special committee in response to the ongoing investigation of the company by certain federal and state agencies and to other governmental or private proceedings. The special committee is authorized to monitor developments in the investigations and to oversee the company's response to them. It is also authorized to facilitate communication between the company's management and its Board of Directors regarding these matters. The members of the special committee are: * Neal Moszkowski, the co-chief executive officer of TowerBrook Capital Partners L.P. and the former Chairman of the Board of the company; * Chris Michalik, a managing director of Kinderhook Capital Partners and a member of the company's audit committee; and * Ruben Jose King-Shaw, the chairman and chief executive officer of Mansa Equity Partners, Inc. and the former deputy administrator and chief operating officer of the Centers for Medicare & Medicaid Services and former secretary of the Florida Agency for Health Care Administration. Mr. Moszkowski will serve as Chairman of the special committee, whose members have all been determined by the Board of Directors to be independent under standards established by the New York Stock Exchange. The special committee is authorized to retain, at the Company's expense, counsel of its choosing and other advisors that it deems appropriate. The committee is in the process of selecting counsel. "The special committee will serve an important purpose for WellCare at this critical time," said Mr. Moszkowski. "We will work to ensure that all matters concerning the investigation are dealt with appropriately and with urgency and attention to detail." SEC Asks for Information WellCare said it also received requests for information from the U.S. Securities and Exchange Commission with regards to an October 24 raid on the company's headquarters. "As previously stated, we are cooperating with all federal and state authorities," said Todd Farha, WellCare's chairman and chief executive officer. "I am confident that the newly formed special committee will provide the independent oversight and support needed to help the Company effectively address any issues that may arise." About WellCare Health Plans Headquartered in Tampa, Florida, WellCare Health Plans Inc. (NYSE: WCG) -- http://www.wellcare.com/-- provides managed care services exclusively for government-sponsored healthcare programs, focusing on Medicaid and Medicare. WellCare offers a variety of health plans for families, children, the aged, blind and disabled and prescription drug plans, currently serving more than 2.3 million members nationwide. WELLCARE HEALTH: Probe Cues Moody's to Place Ratings Under Review ----------------------------------------------------------------- Moody's Investors Service placed the ratings of WellCare Health Plans Inc. on review for possible downgrade as a result of an investigation by federal and State of Florida agencies which led to the issuance of a search warrant at the company's Tampa headquarters. The rating agency said that although details of the investigation have not been disclosed, it is concerned with the potential impact to the company should there be a prolonged investigation or findings of wrongdoing by the company or its management team. WellCare offers both Medicaid and Medicare plans under contracts with individual states and the Center for Medicaid & Medicare Services. The company currently has Medicaid managed care operations in Florida, New York, Connecticut, Ohio, Missouri, Georgia and Illinois. These products account for 88% of WellCare's membership and about 50% of its premium revenue with the Florida and Georgia contracts being the largest. Its Medicare products are offered in all 50 states. The loss of any one of these contracts could have a considerable impact on the revenues and earnings of WellCare. In particular, Moody's notes that the Medicaid business is very reliant on reputation and an operating problem or investigation in one state could jeopardize the Medicaid contracts in other states or prohibit expansion into new states. In addition, the uncertainty associated with this investigation could deter seniors from enrolling in WellCare's Medicare Advantage and Part D plans during the critical open enrollment period which begins next month. Moody's stated that the review will focus on the potential impact of the investigation to WellCare's operations including the cost and disruption incurred in responding to the investigation as well as the impact to the company's Medicaid and Medicare contracts and membership. These ratings were placed on review for possible downgrade: WellCare Health Plans Inc. -- senior secured debt rating at Ba1; WellCare of Florida Inc. -- insurance financial strength rating at Baa2. The previous rating action for WellCare occurred on Aug. 22, 2007 when the ratings were upgraded to their current level with a stable outlook. WellCare Health Plans Inc. is headquartered in Tampa, Florida. For the first six months of 2007, the company reported about $2.6 billion in total revenue. As of June 30, 2007 shareholder's equity was $678 million and total medical membership (excluding Medicare Part D) was 1.3 million members. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to repay punctually senior policyholder claims and obligations. WELLCARE HEALTH: FBI Investigations Cue S&P's Negative Watch ------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'BB-' counterparty credit rating on WellCare Health Plans Inc. on CreditWatch with negative implications. S&P took this rating action in connection with a recent investigation initiated by the U.S. Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of Inspector General, and the Florida attorney general's Medicaid Fraud Control unit. "The rating is on CreditWatch because we view this investigation as a material adverse development with potentially meaningful downside consequences for the company's ongoing operations," explained Standard & Poor's credit analyst Joseph Marinucci. This is because WellCare's market profile is so strongly linked to the more highly regulated public-sector government-sponsored health care programs (Managed Medicaid/Medicare) marketplace. The rating action also reflects S&P's uncertainty about the scope of the investigation and the potential severity of any related actions, which could materially impair the company's prospective business and financial profile. Accordingly, the rating could be lowered by at least one category depending on our assessment of the range of potential outcomes. In addition, regardless of legal outcome, the rating could be lowered if the investigation alone results in impaired business outlook or operational difficulties. WELLS FARGO: Fitch Assigns Low-B Ratings on Two Cert. Classes ------------------------------------------------------------- Fitch Ratings assigned these ratings to Wells Fargo mortgage pass- through certificates, series 2007-AR5: -- $579,265,100 classes A-1, A-2, and A-R 'AAA'; -- $11,495,000 class B-1 'AA'; -- $5,445,000 class B-2 'A'; -- $2,117,000 class B-3 'BBB'; -- $3,328,000 class B-4 'BB'; -- $907,000 class B-5 'B' The 'AAA' rating on the senior certificates reflects the 4.25% subordination provided by the 1.9% class B-1, 0.9% class B-2, 0.35% class B-3, 0.55% privately offered class B-4, 0.15% privately offered class B-5, and 0.4% privately offered class B-6. The class B-6 is not rated by Fitch. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures, and the servicing capabilities of Wells Fargo Bank N.A. (WFB; rated 'RPS1' by Fitch). The transaction is secured by a pool of mortgage loans, which consists of fully amortizing, one- to four-family, adjustable-rate mortgage loans that provide for a fixed interest rate during an initial period of approximately ten years. Thereafter, the interest rate will adjust on an annual basis. The interest rate of each mortgage loan will adjust to equal the sum of the index and a gross margin. About 86.26% of the mortgage loans are interest- only loans, which require only payments of interest until the month following the first adjustment date. The mortgage loans have an aggregate principal balance of about $604,977,737 as of the cut-off date (Oct. 1, 2007), an average balance of $564,345, a weighted average remaining term to maturity of 358 months, a weighted average original loan-to-value ratio of 73.69%, and a weighted average coupon of 6.574%. Rate/Term and equity take-out refinances account for 17.25% and 12.34% of the loans, respectively. The weighted average original FICO credit score of the loans is 743. Owner-occupied properties and second homes comprise 85.99% and 9.38% of the loans, respectively. The states that represent the largest geographic concentration are California (33.52%), Florida (8.91%), New York (7.43%), Virginia (5.27%), and New Jersey (5.08%). All other states represent less than 5% of the aggregate pool balance as of the cut-off date. All of the mortgage loans were generally originated in conformity with underwriting standards of WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, which deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer, master servicer, paying agent, and custodian, and HSBC Bank USA N.A. will act as trustee. For federal income tax purposes, elections will be made to treat the trust as a real estate mortgage investment conduit. WENDY'S INT'L: Earns $29.9 Mil. in 3rd Quarter Ended Sept. 30 ------------------------------------------------------------- Wendy's International Inc. disclosed financial results for the third quarter of 2007, reflecting the continuing turnaround of the business, significantly improving restaurant margins and cost controls. The company reported net income of $29.9 million in the 2007 third quarter, compared to net income of $69.2 million in the 2006 third quarter. Total revenues were $631.1 million in the 2007 quarter, up 0.2% compared to $630.1 million in the third quarter of 2006. Sales were $554.8 million in the third quarter of 2007, compared to $556.7 million in the third quarter of 2006. Sales increased slightly as a result of positive average same-store sales, however Wendy's had 42 fewer company-operated restaurants open at the end of the third quarter of 2007 compared to the same quarter a year ago. Franchise revenues were $76.3 million in the third quarter of 2007, compared to $73.4 million in the third quarter of 2006. The 2007 increase reflects positive franchisee average same-store sales, higher 2007 gains on the sales of stores to franchisees of $900,000 and lower 2007 reserve allowances. Partially offsetting these improvements, Wendy's had 66 fewer franchise-operated restaurants open at the end of the third quarter of 2007 compared to the same quarter a year ago "We continue to execute our strategic plan and delivered significantly improved results this quarter at both the corporate and store level despite a very tough competitive environment and commodity cost pressures," said Wendy's(R) chief executive officer and president Kerrii Anderson. Including third-quarter pre-tax expenses related to the Board's Special Committee of $13.4 and $2.4 million of pre-tax restructuring charges (which include pension settlement charges), the company reported income from continuing operations of $28.8 million in the third quarter of 2007, compared to $23.7 million in the third quarter of 2006. Earnings before interest, taxes, depreciation and amortization from continuing operations were $79.2 million in the third quarter of 2007, up 35.8% from $58.3 million in the third quarter of 2006. Excluding expenses related to the Board's Special Committee and restructuring charges, the company reported for the third quarter of 2007 adjusted income from continuing operations of $38.6 million, compared to $24.9 million in the third quarter of 2006. Excluding expenses related to the Board's Special Committee and restructuring charges, adjusted EBITDA for the third quarter 2007 was $95.0 million, up 57.3% from $60.3 million in the third quarter of 2006. "Our EBITDA growth is encouraging and store operating margins continue to expand," said Anderson. "We're revitalizing Wendy's with a focus on connecting with the consumer, new products, more effective menu management, our market-based pricing strategy, breakthrough advertising and improving operations. That said, we have even greater opportunities to better meet the needs of our customers, grow same-store sales and further increase margins." Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $1.83 billion in total assets, $1.04 billion in total liabilities, and $798.3 million in total shareholders' equity. 2007 Full-year EBITDA Guidance The company expects to report 2007 full-year EBITDA near the higher end of the outlook it provided to investors in June, which was a range of $295 million to $315 million. It also expects to report full-year EPS near the high end of the range provided earlier, which was $1.09 to $1.23. These ranges exclude expenses related to the Board's Special Committee activities and restructuring charges. "Our progress on key elements of our business since June has been positive," Anderson said. "We are focused on building on this momentum in the fourth quarter and 2008." About Wendy's International Based in Dublin, Ohio, Wendy's International Inc. (NYSE: WEN) -- http://www.wendysintl.com/,http://www.wendys.com/-- and its subsidiaries operate, develop, and franchise a system of quick service and fast casual restaurants in the Americas, Asia, the Pacific Rim, Europe and the Middle East. * * * As reported in the Troubled Company Reporter on June 21, 2007, Moody's Investors Service lowered all ratings of Wendy's International Inc. and placed all ratings on review for further possible downgrade. Affected ratings include the company's Ba2 corporate family rating which was lowered to Ba3. Additionally, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Wendy's International Inc. to 'BB-' from 'BB+'. WILTON PRODUCTS: Moody's Holds B3 Corporate Family Rating --------------------------------------------------------- Moody's Investors Service affirmed Wilton Products Inc.'s (formerly known as UCG Paper Crafts Inc.) B3 corporate family rating. Moody's also assigned a Ba3 rating to Wilton's proposed first lien senior secured credit facilities and a Caa1 rating to its second lien term loan. GTCR Golder Rauner through its portfolio company EK Success Ltd. acquired Wilton Industries Inc. and Dimensions Holdings LLC on Aug. 1, 2007. Wilton, a holding company that owns all of the stock of EK Success and the acquired companies, will use proceeds from the credit facilities and $185 million of new mezzanine discount notes (not rated - issued by UCG Paper Crafts Holdco Inc.) to refinance acquisition related debt. The company did not issue the debt that Moody's described in the press release dated July 30, 2007 for UCG Paper Crafts, Inc. However, the herein discussed financing has the same total debt amount as in the original capital structure Moody's rated on July 30, 2007. The ratings outlook remains stable. The ratings are subject to review of final documentation. Wilton Products Inc. Ratings assigned: -- $65 million senior secured revolving credit facility due 2013, at Ba3 (LGD2, 23%); -- $445 million first lien senior secured term loan due 2014, at Ba3 (LGD2, 23%); -- $255 million second lien senior secured term loan due 2015, at Caa1 (LGD4, 68%). Ratings affirmed: -- Corporate family rating at B3; -- Probability-of-default rating at B3. Ratings withdrawn: -- $65 million senior secured revolving credit facility due 2013, at B1 (LGD 3, 32%); -- $585 million first lien senior secured term loan due 2014, at B1 (LGD 3, 32%); -- $225 million second lien senior secured term loan due 2015, at Caa2 (LGD 5, 81%). Wilton's B3 corporate family rating is driven by its high leverage with debt exceeding sales, thin interest coverage, the full purchase multiples for these largely debt-funded acquisitions, material integration risk as three organizations are combined into one, the likelihood that integration spending will compress cash flows over the near-term, and longer term acquisition risk as the company seeks to consolidate the fragmented crafts industry. The rating also considers the company's participation in a highly competitive industry that could be susceptible to changes in discretionary spending and consumer tastes. Notwithstanding these risks, Wilton's rating is supported by its leading position in the niche cake decorating and scrapbooking markets, its meaningful scale relative to other crafting competitors, and the strong strategic rationale for the acquisitions given the complementary nature of the products and customer base. The rating also recognizes the company's significant investments in information technology and logistics, strong brand recognition among its target customers, access to low cost sourcing via its Asian suppliers, strong historical growth trends in the cake decorating business, the potential for significant cost savings, and its good pro forma EBITA margins. The stable outlook reflects Moody's expectation that Wilton will not encounter any material challenges as it absorbs the two acquisitions into its operations, that it will realize synergies, and it will refrain from any additional acquisitions in the near- term. The outlook also reflects Moody's expectation that the company's credit metrics will improve from initial pro forma levels. Headquartered in Woodridge, Illinois, Wilton Products Inc. is a leading provider of food and paper crafting products, and specialty housewares. The company's brands include Wilton, Copco, K&Co, Martha Stewart, and Jolee's Boutique. Pro forma revenue approached $600 million for the twelve months ended Dec. 31, 2006. WR GRACE: Earns $16.7 Million in Quarter Ended September 30 ----------------------------------------------------------- W. R. Grace & Co. disclosed financial results for the third quarter ended Sept. 30, 2007. Net income for the third quarter was $16.7 million, compared with net income of $18.4 million in the prior year quarter. The 2007 and 2006 third quarters were negatively affected by Chapter 11 expenses, litigation and other matters not related to core operations. Excluding such costs, and after tax effects, net income would have been $46.3 million for the third quarter of 2007 compared with $40.3 million calculated on the same basis for the third quarter of 2006, a 14.9% increase. Sales for the third quarter were $783.1 million compared with $741.4 million in the prior year quarter, a 5.6% increase (2.4% before the effects of currency translation). The increase was attributable primarily to higher selling prices in response to rising raw material costs and to higher volumes in most product groups, particularly outside the United States. Sales increased 1.7% for the Grace Davison operating segment and 10.1% for the Grace Performance Chemicals operating segment. Geographically, sales were up 15.2% in Europe, 8.4% in Asia Pacific and 34.8% in Latin America, and down 7.9% in North America, where sales were adversely affected by a lower level of residential construction in the United States and lower sales of hydroprocessing catalysts. Pre-tax income from core operations was $74.0 million in the third quarter compared with $71.1 million in the prior year quarter, a 4.1% increase. Pre-tax operating income of the Grace Davison operating segment was $47.6 million, up 4.4% compared with the third quarter of 2006, attributable principally to sales increases across most product groups and productivity gains. Pre-tax operating income of the Grace Performance Chemicals operating segment was $54.1 million, up 4.2% compared with the third quarter of 2006, attributable primarily to higher sales of construction products (in regions other than North America) and packaging products worldwide. Corporate operating costs were $1.3 million higher than the third quarter of 2006 due primarily to higher performance-based compensation. Sales for the nine months ended Sept. 30, 2007 were $2.3 billion compared with $2.1 billion for the prior year period, an 8.6% increase (5.3% before the effects of currency translation). Net income for the nine months ended Sept. 30, 2007, was $42.0 million, compared with net income in the comparable period of 2006 of $13.3 million. Excluding noncore and Chapter 11-related costs (and after tax effects), net income would have been $122.8 million for the nine months ended Sept. 30, 2007 compared with $96.3 million calculated on the same basis for 2006, a 27.5% increase. Pre-tax income from core operations was $227.7 million for the nine months ended Sept. 30, 2007, a 20.1% increase over 2006, primarily attributable to higher sales volume in regions other than North America, higher selling prices to offset cost inflation, and from lower overall pension costs. "Our business performance is on track to deliver strong financial results for 2007," Grace's President and Chief Executive Officer Fred Festa, said. "The quarter-over-quarter comparison was adversely affected by refill order patterns of hydroprocessing catalysts, which were very strong last year, and the decline in U.S. housing starts, which continues to cause lower sales of construction products in North America. However, we have enjoyed good growth in several key product groups, and in Europe, Asia and Latin America where economic activity has been strong." Cash Flow and Liquidity Grace's net cash inflow from operating activities for the nine months ended Sept. 30, 2007, was $65.7 million, compared with a net cash inflow of $49.4 million for 2006. The increase in cash flow from operating activities was principally attributable to higher pre-tax operating income offset by dividends to joint venture partners and cash paid to resolve certain tax contingencies. Pre-tax income from core operations before depreciation and amortization was $311.2 million for the nine months ended Sept. 30, 2007, 13.0% higher than in the prior year, a result of the performance from core operations. Net cash used for investing activities was $100.5 million for the nine months ended Sept. 30, 2007, primarily related to routine capital improvements, capacity expansion at certain production sites, one acquisition and an investment in a short-term U.S. Government debt security. At Sept. 30, 2007, Grace had available liquidity in the form of cash and cash equivalents of $535.0 million, marketable securities of $28.5 million, net cash value of life insurance of $93.5 million, available credit under its debtor-in-possession facility of $173.7 million and available credit under various non-U.S. credit facilities equivalent to $89.3 million. Grace believes that these sources and amounts of liquidity are sufficient to support its business operations, strategic initiatives and Chapter 11 proceedings for the foreseeable future. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) - - http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Martin W. Dies, III, Esq., at Dies & Hile L.L.P., and C. Alan Runyan, Esq., at Speights & Runyan,to represent it. Lexecon, LLC, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities will commence on Jan. 14, 2008. XEROX CORP: Moody's Reviews Ba1 Rating and May Upgrade ------------------------------------------------------ Moody's Investors Service placed the ratings of Xerox Corporation and supported subsidiaries under review for possible upgrade. Overall, Moody's believes that the combination of consistent business execution, secured debt reduction, and positive operating trends warrant the consideration of a rating upgrade. Ratings under review for possible upgrade include: Xerox Corporation: -- Senior unsecured at Baa3 -- Subordinated at Ba1 Xerox Credit Corporation: -- Senior unsecured at Baa3 (support agreement from Xerox Corporation) The rating review will focus on the prospects for (1) continued steady business execution, that includes equipment installation growth that provides the basis for ongoing post sale revenue streams, (2) overall modest revenue growth, (3) consistent operating profitability in the 8-9% range, (4) ongoing strong annual cash flow from operations (Moody's adjusted) in excess of $1.5 billion, (5) the maintenance of solid liquidity and continued discipline with respect to share repurchase activity which should be contained within free cash flow generation. Since Moody's changed the ratings outlook to positive in November 2006, Xerox has continued to demonstrate good installation growth throughout its product offering and, with a good product lineup, we believe that Xerox is well positioned to maintain or grow its installed base over the intermediate term. Consistent and well managed operating expenses have contributed to operating margins remaining in the 8% to 9% range. Importantly, the company has consistently reduced the level of secured debt in its capital structure and accelerated that process recently such that secured debt is less than $500 million, down from over $2 billion at December 2006. Liquidity remains solid, with cash balances of $848 million at September 2007 plus access to a $2 billion unsecured revolving credit facility, for which covenant room is expected to remain ample. Combined with our expectations of stable to improving annual free cash flow ($1.7 billion for the latest twelve months ended June 2007), Xerox is well positioned to meet (1) aggregate public debt maturities of about $626 million through 2008, as well as (2) potential calls on liquidity related to outstanding shareholder litigation. Xerox Corporation, headquartered in Norwalk, Connecticut, develops, manufactures and markets document processing systems and related supplies and provides consulting and outsourcing document management services. XM SATELLITE: Sept. 30 Balance Sheet Upside-Down by $789.6 Mil. --------------------------------------------------------------- XM Satellite Radio Holdings Inc. disclosed results of its third quarter ended Sept. 2007. At Sept. 30, 2007, the company had $1.71 billion in total assets, $2.43 billion in total liabilities, and $789.6 million in total stockholders' deficit. Total assets does not equal total liabilities plus stockholders' deficit because of minority interest, which information was not provided. The company reported a net loss of $145.4 million for the third quarter of 2007, compared with a net loss of $83.8 million for the same period last year. Revenues for the 2007 third quarter increased approximately 20% year over year to $287 million compared to $240 million in the 2006 third quarter. XM ended the 2007 third quarter with approximately 8.57 million subscribers compared to approximately 7.19 million subscribers in the prior year period. "During the third quarter, XM achieved year-over-year gains in both gross and net subscriber additions, despite weakness at retail, driven primarily by a record number of new automotive subscribers," said Nate Davis, president and chief executive officer, XM Satellite Radio. "We're already seeing the early results of the ramp in production of XM-equipped vehicles, which will provide XM with sustained subscriber growth for 2008 and beyond." "We remain optimistic that our deal to merge with Sirius will close by the end of this year. In the meantime, we continue to work with the Federal Communications Commission and the Department of Justice to further demonstrate that this merger is in the public interest and should be approved." For the third quarter of 2007, adjusted operating loss was $47 million compared to a loss of $2 million in the same period of 2006. The 2007 third quarter adjusted operating loss includes $9 million in expenses related to the company's pending merger with Sirius Satellite Radio. In the 2007 third quarter, XM recorded gross subscriber additions of 952,000 and net subscriber additions of 315,000 compared to 868,000 gross additions and 286,000 net subscriber additions in the 2006 third quarter. In the 2007 third quarter, XM's subscriber acquisition costs, a component of cost per gross addition, were $70, including approximately $10 related to increased factory installations by new automotive partners. This compared to $59 in the third quarter of 2006. CPGA in the 2007 third quarter was $116 compared to $94 in the third quarter of 2006. As of Sept. 30, 2007, the company had $231 million in cash compared to $275 million at the end of June 30, 2007. As of Sept. 30, 2007, the company also had $400 million in credit facilities, resulting in total available liquidity of $631 million. Pending Merger with Sirius Satellite Radio XM announced it will hold a special meeting of shareholders on Nov. 13, 2007, to consider and vote upon a proposal to adopt the Agreement and Plan of Merger between XM and Sirius Satellite Radio. The proposed transaction, which has been approved by the Board of Directors of both companies, is also subject to regulatory review and approvals, including the Department of Justice and the Federal Communications Commission, and the satisfaction of customary closing conditions. The companies remain optimistic that the merger will close in late 2007. XM and Sirius announced their agreement to combine in a tax-free, all-stock merger on Feb. 19, 2007. The companies filed their Merger Agreement with the Securities and Exchange Commission on Feb. 21, 2007. Under the terms of the agreement, XM shareholders will receive a fixed exchange ratio of 4.6 shares of Sirius common stock for each share of XM. XM and Sirius shareholders will each own approximately 50% of the combined company. About XM Headquartered in Washington, D.C., XM Satellite Radio Holdings Inc. -- http://www.xmradio.com/-- parent of XM Satellite Radio Inc. (Nasdaq: XMSR), is a satellite radio company, with more than 8.5 million subscribers. XM delivers entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Ferrari, Subaru, Suzuki and Toyota. * * * Standard & Poor's assigned CCC+ long-term foreign and local issuer credit ratings to XM Satellite Radio Holdings Inc. on February 2007. XM Satellite Radio Holdings Inc. also holds Moody's Investors Services' Caa1 long-term corporate family rating (assigned June 2003), Caa3 senior unsecured debt rating (assigned February 2005), and Caa1 probability of default rating (assigned September 2006). These three ratings still hold to date. * BOND PRICING: For the Week of Oct. 22 - Oct. 26 2007 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 12/31/04 0 Acme Metals Inc 12.500% 08/01/02 0 Alesco Financial 7.625% 05/15/27 72 Allegiance Tel 11.750% 02/15/08 52 Amer & Forgn Pwr 5.000% 03/01/30 65 Amer Color Graph 10.000% 06/15/10 71 Antigenics 5.250% 02/01/25 69 Archibald Candy 10.000% 11/01/07 0 Ashton Woods USA 9.500% 10/01/15 75 Atherogenics Inc 1.500% 02/01/12 30 Atherogenics Inc 4.500% 03/01/11 38 Bank New England 8.750% 04/01/99 8 Bank New England 9.875% 09/15/99 8 BankUnited Cap 3.125% 03/01/34 73 BBN Corp 6.000% 04/01/12 0 Beazer Homes USA 4.625% 06/15/24 74 Beyond.com 7.250% 12/01/03 0 Big City Radio 11.250% 03/15/05 0 Buffets Inc 12.500% 11/01/14 69 Burlington North 3.200% 01/01/45 55 Calpine Gener Co 11.500% 04/01/11 37 Clark Material 10.750% 11/15/06 0 Collins & Aikman 10.750% 12/31/11 2 Color Tile Inc 10.750% 12/15/01 0 Complete Mgmt 8.000% 12/15/03 0 CompuCredit 5.875% 11/30/35 67 Curagen Corp 4.000% 02/15/11 67 Decode Genetics 3.500% 04/15/11 69 Decode Genetics 3.500% 04/15/11 68 Dura Operating 8.625% 04/15/12 46 Dura Operating 9.000% 05/01/09 2 E.Spire Comm Inc 10.625% 07/01/08 0 Eagle Food Centr 11.000% 04/15/05 0 Empire Gas Corp 9.000% 12/31/07 0 Encysive Pharma 2.500% 03/15/12 67 Epix Medical Inc 3.000% 06/15/24 72 Exodus Comm Inc 11.625% 07/15/10 0 Fedders North Am 9.875% 03/01/14 14 Finova Group 7.500% 11/15/09 19 Ford Motor Co 6.375% 02/01/29 72 Ford Motor Co 6.625% 02/15/28 73 Ford Motor Co 6.625% 10/01/28 73 Ford Motor Co 7.125% 11/15/25 74 Ford Motor Co 7.400% 11/01/46 74 Ford Motor Co 7.700% 05/15/97 73 Ford Motor Co 7.750% 06/15/43 75 Gulf States STL 13.500% 04/15/03 0 Harrahs Oper Co 5.750% 10/01/17 75 Hines Nurseries 10.250% 10/01/11 74 HNG Internorth 9.625% 03/15/06 28 Ion Media 11.000% 07/31/13 72 Iridium LLC/CAP 10.875% 07/15/05 3 Iridium LLC/CAP 11.250% 07/15/05 3 Iridium LLC/CAP 13.000% 07/15/05 3 Iridium LLC/CAP 14.000% 07/15/05 3 K Hovnanian Entr 7.750% 05/15/13 72 K Hovnanian Entr 8.875% 01/01/12 74 KMart Funding 8.800% 07/01/10 10 KMart Funding 9.440% 07/01/18 3 Kaiser Aluminum 9.875% 02/15/02 0 Kaiser Aluminum 12.750% 02/01/03 8 Kellstrom Inds 5.750% 10/15/02 0 Kimball Hill Inc 10.500% 12/15/12 64 Kmart Corp 9.780% 01/05/20 0 Lehman Bros Holding 11.000% 10/25/17 75 Liberty Media 3.750% 02/15/30 59 Liberty Media 4.000% 11/15/29 65 Lifecare Holding 9.250% 08/15/13 72 LTV Corp 8.200% 09/15/07 0 McSaver Financl 7.400% 02/15/02 5 McSaver Financl 7.600% 08/01/07 5 McSaver Financl 7.875% 08/01/03 5 MediaNews Group 6.375% 04/01/14 73 MHS Holdings Co 16.875% 09/22/04 0 Mosler Inc 11.000% 04/15/03 0 Movie Gallery 11.000% 05/01/12 27 Muzak LLC 9.875% 03/15/09 53 National Steel Corp 8.375% 08/01/06 0 Neff Corp 10.000% 06/01/15 69 New Orl Grt N RR 5.000% 07/01/32 64 Northern Pacific RY 3.000% 01/01/47 53 Northern Pacific RY 3.000% 01/01/47 53 Northpoint Comm 12.875% 02/15/10 0 Northwest Steel & Wire 9.500% 06/15/01 0 NTK Holdings Inc 10.750% 03/01/14 66 Nutritional Src 10.125% 08/01/09 5 Oakwood Homes 7.875% 03/01/04 13 Oakwood Homes 8.125% 03/01/09 3 Oscient Pharma 3.500% 04/15/11 58 Oscient Pharma 3.500% 04/15/11 63 Outboard Marine 9.125% 04/15/17 8 Pac-West Telecom 13.500% 02/01/09 2 Pac-West Telecom 13.500% 02/01/09 4 PCA LLC/PCA FIN 11.875% 08/01/09 6 Pegasus Satellite 13.500% 03/01/07 0 Piedmont Aviat 10.250% 01/15/49 0 Pixelworks Inc 1.750% 05/15/24 74 Polaroid Corp 11.500% 02/15/06 0 Pope & Talbot 8.375% 06/01/13 37 Pope & Talbot 8.375% 06/01/13 37 Primus Telecom 3.750% 09/15/10 68 Primus Telecom 8.000% 01/15/14 67 Propex Fabrics 10.000% 12/01/12 74 Radnor Holdings 11.000% 03/15/10 0 Rait Financial 6.875% 04/15/27 70 Read-Rite Corp 6.500% 09/01/04 0 Realogy Corp 12.375% 04/15/15 74 RJ Tower Corp. 12.000% 06/01/13 4 Rotech HealthCare 9.500% 04/01/12 64 Saint Acquisition 12.500% 05/15/17 62 ServiceMaster Co 7.100% 03/01/18 73 ServiceMaster Co 7.250% 03/01/38 70 ServiceMaster Co 7.450% 08/15/27 69 SLM Corp 5.000% 06/15/28 74 SLM Corp 5.050% 03/15/23 73 SLM Corp 5.150% 12/15/28 74 SLM Corp 5.250% 03/15/28 73 SLM Corp 5.250% 12/15/28 71 SLM Corp 5.350% 06/15/28 73 SLM Corp 5.500% 06/15/29 72 SLM Corp 5.500% 06/15/29 74 SLM Corp 5.500% 06/15/29 71 SLM Corp 5.500% 03/15/30 71 SLM Corp 5.500% 03/15/30 70 SLM Corp 5.500% 12/15/30 71 SLM Corp 5.550% 06/15/25 71 SLM Corp 5.600% 03/15/29 74 SLM Corp 5.600% 06/15/29 75 SLM Corp 5.650% 03/15/29 73 SLM Corp 5.650% 12/15/29 72 SLM Corp 5.650% 12/15/29 74 SLM Corp 5.650% 09/15/30 74 SLM Corp 5.700% 03/15/29 75 SLM Corp 5.700% 03/15/29 74 SLM Corp 5.700% 03/15/29 74 SLM Corp 5.700% 12/15/29 73 SLM Corp 5.700% 03/15/30 70 SLM Corp 5.750% 03/15/29 74 SLM Corp 5.750% 03/15/29 74 SLM Corp 5.750% 06/15/29 73 SLM Corp 5.750% 09/15/29 74 SLM Corp 5.750% 12/15/29 73 SLM Corp 5.750% 03/15/30 73 SLM Corp 5.750% 03/15/30 73 SLM Corp 5.800% 12/15/29 71 SLM Corp 5.850% 12/15/31 73 SLM Corp 5.900% 09/15/29 74 SLM Corp 6.000% 12/15/26 75 SLM Corp 6.000% 12/15/31 71 Spacehab Inc 5.500% 10/15/10 56 Spansion Llc 2.250% 06/15/16 71 Special Devices 11.375% 12/15/08 66 Spectrum Brands 7.375% 02/01/15 72 Standard Pac corp 6.000% 10/01/12 73 Standard Pac Corp 6.250% 04/01/14 71 Standard Pacific 6.500% 08/15/10 74 Standard Pac Corp 6.875% 05/15/11 74 Standard Pac corp 7.000% 08/15/15 71 Standard Pacific 7.750% 03/15/13 75 Standard Pacific 9.250% 04/15/12 56 Stanley-Martin 9.750% 08/15/15 69 Tekni-Plex Inc 12.750% 06/15/10 69 Tenet Healthcare 6.875% 11/15/31 74 Times Mirror Co 6.610% 09/15/27 61 Times Mirror Co 7.250% 11/15/96 59 Times Mirror-New 7.500% 07/01/23 68 Tom's Foods Inc 10.500% 11/01/04 1 Tousa Inc 7.500% 03/15/11 17 Tousa Inc 7.500% 01/15/15 15 Tousa Inc 9.000% 07/01/10 62 Tousa Inc 9.000% 07/01/10 64 Tousa Inc 10.375% 07/01/12 17 Trans Mfg Oper 11.250% 05/01/09 50 TransTexas Gas 15.000% 03/15/05 0 Tribune Co 5.250% 08/15/15 69 True Temper 8.375% 09/15/11 67 TXU Corp 6.500% 11/15/24 74 TXU Corp 6.550% 11/15/34 73 United Air Lines 9.200% 03/22/08 49 United Air Lines 9.350% 04/07/16 31 United Air Lines 9.560% 10/19/18 54 United Air Lines 10.020% 03/22/14 50 United Air Lines 10.850% 02/19/15 30 Universal Stand 8.250% 02/01/06 0 US Air Inc. 10.700% 01/01/49 0 US Air Inc. 10.800% 01/01/49 0 Venture Holdings 12.000% 06/01/09 0 Vertis Inc 13.500% 12/07/09 70 Vesta Insur Grp 8.750% 07/15/25 2 Vicorp Restaurant 10.500% 04/15/11 60 Wachovia Corp 9.250% 04/10/08 60 Wachovia Corp 12.500% 03/05/08 74 Wachovia Corp 15.500% 12/05/07 68 WCI Communities 6.625% 03/15/15 67 WCI Communities 7.875% 10/01/13 70 Weirton Steel 10.750% 06/01/05 0 Werner Holdings 10.000% 11/15/07 0 William Lyon 7.500% 02/15/14 61 William Lyon 7.625% 12/15/12 63 William Lyon 10.750% 04/01/13 66 Wimar Opco/Fin 9.625% 12/15/14 74 Winstar Comm Inc 10.000% 03/15/08 0 Winstar Comm Inc 12.750% 04/15/10 0 Winstar Comm 14.000% 10/15/05 0 Wornick Co 10.875% 07/15/11 69 Ziff Davis Media 12.000% 08/12/09 56 ********* 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, Joseph Medel C. Martirez, Sheena R. Jusay, and Peter A. 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