/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/071102.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, November 2, 2007, Vol. 11, No. 260 Headlines 3XS LLC: Voluntary Chapter 11 Case Summary ABACUS 2006-14: Moody's Lowers Ratings on $30 Million Notes ABACUS 2006-14: Moody's Junks Rating on $36.6MM Class B Notes ABACUS 2006-14: Moody's Junks Rating on $20 Mil. Class C Notes ABACUS 2006-15: Moody's Cuts Rating on Class C Notes to Ba2 ABACUS 2006-15: Moody's Lowers Class C Notes Rating' to Ba2 ABACUS 2006-15: Moody's Lowers Class D Notes Rating' to B1 ABACUS 2006-15: Moody's Lowers $2.8 Million Notes Rating' to B1 AFFILIATED COMPUTER: Cerberus Withdraws Acquisition Offer AFFILIATED COMPUTER: Five Directors Resign on Chairman's Call ALCATEL-LUCENT: Posts EUR345 Mil. Net Loss in Qtr. Ended Sept. 30 ALERT CELLULAR: Exclusive Plan Filing Period Moved to Dec. 10 ANIXTER INT'L: Fitch Affirms BB+ Issuer Default Rating ART CDO: Moody's Reviews Ba2 Rating on $5 Mil. Class C Notes AURIGA CDO: Moody's Junks Ratings on Four Note Classes AUTOMOTIVE GLASS: Moody's Places Corporate Family Rating at B2 BEAZER HOMES: Amends Four-Year Revolving Credit Facility BELO CORP: Earns $18.7 Million in Quarter Ended September 30 BFC AJAX: Moody's Cuts Ratings on Two Note Classes to Low-B BIOSTEM INC: Buying Joyon Via 115 Million Stock Exchange Deal BROADRIDGE TRANSPORT: Case Summary & 15 Largest Unsec. Creditors CAIRN MEZZ: Moody's Lowers Ratings on Two Note Classes to Low-B CALPINE CORP: Quadrangle & JP Morgan Objects to Plan Confirmation CALPINE CORP: Contends Litigation is Premature & Unnecessary CAP CANA: Moody's Rates Proposed $500 Mil. Senior Notes at B3 CDC MORTGAGE: S&P Cuts Ratings on Four Cert. Classes to Low-B CHALLENGER POWERBOATS: Board OKs Reverse Split on Common Stock CHAMPION ENTERPRISES: Prices $160 Mil. Public Offering of Notes CHANCELLOR GROUP: Voluntary Chapter 11 Case Summary CHYPS CBO: Fitch Junks Ratings on Four Note Classes CHYPS CBO: Fitch Junks Ratings on Two Certificate Classes CITIGROUP MORTGAGE: Fitch Assigns Low-B Ratings on $6.6MM Notes CITIGROUP MORTGAGE: Fitch Takes Rating Actions on 14 Deals CITIMORTGAGE ALTERNATIVE: Fitch Junks Ratings on Two Certificates CITIGROUP MORTGAGE: S&P Junks Rating on 2003-HE4 Class M-7 Certs. COLLINS & AIKMAN: Fee Examiner Files Report COMMODORE CDO: Moody's Junks Ratings on Two Note Classes COMSTOCK HOMEBUILDING: S&P Withdraws B Corporate Credit Rating CONSECO INC: Posts $53.7 Million Net Loss in Qtr. Ended Sept. 30 CRDENTIA CORP: Acquiring Medical People for $750,000 in Cash CRESTED CORP: Special Stockholders Meeting Set for November 26 DAVIS & ASSOCIATES: Voluntary Chapter 11 Case Summary DRACO 2007-1: Moody's Junks Ratings on Two Note Classes FIDELITY NAT'L: Board Okays Lender Processing Services Spin-Off FIDELITY NATIONAL: Earns $245.3 Million in Third Quarter 2007 FHC HEALTH: Moody's Holds B2 Corporate Family Rating FORD CREDIT: Fitch Holds BB+ Rating on Class D Notes FORD MOTOR: UAW Contract Negotiations Continue FURLONG SYNTHETIC: Moody's Cuts Rating on Class B Notes to Ba1 GEMSTONE CDO: Moody's Junks Ratings on Two Note Classes GENERAL MOTORS: Investing $73 Million in Shreveport Assembly Plant GRANT PRIDECO: Selling Three Biz Units to Vallourec for $800 Mil. GSV-2 RESORT: Voluntary Chapter 11 Case Summary HALCYON SECURITIZED: Moody's Junks Rating on $4MM Class E Notes HALO TECHNOLOGY: U.S. Trustee Amends Creditors Panel Membership HALO TECH: Court Okays Pepe & Hazard as Committee's Bankr. Counsel HALO TECHNOLOGY: Committee Taps Weiser LLP as Financial Advisor HAMILTON GARDENS: Moody's Lowers Ratings on Two Notes to Low-B HAWAIIAN AIRLINES: Awarded $80 Million in Damages Against Mesa HEALTHTRONICS INC: Moody's Holds B1 Corporate Family Rating HEMOSOL CORP: Court Extends CCAA Protection Until November 30 HICKORY TREE: Case Summary & Four Largest Unsecured Creditors HIGDON FURNITURE: Case Summary & 20 Largest Unsecured Creditors HYDRO SPA: U.S. Trustee Wants Chapter 11 Trustee Appointed INNOVATIVE DESIGNS: Judge Dismisses Bankruptcy Case IRON MOUNTAIN: To Acquire Stratify for $158 Million Cash ISCHUS MEZZ: Moody's Junks Rating on $7 Mil. Class E Notes J. CREW: S&P Lifts Corporate Credit Rating to BB- JP MORGAN: Fitch Affirms and Downgrades Ratings on Five Deals KLEROS PREFERRED: Moody's Junks Rating on $6 Mil. Class E Notes LIBRA CDO: Moody's Cuts Rating on $52.5MM Class D Notes to B1 LINCOLN AVENUE: Moody's Lowers Ratings on Two Notes to Low-B LINEAR TECH: Sept. 30 Balance Sheet Upside-Down by $635 Million MACO STEEL: Section 341(a) Creditors Meeting Set for November 14 MACO STEEL: Court Okays Miller Johnson as Bankruptcy Counsel MAGNOLIA FINANCE: Moody's Cuts Rating on $4.25 Million Notes to B3 MAGNOLIA FINANCE: Moody's Junks Rating on $3 Million Notes MAGNOLIA FINANCE: Moody's Junks Rating on Series 2006-9F2 Notes MAYFLOWER CDO: Moody's Cuts Ratings on Two Notes to Low-B MECACHROME INT'L: S&P Revises Outlook to Negative from Stable MESABA AVIATION: Embraer Wants Nod on Contractual Default Rate MILLER PLATING: Voluntary Chapter 11 Case Summary MORGAN STANLEY: Fitch Assigns Low-B Ratings on $7.3MM Certificates MOVIE GALLERY: Can Walk Away from 212 Unexpired Store Leases MOVIE GALLERY: Landlords React to the Auction of 508 Stores Leases NETBANK INC: Files List of 20 Largest Unsecured Creditors NETBANK INC: Holland & Knight Approved as Bankruptcy Counsel NETBANK INC: Files Schedules of Assets and Liabilities NEUMANN HOMES: Files for Bankruptcy Protection in Illinois NEUMANN HOMES: Case Summary & 20 Largest Unsecured Creditors NEWLAND INT'L: Moody's Rates Proposed $220 Mil. Notes at Ba3 ODOM EXCAVATION: Section 341(a) Meeting Scheduled on November 19 OSG INC: S&P Places BB+ Corporate Credit Rating on Negative Watch OWENS CORNING: Completes $640 Mil. Buyout of Saint-Gobain's Biz PHARMED GROUP: Wants to Hire Berger Singerman as Counsel PYXIS ABS: Moody's Junks Ratings on Three Note Classes RAHWAY HOSPITAL: Moody's Affirms Series 1998 Bonds' Ba2 Rating REABLE THERAPEUTICS: S&P Holds B Corporate Credit Rating REAL ESTATE: Section 341(a) Meeting Scheduled for December 4 REAL ESTATE: Wants Until Nov. 20 to File Schedules and Statement REMY WORLDWIDE: Taps Greenberg Traurig as Special Counsel REMY WORLDWIDE: Wants to Hire Ernst & Young as Accountant RMS LEASING: Voluntary Chapter 11 Case Summary ROADHOUSE GRILL: Section 341(a) Creditors Meeting Set for Nov. 19 ROADHOUSE GRILL: Court Okays Kelley & Fulton as Bankruptcy Counsel ROADHOUSE GRILL: U.S. Trustee Appoints Members to Creditors Panel ROCKY ROBINSON: Court Gives Nod to Tyler Bartl as Counsel SAGITTARIUS CDO: S&P Puts Four Low-B Rated Notes on CreditWatch SEALY MATTRESS: S&P Rates $440 Million Senior Loans at BB+ SMURFIT-STONE: Solid Performance Prompts S&P to Lift Ratings SOLOMON DWEK: Case Summary & 253 Largest Unsecured Creditors SPX CORP: Earns $92.9 Million in Third Quarter Ended Sept. 30 SPX CORP: Inks Definitive Pact to Acquire APV from Invensys PLC SPX CORP: Fitch Affirms BB+ Issuer Default Rating STACK 2006-1: Moody's Junks Rating on $5 Mil. Class VII Notes STONEYBROOK TOWNHOMES: Case Summary & Five Largest Creditors SUSSER HOLDINGS: Prices $150MM Offering of 10-5/8% Sr. Notes TALLSHIPS FUNDING: Moody's Cuts Ratings on Two Notes to Low-B TARPON INDUSTRIES: Reduces Debt with Sale of Steelbank Unit TESORO PETROLEUM: Fitch Says Tracinda Offer Won't Affect Ratings THORPE INSULATION: Section 341(a) Creditors Meeting Set on Nov. 27 TOPANGA CDO: Moody's Lowers Ratings on Three Notes to Low-B UNITED RENTALS: Provides Update on Unit's Tender Offer VISTEON CORP: Sept. 30 Balance Sheet Upside-Down by $162 Million WACHOVIA AUTO: Fitch Affirms BB Rating on Class E Notes WELLMAN INC: S&P Junks Corporate Credit Rating WELLMAN INC: Poor Operating Results Cue Moody's to Junk Rating WENDY'S INT'L: Banks Propose "Highly Conditional" Financing WEST TRADE: Moody's Lowers Ratings on Two Notes to Low-B WETCO RESTAURANT: Section 341(a) Creditors Meeting Set for Nov. 20 WETCO RESTAURANT: Wants Tom St. Germain as Bankruptcy Counsel WILLIAMS SCOTSMAN: Moody's Withdraws B1 Corporate Family Rating WILLIAMS SCOTSMAN: Ristretto Deal Cues S&P to Withdraw Ratings WP EVENFLO: Moody's Affirms B2 Corporate Family Rating * BOOK REVIEW: Dangerous Pursuits - Mergers and Acquisitions in the Age of Wall Street ********* 3XS LLC: Voluntary Chapter 11 Case Summary ------------------------------------------ Debtor: 3XS, L.L.C. 4600 Mountain Home Ranch Road Calistoga, CA 94515 Bankruptcy Case No.: 07-11417 Chapter 11 Petition Date: October 31, 2007 Court: Northern District of California (Santa Rosa) Debtor's Counsel: John S. Morken, Sr., Esq. 760 Market Street, Suite 938 San Francisco, CA 94102 Tel: (415) 391-6140 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. ABACUS 2006-14: Moody's Lowers Ratings on $30 Million Notes ----------------------------------------------------------- Moody's downgraded and left on review for possible downgrade the following notes issued by ABACUS 2006-14, Ltd. Class Descriptions: -- $20,000,000 Class A-2 Variable Rate Notes, Due 2045 Prior Rating: Aa1 Current Rating: Ba3, on review for possible downgrade -- $10,000,000 Class A-2 Series 2 Variable Rate Notes, Due 2045 Prior Rating: Aa1 Current Rating: Ba3, 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. ABACUS 2006-14: Moody's Junks Rating on $36.6MM Class B Notes ------------------------------------------------------------- Moody's downgraded and left on review for possible downgrade these notes issued by ABACUS 2006-14, Ltd. Class Description: -- $36,684,375 Class B Variable Rate Notes, Due 2045 Prior Rating: Aa3, on review for possible downgrade Current Rating: Caa3, 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. ABACUS 2006-14: Moody's Junks Rating on $20 Mil. Class C Notes -------------------------------------------------------------- Moody's downgraded and left on review for possible downgrade the following notes issued by ABACUS 2006-14 Ltd. Class Description: -- $20,000,000 Class C Variable Rate Notes, Due 2045 Prior Rating: A2, on review for possible downgrade Current Rating: Caa3, 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. ABACUS 2006-15: Moody's Cuts Rating on Class C Notes to Ba2 ----------------------------------------------------------- Moody's Investors Service downgraded and left these notes issued by Abacus 2006-15 Ltd. (Class C) on review for possible downgrade: Class Description: -- $41,150,000 Class C Series 1 Variable Rate Notes Due 2045 Prior Rating: A3 Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of asset- backed securities. ABACUS 2006-15: Moody's Lowers Class C Notes Rating' to Ba2 ----------------------------------------------------------- Moody's Investors Service downgraded and left these notes issued by Abacus 2006-15 Ltd. (Class C Series 2) on review for possible downgrade: Class Description: -- $2,850,000 Class C Series 2 Variable Rate Notes Due 2037 Prior Rating: A3 Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of asset- backed securities. ABACUS 2006-15: Moody's Lowers Class D Notes Rating' to B1 ---------------------------------------------------------- Moody's Investors Service downgraded and placed these notes issued by Abacus 2006-15 Ltd. (Class D Series 1) on review for possible downgrade: Class Description: -- $14,650,000 Class D Series 1 Variable Rate Notes Due 2045 Prior Rating: Baa3 Current Rating: B1, on review for possible downgrade According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of asset- backed securities. ABACUS 2006-15: Moody's Lowers $2.8 Million Notes Rating' to B1 --------------------------------------------------------------- Moody's Investors Service downgraded and left these notes issued by Abacus 2006-15, Ltd. (Class D Series 2) on review for possible downgrade: Class Description: -- $2,850,000 Class D Series 2 Variable Rate Notes Due 2037 Prior Rating: Baa3 Current Rating: B1, on review for possible downgrade According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of asset- backed securities. AFFILIATED COMPUTER: Cerberus Withdraws Acquisition Offer --------------------------------------------------------- Affiliated Computer Services, Inc., disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that on Oct. 30, 2007, the Special Committee of its Board of Directors receive a letter from Cerberus Capital Management, L.P., stating that Cerberus was withdrawing its offer to acquire the company. In the letter, Cerberus said that although it believes that the company is an attractive investment opportunity, it had to withdraw its offer due to the continuation of poor conditions in the debt financing markets. Cerberus further said that had the company's Special Committee engaged with Cerberus and Mr. Darwin Deason, Chairman of the Board of ACS, on the schedule proposed in the original offer letter, the acquisition would been approved and closed months ago. Cerberus however stated that it market conditions change, it may consider proposing another transaction with ACS. Cerberus Offer As reported in the Troubled Company Reporter on March 23, 2007, the company confirmed that it received a proposal from Mr. Deason and Cerberus to acquire, for a cash purchase price of $59.25 per share, all of the outstanding shares of the company's common stock, other than certain shares and options held by Mr. Deason and members of the company's management team that would be rolled into equity securities of the acquiring entity in connection with the proposed transaction. Mr. Deason and Cerberus stated that their proposed price represented a premium of 15.5% over the closing price of the company's class A common stock on March 19, 2007, and an 18.3% premium over the 90-day average closing price. The proponents had anticipated to execute a merger agreement in early May 2007. In connection with their proposal, Mr. Deason and Cerberus entered into an Exclusivity Agreement, dated March 20, 2007, pursuant to which Mr. Deason agreed to work exclusively with Cerberus to negotiate an acquisition of the company. Citigroup Commitment Letter In order to further support their offer, Mr. Deason and Cerberus disclosed that they received a letter from Citigroup Global Markets Inc. stating that it is highly confident of its ability to raise the debt necessary to complete the transaction. Suspension of Exclusivity Agreement However, as reported in the Troubled Company Reporter on June 12, 2007, the company reached an agreement with Mr. Deason to suspend the Exclusivity Agreement between Mr. Deason and Cerberus. Lawsuit As reported in the Class Action Reporter on April 12, 2007, the company disclosed in a regulatory filing that it was facing two class actions filed in the Court of Chancery of the State of Delaware, New Castle County against the company and certain directors. The lawsuits were filed by purported shareholders opposed to a proposal to acquire the company presented by Mr. Deason and Cerberus. In each of the lawsuits, the plaintiff claims to be a shareholder of the company purporting to bring the action on behalf of all public shareholders of the company and alleges that the proposal is "inadequate and to have resulted from an unfair process." About Cerberus Capital Management Headquartered in New York City, and established in 1992, Cerberus Capital Management LP is one of the world's leading private investment firms with approximately $25 billion of capital under management in funds and accounts. Through its team of investment and operations professionals, Cerberus specializes in providing both financial resources and operational expertise to help transform its portfolio companies into industry leaders for long- term success and value creation. Cerberus has offices in Los Angeles, Chicago and Atlanta, well as advisory offices in London, Baan, Frankfurt, Tokyo, Osaka and Taipei. About Affiliated Computer Headquartered in Dallas, Affiliated Computer Services Inc. (NYSE: ACS) -- http://www.AffiliatedComputer-inc.com/ -- provides business process outsourcing and information technology solutions to world-class commercial and government clients. The company has more than 58,000 employees supporting client operations in nearly 100 countries. The company has global operations in Brazil, China, Dominican Republic, India, Guatemala, Ireland, Philippines, Poland, and Singapore. * * * Affiliated Computer Services currently carries Fitch Ratings' BB Issuer Default Rating. The company also carries Moody's Investors Service's long term rating of Ba2. AFFILIATED COMPUTER: Five Directors Resign on Chairman's Call ------------------------------------------------------------- Affiliated Computer Services Inc. chairman Darwin Deason has sent a letter asking five independent directors to resign saying that the Board of Directors has come under increasing shareholder criticism for its failure to consummate a transaction based on Cerberus Capital Management LP's offer. Specifically, Mr. Deason seeks resignation of Robert B. Holland, J. Livingston Kosberg, Dennis McCuistion, Joseph P. O'Neill, and Frank A. Rossi. "[T]hey clearly demonstrate that the Board has lost the trust and support of the Company's shareholders. It is in the shareholders' best interests to provide the Company with new strategic leadership," Mr. Deason argues. Mr. Deason went on to say that the Board, despite its efforts, has failed to produce any other bidders or superior strategic alternatives. Such failure to produce another bidder or superior strategic alternative has called into question the significant time and resources dedicated to the Board's repeat auction and extensive meetings to consider strategic alternatives, Mr. Deason avers. ACS Directors Respond The independent directors accepted Mr. Deason's call, saying that "the best way for us to discharge our fiduciary duties is to resign in favor of a new majority of independent directors." However, the five directors contended that from the outset, Mr. Deason has attempted to subvert the acquisition process in order to prevent superior alternatives to the Cerberus offer from being consummated. The directors also noted that they have engaged Mr. Deason and Cerberus in an effort to modify the proposal in a way that would make sense for all of the company's shareholders, including increasing the offer price, which Mr. Deason refused. Calling his move as "remarkable piece of bullying and thuggery," the directors argued that Mr. Deason have made it impossible for them to continue to effectively serve as directors of ACS. "We could fire you and the entire management team, but that would not help our shareholders, customers or employees," the directors avered. About Affiliated Computer Headquartered in Dallas, Affiliated Computer Services Inc. (NYSE: ACS) -- http://www.AffiliatedComputer-inc.com/ -- provides business process outsourcing and information technology solutions to world-class commercial and government clients. The company has more than 58,000 employees supporting client operations in nearly 100 countries. The company has global operations in Brazil, China, Dominican Republic, India, Guatemala, Ireland, Philippines, Poland, and Singapore. * * * Affiliated Computer Services currently carries Fitch Ratings' BB Issuer Default Rating. The company also carries Moody's Investors Service's long term rating of Ba2. ALCATEL-LUCENT: Posts EUR345 Mil. Net Loss in Qtr. Ended Sept. 30 ----------------------------------------------------------------- Alcatel-Lucent reported Wednesday results for the third quarter ended Sept. 30, 2007. For the quarter, reported net loss was EUR345 million, including the non-cash impact from purchase price allocation entries of EUR87 million following the merger with Lucent Technologies. The global Thales transaction has been closed during the second quarter 2007 and all activities which have been disposed of or contributed to Thales as of June 30, 2007, are not included in third quarter 2007 results. For the third quarter 2007, Alcatel-Lucent's reported revenues amounted to EUR4.350 billion, compared to a pro-forma EUR4.909 billion in the year-ago quarter, an 8% decrease at a constant Euro/US$ exchange rate, or an 11% decline at current rate. The reported gross profit was EUR1.487 billion, including the impacts from purchase price allocation entries of EUR1 million. Reported operating income was EUR74 million, including the impact from purchase price allocation entries of EUR144 million. The adjusted gross profit was EUR1.486 billion, 34.2% of sales, compared to an adjusted pro-forma gross profit of EUR1.925 billion in the year-ago quarter. Adjusted operating income was EUR70 million, 1.6% of sales, compared with an adjusted pro-forma operating income of EUR 430 million in the year-ago quarter. For the quarter, adjusted net loss was EUR258 million. The adjusted pro-forma net income was EUR532 million in the third quarter 2006. The net debt cash position was EUR 124 million as of Sept. 30, 2007, compared with EUR221 million as of June 30, 2007. Chief Executive Officer Pat Russo commented: "We believe that our strategy, our product portfolio and our expertise align with the long-term market drivers that will underpin the industry for the next several years, as networks migrate to all-IP based architecture. During the first nine months of operations as a single company, we strengthened our position in key strategic markets and technologies such as IP and mobile broadband required to position the company for long-term sustained growth. Having said that, and in spite of the promise of this industry and the long term benefits of the merger, we recognize that market conditions remain difficult, with continued pressure on revenues and margins due to intensified competition and some slowdown of spending in North America. These market conditions along with our commitment to transform the company for the long term lead us to put in place an aggressive three-part plan to improve profitability and reposition the business." The plan includes: - streamlining the core carrier business, accelerated product cost improvement with increased portfolio focus on IP transformation of wireline and wireless networks. - enhancing growth by developing an offensive strategy on sectors offering a strong growth potential, namely : -- high value added services and applications for the carrier markets -- solutions for the enterprise markets and industry and public sector. -- streamlining the organization into a simplified model with a focused management committee with clear accountabilities and ownership to quickly execute the plans. This plan will result in an acceleration of cost structure improvement, especially in support functions and other savings arising from the realigned and streamlined carrier business Group. The company expects that this plan will result in incremental savings of Euro 400 million in gross margin and comparable operating expenses by the end of year 2009. This implies an acceleration of our ongoing headcount targets into 2008 with incremental reductions of about 4,000 by 2009. Pat Russo further added: "These are difficult but necessary decisions, and we will manage these reductions with care. With this plan, the company is targeting gross margins in the high 30's and operating margins of 10% or better in the post integration phase beginning 2010." About Alcatel-Lucent Headquartered in Paris, France, Alcatel-Lucent -- http://www.alcatel-lucent.com/-- provides solutions that enable service providers, enterprises and governments worldwide to deliver voice, data and video communication services to end users. Alcatel-Lucent maintains operations in 130 countries, including, Austria, Germany, Hungary, Italy, Netherlands, Ireland, Canada, United States, Costa Rica, Dominican Republic, El Salvador, Guatemala, Peru, Venezuela, Indonesia, China, Australia, Brunei and Cambodia. On Nov. 30, 2006, Alcatel and Lucent Technologies Inc. completed their merger transaction, and began operations as a communication solutions provider under the name Alcatel-Lucent on Dec. 1, 2006. * * * In September 2007, Standard & Poor's Ratings Services revised its outlook on Alcatel-Lucent and related entity Lucent Technologies Inc. to stable from positive. At the same time, the 'BB-' long- term corporate credit ratings on the group were affirmed. The 'B' short-term corporate credit rating on Alcatel-Lucent and 'B-1' short-term rating on Lucent Technologies were also affirmed. In April 2007, Fitch Ratings affirmed Alcatel-Lucent's ratings at Issuer Default 'BB' with a Stable Outlook, senior unsecured 'BB' and Short-term 'F2' and simultaneously withdrew them. In February 2007, Moody's Investor Services put a Ba2 rating on Alcatel's Corporate Family and Senior Debt ratings. Lucent carries also carries Moody's B1 Senior Debt rating and B2 Subordinated debt & trust preferred rating. ALERT CELLULAR: Exclusive Plan Filing Period Moved to Dec. 10 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District Of California in Santa Barbara has extended Alert Cellular LC's exclusive period to file a plan until Dec. 10, 2007, Bill Rochelle of Bloomberg News reports. Alert Cellular will have 60 days after that date to solicit acceptances of any plan it may file. The Debtor sought the extension on Oct. 5, 2007, to address remaining issues relating to its closure of 40 of its underperforming retail locations. W. Joseph Kautz, Alert Cellular's chief financial officer, told the Court that the Debtor has achieved significant milestones in its chapter 11 case, including: -- negotiation with its prepetition secured lender and other major parties-in-interest of terms governing cash collateral use on a final basis for the duration of the case; and -- elimination of over $2.2 million in prepetition debt. However, Mr. Kautz explained, the Debtor needs more time to file a plan because : a) it is "fine tuning" its final store mix which may require it to reject additional leases or licenses; b) it will have to negotiate with T-Mobile and Verizion business terms that will govern the Debtor's operations through the upcoming holiday retail season and beyond; and c) it needs to determine the size of its claim pool after the filing of its proposed claim bar date. On Oct. 9, 2007, the Court declined to sign an order approving a Nov. 30, 2007 general claims bar date proposed by the Debtor, stating that "counsel has not complied with Local Bankruptcy Rule 9013-1(g)." Headquartered in Carpinteria, California, Alert Cellular LC -- http://alertcellular.com/-- is an authorized wireless retailer for Verizon and T-Mobile. The company filed for chapter 11 protection on July 3, 2007 (Bankr. C.D. Calif. Case No. 07- 10918). Malhar S. Pagay, Esq., and Scotta E. McFarland, Esq., at Pachulski Stang Ziehl & Jones LLP serve as the Debtor's counsel. The Official Committee of Unsecured Creditors selected Irell & Manella LLP as its counsel. When the Debtor filed for bankruptcy, it listed estimated assets and debts of $1 million to $100 million. ANIXTER INT'L: Fitch Affirms BB+ Issuer Default Rating ------------------------------------------------------ Fitch Ratings affirmed these ratings for Anixter International Inc. and its wholly owned operating subsidiary, Anixter Inc.: Anixter -- Issuer Default Rating 'BB+'; -- Senior unsecured debt 'BB-'. AI -- Issuer Default Rating 'BB+'; -- Senior unsecured notes 'BB+'; -- Senior unsecured bank credit facility at 'BB+'. Fitch's action affects about $800 million of public debt securities. The rating outlook is stable. The ratings and Outlook reflect these considerations: -- Fitch expects Anixter to demonstrate continued strong organic growth driven by solid end market demand and market share gains; -- Fitch believes that, although Anixter is operating near the peak of a typical business cycle, the company should be able to maintain its current profitability profile with EBITDA margins approximately 7% to 8% as additional operating efficiencies mitigate ongoing pricing pressure; -- Anixter will likely continue to make small acquisitions to complement growth in its OEM supply business as well as potential opportunistic acquisitions in its industrial wire and enterprise cabling businesses which in the past have been partially debt financed; -- Fitch expects Anixter will use free cash flow in excess of funds needed for acquisitions for additional share repurchase programs and/or one-time dividends; and -- Anixter's use of debt financing for acquisitions and other items is expected to, at times, temporarily increase the company's leverage ratio but Fitch expects the company to manage its balance sheet in the long term near its current leverage ratio (total debt/operating EBITDA) of 2.5x, or about 3x on an adjusted basis (total adjusted debt/operating EBITDAR) as well as a debt to total capitalization ratio near 50%. Anixter ratings are supported by: -- Strong diversification of products, suppliers, customers and geographic penetration adds stability to the financial profile by reducing operating volatility; and -- Anixter has established itself as a market leader in niche distribution markets, which has resulted in above average margins for a distributor. Rating concerns include: -- Anixter has historically been highly acquisitive with a portion of acquisitions being debt financed; and -- Anixter has a history of shareholder friendly actions coupled with Fitch's expectations that free cash flow in excess of investments in internal growth and acquisitions would be returned to shareholders rather than being used to reduce debt. Fitch believes Anixter's liquidity was sufficient and consisted of the following as of Sept. 30, 2007: i. about $46 million of cash and cash equivalents; ii. $450 million five-year revolving credit agreement maturing April 2012, of which, $216 million was available; iii. various other committed and uncommitted credit facilities totaling about $80 million with nominal amounts available; and iv. $225 million on-balance-sheet accounts receivable securitization program expiring September 2008, of which, about $170 million was available. Total debt as of Sept. 30, 2007 was $1 billion and included $55 million outstanding under Anixter's $225 million accounts receivable securitization program, $234 million outstanding under the $450 million revolving credit facility, $75 million outstanding under various other credit facilities, $200 million in 5.95% senior unsecured notes due February 2015, $163 million in 3.25% zero-coupon unsecured notes due July 2033 and $300 million in 1% convertible unsecured notes due February 2013. The 3.25% zero coupon notes and the 1% convertible notes are issued by Anixter International and are structurally subordinated to the remaining debt which is issued by Anixter Inc. Anixter Inc. is the operating company under the parent company of Anixter International. ART CDO: Moody's Reviews Ba2 Rating on $5 Mil. Class C Notes ------------------------------------------------------------ Moody's Investors Service placed these notes issued by ART CDO 2006-1, Ltd. on review for possible downgrade: Class Descriptions: -- $20,000,000 Class A2 Senior Floating Rate Notes Due August 2046 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade -- $10,000,000 Class A3 Deferrable Floating Rate Notes Due August 2046 Prior Rating: A2 Current Rating: A2, on review for possible downgrade -- $8,000,000 Class B Deferrable Floating Rate Notes Due August 2046 Prior Rating: Baa2 Current Rating: Baa2, on review for possible downgrade -- $5,000,000 Class C Deferrable Floating Rate Notes Due August 2046 Prior Rating: Ba2 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 collateral pool, which consists primarily of structured finance securities. AURIGA CDO: Moody's Junks Ratings on Four Note Classes ------------------------------------------------------ Moody's Investors Service placed these notes issued by Auriga CDO Ltd. on review for possible downgrade: Class Descriptions: -- $975,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes due January 2047 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: -- $97,500,000 Class A-2A Second Priority Senior Secured Floating Rate Notes due January 2047 Prior Rating: Aaa Current Rating: A2, on review for possible downgrade -- $48,000,000 Class A-2B Third Priority Senior Secured Floating Rate Notes due January 2047 Prior Rating: Aaa Current Rating: A3, on review for possible downgrade -- $64,500,000 Class B Fourth Priority Senior Secured Floating Rate Notes due January 2047 Prior Rating: Aa2 Current Rating: Baa2, on review for possible downgrade -- $63,000,000 Class C Fifth Priority Senior Secured Floating Rate Notes due January 2047 Prior Rating: Aa3 Current Rating: Baa3, on review for possible downgrade -- $48,000,000 Class D Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes due January 2047 Prior Rating: A2 Current Rating: Ba2, on review for possible downgrade -- $42,000,000 Class E Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes due January 2047 Prior Rating: A3 Current Rating: Ba3, on review for possible downgrade -- $51,000,000 Class F Eighth Priority Mezzanine Secured Deferrable Floating Rate Notes due January 2047 Prior Rating: Baa2 Current Rating: Caa2, on review for possible downgrade Moody's also announced that it has downgraded these notes: -- $28,500,000 Class G Ninth Priority Mezzanine Secured Deferrable Floating Rate Notes due January 2047 Prior Rating: Baa3 Current Rating: Ca -- $43,500,000 Class H Ninth Priority Junior Secured Deferrable Floating Rate Notes due January 2047 Prior Rating: Baa3 Current Rating: C -- $22,500,000 Class I Ninth Priority Junior Secured Deferrable Floating Rate Notes due January 2047 Prior Rating: Ba2 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. AUTOMOTIVE GLASS: Moody's Places Corporate Family Rating at B2 -------------------------------------------------------------- Moody's Investors Service assigned ratings to Automotive Glass & Services: -- Corporate Family Rating, B2; -- senior secured asset based revolving credit, B1; -- senior secured first lien term loan, B1; and -- senior secured second lien term loan, Caa1. The rating outlook is stable. The new senior secured facilities will be used to finance the purchase of AG&S by affiliates of Platinum Equity LLC for $500 million. As part of the transaction, Platinum will contribute $156.5 million in equity. AG&S manufactures, fabricates and delivers glass products and solutions to automotive OEMs directly or through third party suppliers; manufactures replacement auto glass and distributes glass and related sundries to the glass replacement aftermarket; and provides a suite of software and services that manages the auto glass insurance claims process and inventory and work flow for glass retailers. The ratings reflect the company's high leverage, moderate interest coverage, and weak initial free cash flow generation following its purchase by Platinum. AG&S is a leading player in the market for OEM and aftermarket automotive glass. While the company does have exposure to Big-3 OEM build rates (about 48% of OEM revenues and 24% of totals revenues), its aftermarket and services activities provide important revenue streams that suggest more stable operating performance than other companies in the auto parts sector. Nevertheless, the company's ability to achieve expected results will be contingent on successful implementation of a multi-year restructuring initiative designed to improve the company's cost competitiveness. While the actions necessary to achieve this restructuring have been identified, implementation has only just begun. Moreover, the ratings consider that the company faces a near term scheduled rebuild of one of the float glass lines at its Meadville facility, which will involve a short term shutdown of the line. The large capital investment necessary to rebuild this line, coupled with restructuring costs, will constrain cash flow during the near term. The stable outlook reflects Moody's expectation that AG&S will maintain its leading positions in the automotive OEM and replacement glass markets over the intermediate term. The outlook also anticipates that the adverse effects of weak auto sales trends on the company's OEM volumes will be mitigated by the company's non-OEM businesses and planned ongoing restructuring efforts. Availability under the company's liquidity facility is expected to be sufficient to support these operating pressures and planned refurbishing expenditures at the company's Meadville facility. On a pro forma basis, initial leverage (using Moody's standard adjustments) is estimated to be 3.9x, and EBIT/Interest is estimated at 1.9x. However, the company is subject to certain cyclical industry risks, and sensitivity analysis indicates potential for metrics that are consistent with the B2 rating. Moreover, free cash flow in 2008 is expected to be negative given the planned capital expenditures at the company's Meadville facility. At closing, the combined company is expected to have about $59.8 million of availability under its new $75 million asset based revolving credit facility. A fixed charge covenant will not be applicable until availability falls to a level to be determined by closing. Ratings assigned: -- Corporate Family Rating, B2 -- Probability of Default, B2 -- $75 million senior secured asset based revolving credit facility, B1 (LGD3, 37%) -- $225 million senior secured first lien term loan, B1 (LGD3, 37%) -- $125 million senior secured second lien term loan, Caa1 (LGD5, 83%) Future events that have the potential to drive AG&S' outlook or ratings lower include: ongoing OEM production pressures which result in significantly lower revenues; market share losses in any of the company's segments; the inability of the company's restructuring efforts to offset OEM production pressures; significant deterioration in liquidity; or acquisitions requiring debt funding. Consideration for a lower rating could arise if any combination of these factors results in leverage approaching 5x, or EBIT/ interest coverage below 1.5x. Future events that have the potential to drive AG&S' outlook or ratings higher include: a sustained improvement in operating performance which results in Debt/EBITDA consistently below 3.8x, and EBIT/Interest consistently above 2x. Automotive Glass and Services manufactures, fabricates and delivers glass products and solutions to automotive OEMs directly or through third party suppliers; manufactures replacement auto glass and distributes glass and related sundries to the glass replacement aftermarket and; provides a suite of software and services that manages the auto glass insurance claim process and inventory and work flow for glass retailers. BEAZER HOMES: Amends Four-Year Revolving Credit Facility -------------------------------------------------------- Beazer Homes USA, Inc., amended its four-year revolving credit facility to provide that any adverse judgment entered in the company's Senior Notes Litigation would not result in an event of default if, to the extent such judgment has the effect of determining that there has been a default with respect to one or more tranches of Senior Notes based on the company's failure to make a filing with the U.S. Securities and Exchange Commission or deliver a copy of an SEC filing to the applicable trustees or denying a motion for preliminary injunction with respect to such a default, such defaults shall have been waived by the requisite holders of such applicable tranches of Senior Notes in accordance with the applicable Senior Indentures. In addition, the definition of Secured Borrowing Base was amended to provide that, in the event of any adverse judgment entered in the Company's Senior Notes Litigation, certain of the collateral advance rates will be lowered during the period commencing on the date on which any such adverse judgment shall have been entered in the Senior Notes Litigation until the delivery of restated financials. Restatements As reported in the Troubled Company Reporter on Oct. 12, 2007, the audit committee of Beazer Homes determined that it will be necessary for the company to restate its financial statements relating to fiscal years 2004 through 2006 and the interim periods of fiscal 2006 and fiscal 2007. Consent Solicitation As reported in the Troubled Company Reporter on Oct. 31, 2007, the company completed its solicitation of consents from the holders of its $1.525 billion of outstanding Senior Notes and Senior Convertible Notes to approve proposed amendments and a proposed waiver pursuant to the indentures under which the Notes were issued. Beazer received consents from holders of more than a majority of the aggregate principal amount of each series of the Notes. Beazer and the trustee have executed Supplemental Indentures amending the Indentures to effect the Proposed Amendments. The Supplemental Indentures amend the definition of Permitted Liens to restrict the ability of the Company to secure additional debt in excess of $700 million until the company has four consecutive fiscal quarters with a Consolidated Fixed Charge Coverage Ratio of at least 2 to 1, after which time the limit will revert to the previous level of 40% of Consolidated Tangible Assets, and amend the definition of Permitted Investments to enable the company to invest up to $50 million in joint ventures or unrestricted subsidiaries. In accordance with the Indentures, the amendments are binding on all holders, including non- consenting holders. The consents also provided Beazer with a waiver of any and all defaults under the Indentures that may have occurred or may occur on or prior to May 15, 2008, due to Beazer's failure to file or deliver reports or other information it would be required to file with the Securities and Exchange Commission. About Beazer Homes Headquartered in Atlanta, Beazer Homes USA Inc., (NYSE: BZH) -- http://www.beazer.com/-- is a single-family homebuilders with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia and also provides mortgage origination and title services to its homebuyers. * * * As reported in the Troubled Company Reporter on Nov 1, 2007, Standard & Poor's Ratings Services ratings on Beazer Homes USA Inc. (B+/Watch Neg/--) will remain on CreditWatch with negative implications until the extent of pending restatements tied to its recently completed internal investigation are finalized and the company files all financial statements with the SEC. As reported in the Troubled Company Reporter on Oct 16, 2007, Fitch Ratings downgraded Beazer Homes USA Inc.'s Issuer Default Rating to 'BB-' from 'BB'. BELO CORP: Earns $18.7 Million in Quarter Ended September 30 ------------------------------------------------------------ Belo Corp. disclosed financial results for the quarter ended Sept. 30, 2007. For the three months ended Sept. 30, 2007, the company reported net earnings of $18,758,000 on net operating revenues of $364,349,000. This compares to net earnings on $19,218,000 on net operating revenues of $376,395,000 for the three months ended Sept. 30, 2006. For the nine months ended Sept. 30, 2007, the company's net earning also went to $70,631,000 from $79,177,000 for the nine months ended Sept. 20, 2006. Net operating revenue was $1,108,909,000 for the nine months ended Sept. 30, 2007, compared to $1,151,675,000 for the period ended Sept. 20, 2006. At Sept. 30, 2007, the company's balance sheet showed $3,541,234,000 in total assets and $1,563,349,000 in total shareholders' equity. Shareholders' equity stood at $1,527,148,000 at Dec. 31, 2006. A full-text copy of the company's financial report for the quarter ended Sept. 30, 2007, may be viewed for free at: http://ResearchArchives.com/t/s?24b6 About Belo Belo Corp. -- http://wwwbelo.com/-- is a media company with a diversified group of market-leading television, newspaper, cable and interactive media assets. The company operates in Texas, the Northwest, the Southwest, the Mid-Atlantic and Rhode Island. Belo owns 20 television stations, six of which are in the 15 largest U.S. broadcast markets. The company also owns or operates six cable news stations and manages one television station through a local marketing agreement. Belo's daily newspapers are The Dallas Morning News, The Providence Journal, The Press-Enterprise (Riverside, CA) and the Denton Record-Chronicle (Denton, TX). The company also publishes specialty publications targeting young adults, and the fast-growing Hispanic market, including Quick and Al Dia in Dallas/Fort Worth, and El D and La Prensa in Riverside. Belo operates more than 30 Web sites associated with its operating companies. * * * As reported in the Troubled Company Reporter on Oct. 19, 2007, Moody's Investors Service downgraded Belo Corp.'s senior unsecured ratings to Ba1 from Baa3 and assigned the company a Ba1 Corporate Family rating and Ba1 Probability of Default rating. The downgrade reflects (1) Moody's expectation that Belo's free cash flow-to-debt has limited scope for improvement due to revenue pressure in the newspaper business and will remain below the 10% level that was anticipated in the Baa3 rating; and (2) Moody's belief that the company's reliance on a bank facility with a MAC clause to fund the significant $350 million November 2008 note maturity is a liquidity profile consistent with a speculative- grade rating. BFC AJAX: Moody's Cuts Ratings on Two Note Classes to Low-B ----------------------------------------------------------- Moody's Investors Service placed these notes issued by BFC Ajax CDO Ltd. on review for possible downgrade: Class Descriptions: -- $15,000,000 Class B Floating Rate Notes Due 2046 Prior Rating: Aa3 Current Rating: Aa3, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $20,000,000 Class C Deferrable Floating Rate Notes Due 2046 Prior Rating: A2 Current Rating: Baa3, on review for possible downgrade -- $40,000,000 Class D Deferrable Floating Rate Notes Due 2046, Downgraded to Ba3 from Baa2; Placed Under Review for further Possible Downgrade Prior Rating: Baa2 Current Rating: Ba3, on review for possible downgrade -- $40,000,000 Class E Deferrable Floating Rate Notes Due 2046 Prior Rating: Ba2 Current Rating: B2, on review for possible downgrade -- $10,000,000 Class X Deferrable Floating Rate Notes Due 2046 Prior Rating: A1 Current Rating: Baa2, 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. BIOSTEM INC: Buying Joyon Via 115 Million Stock Exchange Deal ------------------------------------------------------------- BioStem Inc. has entered into a definitive agreement to acquire Joyon Entertainment Inc. in exchange for 115,000,000 shares of the company's common stock, to be issued after giving effect to a one for forty reverse split of the company's common stock, well as the divestment of the company's subsidiaries, BH Holding Company Inc. and ABS Holding Company Inc. On Oct. 12, 2007, the company entered into a Stock Exchange Agreement with Joytoto Co. Ltd. and Joyon Entertainment Co. Ltd., to purchase 100% of the issued and outstanding capital stock of Joyon Entertainment Inc. In order to complete the acquisition of JEI, the company is required to secure a release of the company from the holders of the company's Senior Secured Convertible Debentures, well as effect the conversion of the company's Junior Convertible Secured Debentures. Accordingly, the company entered into an Agreement to Purchase Subsidiaries and Cancel Shares with Marc Ebersole, the company's CEO and Director, Christine Ebersole, a Director and employee, and Scott Schweber, a Director, well as the holders of the company's Senior Secured Convertible Debentures and the Company's Junior Convertible Debentures. According to the Subsidiary Purchase Agreement, Mr. Ebersole, Ms. Ebersole and Mr. Schweber will release the company from any and all claims they may have against the company and its lenders, and will tender to the company a total of 130 million shares of the company's common stock for cancellation. The company's Senior Secured Debenture Holder will release the company from its obligations under the Senior Debenture, and such obligations will remain obligations of the company's two subsidiaries, BH Holding and ABS Holding. The holders of the company's Junior Debentures, which are convertible into 17.35 million shares of common stock after giving effect to a one for forty reverse split, will convert their debentures into: i) 17,350,000 shares of common stock; ii) will be issued an additional 16,169,549 shares of common stock; and iii) will be issued warrants to purchase 21 million shares of common stock at an exercise price of $0.10 per share. Finally, the company will transfer 100% of the outstanding capital stock of its two operating subsidiaries, BH Holding and ABS Holding to the Management Shareholders and the holders of the company's Junior Convertible Debentures. The company has changed its name to Joytoto USA Inc., and completed a one for forty reverse split of the company's common stock, which became effective on Oct. 31, 2007. On Oct. 31, 2007, the company's common stock has commenced trading under the new symbol "JYTO." Immediately after the closing of the actions, Mr. Ebersole and Ms. Ebersole will resign as officers and directors of the company. Immediately prior to their resignations, they will appoint: -- Cho, Seong Yong as president, CEO and director; -- Cho, Seong Sam as CFO, vice president, secretary and director; -- Choi, Doo Ho, as COO and director; -- Um, San Yong as internal auditor. The new officers and directors of the company were designated by Joytoto Co. Ltd., which is the new controlling shareholder of the company as of Oct. 31, 2007. About Joyon Entertainment Inc. Joyon Entertainment Inc. is in the online games and electronics manufacturing businesses. About Biostem Headquartered in Atlanta, Georgia, Biostem Inc., fka National Parking Systems, Inc., provides parking and parking related services. Services include valet parking services which the company operates through its wholly owned subsidiary BH holding Company Inc and vehicle immobilization services which the company operates through its another wholly owned subsidiary ABS Holding Company Inc. At June 30, 2007, the company's balance sheet showed total assets of $.2 million and total liabilities of $1.8 million, resulting to s total stockholders' deficit of $1.6 million. Going Concern Doubt Meyler & Company LLC, expressed substantial doubt about BioStem Inc.'s ability to continue as a going concern after it audited the company's financial statements for fiscal year ended Dec. 31, 2006. The auditors pointed to the company's recurring net losses of $2,051,539 in 2006, $7,857,124 in 2005 and $5,200,418 in 2004; negative working capital of $1,338,517; and a stockholders' deficit of $1,242,540 at Dec. 31, 2006. BROADRIDGE TRANSPORT: Case Summary & 15 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Broadridge Transport, Inc. aka Broadridge Transportation, Inc. P.O. Box 316 Bishopville, SC 29010 Bankruptcy Case No.: 07-05948 Type of Business: The Debtor provides long-distance trucking services. Chapter 11 Petition Date: October 31, 2007 Court: District of South Carolina (Columbia) Judge: Helen E. Burris Debtor's Counsel: Reid B. Smith, Esq. Price Bird & Smith, P.A. 1712 Street Julian Place P.O. Box 5537 Columbia, SC 29250 Tel: (803) 779-2255 Fax: (803) 799-3131 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's list of its 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ SC Department of Motor International Fuel $6,716 Vehicles Tax Agreement Motor Carrier Services P.O. Box 1498 Blythewood, SC 29016 Arthur Tire, Inc. Recap Tire $8,145 P.O. Box 1198 Purchases Roebuck, SC 29376 Columbia Freightliner $7,918 1450 Bluff Road Columbia, SC 29201 Bishopville Parts, Inc. Parts Purchases $2,453 Dilmar Oil Co. Oil & Grease Purchases $2,048 Blake & Ford, Inc. Office Supplies $1,876 Buster's Garage Wrecker Service $1,670 Consolidated Truck Parts, Inc. Parts Purchases $1,517 Transportation Cabinet Kentucky Weight $1,487 Division of Motor Carriers Distance Tax San-Glo Glass Tractor Repairs $937 Corporate Medical Services, Inc. $804 Vengroff Williams and Collection Account $640 Associates, Inc. Battery Specialists Parts Purchases $483 New Dixie Distributing Co. Truck Wash $462 Lube Industries, Inc. Oil & Grease Purchases $161 CAIRN MEZZ: Moody's Lowers Ratings on Two Note Classes to Low-B --------------------------------------------------------------- Moody's Investors Service placed these notes issued by Cairn Mezz ABS CDO I PLC on review for possible downgrade: Class Descriptions: -- $55,000,000 Class II Senior Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $49,000,000 Class III Senior Floating Rate Notes Due 2046 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade -- $11,000,000 Class IV Senior Floating Rate Notes Due 2046 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: -- $13,000,000 Class V Mezzanine Floating Rate Deferrable Notes Due 2046 Prior Rating: A2 Current Rating: Baa2, on review for possible downgrade -- $20,500,000 Class VI Mezzanine Floating Rate Deferrable Notes Due 2046 Prior Rating: Baa2 Current Rating: Ba2, on review for possible downgrade -- $6,500,000 Class VII Mezzanine Floating Rate Deferrable 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. CALPINE CORP: Quadrangle & JP Morgan Objects to Plan Confirmation ----------------------------------------------------------------- Quadrangle Master Funding, Ltd., and JP Morgan Chase Bank, N.A., as assignee to Quadrangle's Claims, are holders of allowed general unsecured claims against Calpine Corp. and its affiliates, aggregating $85,000,000, exclusive of postpetition interest and other charges. The Debtors' proposed Plan of Reorganization contemplates payment of contract rate of postpetition interest to creditors in Classes A-3, B, C-2, C-3, and C-5. With respect to General Unsecured Claims, the Plan provides for "Interest Accrued After the Petition Date" at the Federal Judgment Rate of 4.34% unless the Debtors agree to a different rate or the Court directs otherwise. The Plan, however, fails to specify the standard to be used by the Debtors in reaching agreements with holders of General Unsecured Claims, Terence K. McLaughlin, Esq., at Willie Farr & Gallagher, LLP, in New York, asserts, in Quadrangle's behalf. He adds that the Plan is also silent as to whether the mere existence of a contract is sufficient for the U.S. Bankruptcy Court for the Southern District of New York to direct otherwise or if some other set of facts must be present before the Court can so rule. Mr. McLaughlin relates that the Power Purchase Agreement on which Quadrangle's Claims are based provides for the payment of interest, which will be calculated at a rate equal to 2% over the prime rate published in the "Money Rates" section of the Wall Street Journal, from the date on which payment became overdue to and until the payment is paid in full. The date that payments became overdue under the PPA was December 20, 2005, Mr. McLaughlin notes, and the prime rate as published in the Wall Street Journal on that date was 7.25%. Thus, he says, Quadrangle and JP Morgan's contractual rate of interest is 9.25%. Accordingly, Quadrangle and JP Morgan ask Judge Lifland to allow postpetition interest on their Claims at a 9.25% contract rate, to the extent that the interest is paid to other unsecured creditors under the Debtors' Plan. If the Debtors will contend that the existence of a contractual interest rate alone is insufficient, Quadrangle and JP Morgan asserts that contractual rate of interest is appropriate as a matter of law if the Debtors have a surplus, particularly if other classes are receiving a contractual rate of interest. "[N]o class of creditors should receive less than any other class where the sole beneficiaries of the discriminatory treatment are the shareholders," Mr. McLaughlin asserts. JP Morgan is represented by Lewis Kruger, Esq., at Stroock & Stroock & Lavan, LLP, in New York. About Calpine Corporation Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2007, the Debtors disclosed total assets of $18,467,000,000, total liabilities not subject to compromise of $11,207,000,000, total liabilities subject to compromise of $15,354,000,000 and stockholders' deficit of $8,102,000,000. On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC, and Silverado Geothermal Resources, Inc., filed voluntary chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198). On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another affiliate, also filed a voluntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 07-12967). On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. Calpine filed a Second Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a Third Amended Plan. On Sept. 25, 2007, the Court approved the adequacy of the Debtors' Disclosure Statement and entered a written order on September 26. The hearing to consider confirmation of the Plan is scheduled on Dec 18, 2007. (Calpine Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). CALPINE CORP: Contends Litigation is Premature & Unnecessary ------------------------------------------------------------ Calpine Corp. and its debtor-affiliates the U.S. Bankruptcy Court for the Southern District of NEw York to deny the request of the 7.75% Noteholders to establish a pre-confirmation timetable for the resolution of the contractual subordination dispute. Representing the Debtors, Edward O. Sassower, Esq., at Kirkland & Ellis, LLP, in New York, points out that litigation of the dispute at this stage of the Debtors' Chapter 11 cases is improper because it would "put the proverbial cart before the horse." Mr. Sassower contends that the Contractual Subordination Dispute could only become ripe if the Court determines that the Debtors' reorganized enterprise value is at an amount that is sufficient to pay unsecured creditors' claims for principal and prepetition interest in full, but insufficient to satisfy fully unsecured creditors' claims for postpetition interest. Any other valuation determination on the high- or low-end would moot out the now unripe Contractual Subordination Dispute, Mr. Sassower continues. A premature litigation, for which the parties-in-interest likely will seek reimbursement of attorneys' fees from the Debtors' estates, would be a needless waste of resources, Mr. Sassower asserts. Mr. Sassower further asserts that resolution of the Contractual Subordination Dispute at this time does not aid confirmation of the Debtors' Plan. The Plan specifically protects the rights of the parties with a stake in the Contractual Subordination Dispute, and confirmation of the Plan simply is not dependent on its outcome, if it ever needs to be decided. Mr. Sassower also notes that while the Debtors ultimately may not take a position on the merits of the potential inter creditor dispute, the state of the law on the "Rule of Explicitness" may not allow for resolution of the Contractual Subordination Dispute as rapidly as the 7.75% Noteholders seem to suggest. Moreover, the Unofficial Committee of Second Lien Debtholders, represented by Alan W. Kornberg, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, LLP, in New York, asserts that a determination of the subordination dispute would be unnecessary if certain contingencies occur, including: (a) if the Court were to conclude that the Debtors are required to pay postpetition default and compound interest, the dispute would be obviated without the need for any judicial intervention; (b) if the Debtors could amend their Plan to voluntarily pay the Second Lien Debtholders' claims, it would eliminate the dispute; (c) if the Second Lien Debtholders and the Debtors could reach a settlement concerning payment of the postpetition interest and default amounts; or (d) if the Debtors' Fourth Amended Plan of Reorganization could fail to secure the necessary votes for confirmation or otherwise be found unconformable. Wilmington Trust Company, as Indenture Trustee for the Second Lien Noteholders, supports the Second Lien Committee's position. Furthermore, in a separate filing, Davidson Kempner Capital Management, LLC; Highland Capital Management, LP; Jana Partners, LLC; and Longacre Fund Management, LLC; as substantial holders of Senior Debt, and the Bank of New York, as administrative agent under the Second Lien Term Loan Agreement, assert that litigation of the Subordination Dispute is lengthy and wasteful of estate resources. The Senior Unsecured Noteholders assert that the 7.75% Noteholders will not be prejudiced if the Court denies their request. The Senior Unsecured Noteholders note that the Debtors intend to hold in reserve the shares of New Calpine Common Stock that are implicated by the Subordination Dispute pending a final determination or settlement of the dispute. The Senior Noteholders tell Judge Lifland that they are agreeable to an expedited, post-confirmation litigation schedule. BNY, on the other hand, asserts that if the Court is nevertheless inclined to adjudicate the Subordination Dispute before determining the Debtors' enterprise value and the Second Lien Term Loan Lenders' right to collect default and compound interest from the Debtors, various provisions to the 7.75% Noteholders' proposed schedule would have to be negotiated and modified to provide that: * All parties who do not participate in the Contractual Subordination Dispute cannot be bound by any decision rendered in the dispute; * All parties who participate in the Contractual Subordination Dispute should have the ability to file an opening and reply brief; * The exact scope of what is to be decided as part of the Contractual Subordination Dispute needs to be expressly set forth; and * There needs to be an express reservation of rights for all parties who participate in the Contractual Subordination Dispute as pertains to the Plan or any other rights such parties may have as against the Debtors or other third parties. HSBC Bank USA, National Association, as successor indenture trustee on behalf of the holders of the 6.00% Convertible Notes Due 2014, reserve all of their rights with respect to the subordination provision contained in the 6% Indenture. HSBC contends that because the subordination provisions contained in the 6% Indenture may be similar in certain respects to the subordination provisions contained in the 7.75% Indenture, certain issues raised before the Court during the resolution of the Subordination Dispute may be analogous to issues that may be raised in connection with the resolution of a subordination dispute with respect to the 6% Indenture. Creditors Panel Wants Noteholders to Revise Dispute Resolution Process The Official Committee of Unsecured Creditors states that it does not object to the 7.75% Noteholders' request, and believes that the Subordination Dispute, if not settled, will need to be resolved by either the Court or another court of competent jurisdiction. The Creditors Committee, however, is concerned that schedule proposed by the Noteholders may interfere with the Debtors' confirmation process. Thus, the Creditors Committee asks Judge Lifland to direct the 7.75% Noteholders to modify their proposed inter-creditor dispute resolution process to ensure that it will not interfere with the Plan process or the Confirmation Hearing. 7.75% Noteholders Talk Back The 7.75% Noteholders, together with Manufacturers & Traders Trust Company, as successor Indenture Trustee, argue that the resolution of the Contractual Subordination Dispute now will simplify the overall Plan confirmation process by resolving an issue affecting the allocation of a significant amount of the reorganized Debtors' common stock under the Plan. The resolution of the Contractual Subordination Dispute in advance of the confirmation would eliminate uncertainty with respect to the treatment and recovery for some of the Debtors' largest creditor constituencies, the 7.75% Noteholders insist. Kristopher M. Hansen, Esq., at Strook & Stroock & Lavan, LLP, in New York, notes, on the 7.75% Noteholders' behalf, that in the bankruptcy case of Adelphia Communications Corp., Judge Gerber of the U.S. Bankruptcy Court of the Southern District of New York, permitted the Adelphia subordinated noteholders to resolve the subordination dispute in advance of the case's confirmation proceedings. Mr. Hansen points out that under the Debtors' proposed Plan, though the inter-creditor provisions of the Indenture survive confirmation, the indemnity and reimbursement provisions of the Indenture that inure to the benefit of M&T Bank will be canceled, leaving the Bank to litigate the Subordination Dispute without the full protections otherwise afforded to it under the Indenture. Deprived of those protections, the Noteholders face a skewed playing field vis-a-vis the Debtors, Mr. Hansen asserts. Mr. Hansen adds that the Objectors' argument that the dispute should await a Court ruling as to the determination of New Enterprise Value incorrectly assumes that the dispute will be rendered moot and the Senior Debtholders will not seek pay-over from the Noteholders in a scenario where the Court determines Calpine Corp.'s reorganized value either is at an amount that is "insufficient to pay all claims" or is sufficient to pay all creditors in full, including postpetition interest. Mr. Hansen notes that the Second Lien Debtholders have publicly and expressly stated that they intend to seek pay-over from the 7.75% and 6% Noteholders to the extent they do not recover default interest and compounded interest from the Debtors. Accordingly, the 7.75% Noteholders ask Judge Lifland to overrule all the Objections filed by the Debtors, et al. About Calpine Corporation Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2007, the Debtors disclosed total assets of $18,467,000,000, total liabilities not subject to compromise of $11,207,000,000, total liabilities subject to compromise of $15,354,000,000 and stockholders' deficit of $8,102,000,000. On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC, and Silverado Geothermal Resources, Inc., filed voluntary chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198). On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another affiliate, also filed a voluntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 07-12967). On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. Calpine filed a Second Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a Third Amended Plan. On Sept. 25, 2007, the Court approved the adequacy of the Debtors' Disclosure Statement and entered a written order on September 26. The hearing to consider confirmation of the Plan is scheduled on Dec 18, 2007. (Calpine Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). CAP CANA: Moody's Rates Proposed $500 Mil. Senior Notes at B3 ------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Cap Cana, S.A.'s proposed $500 million senior secured notes due 2017. These notes will be secured by a first-priority lien on certain of the Cap Cana's property, and have a liquidation value of not less than 150% of the principal amounts of the notes and certain receivables. An escrow will be created by the trustee to manage the receivables from clients who are buying property in Cap Cana. These receivables are to be maintained at 125% of the issue amount. The notes are senior secured obligations of Cap Cana, and will rank equally in right of payment with all of the company's existing and futures senior secured indebtedness. The notes contain certain covenants which include restricted payments and incurrence of debt. In addition, the notes also include a fully funded six month debt service reserve for principal and interest, and a cash flow waterfall and related accounts to ensure that cash flow generated is used first to service debt during each payment period. These proposed notes are rated a notch lower than Cap Cana's existing $250 million senior secured debt, rated B2, because of differences in the underlying collateral," says Moody's analyst Philip Kibel. Cap Cana's proposed US$500 million secured notes are backed with a first priority lien on parcels of raw land within the project vs. already-sold and partially-built product, which backs the existing US$250 million notes. Furthermore, the $250 million notes are backed by 2x orderly liquidation value, and a higher percentage of actual receivables from existing sales, while the proposed notes have a lower collateralization of 1.5x, based on orderly liquidation value. The stable rating outlook reflects Moody's expectation that Cap Cana will maintain its conservative approach to leverage and stable earnings, while at least meeting its sales projections. Positive ratings movement would be difficult in the intermediate term, and would reflect the success of the maintenance of total leverage at current levels, and the demand for Cap Cana's product outpacing budgeted sales and revenues by 30%. A downgrade would reflect economic difficulties in the Dominican Republic, a natural disaster or other event that delays or damages the development, or sales demand for Cap Cana's housing and related property being less than anticipated by at a least 10%. This rating was assigned with a stable outlook: Cap Cana S.A. -- $500 million senior secured notes at B3 Cap Cana S.A., a privately owned company, is a corporation that was organized under the laws of the Dominican Republic. Its principal activity is the development, construction, operation and administration of a tourist and leisure resort community project known as Cap Cana. Cap Cana is being developed as a multi-use luxury Caribbean resort with world-class beaches, championship golf courses, yachting facilities and similar leisure amenities. The property consists of over 119.9 square kilometers of land, including an eight kilometer coastline and 3.5 kilometers of pristine beach. Cap Cana is located on the easternmost tip of the Dominican Republic, and is a few minutes drive from Punta Cana International Airport, which receives nonstop flights from large metropolitan centers in Europe, Canada and the USA. When fully developed, Cap Cana is expected to have six championship golf courses (three of which will be Nicklaus Signature courses, one of which was recently completed); one of the largest inland marinas in the Caribbean; several luxury hotels; over 10,000 housing units, including estate homes, villas and condominiums; numerous sports facilities, including golf, beach and yacht clubs; and a variety of high-end shops, restaurants, spas and entertainment complexes. Plans also include the development of a large ecological preserve. CDC MORTGAGE: S&P Cuts Ratings on Four Cert. Classes to Low-B ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on six classes of mortgage pass-through certificates from CDC Mortgage Capital Trust 2004-HE2. S&P removed two of the lowered ratings from CreditWatch with negative implications. Furthermore, S&P affirmed the 'AA' rating on class M-1 from this series. The lowered ratings reflect the deterioration of available credit support. The failure of excess interest to cover monthly losses has resulted in an overcollateralization deficiency of about $2.07 million, or 63% below its OC target, as of the Sept. 25, 2007, distribution date. During the previous six remittance periods, monthly losses have exceeded excess interest by about 3x. As of the September 2007 distribution period, this transaction was 39 months seasoned and had realized $7.21 million in cumulative losses. Total delinquencies and severe delinquencies (90-plus days, foreclosures, and REOs) were 32.51% and 18.69% of the current pool balance, respectively. The affirmation on the M-1 class was based on a loss coverage percentage that is sufficient to maintain the current rating for this class. Credit enhancement for this transaction is derived from a combination of subordination, excess interest, and O/C. The collateral supporting these transactions consists of subprime pools of fixed- and adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered CDC Mortgage Capital Trust 2004-HE2 Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- B-1 B BBB+ B-2 B- BBB M-2 BB A M-3 B+ A- Ratings Lowered and Removed from Creditwatch Negative CDC Mortgage Capital Trust 2004-HE2 Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- B-3 CCC BB-/Watch Neg B-4 CCC B+/Watch Neg Ratings Affirmed CDC Mortgage Capital Trust 2004-HE2 Mortgage pass-through certificates Class Rating ----- ------ M-1 AA CHALLENGER POWERBOATS: Board OKs Reverse Split on Common Stock -------------------------------------------------------------- Challenger Powerboats Inc.'s board of directors has declared a reverse split of its common stock, at a one-for-twenty ratio, effective Oct. 31, 2007. After the reverse stock split, the company's common stock will trade under a new symbol CPBI on the OTC Bulletin Board. Based in Washington, Missouri, Challenger Powerboats Inc. (OTC:CPWB) - http://www.challengerpowerboats.com/-- designs and manufactures 'go fast' offshore racing boats, family sport cruisers, jet boats and water ski tow boats under the brands 'Challenger Powerboats', 'Sugar Sand' and 'Gekko', which target the recreational boating market. The company is a design-to- manufacturing organization, creating or licensing designs, and creating tooling, molds, and parts necessary to assemble its products in-house. The company markets its products through a dealer network comprising more than 100 dealers throughout the United States, Canada, Mexico, Europe, Australia, the Middle East and Japan. At June 30, 2007, Challenger Powerboats' balance sheet showed total assets of $7.4 million and $28.1 million in total liabilities, resulting on a $20.7 million total shareholders' deficit. Going Concern Doubt As reported in the Troubled Company Reporter on May 2, 2007, Jaspers + Hall PC expressed substantial doubt about Challenger Powerboats Inc.'s ability to continue as a going concern after auditing the company's financial statements as of Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and its difficulties in generating sufficient cash flow to meet its obligation and sustain its operations. CHAMPION ENTERPRISES: Prices $160 Mil. Public Offering of Notes --------------------------------------------------------------- Champion Enterprises Inc. has priced its public offering of convertible senior notes due 2037. The transaction was increased in size from the aggregate principal amount of $130 million to $160 million. The company has also granted to the underwriter of the offering an option to purchase up to an additional $20 million aggregate principal amount of notes solely to cover over-allotments. Credit Suisse Securities (USA) LLC is acting as the underwriter and sole bookrunning manager for the convertible notes offering. The notes will bear interest at a rate of 2.75% per year, payable on May 1 and Nov. 1, beginning on May 1, 2008. The notes will mature on Nov. 1, 2037. Holders of the notes may require the company to repurchase the notes if the company is involved in certain types of corporate transactions or other events constituting a fundamental change. Beginning in 2012 the company will have the right to redeem the notes, in whole or in part. Holders of the notes have the right to require the company to repurchase all or a portion of their notes on Nov. 1 of each of 2012, 2017, 2022, 2027 and 2032. The notes will be convertible, under certain circumstances, at the holder's option, at an initial conversion rate of 47.6954 shares of the company's common stock per $1,000 principal amount of notes, or an initial conversion price of approximately $20.97 per share of common stock, representing an 82% conversion premium based on the closing price of $11.52 per share of the company's common stock on Oct. 29, 2007, payable in common stock. The conversion rate and the conversion price will be subject to adjustment in certain events. The company intends to use approximately $97 million of the net proceeds of the notes offering to repurchase its notes due 2009 tendered in a tender offer, including the tender premium and any accrued interest thereon, repay no less than $8 million of the outstanding principal, plus accrued interest, under its term loan due 2012 and pay related fees and expenses. The remaining net proceeds of approximately $58 million, or approximately $78 million if the underwriters exercise their over- allotment option in full, will be used for general corporate purposes. Closing of the public offering of the notes is expected to occur on Nov. 2, 2007, and will be subject to the satisfaction of various customary closing conditions. Champion Enterprises, the underwriter or any dealer participating in the offering will arrange to send the prospectus and prospectus supplement if requested by calling Credit Suisse Securities (USA) LLC toll free at 1-800-221-1037 or Champion Enterprises, Inc. toll free at 1-888-603-0071. About Champion Enterprises Inc. Auburn Hills, Michigan-based Champion Enterprises Inc., (NYSE: CHB) -- http://www.championhomes.com/-- operates 32 manufacturing facilities in North America and the United Kingdom and works with over 3,000 independent retailers, builders and developers. The Champion family of builders produces manufactured and modular homes, as well as modular buildings for government and commercial applications. * * * Moody's Investor Service placed Champion Enterprises Inc.'s senior unsecured debt and probability of default ratings at 'B1' in September 2006. The ratings still hold to date with a negative outlook. CHANCELLOR GROUP: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Chancellor Group, Inc. P.O. Box 742 Pampa, TX 79066-0742 Bankruptcy Case No.: 07-20512 Type of Business: The Debtor acquires, explores and develops natural gas and oil properties. It further examines opportunities in the fields of power generation, minerals development and environmental engineering and remediation. Chapter 11 Petition Date: October 30, 2007 Court: Northern District of Texas (Amarillo) Judge: Robert L. Jones Debtor's Counsel: Bill Kinkead, Esq. 6937 Bell Street, Suite G Amarillo, TX 79109 Tel: (806) 353-2129 Fax: (806) 353-4370 Unaudited Consolidated Annual Financial Condition as of June 2007: Total Assets: $5,649,018 Total Debts: $6,228,336 The Debtor did not file a list of its 20 largest unsecured creditors. CHYPS CBO: Fitch Junks Ratings on Four Note Classes --------------------------------------------------- Fitch downgraded three classes of notes issued by CHYPS CBO 1997-1 Ltd., as: -- $21,047,114 class A-2A to 'C/DR5' from 'CCC/DR4'; -- $3,047,708 class A-2B to 'C/DR5' from 'CCC/DR4'; -- $57,100,000 class A-3 to 'C/DR6' from 'CC/DR5'. Additionally: -- $42,400,000 class B notes remain at 'C/DR5'. CHYPS 1997-1 is a collateralized debt obligation that closed Dec. 18, 1997 and is managed by Delaware Investment Advisers. CHYPS 1997-1 has a portfolio composed of high yield corporate bonds and emerging market assets. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. The transaction is severely undercollateralized due to the defaulting of a significant portion of assets in the portfolio. The class A overcollateralization ratio was reported at 24.7% as of the Oct. 2, 2007 trustee report. In addition, due to a lack of sufficient interest proceeds, principal proceeds are currently being used to cover interest shortfalls to the class A-3 and B notes, further reducing the par coverage for all classes of notes. Fitch expects the class A-2 notes to continue to receive some interest payments and minimal principal recovery, and for the class A-3 notes to receive some interest payments but no principal recovery. The class B notes benefit from a letter of credit provided by Dresdner Bank AG (rated 'A+/F1+' by Fitch) which can be drawn upon to make up for any interest shortfalls to these notes, or upon a principal shortfall to the class B notes at the deal's maturity in January 2010. About $9.7 million of this LOC remains available, which should be sufficient for full interest payments to the class B notes for the remainder of the transaction and for some principal recovery at maturity. The ratings on classes A-2 and A-3 address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class B notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. CHYPS CBO: Fitch Junks Ratings on Two Certificate Classes --------------------------------------------------------- Fitch downgraded two classes and affirmed one class of notes issued by CHYPS CBO 1999-1 Ltd (CHYPS 1999-1). These rating actions are effective immediately: -- $13,699,984 class A-2 notes affirmed at 'AAA'; -- $41,000,000 class A-3A notes downgraded to 'C/DR5' from 'CC/DR5'; -- $14,851,485 class A-3B notes downgraded to 'C/DR6' from 'CC/DR5'. CHYPS 1999-1 is a collateralized debt obligation that closed Jan. 7, 1999 and is managed by Delaware Investment Advisers. CHYPS 1999-1 has a portfolio composed of high yield corporate bonds. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. The transaction has experienced significant defaults in the underlying assets, which have led to the notes being severely undercollateralized, as evidenced by the class A overcollateralization ratio of 33.4% as of the Oct. 2, 2007 trustee report. There are currently insufficient interest proceeds available to make full interest payments to the class A-3 notes, leading to the use of principal proceeds to make up for this shortfall, which further reduces the par coverage available to the notes. Based on expected collateral performance and the magnitude of principal proceeds to pay interest on the notes in the future, Fitch believes the class A-2 notes may experience an ultimate principal shortfall. These notes, however, are insured for interest and principal by Financial Security Assurance Inc. (FSA; rated 'AAA' by Fitch), and therefore maintain their 'AAA' rating. The class A-3 notes will continue receiving some interest payments but are expected to receive minimal, if any, principal recovery by the maturity date. The class A-3A notes have a higher interest coupon than the class A-3B notes, explaining their higher distressed recovery prospects. The ratings on classes A-2 and A-3 address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. CITIGROUP MORTGAGE: Fitch Assigns Low-B Ratings on $6.6MM Notes --------------------------------------------------------------- Fitch rates Citigroup Mortgage Loan Trust Inc., mortgage pass- through certificates, series 2007-10 as: Group I: -- $201.2 million classes 1-A1A, 1-A1B and R 'AAA' (senior notes); -- $2.3 million class 1-B1 'AA'; -- $1.2 million class 1-B2 'A'; -- $517,000 class 1-B3 'BBB'. Group II: -- $611 million classes 2-A1A, 2-2AA, 2-A2A, 2-A2B, 2-12B, 2-A2IO, 2-A3A, 2-A3B, 2-A3IO, 2-A4A, 2-A4B, 2-A5A, 2-A5B, and 2-R 'AAA' (senior notes); -- $11.8 million class 2-B1 'AA'; -- $5.4 million class 2-B2 'A'; -- $2.5 million class 2-B3 'BBB'; -- $5.1 million non-offered class 2-B4 'BB'; -- $1.5 million non-offered class 2-B5 'B'. Group III: -- $262.7 million classes 3-1AA, 3-A1A, 3-A1B, 3-A1C, 3-1AB, 3-A1IO, 3-A2A, 3-A2B, 3-A3A, 3-A3B, 3R, and 3P 'AAA' (senior notes). The 'AAA' ratings on the Group 1 senior notes reflect the 2.70% subordination provided by the 1.15% class 1-B1, the 0.60% class 1- B2, the 0.25% class 1-B3, the 0.45% non-offered class 1-B4, the 0.15% non-offered class 1-B5 and the 0.10% non-offered class 1-B6. Classes 1-B4 through 1-B6 are not rated by Fitch. The 'AAA' ratings on the Group 2 senior notes reflect the 4.50% subordination provided by the 1.85% class 2-B1, the 0.85% class 2- B2, the 0.40% class 2-B3, the 0.80% non-offered class 2-B4, the 0.25% non-offered class 2-B5, the 0.35% non-offered class 2-B6 (not rated by Fitch). The 'AAA' ratings on the Group 3 senior notes reflect the 10.85% subordination provided by the 6.35% class 3-B1, the 1.10% class 3- B2, the 0.60% class 3-B3, the 0.85% non-offered class 3-B4, the 0.90% non-offered class 3-B5, the 1.05% non-offered class 3-B6. Classes 3-B1 through 3-B6 are 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 master servicing capabilities of CitiMortgage Inc. (rated 'RMS1' by Fitch Ratings). The transaction is secured by three groups of mortgage loans, which consist of about 2,331 conventional, one- to four-family, adjustable rate mortgage loans secured by first liens on residential real properties. The mortgage loans have and aggregate principal balance of about $1,141,379,050 as of Oct. 1, 2007. The three groups of mortgage loans are not cross- collateralized. The Group I mortgage loans have a final aggregate principal balance of about $206,824,470 as of the cut-off date (Oct. 1, 2007), an average balance of $544,275 a weighted average remaining term to maturity of 321 months, a weighted average original loan-to-value ratio of 68.02% and a weighted average coupon of 5.90%. The weighted average FICO credit score of the loans is 747. Owner occupied properties and second homes comprise 95.31% and 4.66% of the loans, respectively. The states that represent the largest geographic concentration are New Jersey (66.82%), Florida (11.87%) and Texas (7.77%). All other states represent less than 5% of the outstanding balance of the pool. The Group II mortgage loans have a final aggregate principal balance of about $639,880,492 as of the cut-off date (Oct. 1, 2007), an average balance of $544,116, a weighted average remaining term to maturity of 355 months, a weighted average original loan-to-value ratio of 75.63% and a weighted average coupon of 6.26%. The weighted average FICO credit score of the loans is 737. Owner occupied properties and second homes comprise 92.02% and 6.90% of the loans, respectively. The states that represent the largest geographic concentration are California (39.48%), Florida (11.08%), New Jersey (7.69%) and Georgia (5.08%). All other states represent less than 5% of the outstanding balance of the pool. The Group III mortgage loans have a final aggregate principal balance of about $294,674,087 as of the cut-off date (Oct. 1, 2007), an average balance of $380,225, a weighted average remaining term to maturity of 353 months, a weighted average original loan-to-value ratio of 77.03% and a weighted average coupon of 6.635%. The weighted average FICO credit score of the loans is 714. Owner occupied properties and second homes comprise 86.90% and 5.36% of the loans, respectively. The states that represent the largest geographic concentration are California (34.35%), Florida (11.76%), New York (6.45%), Illinois (5.62%), Virginia (5.13%) and Arizona (5.01%). All other states represent less than 5% of the outstanding balance of the pool. U.S. Bank National Association will serve as trustee. CITIGROUP MORTGAGE: Fitch Takes Rating Actions on 14 Deals ---------------------------------------------------------- Fitch Ratings took rating actions on these Citigroup Mortgage Loan Trust mortgage pass-through certificates: Series 2005-5 Group 1 -- Class I-A affirmed at 'AAA'. Series 2005-5 Group 2 -- Class II-A affirmed at 'AAA'. Series 2005-5 Group 3 -- Class III-A affirmed at 'AAA'; -- Class III-B-1 affirmed at 'AA'; -- Class III-B-2 affirmed at 'A'; -- Class III-B-3 downgraded to 'BBB-' from 'BBB'; -- Class III-B-4 downgraded to 'B' from 'BB'; -- Class III-B-5 downgraded to 'C/DR5' from 'B'. Series 2005-8 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-B-1 affirmed at 'AA'; -- Class I-B-2 affirmed at 'A'; -- Class I-B-3 affirmed at 'BBB'; -- Class I-B-4 downgraded to 'BB-' from 'BB'; -- Class I-B-5 downgraded to 'C/DR4' from 'B'. Series 2005-8 Group 3 -- Class III-A affirmed at 'AAA'; -- Class III-B-1 affirmed at 'AA'; -- Class III-B-2 affirmed at 'A'; -- Class III-B-3 affirmed at 'BBB'; -- Class III-B-4 affirmed at 'BB'; -- Class III-B-5 affirmed at 'B'. Series 2006-4 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 downgraded to 'B+' from 'BB'; -- Class B-5 downgraded to 'CC/DR4' from 'B'. Series 2006-AR2 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-B-1 affirmed at 'AA'; -- Class I-B-2 affirmed at 'A'; -- Class I-B-3 affirmed at 'BBB'; -- Class I-B-4 downgraded to 'B+' from 'BB'; -- Class I-B-5 downgraded to 'C/DR4' from 'B'. Series 2006-AR2 Group 2 -- Class II-A affirmed at 'AAA'; -- Class II-B-1 affirmed at 'AA'; -- Class II-B-2 affirmed at 'A'; -- Class II-B-3 affirmed at 'BBB'; -- Class II-B-4 affirmed at 'BB'; -- Class II-B-5 affirmed at 'B'. Series 2006-AR3 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-B-1 affirmed at 'AA'; -- Class I-B-2 affirmed at 'A'; -- Class I-B-3 affirmed at 'BBB'; -- Class I-B-4 affirmed at 'BB'; -- Class I-B-5 affirmed at 'B'. Series 2006-AR3 Group 2 -- Class II-A affirmed at 'AAA'; -- Class II-B-1 affirmed at 'AA'; -- Class II-B-2 affirmed at 'A'; -- Class II-B-3 downgraded to 'BB' from 'BBB' and placed on 'Rating Watch Negative'; -- Class II-B-4 downgraded to 'CCC/DR2' from 'BB'; -- Class II-B-5 downgraded to 'C/DR4' from 'B'. Series 2006-AR5 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-B-1 affirmed at 'AA'; -- Class I-B-2 affirmed at 'A'; -- Class I-B-3 affirmed at 'BBB'; -- Class I-B-4 downgraded to 'BB-' from 'BB'; -- Class I-B-5 downgraded to 'C/DR4' from 'B'. Series 2006-AR5 Group 2 -- Class II-A affirmed at 'AAA'; -- Class II-B-1 affirmed at 'AA'; -- Class II-B-2 affirmed at 'A'; -- Class II-B-3 downgraded to 'BBB-' from 'BBB' and placed on Rating Watch Negative; -- Class II-B-4 downgraded to 'CC/DR3' from 'BB'; -- Class II-B-5 downgraded to 'C/DR5' from 'B'. Series 2006-AR7 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-B-1 affirmed at 'AA'; -- Class I-B-2 affirmed at 'A'; -- Class I-B-3 downgraded to 'BBB-' from 'BBB'; -- Class I-B-4 downgraded to 'B+' from 'BB'; -- Class I-B-5 downgraded to 'C/DR4' from 'B'. Series 2006-AR7 Group 2 -- Class II-A affirmed at 'AAA'; -- Class II-B-1 affirmed at 'AA'; -- Class II-B-2 affirmed at 'A'; -- Class II-B-3 affirmed at 'BBB'; -- Class II-B-4 downgraded to 'B' from 'BB'; -- Class II-B-5 downgraded to 'C/DR5' from 'B'. The affirmations, affecting about $5 billion of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. The downgrades, affecting about $61.6 million of the outstanding certificates, are taken as a result of a deteriorating relationship between credit enhancement and expected loss. The Rating Watch Negative status affects about $9.3 million of the outstanding certificates. The negative rating actions on the 2005 and 2006 vintage CMLT transactions are because of current trends in the relationship between serious delinquency and credit enhancement. The 90+ DQ (including loans in bankruptcy, foreclosure, and REO) for transactions with negative rating actions ranges from 0.48% (series 2006-AR7 Group 1) to 6.12% (series 2006-AR3 Group 2) of the current collateral balance. The collateral of the above transactions generally consists of fixed-rate and adjustable-rate mortgage loans extended to Alt-A borrowers and secured by first liens on one- to four-family residential properties. The loans were originated by various originators and are serviced by various servicers. The transactions are master serviced by CitiMortgage Inc, which is rated 'RMS1' by Fitch. As of the September 2007 remittance date, the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) of the above transactions range from 56% (series 2005-5 Group 1) to 87% (series 2006-AR3 Group 1). In addition, the seasoning ranges from 11 months (series 2006-AR7 Groups 1 & 2) to 25 months (series 2005-5 Groups 1-3). CITIMORTGAGE ALTERNATIVE: Fitch Junks Ratings on Two Certificates ----------------------------------------------------------------- Fitch Ratings took these rating actions on two CitiMortgage Alternative Loan Trust mortgage pass-through certificates: Series 2006-A4 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 downgraded to 'A-' from 'A'; -- Class B-3 downgraded to 'BB+' from 'BBB'; -- Class B-4 downgraded to 'B' from 'BB'; -- Class B-5 downgraded to 'C/DR5' from 'B'. Series 2006-A6 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 downgraded to 'A-' from 'A'; -- Class B-3 downgraded to 'BB+' from 'BBB'; -- Class B-4 downgraded to 'B+' from 'BB'; -- Class B-5 downgraded to 'C/DR4' from 'B'. The affirmations, affecting about $674 million of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. The downgrades, affecting about $16.5 million of the outstanding certificates, are taken as a result of a deteriorating relationship between credit enhancement and expected loss. Classes B-2 through B-4 of the above transactions were downgraded because of current trends in the relationship between serious delinquency and credit enhancement. The 90+ DQ (including loans in bankruptcy, foreclosure, and REO) of series 2006-A4 is 1.73% of the current collateral balance, while the current CE for the B-5 bond is 0.35%. The 90+ DQ of series 2006-A6 is 1.28%, while the current CE for the B-5 bond is 0.34%. The collateral of the above transactions consists of conventional, fully amortizing, fixed-rate mortgage loans extended to Alt-A borrowers and secured by first-liens on one- to four-family residential properties. All of the loans were originated or acquired by and are serviced by CitiMortgage, Inc, which is rated 'RPS1' by Fitch. As of the September 2007 remittance date, the pool factor (current mortgage loan principal outstanding as a percentage of the initial pool) of series 2006-A4 is 84% and series 2006-A6 is 87%. In addition, series 2006-A4 is seasoned 12 months and series 2006-A6 is seasoned 10 months. CITIGROUP MORTGAGE: S&P Junks Rating on 2003-HE4 Class M-7 Certs. ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of asset-backed pass-through certificates from Citigroup Mortgage Loan Trust Inc.'s series 2003-HE4. Concurrently, S&P removed one of the lowered ratings from CreditWatch with negative implications. Furthermore, S&P affirmed the ratings on the remaining four classes from this transaction. The lowered ratings reflect the deterioration of available credit support. The failure of excess interest to cover monthly losses has resulted in an overcollateralization deficiency of about $6.33 million, or 64% below it's OC target, as of the Sept. 25, 2007, distribution date. During the previous six remittance periods, monthly losses have exceeded excess interest by about 2.62x. As of the September 2007 distribution period, this transaction was 44 months seasoned and had realized $22.89 million in cumulative losses. Total delinquencies and severe delinquencies (90-plus days, foreclosures, and REOs) were 32.82% and 15.15% of the current pool balance, respectively. The affirmations are based on credit support percentages that are adequate to maintain the current ratings on the certificates. Credit enhancement for this transaction is derived from a combination of subordination, excess interest, and O/C. The collateral supporting these transactions consists of subprime adjustable- and fixed-rate, fully amortizing, first- and second- lien residential mortgage loans. Ratings Lowered Citigroup Mortgage Loan Trust Inc. Asset-backed pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-HE4 M-4 BBB- A+ 2003-HE4 M-5 B A 2003-HE4 M-6 B- A- Rating Lowered and Removed from Creditwatch Negative Citigroup Mortgage Loan Trust Inc. Asset-backed pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-HE4 M-7 CCC BBB+/Watch Neg Ratings Affirmed Citigroup Mortgage Loan Trust Inc. Asset-backed pass-through certificates Series Class Rating ------ ----- ------ 2003-HE4 A AAA 2003-HE4 M-1 AA+ 2003-HE4 M-2 AA 2003-HE4 M-3 AA- COLLINS & AIKMAN: Fee Examiner Files Report ------------------------------------------- Judy A. O'Neill, the fee examiner appointed in Collins & Aikman Corp. and its debtor-affiliates Chapter 11 cases, filed with the U.S. Bankruptcy Court for the Eastern District of Michigan a report, prepared in collaboration with her business consultant, Fred Caruso of Development Specialists, Inc., on the results of her investigation of the fees and expenses incurred by professionals retained in the Chapter 11 cases. As of June 30, 2007, approximately $123,000,000 in fees and expenses has been incurred by the 25 professionals whose fees ares subject to Sections 327 and 328 of the Bankruptcy Code, Ms. O'Neill relates. The fee examiner conducted informal interviews and examinations of key parties and professionals, rather than formal depositions. Ms. O'Neill worked with the Debtors, the Official Committee of Unsecured Creditors, and JPMorgan Chase Bank, N.A., the pre- and postpetition agent of lenders, to obtain entry of a protective order, as amended, to protect parties from the disclosure of sensitive confidential information on certain terms. Ms. O'Neill concludes that the substantial operational, managerial and financial issues in the Debtors' Plastics division and the effect of the issues on the achievability of management's business plan goals should have been discovered earlier. She says that from the outset of the Debtors' Chapter 11 cases, the "key constituents, namely the Debtors' major customers, the bank group -- subset of prepetition lenders, which acted as a steering committee for the prepetition lenders, together with the Prepetition Agent -- the Agent, and the Creditors Committee were aware of the substantial operational, managerial and financial issues in Plastics. Due in large part to the Plastics issues, until the approval of certain October 2005 customer agreements in December 2005, the Debtors could not formulate a reliable business plan, Ms. O'Neill notes. With respect to the summer of 2006, she concludes that based on the Debtors' performance in March, April and May of 2006, the Debtors should have known that: -- the aggressive $179,000,000 2006 EBITDA projection in that certain 4+8 plan was unachievable considering the Plastics issues in June 2006; and -- the projected 2006 EBITDA at that time should have more realistically resembled the $105,500,000 projected in that certain 6+6 plan subsequently issued in August 2006. Ms. O'Neill does not believe that the delay in the discovery of the impact of the Plastics issues on the Debtors' business plan resulted in material unnecessary losses or reductions in creditor recoveries, except with respect to the Prepetition Lenders who funded professionals' fees and likely unnecessarily funded two months of fees as a result of the delay, and the Customers, to the extent they made business decisions during the delay that increased their costs upon liquidation. If the Court concludes that the business plan should have been more conservative when initially issued in January 2006, the Prepetition Lenders and the Customers likely suffered losses or reductions in recoveries, Ms. O'Neill adds. To the question of whether the key assumptions underlying management's business plan, the nature and substance of the Debtors' operating challenges in their Plastics Division and substantive developments and changes in the Debtors' views on future operating performance were adequately and timely disclosed to the Debtors' principal creditor constituencies, Ms. O'Neill affirms that the Debtors did. According to Ms. O'Neill, because the Debtors' inability to timely achieve the business plan improvements resulted in a failure to increase value rather than a true decrease in value, the substantial diminution of the Debtors' estates is not relevant to the inquiry, and therefore, the relevant initial inquiry is whether any particular work was no longer reasonably necessary after reorganization became unlikely. Ms. O'Neill states that the probability of any reorganization substantially decreased in June 2006, when the Debtors' projected 2006 adjusted EBITDA fell substantially below $179,000,000, and that reorganization at the lower EBITDA level became necessarily contingent upon additional third-party concessions, i.e. Extraordinary Customer relief, which the fee examiner concludes was not likely to be obtained. Given the delay, Ms. O'Neill concludes that the decision to liquidate could have occurred approximately two months earlier. Therefore, she tells the Court, the Chapter 11 cases and the attendant fees were unnecessarily extended by approximately two months. Moreover, less significant work may have been reasonably unnecessary under the circumstances. A full copy of Ms. O'Neill's report is available for free at http://bankrupt.com/misc/Collins_FeeExaminer'sReport.pdf * * * Prior to the filing of the report, the Court approve the stipulation among the Debtors, United States Trustee, Ms. O'Neill, the Creditors Committee, for, among other things, the the immediate delivery of O'Neil's complete and unredacted draft report, including any attachments, to the U.S. Trustee. About Collins & Aikman Headquartered in Troy, Mich., Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtors with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. On Aug. 30, 2006, the Debtors filed a Joint Chapter 11 Plan and a Disclosure Statement explaining that plan. On Dec. 22, 2006, they filed an Amended Plan and on Jan. 22, 2007, filed a modified Amended Plan. On Jan. 25, 2007, the Court approved the adequacy of the Disclosure Statement. On July 18, 2007, the Court confirmed the Debtors' Liquidation Plan which became effective on Oct. 12, 2007. The Debtors' cases are set to be closed on Feb. 28, 2008. (Collins & Aikman Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) COMMODORE CDO: Moody's Junks Ratings on Two Note Classes -------------------------------------------------------- Moody's Investors Service downgraded and placed on review for downgrade these notes issued by Commodore CDO V Ltd.: Class Descriptions: -- $75,000,000 Class A1-A First Priority Senior Secured Floating Rate Delayed Draw Notes Due 2047 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $225,000,000 Class A1-B Second Priority Senior Secured Floating Rate Notes Due 2047 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $50,000,000 Class A-2 Third Priority Senior Secured Floating Rate Notes Due 2047 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $25,000,000 Class A-3 Fourth Priority Senior Secured Floating Rate Notes Due 2047 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $70,000,000 Class B Fifth Priority Senior Secured Floating Rate Notes Due 2047 Prior Rating: Aa2, on review for possible downgrade Current Rating: Baa2, on review for possible downgrade -- $13,250,000 Class C Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2047 Prior Rating: A2, on review for possible downgrade Current Rating: B3, on review for possible downgrade -- $24,000,000 Class D Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2047 Prior Rating: Baa2, on review for possible downgrade Current Rating: Caa1, on review for possible downgrade -- $8,500,000 Class E Eighth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2047 Prior Rating: Ba1, on review for possible downgrade Current Rating: Caa2, 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 subprime RMBS securities. COMSTOCK HOMEBUILDING: S&P Withdraws B Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' corporate credit rating on Comstock Homebuilding Cos. Inc. The company has no publicly rated debt. S&P withdrew the rating at the company's request. Comstock is a small publicly traded homebuilder and developer based in Reston, Virginia. The company develops a wide range of for-sale housing from roughly 30 active development projects in Virginia, Georgia, and the Carolinas. The previous rating, which had a negative outlook, acknowledged Comstock's broad product offering and the company's efforts to improve geographic diversity, but these strengths were offset by a very constrained financial profile. CONSECO INC: Posts $53.7 Million Net Loss in Qtr. Ended Sept. 30 ---------------------------------------------------------------- Conseco Inc. reported Wednesday results for the third quarter of 2007. For the third quarter ended Sept. 30, 2007, net loss applicable to common stock was $53.7 million, compared to net income applicable to common stock of $38.9 million in the third quarter of 2006 (including $28.1 million of net realized investment losses in the third quarter of 2007 vs. $13.9 million of net realized investment losses in the third quarter of 2006). Total revenues were $1.17 billion in the third quarter of 2007, compared with total revenues of $1.12 million in the same period last year. Net operating loss was $25.6 million in the third quarter of 2007, compared to net operating income of $52.8 million in the third quarter of 2006. Loss before net realized investment losses, corporate interest and taxes was $23.4 million, compared to income before net realized investment losses, corporate interest and taxes of $110.4 million in the third quarter of 2006. "Third Quarter results reflect a number of significant events, as progress on our program to position Conseco for future profitability and growth is increasingly evident," chief executive officer Jim Prieur said. "We saw continued strong growth in both our Bankers Life and Colonial Penn businesses, while Conseco Insurance Group, even with a decline in sales during the quarter, produced new business expected to be more profitable. Importantly, continued progress also was evident on the turnaround in our run-off long-term care block, with our claims reserve volatility reduced this quarter following the reserve strengthening of the previous quarter. With only a small loss in the quarter, we are on target for that block to become profitable next year." "The majority of our organizational realignment is now complete as well, with all of our customer service calls now being handled in our Carmel, Indiana offices," Mr. Prieur said. "Our just announced agreement in which we will invest $63 million to recapture a block of Colonial Penn life insurance business comprising approximately $50 million annual premium that had been ceded in 2002 to a subsidiary of Swiss Re, is a significant investment in the growth of this high-return core business," said chief financial officer Ed Bonach. "This transaction is expected to be immediately accretive to earnings and return on equity. Our Oct. 12, 2007, announcement that we completed the 100% coinsurance of an older block of fixed and equity-indexed annuities is another important step in improving Conseco's performance." "Conseco also further executed on its share repurchase program in the third quarter," Mr. Bonach said, "with the purchase of 2.4 million shares at an average price of $14.22 per share, for a total of $34.7 million." Net realized losses of $28.1 million (net of taxes) in the third quarter of 2007 consisted of losses from market value declines on the assets transferred pursuant to the company's 100% annuity coinsurance transaction, and from sales of mortgage-backed securities collateralized by sub-prime residential mortgage loans. In the third quarter of 2007, the company recorded a charge of approximately $76.5 million related to the coinsurance transaction. The results from the third quarter of 2007 reflect additional pre-tax costs of $16.4 million related to the litigation settlement the company entered into in the second quarter of 2006. At Sept. 30, 2007, the company's consolidated balance sheet showed $36.16 billion in total assets, $31.86 billion in total liabilities, and $4.30 billion in total shareholders' equity. About Conseco Inc. Headquartered in Carmel, Indiana, Conseco Inc. (NYSE: CNO) -- https://www.conseco.com/ -- is the holding company for a group of insurance companies operating throughout the United States that develop, market and administer supplemental health insurance, annuity, individual life insurance and other insurance products. The company became the successor to Conseco Inc. (Old Conseco), in connection with its bankruptcy reorganization. CNO focuses on serving the senior and middle-income markets. The company sells its products through three distribution channels: career agents, professional independent producers and direct marketing. CNO operates through its segments, which includes Bankers Life, Conseco Insurance Group, Colonial Penn, other business in run-off and corporate operations. * * * As reported in the Troubled Company Reporter on Sept. 11, 2007, Moody's Investors Service changed the outlook on the ratings of Conseco Inc. and its insurance subsidiaries to negative from stable. The rating agency also affirmed Conseco's senior bank facility at Ba3. As reported in the Troubled Company Reporter on Aug. 9, 2007, Standard & Poor's Ratings Services lowered its counterparty credit and senior debt ratings on Conseco Inc. to 'B+' from 'BB-'. The outlook remains negative. At the same time, Standard & Poor's lowered its counterparty credit and financial strength ratings on Conseco Senior Health Insurance Co. to 'CCC-' from 'CCC'. Its outlook also remains negative. CRDENTIA CORP: Acquiring Medical People for $750,000 in Cash ------------------------------------------------------------ Crdentia Corp. has signed a definitive agreement to acquire Medical People Healthcare Services Inc. Terms of the acquisition include $750,000 in cash and $500,000 in a 3-year note payable. Crdentia expects this acquisition to close in the next two weeks. Approximately 65% of MPHS's revenues are from healthcare staffing in the nursing home segment, with the remaining revenues from services to local hospitals and other healthcare facilities. The acquisition is expected to be immediately accretive to Crdentia. Crdentia believes that this acquisition will augment the services Crdentia currently offers in Alabama with a strong presence in nursing home staffing -- bringing Crdentia closer to becoming a one-stop-shop for healthcare staffing needs. Amy Disney from MPHS has joined Crdentia's senior management team and will be responsible for overseeing the acquired operations. Integration of the acquisition will begin upon closure. "I am very pleased to disclose Crdentia's acquisition of Medical People Healthcare Services Inc.," John Kaiser, Crdentia's chief executive officer, said. "The company is a successful and reputable brand with a strong presence in the Alabama market. As part of our overall expansion strategy that focuses on the Sun Belt region of the United States, this is a valuable acquisition that triples our business in Alabama, adds many new customers without any contract overlaps, and increases Crdentia's overall projected revenue by 10%, after including the company's recent acquisition of ATS Health Services." "In addition, Crdentia will add substantial experience to its management team with the addition of Amy Disney who has over twenty years of executive level experience in the healthcare staffing industry. With this accretive strategic acquisition, Crdentia moves closer to our goal of being a major medical staffing company in the Sun Belt and one of the largest healthcare staffing companies in the country," Mr. Kaiser added. About Medical People Healthcare Services Inc. Medical People Healthcare Services Inc. is a provider of temporary nursing and allied health staff to nursing homes, hospitals and other healthcare facilities in the Alabama market. About Crdentia Corp. Headquatered in Dallas, Texas, Crdentia Corp. (OTCBB: CRDT) -- http://www.crdentia.com/-- is a provider of healthcare staffing services to 1,500 healthcare providers in 49 states. Crdentia provides temporary healthcare staffing comprised of travel and per diem nursing, locum tenens, and allied healthcare staffing. Going Concern Doubt KBA Group LLP, in Dallas, expressed substantial doubt about Crdentia Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm reported that the company has incurred net losses totaling $16.1 million and $6.3 million for the years ended Dec. 31, 2006, and 2005, respectively, and has used cash flows from operating activities totaling $4.1 million and $5.1 million for the years ended Dec. 31, 2006, and 2005, respectively. Additionally, at Dec. 31, 2006, the company's current liabilities exceed their current assets by $8.1 million. CRESTED CORP: Special Stockholders Meeting Set for November 26 -------------------------------------------------------------- A special meeting of the Crested Corp. shareholders to vote on the proposed merger of Crested into U.S. Energy Corp. is set for Nov. 26, 2007. If the required shareholder vote is obtained at the meeting, and the other conditions to the merger are satisfied, the minority shareholders of Crested will receive 1 share of U.S. Energy common stock for every 2 shares of Crested's common stock they own. On Jan. 23, 2007, the boards of directors of U.S. Energy and Crested Corp. approved and executed a Merger Agreement where Crested would merge into USE, by means of an offer to acquire the minority shares of Crested, based on an exchange ratio of one share of common stock of USE for every two shares of Crested common stock not held by USE, which owns 71% of the Crested common stock. The Merger Agreement also provided that USE vote in line with the vote of a majority of the holders of the Crested minority shares. Consummation of the merger was subjected to execution of definitive documents: -- USE delivering to the Crested minority shareholders a proxy statement/prospectus, after declaration of effectiveness by the Securities and Exchange Commission of a Form S-4 filed by USE with the SEC; -- for a special meeting of the Crested shareholders; -- approval of the merger by the holders of a majority of the minority Crested shares; and satisfaction of customary representations and warranties to be contained in the definitive documents. The board of directors has recommended that approval of the merger agreement be given by the shareholders of Crested Corp. USE will not seek USE shareholder approval of the merger. The SEC has declared effective the registration statement on Form S-4 of Crested Corp. About US Energy Corp. Headquartered in Riverton, Wyoming, US Energy corp. -- http://www.usnrg.com/-- is a diversified natural resource company with interests in molybdenum, gold and oil & gas. About Crested Corp. Headquartered in Riverton, Wyoming, Crested Corp. (OTC BB: CBAG) develops and leases mineral properties. The company primarily focuses on hard rock minerals, including lead, zinc, silver, molybdenum, gold, uranium, and oil and gas properties. It also engages in the production of petroleum properties and marketing of minerals through equity investees. * * * Moss Adams LLP cited several factors that raise substantial doubt about the ability of Crested Corp. to continue as a going concern after auditing the company's financial statements as of Dec. 31, 2006. The factors were the company's significant losses from operations and working capital deficit of $3,730,800 as of Dec. 31, 2006. Moss Adams also stated that a substantial portion of Crested's obligation is owed to an affiliated entity. DAVIS & ASSOCIATES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Davis and Associates, Inc. 3040 Halls Ferry Road Vicksburg, MS 39180 Bankruptcy Case No.: 07-03484 Chapter 11 Petition Date: October 31, 2007 Court: Southern District of Mississippi (Jackson Division) Debtor's Counsel: Jeffrey Kyle Tyree, Esq. Harris, Jernigan & Geno, P.P.L.C. P.O. Box 3380 Ridgeland, MS 39158-3380 Tel: 601 427-0048 Fax: 601-427-0050 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million The Debtor did not file a list of its 20 largest unsecured creditors. DRACO 2007-1: Moody's Junks Ratings on Two Note Classes ------------------------------------------------------- Moody's Investors Service placed these notes issued by Draco 2007- 1, Ltd. on review for possible downgrade: Class Descriptions: -- $1,250,000,0001 Class A1S Variable Funding Senior Secured Floating Rate Notes Due 2047 Prior Rating: Aaa Current Rating: Aaa on review for possible downgrade -- $282,000,000 Class A1J Senior Secured Floating Rate Notes Due 2047 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: -- $120,000,000 Class A2 Senior Secured Floating Rate Notes Due 2047 Prior Rating: Aa2 Current Rating: A3 on review for possible downgrade -- $125,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2047 Prior Rating: A2 Current Rating: Ba1 on review for possible downgrade -- $23,000,000 Class B1 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 Prior Rating: Baa1 Current Rating: Ba2 on review for possible downgrade -- $65,000,000 Class B2 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 Prior Rating: Baa2 on review for possible downgrade Current Rating: Ba3 on review for possible downgrade -- $25,000,000 Class B3 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 Prior Rating: Baa3 on review for possible downgrade Current Rating: B1 on review for possible downgrade -- $35,000,000 Class C1 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 and Prior Rating: Ba1 on review for possible downgrade Current Rating: Caa1 on review for possible downgrade -- $25,000,000 Class C2 Mezzanine Deferrable Interest Floating Rate Notes Due 2047. Prior Rating: Ba2 on review for possible downgrade Current Rating: Caa2 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. FIDELITY NAT'L: Board Okays Lender Processing Services Spin-Off --------------------------------------------------------------- Fidelity National Information Services, Inc.'s Board of Directors has approved pursuing a plan to spin-off its Lender Processing Services division into a separate publicly traded company. As currently contemplated, the company will contribute the assets of lender division into a newly formed subsidiary (Newco) in exchange for 100% of Newco common stock and approximately $1.6 billion of Newco debt securities. Following 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 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. 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 leading global provider of core processing, e-payments, item processing and card processing solutions to financial institutions. On a pro forma basis, including the recently acquired eFunds, Transaction Processing Services generated revenue of $3.3 billion over the last 12 months. FIS' Lender Processing Services business is the nation's leading provider of integrated data, servicing and technology solutions to large-scale mortgage lenders. Lender processing services' end-to-end mortgage services include origination, automated title and settlement, processing, default, valuation, risk management, tax, flood and collateral protection solutions. More than 50 percent of mortgage loans in the United States are processed using the lender division's industry leading Mortgage Servicing Package. Lender Processing Services generated US$1.7 billion in revenue over the last 12 months. "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." FIS expects to file a ruling request with the IRS regarding the tax-free nature of the lender division spin-off within approximately 60 days and a preliminary Form 10 Registration Statement with the SEC in the first quarter of 2008. 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 Based in Jacksonville, Florida, Fidelity National Information Services, Inc. -- http://www.fidelityinfoservices.com/-- provides core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage related information products; and outsourcing services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top ten. Nearly 50% of all US residential mortgages are processed using FIS software. FIS maintains a strong global presence, serving over 7,800 financial institutions in more than 60 countries worldwide, including Brazil and Japan. * * * As reported in the Troubled Company Reporter on Oct. 30, 2007, following Fidelity National Information Systems Inc.'s announcement of a plan to split the company into two segments, Fitch Ratings will reevaluate Fidelity's Issuer Default Rating and debt ratings once further clarity is available on the final capital structure and operating profile of each entity. Fitch currently rates Fidelity as: IDR 'BB'; $900 million secured revolving credit facility 'BB+'; $2.1 billion secured term loan A 'BB+'; $1.6 billion secured term loan B 'BB+'; and 4.75% senior notes 'BB+'. The Rating Outlook is Stable. FIDELITY NATIONAL: Earns $245.3 Million in Third Quarter 2007 ------------------------------------------------------------- Fidelity National Information Services, Inc. reported financial results for the third quarter of 2007. Consolidated revenue increased to $1.2 billion and net earnings totaled $245.3 million, compared to last year's $1 billion consolidated revenue and $78.5 million net earnings. These results include after-tax gains of $159.4 million and after- tax restructuring and other charges of $12.9 million. FIS reported revenue growth of 10.4%, adjusted EBITDA growth of 14.4%. These results include a partial month of eFunds operations, which the company acquired on Sept. 12, 2007. "FIS delivered another quarter of solid operating performance in a challenging market," FIS Executive Chairman William P. Foley, II, stated. "The eFunds integration is off to a good start, and we remain confident that the additional scale and product capabilities will generate meaningful growth opportunities," FIS President and Chief Executive Officer Lee A. Kennedy added. "We are also confident that we will achieve our targeted annualized run rate cost savings of $65 million by the end of 2009. Based on our preliminary assessment, we expect eFunds to contribute approximately $0.05 to $0.10 to diluted cash earnings per share in 2008." Transaction Processing Services' adjusted EBITDA, which includes a partial month of eFunds, increased 18.8% over the prior-year quarter to $186.7 million. The adjusted EBITDA margin was 25.9%, which is a 170 basis point increase compared to prior year. Lender Processing Services' adjusted EBITDA was $150.8 million, or 6.2% above the prior year quarter. The adjusted EBITDA margin was 33.9%, compared to 32.4% in the second quarter of 2007, and 34.7% in the third quarter of 2006. The decline from the prior year quarter is the result of strong growth in lower margin appraisal volumes and reduced volumes in origination and tax services. Corporate EBITDA, as adjusted, for the third quarter of 2007 totaled $18.3 million. The $2.0 million decrease compared to the prior year quarter is attributable to lower compensation and benefit expense. The effective tax rate was 37.0%. About Fidelity National Based in Jacksonville, Florida, Fidelity National Information Services, Inc. -- http://www.fidelityinfoservices.com/-- provides core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage related information products; and outsourcing services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top ten. Nearly 50% of all US residential mortgages are processed using FIS software. FIS maintains a strong global presence, serving over 7,800 financial institutions in more than 60 countries worldwide, including Brazil and Japan. * * * As reported in the Troubled Company Reporter on Oct. 30, 2007, following Fidelity National Information Systems Inc.'s announcement of a plan to split the company into two segments, Fitch Ratings will reevaluate Fidelity's Issuer Default Rating and debt ratings once further clarity is available on the final capital structure and operating profile of each entity. Fitch currently rates Fidelity as: IDR 'BB'; $900 million secured revolving credit facility 'BB+'; $2.1 billion secured term loan A 'BB+'; $1.6 billion secured term loan B 'BB+'; and 4.75% senior notes 'BB+'. The Rating Outlook is Stable. FHC HEALTH: Moody's Holds B2 Corporate Family Rating ---------------------------------------------------- Moody's Investors Service confirmed the B2 corporate family rating of FHC Health Systems Inc. and assigned ratings to its proposed first and second lien credit facility. These actions conclude Moody's formal review (direction uncertain), which was initiated in July 2007 and prompted by the loss of the Arizona contract, change in the company's corporate governance, and equity infusion by Crestview Partners L.P. The ratings outlook is stable. The confirmation of the B2 Corporate Family Rating reflects the risk associated with the high concentration of its revenues with several major contracts (accounting for about 50%) including renewal risk as well as any adverse change in terms. The rating also reflects concern regarding the volatility of the company's operating cash flow, low operating margins, limited free cash flow, and adequate near-term liquidity. The company benefits from positive near term momentum in its public health segment due to rate increases realized in existing contracts and the addition of new contracts. The expectation of the company's continued leading position in the public health sub- segment of the managed care health market and the maintenance of diverse, well established contracts are also considered in the rating. Moody's anticipates benefits from the company's improved corporate governance structure, guidance provided by the financial sponsor, and more streamlined operations due to its focus as a managed care operator. The stable outlook reflects relatively modest financial leverage and improving fundamentals as the company continues its exit from the Arizona contract and stabilizes at a new run-rate. The stable outlook is sensitive to FHC's ability to lower, on a sustained basis, the operating expenses and to improve margins. However the ratings could likely tolerate a slight increase in the medical loss ratio over the intermediate term. Moody's expects capital spending to moderate as the company has already made significant infrastructure investments in the past few years, including expanding and upgrading its information and operating systems. These ratings of FHC Health Systems were confirmed: -- Corporate Family Rating: B2 -- Probability of Default Rating: B2 These ratings were assigned: -- $175 million proposed Senior Secured First Lien Term Loan, due 2013 - rated B1, LGD 3, 42% -- $85 million proposed Senior Secured Second Lien Term Loan, due 2013 - rated B3, LGD 4, 64% These ratings were confirmed but will be withdrawn following the completion of the transaction: -- $130 million Senior Secured Second Lien Term Loan, due 2009 -- rated Ba3, LGD 2, 25% -- $100 million Senior Secured Third Lien Term Loan, due 2010 -- rated B3, LGD 5, 75% FHC Health Systems Inc., headquartered in Norfolk, Virginia, is one of the leading behavioral managed care providers in the U.S., covering about 24 million lives. The company's remaining subsidiary, Value Options, provides services to the public sector, employer groups, health plans and federal agencies. Annual revenues are about $1 billion. FORD CREDIT: Fitch Holds BB+ Rating on Class D Notes ---------------------------------------------------- Fitch Ratings affirmed these eight classes of Ford Credit Auto Owner Trust 2006-C as part of its on going surveillance process: -- Class A-2a notes affirmed at 'AAA'; -- Class A-2b notes affirmed at 'AAA'; -- Class A-3 notes affirmed at 'AAA'; -- Class A-4a notes affirmed at 'AAA'; -- Class A-4b notes affirmed at 'AAA'; -- Class B notes affirmed at 'A'; -- Class C notes affirmed at 'BBB+'; -- Class D notes affirmed at 'BB+'. The class A-1 notes are paid in full. The affirmations are a result of continued available credit enhancement in excess of stressed remaining losses. Current principal allocation and expected future cashflows are also contributing factors. The collateral continues to perform within Fitch's base case expectations. Currently, under the CE structure, the securities can withstand stress scenarios consistent with the current rating categories and still make full payments of interest and principal in accordance with the terms of the documents. FORD MOTOR: UAW Contract Negotiations Continue ---------------------------------------------- Debate between Ford Motor Company and the United Auto Workers union on union-run trust financing recommenced at 9 a.m., Wednesday, after it broke off at 1 a.m. Wednesday morning following high-level contract talks that began Tuesday morning, Jui Chakravorty and Poornima Gupta of Reuters report citing a source familiar with the matter. Reuters' source says the union is also seeking a favorable deal on UAW-represented U.S. plants that the company plans to close as part of its turnaround plan announced last year. UAW President Ron Gettelfinger joined the negotiations on Tuesday, indicating that both parties are nearing a settlement, acccording to various sources. As reported in the Troubled Company Reporter on Oct. 30, 2007, contract talks with Ford and the union speeded up after Chrysler LLC ratified its four-year labor contract with the union on Oct. 27, 2007. Ford and the UAW have reached a new set of terms for a labor contract, cutting thousands of jobs under a buyout program. If Ford could bargain cost savings from the UAW under their new contract, the carmaker is likely change its plans on closing six plants and displacing workers. Ford Family Controlling Stake Resolved differences within the Ford family botched a proposed sale of the family's 40% controlling stake in the company, instigating heirs of founder Henry Ford to stop talks with investment bankers, Francesco Guerrera in New York, John Reed in London and Bernard Simon in Toronto of the Financial Times wrote quoting people close to the situation. About Ford Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on July 30, 2007, Moody's Investors Service said that the performance of Ford Motor Company's global automotive operations for the second quarter of 2007 was significantly stronger than the previous year and better than street expectations. However, Moody's explained that the company continues to face significant competitive and financial challenges, and the rating agency expects that Ford's credit metrics and rate of cash consumption will likely remain consistent with no higher than a B3 corporate family rating level into 2008. According to the rating agency, Ford's corporate family rating is currently a B3 with a negative outlook. The rating is pressured by the shift in consumer preference from high margin trucks and SUVs, and by the need for a new 2007 UAW contract that provides meaningful relief from high health care costs and burdensome work rules, Moody's relates. In June 2007, S&P raised the Issue Rating on Ford's senior secured credit facilities to B+ from B. FURLONG SYNTHETIC: Moody's Cuts Rating on Class B Notes to Ba1 -------------------------------------------------------------- Moody's Investors Service placed these notes issued by Furlong Synthetic ABS CDO 2006-1, Ltd. on review for possible downgrade: Class Descriptions: -- $52,000,000 Class A1 Senior Secured Floating Rate Notes Due October 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $50,000,000 Class A2 Senior Secured Floating Rate Notes Due October 2046 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $21,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due October 2046 Prior Rating: A2 Current Rating: Baa1, on review for possible downgrade -- $19,500,000 Class B Mezzanine Secured Deferrable Interest Floating Rate Notes Due October 2046 Prior Rating: Baa2 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 collateral pool, which consists primarily of structured finance securities. GEMSTONE CDO: Moody's Junks Ratings on Two Note Classes ------------------------------------------------------- Moody's Investors Service placed these notes issued by Gemstone CDO VI Ltd on review for possible downgrade: Class Descriptions: -- $446,250,000 Class A-1 Floating Rate Notes Due August 2046 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: -- $78,750,000 Class A-2 Floating Rate Notes Due August 2046 Prior Rating: Aaa Current Rating: A3 (on review for possible downgrade) -- $66,500,000 Class B Floating Rate Notes Due August 2046 Prior Rating: Aa2 Current Rating: Baa3 (on review for possible downgrade) -- $26,000,000 Class C Floating Rate Deferrable Interest Notes Due August 2046 Prior Rating: A2 Current Rating: B1 (on review for possible downgrade) -- $35,250,000 Class D Floating Rate Deferrable Interest Notes Due August 2046 Prior Rating: Baa2 Current Rating: Caa1 (on review for possible downgrade) -- $10,500,000 Class E Floating Rate Deferrable Interest Notes August 2046 Prior Rating: Ba2 Current Rating: Ca According to Moody's, the rating actions reflect the deterioration in the credit quality of the transaction's underlying reference portfolio, consisting primarily of structured finance securities. GENERAL MOTORS: Investing $73 Million in Shreveport Assembly Plant ------------------------------------------------------------------ General Motors confirmed that it will invest $73 million into its Shreveport, Louisiana truck assembly plant to prepare the plant for production of the all-new HUMMER H3T. "GM's $73-million investment in Shreveport is further proof that the community remains an important part of GM's manufacturing plan," Troy Clarke, GM Group Vice President and GM North America President, said. "The H3T is unique for HUMMER because it is the brand's first true pickup. Like every HUMMER model, the H3T delivers capabilities unparalleled in the marketplace and will carve out a new niche in the truck market. I'm happy to say that the men and women of Shreveport will be a big part of this new growth." Cal Rapson, UAW vice president and director of the GM Department, also voiced strong support for the project. "This investment is a testament to the members of UAW Local 2166 for their hard work and commitment to build high quality products," Mr. Rapson said. "UAW members at the Shreveport plant are an important part of the team that is bringing this exciting new GM vehicle to the market." Larger than a midsize truck, smaller than a full-size, the H3T delivers attitude, versatility and capability. And more important, with a fully functional truck bed and one of the industry's broadest range of personalization accessories, the H3T provides a new level of lifestyle functionality to the HUMMER portfolio and will draw new customers into the brand. The H3T is scheduled to arrive in dealerships by third quarter 2008. "I am delighted that GM has once again chosen to increase investments in Louisiana by expanding operations in Shreveport," Governor Blanco said. "Louisiana looks to partner with companies interested in doing business in our state who will not only positively impact the region's economy with their activity, but will also provide quality jobs with good benefits to our workers. Thank you for helping us move Louisiana forward." In the last several years, GM has invested approximately $1.5 billion in the Shreveport facility. This investment along with the plant's annual payroll of $160 million and annual taxes of $4.5 million, demonstrates that GM will continue to be an economic force in the local community and state of Louisiana for years to come. Shreveport Assembly has built trucks since 1981, beginning with the Chevy S-10. The plant presently produces the HUMMER H3 and Chevy Colorado and GMC Canyon mid-size pickup trucks. Shreveport Assembly employs approximately 2,100 employees. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on Oct. 23, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with positive implications, where they were placed Sept. 26, 2007, following agreement on the new labor contract. The outlook is stable. GRANT PRIDECO: Selling Three Biz Units to Vallourec for $800 Mil. ----------------------------------------------------------------- Grant Prideco Inc. has entered into a definitive agreement with Vallourec S.A. to sell three of the four business units within its Tubular Technologies and Services segment for $800 million. The business units included in the sale are Atlas Bradford Premium Threading & Services, TCA, and Tube-Alloy, which had combined revenues of $229 million for the twelve-month period ended Sept. 30, 2007. "With the recent consolidation in the OCTG marketplace, this transaction represents an opportunity to combine the company's leading tubular services businesses with a world-class tubular mill," Michael McShane, chairman, president, and CEO, commented. "The benefits of this combination have resulted in an attractive selling price for Grant Prideco." The sale does not include the XL Systems business unit, which is also included in the TTS segment. The businesses sold represented $40.4 million, or 73% of TTS's year-to-date operating income as reported in the company's recent earnings release. Subject to regulatory approvals, the company expects the transaction to close the latter part of 2007 or early 2008. Credit Suisse is acting as financial advisor to Grant Prideco. About Grant Prideco Headquartered in Houston, Texas, Grant Prideco Inc. (NYSE: GRP) -- http://www.grantprideco.com/-- is into drill stem technology development and drill pipe manufacturing, sales and service. The company is a manufacturing, selling and servicing drill bit and specialty tools and provides engineered connections and tubular products and services. * * * Moody's Investor Service placed Grant Prideco Inc.'s corporate family, senior unsecured debt, and probability of default ratings at 'Ba1' in June 2006. The ratings still hold to date with a stable outlook. GSV-2 RESORT: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: G.S.V.-2 Resort Developers, L.L.C. P.O. Box 1318 Palm Desert, CA 92261 Bankruptcy Case No.: 07-16938 Chapter 11 Petition Date: October 30, 2007 Court: Central District Of California (Riverside) Judge: Meredith A. Jury Debtor's Counsel: J. Rudy Freeman, Esq. Pachulski, Stang, Ziehl & Jones, L.L.P. 10100 Santa Monica Boulevard, 11th Floor Los Angeles, CA 90067 Tel: (310) 277-6910 Fax: (310) 201-0760 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million The Debtor did not file a list of its 20 largest unsecured creditors. HALCYON SECURITIZED: Moody's Junks Rating on $4MM Class E Notes --------------------------------------------------------------- Moody's Investors Service placed these notes issued by Halcyon Securitized Products Investors ABS CDO I Ltd. on review for possible downgrade: Class Description: -- $236,400,000 Class A-1 Senior Secured Floating Rate Notes Due 2050 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $76,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2050 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $28,400,000 Class B Senior Secured Floating Rate Notes Due 2050 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: -- $19,600,000 Class C Senior Secured Deferrable Interest Floating Rate Notes Due 2050 Prior Rating: A2 Current Rating: Baa2, on review for possible downgrade -- $19,600,000 Class D Senior Secured Deferrable Interest Floating Rate Notes Due 2050 Prior Rating: Baa2 Current Rating: Ba2, on review for possible downgrade -- $4,000,000 Class E Senior Secured Deferrable Interest Floating Rate Notes Due 2050 Prior Rating: Ba1 Current Rating: Caa1, 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. HALO TECHNOLOGY: U.S. Trustee Amends Creditors Panel Membership --------------------------------------------------------------- The U.S. Trustee for Region 2 amends the membership of the Official Committee of Unsecured Creditors in the Chapter 11 cases of Halo Technology Holdings Inc. and its debtor-affiliates. The Creditors Committee is now composed of: 1. Bowne of New York City LLC Salvatore Astuto, Credit Manager 55 Water Street New York, NY 10041 Tel: (212) 658-5452 Fax: (212) 658-5496 2. RR Donnelley Receivables Inc. Daniel Pevonka, Senior Credit Manager 3075 Highland Parkway Downers Grove, IL 60515 Tel: (630) 322-6931 Fax: (630) 322-6052 3. Unify Corporation Todd Wille, CEO 2101 Arena Boulevard, Suite 100 Sacramento, CA 95834 Tel: (916) 928-6400 Fax: (916) 928-6408 4. Mahoney Cohen & Co. Jeffrey T. Sutton, Director, Corporate Recovery Services 1065 Avenue of the Americas New York, NY 10018 Tel: (212) 790-5732 Fax: (212) 790-5909 5. Montgomery & Co. LLC Kevin P. Higgins, CFO Suite 400, 100 Wilshire Boulevard Santa Monica, CA 90401 Tel: (310) 260-6006 Fax: (310) 260-6095 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Halo Technology Greenwich, Connecticut-based Halo Technology Holdings Inc. fka Warp Technology Holdings Inc. -- http://www.haloholdings.com/-- is a holding company whose subsidiaries operate enterprise software and information technology businesses. The company and its affiliates filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Conn. Lead Case No. 07-50480). Lawyers at Zeisler & Zeisler P.C. serve as the Debtors' counsel. The Official Committee of Unsecured Creditors selected the firm Pepe & Hazard LLP as its bankruptcy counsel. At March 31, 2007, the company reported total assets of $47,344,373 and total liabilities of $45,494,297. HALO TECH: Court Okays Pepe & Hazard as Committee's Bankr. Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Halo Technology Holdings Inc. and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the District of Connecticut to employ Pepe & Hazard LLP as its bankruptcy counsel. As the Committee's counsel, Pepe & Hazard is expected to: a. participate in certain meetings of the Committee; b. meet with representative of the Debtors and the Debtors' professionals; c. advise the Committee regarding proceedings in the Court; d. prepare and file certain pleadings and participate in hearings in the Court; e. monitor the Debtors' activities; f. assist the Committee in maximizing the value to be realized for the unsecured creditors from the Debtors' assets, by sale or otherwise; g. assist the Committee in the formulation and negotiation of a Chapter 11 plan and advise creditors of the Committee's recommendation with respect to any plan; and h. prosecute all possible causes of action. The Committee tells the Court that Kristin B. Mayhew, Esq., a partner at the firm, will bill $360 per hour for this engagement. James C. Graham, Esq., also a partner, will bill $430 per hour. To the best of the Committee's knowledge, the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm's attorneys can be reached at: Kristin B. Mayhew, Esq. James C. Graham, Esq. Pepe & Hazard LLP 30 Jelliff Lane Southport, CT 06890 Tel: (203) 319-4022 Fax: (203) 319-4034 http://www.pepehazard.com/ About Halo Technology Greenwich, Connecticut-based Halo Technology Holdings Inc. fka Warp Technology Holdings Inc. -- http://www.haloholdings.com/-- is a holding company whose subsidiaries operate enterprise software and information technology businesses. The company and its affiliates filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Conn. Lead Case No. 07-50480). Lawyers at Zeisler & Zeisler P.C. serve as the Debtors' counsel. The Official Committee of Unsecured Creditors selected the firm Pepe & Hazard LLP as its bankruptcy counsel. At March 31, 2007, the company reported total assets of $47,344,373 and total liabilities of $45,494,297. HALO TECHNOLOGY: Committee Taps Weiser LLP as Financial Advisor --------------------------------------------------------------- The Official Commitee of Unsecured Creditors in Halo Technology Holdings Inc. and its debtor-affiliates' Chapter 11 cases seeks permission from the U.S. Bankruptcy Court for the District of Connecticut to employ Weiser LLP as its accountant and financial advisor. The Committee believes Weiser LLP has sufficient expertise and experience with the accounting practice in insolvency matters, and will: a) analyze the Debtors' financial operations from the petition date; b) analyze the Debtors' financial operations prior to the petition date; c) analyze and advise the Committee and its counsel in the development, evaluation and documentation of the financial aspects of any plan of reorganization or plan of liquidation proposed by the Debtors, or developed by the Committee, including developing, structuring and negotiating the terms and conditions of such plan and the consideration for the unsecured creditors, and prepare and submit reports to the members of the committee to aid them in evaluating the same; d) analyze and assess the Debtors' business operation, proposed business plan including compensation, retention and severance plans, assumptions/rejection of leases and executory contracts, proposed DIP financing agreements, proposed assets sale and sale procedures and verification of the physical inventory of merchandise, supplies and equipment and other material assets and liabilities; e) assist the Committee in its analysis of financial information including schedules of assets and liabilities, statement of financial affairs, monthly statements of operations; f) assist the Committee in its evaluation of cash flow and other financial projections prepared by the Debtors; g) evaluate the Debtors' cash management system and scrutinize cash disbursements for the period subsequent to the petition date; h) analyze transactions with insiders, related and/or affiliated companies; i) analyze transactions with Debtors' lenders; j) render expert testimony; k) attend meetings of creditors and confer with representatives of the creditor group, their counsel and representatives of the Debtors; l) analyze the Debtors' books and records of potential preferences, fraudulent conveyances and other potential prepetition investigations; m) prepare business valuations of the Debtor on a going concern basis; and n) perform other services that may be requested by the Committee. James Horgan, a partner at the Business Advisory and Recovery Services group of Weiser LLP, tells the Court that the firm's professional rates are: Designation Hourly Rate ----------- ----------- James Horgan $395 Partners/Principals $350 - $540 Directors/Senior Managers $280 - $350 Assistants to Managers $125 - $300 Paraprofessionals $70 - $125 Mr. Horgan assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. About Halo Technology Greenwich, Connecticut-based Halo Technology Holdings Inc. fka Warp Technology Holdings Inc. -- http://www.haloholdings.com/-- is a holding company whose subsidiaries operate enterprise software and information technology businesses. The company and its affiliates filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Conn. Lead Case No. 07-50480). Lawyers at Zeisler & Zeisler P.C. serve as the Debtors' counsel. The Official Committee of Unsecured Creditors selected the firm Pepe & Hazard LLP as its bankruptcy counsel. At March 31, 2007, the company reported total assets of $47,344,373 and total liabilities of $45,494,297. HAMILTON GARDENS: Moody's Lowers Ratings on Two Notes to Low-B -------------------------------------------------------------- Moody's Investors Service placed these notes issued by Hamilton Gardens CDO Ltd. on review for possible downgrade: Class Descriptions: -- $54,250,000 Class A-2 Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $56,500,000 Class B Floating Rate Notes Due 2046 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $25,000,000 Class C Deferrable Floating Rate Notes Due 2046 Prior Rating: A2 Current Rating: Ba1, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $27,500,000 Class D Deferrable Floating Rate Notes Due 2046 Prior Rating: Baa3 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 subrpime RMBS securities. HAWAIIAN AIRLINES: Awarded $80 Million in Damages Against Mesa -------------------------------------------------------------- The U.S. Bankruptcy Court District of Hawaii has ruled in favor of Hawaiian Airlines in its lawsuit against Mesa Air Group (Case No. 03-00817), awarding Hawaiian $80 million in damages and ordering Mesa to pay Hawaiian's costs of litigation and reasonable attorneys' fees. Mark Dunkerley, Hawaiian's president and CEO, said, "[The] ruling is a triumph for fair competition and ethics over dishonesty and illegal behavior. Nobody benefits when a company like Mesa misuses confidential information to gain an unfair competitive advantage, then lies about it and destroys evidence." Mr. Dunkerley added that evidence presented at trial confirmed a Mesa strategy to reduce competition in the marketplace. "Mesa pretends that they are in Hawaii to help the consumer. As the evidence in this trial showed, the reality is that Mesa's intent was to drive local competition out of business and raise fares. We are pleased that the Court laid out the facts for all to see." "We would especially like to thank our customers, who have stayed loyal to Hawaiian Airlines throughout this difficult period. Our battle is not over but today is an important step in the right direction," Mr. Dunkerley commented after the ruling was handed. The court's decision followed two weeks of court proceedings from September 25 through October 4, including witness testimony and presentation of evidence. In a pre-trial hearing, the court made findings that: (1) Mesa kept confidential information it was supposed to destroy or return to Hawaiian in accordance with a signed confidentiality agreement; (2) Mesa misused the information it kept; and (3) the information Mesa kept was a substantial factor in the company's decision to enter the Hawaii market. The $80 million in damages was awarded to compensate Hawaiian for damages it suffered through October 2007. The court did not award damages for any injury Hawaiian may sustain in the future as a result of Mesa's misconduct. Hawaiian intends to study the opinions handed down and applicable law to determinate what steps it can take to recover damages it may suffer in subsequent periods. About Hawaiian Airlines Hawaiian Airlines, Inc. -- http://www.hawaiianair.com/-- a subsidiary of Hawaiian Holdings Inc. (Amex: HA), provides passenger air service between the U.S. mainland and Hawaii. The company also offers service to Australia, American Samoa and Tahiti. The company filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Hawaii (Case No. 03-00827) on March 21, 2003. Joshua Gotbaum served as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum was represented by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. The Bankruptcy Court confirmed the Chapter 11 Trustee's Plan of Reorganization on March 10, 2005. The Plan took effect on June 2, 2005. HEALTHTRONICS INC: Moody's Holds B1 Corporate Family Rating ----------------------------------------------------------- Moody's Investors Service affirmed the B1 Corporate Family Rating and the B1 rating on the $50 million senior secured revolving credit facility of HealthTronics Inc. The outlook remains negative. Moody's affirmed these ratings: -- $50 million senior secured revolving credit facility, at Ba3 (LGD2, 27%); -- Corporate Family Rating, at B1; -- Probability of Default Rating, at B2; The ratings outlook is negative. The Corporate Family Rating of B1 primarily reflects the company's nominal free cash flow and modestly declining lithotripsy volumes, factors that are mitigated by the lack of corporate level debt on the company's balance sheet. The corporate family rating continues to be constrained by the company's small size, its still short operating history post- merger, and the reliance on acquisitions to support future growth, given that lithotripsy pricing and volumes are constrained. The risks inherent in commercializing new products and therapies also continue to constrain the ratings. Additional limitations on the ratings are imposed by the technology risk inherent in the company's business, potential liability issues and possible changes in the regulatory environment. Factors providing positive support to the ratings include: i. the company leading market share as the #1 provider of lithotripsy services; ii. the company's stable, broad-based provider network of roughly 3,000 urologists, representing coverage of about one-third of the total urologists in the U.S.; iii. its strong EBITDA margins in excess of 40% (before minority interest) and iv. its favorable payor mix, with only 20% of revenues derived from government programs. The rating outlook remains negative, reflecting the challenge to revenue growth presented by the company's lithotripsy business, which accounts for 87% of the company's revenue stream. The outlook also encompasses the risk that the company's investment in radiation therapy could drain cash balances without an offsetting improvement in cash flows in 2008 and beyond. HealthTronics Inc. provides lithotripsy services through partnerships with urology physicians and it manufacturers a line of specialty medical devices primarily for the urologic industry. For the twelve months ended June 30, 2007, the company generated revenues of about $138 million. HEMOSOL CORP: Court Extends CCAA Protection Until November 30 ------------------------------------------------------------- PricewaterhouseCoopers Inc. in its capacity as interim receiver of the assets, property and undertaking of Hemosol Corp. and its affiliate Hemosol LP disclosed that the Ontario Superior Court of Justice granted a further extension of the stay of proceedings against Hemosol. The current Companies' Creditors Arrangement Act stay of proceedings will now expire on Nov. 30, 2007. The further extension is necessary to allow the Receiver to determine whether a restructuring of the Hemosol corporate shell can be achieved. Headquartered in Ontario, Canada, Hemosol Corp. (NASDAQ: HMSLQ, TSX: HML) -- http://www.hemosol.com/-- is an integrated biopharmaceutical developer and manufacturer of biologics, particularly blood-related protein based therapeutics. Information on Hemosol's restructuring is available at http://www.pwc.com/ca/eng/about/svcs/brs/hemosol.html/ Hemosol Corp. and Hemosol LP filed a Notice of Intention to Make a Proposal Pursuant to Section 50.4 (1) of the Bankruptcy and Insolvency Act on Nov. 24, 2005. The company had defaulted in the payment of interest under its $20 million credit facility. Hemosol said that it would require additional capital to continue as a going concern and is in discussions with its secured creditors with respect to its current financial position. On Dec. 5, 2005, PricewaterhouseCoopers Inc. was appointed interim receiver of the companies. HICKORY TREE: Case Summary & Four Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Hickory Tree Apartment Homes, LLC 734 Ordnance Drive Church Hill, TN 37642 Bankruptcy Case No.: 07-51560 Type of Business: The Debtor operates an apartment complex. Chapter 11 Petition Date: October 31, 2007 Court: Eastern District of Tennessee (Greeneville) Debtor's Counsel: Mark S. Dessauer, Esq. Hunter, Smith & Davis 1212 North Eastman Road P.O. Box 3740 Kingsport, TN 37664 Tel: (423) 378-8840 Fax: (423) 378-8801 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's list of its Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Rodger D. Stewart, Jr. Loan $719,441 Deanna L. Stewart, Kevin S. Stewart, Tonya S. Stewart, Timothy Stewart 214 Reno Street Rogersville, TN 37857 William E. Philips, Esq. Substitute Trustee $0 210 East Main Street on Deed of Trust Rogersville, TN 37857 Tel: (423) 272-7633 The Citzens Bank of Lien Holder $0 East Tennessee P.O. Box 550 Rogersville, TN 37857 Tel: (423) 357-2200 Thomas Peters, Esq. Attorney's Fees Unknown 127 Broad Street Kingsport, TN 37662 Tel: (423) 245-2151 HIGDON FURNITURE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Higdon Furniture Company P.O. Box 1739 Quincy, FL 32353 Bankruptcy Case No.: 07-40562 Chapter 11 Petition Date: October 31, 2007 Court: Northern District of Florida (Tallahassee) Debtor's Counsel: C. Edwin Rude, Jr., Esq. 211 East Call Street Tallahassee, FL 32301-7607 Tel: (850) 222-2311 Fax: (850) 222-2120 Estimated Assets: $0 to $10,000 Estimated Debts: $1 Million to $100 Million Debtor's list of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Capital City Bank $3,795,400 P.O. Box 0517 Tallahassee, FL 32302 High Point Building Partnership $1,843,106 P.O Box 1739 Quincy, FL 32353 Alter Moneta Corporation $766,769 P.O. Box 0517 Buffalo, NY 14240-0517 Joseph Higdon, Jr. $590,262 Warren Higdon $191,000 Marie Middlemas (Trusts) $160,000 Ralph Higdon $120,000 Pennsylvania Lumbers Mutal $111,626 Larry Higdon $66,061 J. Smith Lanier $53,880 Tupelo Furniture Market Inc. $47,660 Langboard, Inc. $35,523 Florida Plywood $31,630 Capital Health $31,180 Kaba Ilco $29,577 Johnson-Higdon Nurseries $28,680 Crown Life Insurance $28,139 First Insurance Funding Corp. $22,181 DNP America LLC $19,343 Sierrapine Pine Ltd. $17,776 HYDRO SPA: U.S. Trustee Wants Chapter 11 Trustee Appointed ---------------------------------------------------------- Donald F. Walton, the Acting U.S. Trustee for Region 21, asks the U.S. Bankruptcy Court for the Middle District of Florida to appoint a Chapter 11 Trustee in Hydro Spa Parts and Accessories, Inc.'s bankruptcy case, or alternatively, convert the bankruptcy case into a Chapter 7 liquidation proceeding. The U.S. Trustee's reason for appointment of a Chapter 11 trustee or conversion of the Debtor's case basically revolves on the Debtor's issue of insider trading during the process of insolvency, and consequently, gross mismanagement. Trustee's Allegations The Debtor's shareholders are three trusts of Charles Wiley, Robert Wiley and Brian Wiley. The Wileys' asserted secured claims based on security agreements and promissory notes, executed in their capacity as the Debtor's officers and lenders. The Wileys contend that they entered into a lending relationship with the Debtor to pay off a $6 million loan owned to Fifth Third Bank, which the Wileys guaranteed. The security agreements, promissory notes, and UCC-1 documents were prepared by Debtor's counsel, Gray Robinson, P.A. In August 2007, immediately prior to the bankruptcy filing, the Wileys' called their note due from Debtor although the Debtor has sufficient funds to make the regular on going payments pursuant to the promissory notes. The Wileys paid themselves more than $3 million within 60 days of the bankruptcy filing after calling the notes due in their capacity as lenders. There payments were noted as interest expense, notes payable and director fees in the accounts payable records. The Trustee relates that the Debtor apparently triggered a default with its insider landlord, Wiley Properties, Inc. -- the company that is controlled by Wesley James Wiley -- by failing to pay one month's rent when the Debtor had sufficient funds to make the rent payment. "This act has the effect of devaluing the going concern value of the company," said the Trustee. "The Wileys breached their fiduciary duty to the bankruptcy estate and have not acted in the best interest of the estate or the Debtor." The transactions that the Debtor's counsel referenced are the same transactions where Debtor's counsel assisted in the preparation of the security agreements. The U.S. Trustee asserts that the situation puts the Debtor's officers in a potentially conflicting position as fiduciary of the bankruptcy estate and impairs their ability to objectively evaluate all of the creditors' claims in the bankruptcy. "Transfer of assets to or payment of funds for the benefit of insiders, when the debtor is insolvent suggests gross mismanagement, and constitutes further grounds for conversion to Chapter 7 or the appointment of a Chapter 11 Trustee," the Trustee reminds the Court. Because of the relationship of the insiders with the Debtor, it is unlikely that insider transfers will be pursued, creating a conflict of interest. The Trustee argues that an independent Chapter 11 trustee should be appointed to investigate and pursue any all causes of actions. The Debtor has provided the U.S. Trustee with a number of insurance policies and proof of closing pre-bankruptcy filing accounts. The Debtor, the Wileys, and their respective counsel have failed to turn over all documents that the U.S. Trustee has reasonably requested regarding payment of the Fifth Third Bank loan payoff and the source of the funds used to pay off the FifthThird Bank loan. "The Debtor, under present management," the Trustee contends, "is incurring a continuing loss and diminution in the value of the estate." Debtor's Objection The Debtor reminds the Court that its core business operations continue to be viable, and its going concern value continues to be viable as well. The industry in which the Debtor operates is extremely small, and its management believes it has marketed the same such that it will produce a reasonable bid for its assets. As a result, the Debtor had asked the Court to establish bidding procedures for the auction and sale of its assets. The Debtor's request was challenged by the Official Committee of Unsecured Creditors, resulting in the loss of approximately 10 days of marketing and a deferral of the auction by one week. Just after a consensus was reached by the parties, the U.S. Trustee requested the Court to convert the Debtor's case or appoint a Chapter 7 trustee. The Debtor explains that the timing of the U.S. Trustee's request could potentially chill the bidding scheduled on Nov. 9, 2007, as potential bidders wait to see if they can purchase the assets in a liquidation, rather than as a going concern on the sale date. In light of the same, the Debtor believes that emergency consideration is needed with respect to the Trustee's motion. 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. Foley & Lardner LLP represents the Official Committee of Unsecured Creditors appointed in the Debtor's in the Chapter 11 case. When the Debtor filed for protection from its creditors, it listed total assets of $10,659,077, and total liabilities of $13,611,578. The Debtor has filed a Chapter 11 Plan of Reorganization and Disclosure Statement on Oct. 17, 2007. INNOVATIVE DESIGNS: Judge Dismisses Bankruptcy Case --------------------------------------------------- The Honorable M. Bruce McCullough, Chief Judge of the United States Bankruptcy Court for the Western District of Pennsylvania, approved and executed, on Oct. 30, 2007, the Stipulated Order of Dismissal filed on Oct. 26, 2007, officially dismissing the Innovative Designs, Inc. bankruptcy case. As reported in the Troubled Company Reporter on Sept. 28, 2007, the counsel for Innovative Designs Inc. filed on Sept. 24, 2007, a motion to dismiss the bankruptcy case pending in the United States Bankruptcy Court for the Western District of Pennsylvania, case number 06-23921-MBM. The motion noted that Eliotex SRL and Elio D. Cattan and all of the petitioning creditors, who either initiated or joined the involuntary petition, averred claims arising out of the default arbitration award entered against IDI in Italy and subsequently reduced to judgment in the United States. IDI wished to thank its attorneys, employees, suppliers, sales representatives, shareholders and customers who remained loyal during these trying times, and looks forward to a bright future free of any further legal entanglements. "We can now fully focus on the successes that lie ahead," CEO Joseph Riccelli said. "Everyone involved in the company has endured through some trying times. Our judicial system was able to disseminate fact from fiction and we have prevailed." Headquartered in Bradenton, Florida, Innovative Designs Inc. (OTCBB: IVDNQ) -- http://www.idigear.com/-- manufactures the Arctic Armor(TM) Line, hunting apparel, swimwear, wind shirts, jackets, sleeping bags, and the multi-function "All in One" under the "i.d.i.gear" label featuring INSULTEX(TM). IRON MOUNTAIN: To Acquire Stratify for $158 Million Cash -------------------------------------------------------- Iron Mountain Incorporated has signed a definitive agreement to acquire Stratify Inc. for approximately $158 million in cash. With this acquisition, Iron Mountain augments its eDiscovery services, providing businesses with a complete, end-to-end Discovery Services solution that manages paper and digital information for discovery and data investigations, compliance and associated records management, and litigation matters. "With increased litigation and regulatory investigations, businesses are facing significant pains associated with the growing cost and complexity of discovery across tremendous volumes of discoverable information," said John Clancy, president of Iron Mountain Digital, the technology arm of Iron Mountain. "In order to help meet our customers' needs in this area, we began an exhaustive search for the leading provider of electronic discovery and investigation services. We formed a partnership with Stratify that has since evolved into a natural extension of the Iron Mountain Digital portfolio." "Stratify provides the most intuitive, advanced and efficient electronic discovery and data investigation services on the market today," Mr. Clancy continued. "By combining Stratify's advanced electronic discovery and investigation capabilities with Iron Mountain's data protection and records management solutions, we're providing our customers with the ability to meet their discovery requirements better, faster and more cost-effectively." As the risks and volume of litigation and regulatory investigations continue to grow, so do the complexities associated with managing the exponential growth of information. In acquiring Stratify, Iron Mountain expands its core data protection and management capabilities by integrating Stratify's service offerings that address discovery issues for both paper and digital records. The acquisition enables Iron Mountain to help businesses minimize the risks of eDiscovery by simplifying the electronic discovery process to facilitate a secure chain of custody, increasing the accuracy and consistency of review, and enabling attorneys to identify and protect privileged documents during review. "The electronic discovery process puts a tremendous strain on organizations, particularly for legal, compliance and IT departments, due to the huge volumes of information that must be searched and the demanding deadlines of the legal system," Brian Babineau, senior analyst of Enterprise Strategy Group, noted. "This acquisition is a logical step for Iron Mountain, a service provider already known for cost-efficient information storage and management solutions." "Our research shows that nearly 40% of North American corporate counsels expect electronic discovery spending to remain flat next year," Mr. Babineau continued. "The only way this is feasible is for organizations to work with partners like Iron Mountain that provide a single point of control that increases the speed at which data is retrieved, restored, organized, indexed and ready for review." As a division of Iron Mountain Digital, Stratify will provide its electronic discovery services and software to AmLaw 200, Fortune 500 and other firms for investigative, regulatory and litigation matters, augmented by Iron Mountain's scale and distribution. In addition, Iron Mountain customers will now be able to maximize their investment in Iron Mountain Digital's storage and data protection solutions by leveraging the capabilities of Stratify's solution integrated as a value-added service. The Stratify Legal Discovery service provides attorneys a single review application for scanned paper and native electronic documents, securely managing documents through the entire discovery lifecycle. Stratify's complete feature support for European and complex, multi-byte languages such as Chinese, Japanese and Korean removes all barriers to in-depth eDiscovery for corporations active in the expanding economy. "Joining the Iron Mountain Digital family represents the next evolutionary development for Stratify's electronic discovery and information management solutions and business," Ramana Venkata, CEO and founder of Stratify, said. "Integrating our advanced electronic discovery and data investigation capabilities with the industry leading data protection and records management provider is critically important to cater to the critical needs of customers who face increasing regulatory and legal discovery obligations and rapidly rising costs," Mr. Venkata added. "With Stratify, Iron Mountain is now the only company that can collect, protect and store an organization's information, consolidate matter- specific information from external parties, and deliver high-productivity results through people, process and unique underlying technology to handle investigations and discovery requirements quickly and cost-effectively," stated Mr. Venkata. The acquisition is subject to regulatory review and customary closing conditions and is expected to close by the end of the year. About Stratify Inc. Headquartered in Mountain View, California, Stratify Inc. -- http://www.stratify.com/-- is one of the electronic discovery solution providers and serves many of the AmLaw 200 and Fortune 500 corporations. Founded in September 1999, Stratify is a privately held company that has received funding from Mobius Venture Capital and In-Q-Tel, the strategic investment firm of the U.S. Intelligence Community. About Iron Mountain Based in Boston, Massachusetts, Iron Mountain Incorporated (NYSE:IRM) - http://www.ironmountain.com/-- is an international provider of information storage and protection related services. The company offers comprehensive records management and data protection solutions, along with the expertise to address complex information challenges such as rising storage costs, litigation, regulatory compliance and disaster recovery. Founded in 1951, Iron Mountain has more than 90,000 corporate clients throughout North America, Europe, Latin America, and Asia Pacific. * * * Moody's Investor Service placed Iron Mountain Inc.'s probability of default rating at 'B2' in September 2006. The rating still holds to date with a stable outlook. ISCHUS MEZZ: Moody's Junks Rating on $7 Mil. Class E Notes ---------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade the following classes of Notes issued by Ischus Mezzanine CDO III Ltd.: Class Descriptions: -- $396,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2046; Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $68,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2046; Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $62,000,000 Class B-1 Third Priority Senior Secured Floating Rate Notes Due 2046; Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade -- $10,000,000 Class B-2 Fourth Priority Senior Secured Floating Rate Notes Due 2046; Prior Rating: Aa3 Current Rating: Aa3, on review for possible downgrade In addition Moody's announced that it has placed on review for possible downgrade and downgraded these classes of Notes: -- $19,000,000 Class C Fifth Priority Senior Secured Deferrable Floating Rate Notes Due 2046; Prior Rating: A2 Current Rating: Baa3, on review for possible downgrade -- $20,000,000 Class D Mezzanine Secured Deferrable Floating Rate Notes Due 2046 and Prior Rating: Baa2, on review for possible downgrade Current Rating: B2, on review for possible downgrade -- $7,000,000 Class E Secured Deferrable Floating Rate Notes Due 2046. Prior Rating: Ba1, on review for possible downgrade Current Rating: Caa2, on review for possible downgrade This rating action was prompted by deterioration in the overall credit quality of the underlying assets. Moody's noted that the transaction is violating the Moody's Maximum Rating Factor Test. J. CREW: S&P Lifts Corporate Credit Rating to BB- ------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on J. Crew Group Inc. to 'BB-' from 'B+'. At the same time, we raised the rating on J. Crew Operating Corp.'s $285 million senior secured term loan to 'BB' (one notch higher than the corporate credit rating on the parent company) from 'BB-' and affirmed the recovery rating of '2', indicating the expectation for substantial (70% to 90%) recovery in the event of a payment default. The outlook is positive. J. Crew Group is the parent company of J. Crew Operating Corp. "The rating change reflects the improved operating performance of the company and substantial debt repayment," explained Standard & Poor's credit analyst David Kuntz. This has lead to an enhancement of the company's credit profile. "We could upgrade the rating over the next year," he added, "if progress in operations is sustained, further deleveraging enhances the company's credit profile, and we becomes more comfortable with the long-term financial policy." JP MORGAN: Fitch Affirms and Downgrades Ratings on Five Deals ------------------------------------------------------------- Fitch Ratings took rating actions on these J.P. Morgan Alternative Loan Trust securitizations: J.P. Morgan Alternative Loan Trust 2006-A2 POOL 1 -- $339.8 million class A affirmed at 'AAA' -- $14.6 million class 1-M-1 affirmed at 'AA+' -- $11.5 million class 1-M-2 affirmed at 'A+' -- $7.8 million class 1-B-1 affirmed at 'BBB+' -- $2.8 million class 1-B-2 affirmed at 'BBB' J.P. Morgan Alternative Loan Trust 2006-A2 POOLS 2-5 -- $413.2 million class A affirmed at 'AAA' -- $15.4 million class C-B-1 affirmed at 'AA' -- $6.6 million class C-B-2 affirmed at 'A' -- $4.4 million class C-B-3 downgraded to 'BBB-' from 'BBB' -- $3.8 million class C-B-4 downgraded to 'B' from 'BB' -- $3.3 million class C-B-5 downgraded to 'C/DR5' from 'B' J.P. Morgan Alternative Loan Trust 2006-A3 POOL 2-3 (Aggregate Pool A) -- $169.8 million class A affirmed at 'AAA' -- $6 million class C-B-1 affirmed at 'AA' -- $2.6 million class C-B-2 affirmed at 'A' -- $1.5 million class C-B-3 affirmed at 'BBB' -- $1.6 million class C-B-4 downgraded to 'B+' from 'BB' -- $1.2 million class C-B-5 downgraded to 'C/DR5' from 'B' J.P. Morgan Alternative Loan Trust 2006-S1 POOLS 1-2 -- $392.3 million class A affirmed at 'AAA' -- $11.8 million class B-1 affirmed at 'AA' -- $4 million class B-2 affirmed at 'A' -- $3 million class B-3 downgraded to 'BBB-' from 'BBB' -- $2 million class B-4 downgraded to 'B+' from 'BB' -- $1.7 million class B-5 downgraded to 'CCC/DR2' from 'B' J.P. Morgan Alternative Loan Trust 2006-S1 POOL 3 -- $280.7 million class A affirmed at 'AAA' -- $11.2 million class 3-M-1 affirmed at 'AA+' -- $8.9 million class 3-M-2 affirmed at 'A+' -- $5.4 million class 3-B-1 affirmed at 'BBB+' -- $2.2 million class 3-B-2 affirmed at 'BBB' The underlying collateral for the aforementioned transactions consist primarily of fixed and adjustable-rate, conventional, fully amortizing, first lien residential mortgage loans extended to Alternative A borrowers. The mortgage loans were either originated or acquired by various originators including Chase, PHH, Washington Mutual Mortgage Securities Corp., American Home Mortgage Corp., SunTrust Mortgage Inc., GreenPoint Mortgage Funding Inc. and Countrywide Home Loans Inc. J.P. Morgan Acceptance Corporation I, a special purpose corporation, had subsequently acquired the mortgage loans from the originators. As of the September 2007 distribution date, the above transactions are seasoned from 15 (Series 2006-A3 Pool 2-3) to 19 (Series 2006- S1) months. The pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from 69% (Series 2006-A2 Pool 1) to 81% (Series 2006-A2 Pool 2-5). The loans are master serviced by Wells Fargo Bank, N.A. (rated 'RMS1' by Fitch). The affirmations, affecting about $1.7 billion of outstanding certificates, reflect a stable relationship between credit enhancement and future loss expectations. The downgrades, affecting about $21.2 million in outstanding certificates reflect deterioration in the relationship between CE and loss expectation. KLEROS PREFERRED: Moody's Junks Rating on $6 Mil. Class E Notes --------------------------------------------------------------- Moody's Investors Service placed these notes issued by Kleros Preferred Funding III Ltd. on review for possible downgrade: Class Descriptions: -- $1,800,000,000 Class A-1 First Priority Senior Secured Delayed Draw Floating Rate Notes Due 2050 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $90,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2050 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $54,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2050 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $9,800,000 Class C Fourth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2050 Prior Rating: A2 Current Rating: Ba1, on review for possible downgrade -- $25,800,000 Class D Fifth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2050 Prior Rating: Baa2 Current Rating: B2, on review for possible downgrade -- $6,000,000 Class E Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2050 Prior Rating: Ba1, on review for possible downgrade Current Rating: Caa3, on review for possible downgrade -- $8,000,000 Combination Notes Due 2050 Prior Rating: A2, on review for possible downgrade 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 collateral pool, which consists primarily of high grade ABS securities. LIBRA CDO: Moody's Cuts Rating on $52.5MM Class D Notes to B1 ------------------------------------------------------------- Moody's Investors Service took action on these notes issued by Libra CDO Limited: Class Description: -- $1,050,000,000 Senior Swap Agreement dated as of Oct. 17, 2006 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $150,000,000 Class A Senior Secured Floating Rate Notes due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $82,500,000 Class B Secured Floating Rate Notes due 2046 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $90,000,000 Class C Secured Deferrable Floating Rate Notes due 2046 Prior Rating: A2 Current Rating: Baa3, on review for possible downgrade -- $52,500,000 Class D Mezzanine Secured Deferrable Floating Rate Notes due 2046 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 collateral pool, which consists primarily of structured finance securities. LINCOLN AVENUE: Moody's Lowers Ratings on Two Notes to Low-B ------------------------------------------------------------ Moody's Investors Service placed these notes issued by Lincoln Avenue ABS CDO, Ltd. on review for possible downgrade: Class Descriptions: -- $1,094,000,000 Class A-1 Floating Rate Secured Notes due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $77,000,000 Class A-2 Floating Rate Secured Notes due 2046 Prior Rating: Aaa Current Rating: A1, on review for possible downgrade -- $26,000,000 Class B Floating Rate Secured Notes due 2046 Prior Rating: Aa2 Current Rating: A3, on review for possible downgrade -- $21,000,000 Class C Deferrable Floating Rate Secured Notes due 2046 Prior Rating: A2 Current Rating: Ba1, on review for possible downgrade -- $19,000,000 Class D Deferrable Floating Rate Secured Notes due 2046 Prior Rating: Baa2 Current Rating: Ba3, 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. LINEAR TECH: Sept. 30 Balance Sheet Upside-Down by $635 Million --------------------------------------------------------------- Linear Technology Corporation's consolidated balance sheet at Sept. 30, 2007, showed $1.33 billion in total assets and $1.97 billion in total liabilities, resulting in a $635,929,000 total shareholders' deficit. Net income of $91.5 million for the first quarter of fiscal year 2008 decreased $4.2 million or 4.4% from $95.7 million reported in the fourth quarter of fiscal year 2007 largely due to an increase in net interest expense and an increase in the provision for income taxes. Net income decreased $20.9 million or 18.6% from $112.4 million in the first quarter of fiscal year 2007. Revenue for the first quarter of fiscal year 2008 increased 5.0% to $281.5 million over the previous quarter revenue of $268.1 million and decreased 3.6% or $10.6 million from $292.1 million in the first quarter of fiscal year 2007. In April 2007, the company entered into a $3.0 billion accelerated share repurchase transaction funded by $1.3 billion of the company's own cash and $1.7 billion of convertible debt. As a result, the company's first quarter results had both a decrease in interest income and an increase in interest expense when compared to both last quarter and the first quarter of the prior fiscal year. The first quarter of fiscal year 2008 had higher interest expense than the fourth quarter of fiscal 2007 due to the fourth quarter having two months of accrued interest versus three months in the first quarter of fiscal year 2008. First quarter non-GAAP net income of $101.4 million decreased $8.5 million from $109.9 million in the fourth quarter and decreased $22.8 million from the first quarter of fiscal year 2007. The company's non-GAAP net income exclude charges related to stock-based compensation. According to Lothar Maier, chief executive officer, "This was a good September quarter for us. Revenue, EPS and cash generated from operations all increased and we had a positive book to bill ratio for the quarter. We are pleased with the results of the ASR which was partially responsible for the 11% increase in diluted EPS over the prior quarter which follows on a 12.5% sequential increase in diluted EPS in the quarter before that. "Looking ahead to the December quarter, growth will be impacted by the usual seasonal slowdown in our businesses. Consequently, we expect revenues and diluted EPS to increase in the 1% to 4% range from the September quarter just completed." About Linear Technology Headquartered in Milpitas, California, Linear Technology Corporation (NasdaqGS: LLTC) -- http://www.linear.com/-- is a manufacturer of high performance linear integrated circuits. Linear Technology products include high performance amplifiers, comparators, voltage references, monolithic filters, linear regulators, DC-DC converters, battery chargers, data converters, communications interface circuits, RF signal conditioning circuits, and many other analog functions. Applications for Linear Technology's high performance circuits include telecommunications, cellular telephones, networking products such as optical switches, notebook and desktop computers, computer peripherals, video/multimedia, industrial instrumentation, security monitoring devices, high-end consumer products such as digital cameras, global positioning systems and MP3 players, complex medical devices, automotive electronics, factory automation, process control, and military and space systems. MACO STEEL: Section 341(a) Creditors Meeting Set for November 14 ---------------------------------------------------------------- The U.S. Trustee for Region 9 will convene a meeting of Maco Steel, Inc.'s creditors on Nov. 14, 2007, at 10:00 a.m., at The Law Building, 330 Ionia, Northwest, Suite 203 in Grand Rapids, Michigan. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Belmont, Michigan, Maco Steel, Inc. -- http://www.macosteel.com/-- provides these products and services: C.N.C. flame cut shapes, mold plates-rails-holder blocks, die plates-master plates-sub plates-parallels, die sets-die set kits- die set components and welded assemblies and fabricating. The company filed for chapter 11 protection on Oct. 5, 2007 (Bankr. W.D. Mich. Case No. 07-07346). When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts between $1 million and $100 million. MACO STEEL: Court Okays Miller Johnson as Bankruptcy Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Michigan gave Maco Steel, Inc., permission to employ Miller Johnson as its bankruptcy counsel. As counsel, Miller Johnson is expected to: a. advise the Debtor of its rights, powers, and duties as debtor and debtor-in-possession; b. take all necessary action to protect and preserve the Debtor's estate, including prosecution of actions on the Debtor's behalf, the defense of actions commenced against the Debtor, the negotiation of disputes in which the Debtor is involved, and the preparation of objection to claims filed against the estates; c. assist in preparing, on behalf of the Debtor, all necessary motions, allocations, answers, orders, reports, and papers in connection with the administration of the Debtor's estate; d. assist in presenting on behalf of the Debtor the proposed plan of reorganization and all related transactions and any related revisions, amendments, etc.; and e. perform other legal services in connection with the Debtor's chapter 11 case as may be requested by the Debtor from time to time. The Debtor discloses that the firm has received a $25,000 retainer. In addition, the Debtor says, the firm's professionals who will be expected to render services for this engagement bill: Professional Designation Hourly Rate ------------ ----------- ----------- Thomas P. Sarb, Esq. Member $375 John T. Piggins, Esq. Member $300 Robert D. Wolford, Esq. Associate $225 Other Associates $150 - $225 Mr. Piggins assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Piggins can be reached at: John T. Piggins, Esq. Miller Johnson Calder Plaza Building 250 Monroe Avenue Northwest, Suite 800 Grand Rapids, MI 49503-2250 Tel: (616) 831-1793 Fax: (616) 988-1793 http://www.millerjohnson.com/ Headquartered in Belmont, Michigan, Maco Steel, Inc. -- http://www.macosteel.com/-- is a steel supply and machining company specializing in flam and plasmka cutting, CNC machining, Blanchard grinding and welding/fabricating. Through its non- debtor affiliate Maco Resource, LLC, the company employs approximately 50 employees for its business operations in Rockford, Michigan. The company filed for chapter 11 protection on Oct. 5, 2007 (Bankr. W.D. Mich. Case No. 07-07346). When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts between $1 million and $100 million. In Court documents, the Debtor estimates that it owes, in the aggregate, in excess of $12 million to over 100 creditors. MAGNOLIA FINANCE: Moody's Cuts Rating on $4.25 Million Notes to B3 ------------------------------------------------------------------ Moody's Investors Service downgraded and left on review for possible downgrade these Notes issued by Magnolia Finance II Series 2006-9E2: Class Description: -- Series 2006-9E2 $4,250,000 ABS Portfolio Variable Rate Notes due November 2037 Prior Rating: Baa3 Current Rating: B3, on review for possible downgrade According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MAGNOLIA FINANCE: Moody's Junks Rating on $3 Million Notes ---------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade these Notes issued by Magnolia Finance II Series 2006-9F1: Class Description: -- Series 2006-9F1 $3,000,000 ABS Portfolio Variable Rate Notes due February 2046 Prior Rating: Ba1 Current Rating: Caa3, on review for possible downgrade According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MAGNOLIA FINANCE: Moody's Junks Rating on Series 2006-9F2 Notes --------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade these Notes issued by Magnolia Finance II Series 2006-9F2: Class Description: -- Series 2006-9F2 $4,250,000 ABS Portfolio Variable Rate Notes due November 2037 Prior Rating: Ba1 Current Rating: Caa3, on review for possible downgrade According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. MAYFLOWER CDO: Moody's Cuts Ratings on Two Notes to Low-B --------------------------------------------------------- Moody's Investors Service placed these notes issued by Mayflower CDO I Ltd. on review for possible downgrade: Class Descriptions: -- $20,000,000 Class X Notes Due September 2012 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $157,000,000 Class A-1LB Floating Rate Notes Due June 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $75,000,000 Class A-2L Floating Rate Notes Due June 2046 Prior Rating: Aa2 Current Rating: A3, on review for possible downgrade -- $46,000,000 Class A-3L Floating Rate Notes Due June 2046 Prior Rating: A2 Current Rating: Ba2, on review for possible downgrade -- $50,000,000 Class B-1L Floating Rate Notes Due June 2046 Prior Rating: Baa2 Current Rating: B2, 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. MECACHROME INT'L: S&P Revises Outlook to Negative from Stable ------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on Mecachrome International Inc. to negative from stable. At the same time, S&P affirmed the ratings, including the 'B+' long-term corporate credit rating, on the company. "The ratings on Mecachrome reflect its continued weak cash flow generation, high leverage, the risks inherent in executing its North American growth strategy, and a moderate degree of customer concentration," said Standard & Poor's credit analyst Greg Pau. These risks are partially offset by its established operating assets in Europe, long-standing business relationships with key customers, and steady margin supported by an acceptable backlog position. "Despite efforts to reduce debt with part of the recent IPO proceeds, Mecachrome's continued weak operating cash flow generation and the hefty cash need for capital expenditure and inventory buildup remain key concerns and constrain the ratings." Mr. Pau added. Mecachrome produces precision parts for the aerospace, automotive, and motor sport industries. Although the company is relatively small with 2006 revenue of only EURI262 million, it has an established reputation with key customers and its demonstrated technical expertise should provide a reasonably strong competitive position in its niche markets. The company's primary operations are in France but recently it has developed operations in Canada. These operations will be the focus of its growth into the North American market and will help foster a stronger relationship with aerospace partners such as Boeing Co. (A+/Stable/A-1) and Bombardier Inc. (BB/Stable/--). The negative outlook reflects Mecachrome's continued inability to generate free cash flow in the next one to two years. Both this and the high financial leverage have necessitated that the company obtain lenders' approval to revise the financial covenants for the senior secured credit facilities. It also reflects that future cash flow improvements and the North American operations ramp-up remain subject to delay risks in major aircraft and automotive programs. S&P could lower the ratings if further events weaken the company's prospects for generating positive free cash flow, thereby delaying its deleveraging effort. Conversely, S&P could revise the outlook to stable when the company becomes free cash flow positive and is able to materially deleverage with the excess cash flow. MESABA AVIATION: Embraer Wants Nod on Contractual Default Rate -------------------------------------------------------------- Mesaba Aviation Inc. and Embraer Aircraft Maintenance Services, Inc. entered into an agreement where Embraer agreed to perform maintenance services on the fleet of Saab 340 aircraft operated by the Debtor. Under the Agreement, Mesaba agreed to pay Embraer on 30-day terms. Any remaining balance unpaid more than 30 days were subject to a time-price differential rate of 1.5% per month or 18% per annum. Derek W. Edwards, Esq., at Waller Lansden Dortch & Davis LLP, in Nashville, Tennessee, relates that Embraer provided the Debtor numerous maintenance services through October 2005 and during its reorganization. As of the Petition Date, the Debtor had not paid all of Embraer's invoices and Embraer filed proofs of claim for the unpaid invoices having an aggregate amount of $630,064, Mr. Edwards notes. Pursuant to the Plan, the Debtor asked Embraer to submit documentation to support any request for a contractual default rate on its claims. Embraer submitted the required documentation and asked for a contractual default rate of 1.5% per month or 18% per annum. Pursuant to the Debtor's confirmed Plan of Reorganization, the Mesaba Liquidating Trust made a $630,064 distribution to Embraer, but informed Embraer that it rejects the requested Contractual Default Rate because it is "an unenforceable penalty," Mr. Edwards says. Accordingly, Embraer asks the U.S. Bankruptcy Court for the District of Minnesota to approve its request for a Contractual Default Rate on its claim because the Debtor did not pay the unpaid balance within 30 days as required. Mr. Edwards informs the Court that if witnesses are necessary, Embraer may call Robert H. DePriest, Embraer's Vice President of Finance and Administration. Liquidating Trustee Responds In behalf of Odyssey Capital Group, LLC, the Debtor's Liquidating Trustee, Will R. Tansey, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, contends that there does not appear to be any disputed facts related to Embraer's request. Mr. Tansey notes that Embraer's Claim was secured by collateral valued at the amount of the Claim without interest. He added that the Claim has been paid without interest. According to Mr. Tansey, Embraer commits most of its arguments in support of time-price differentials under Tennessee statutes and case law. However, the law on time-price differentials is inapposite to the issue at bar, Mr. Tansey says. He explains that the statutes cited by Embraer are nothing more than the codification of a previously existing common law distinction between usurious interest and charges imposed in connection with a bona fide credit sale. In support of the Debtor's assertion that the default rate is not enforceable, Mr. Tansey cited Wilson v. Dealy, 434 S.W.2d 835 (Tenn. 1968), wherein the parties executed a contract which provided that the defendant's fees for services were payable within 30 days upon the defendant's successful performance of the services, unless a suitable note had been signed. The contract further provided that late charges of 1.5% per month applied to any payment not received within the 30-day period, Mr. Tansey notes. The defendant successfully performed its services, but the parties did not agree on a note and the plaintiff did not pay the service fee within 30 days. The defendant sued the plaintiff for the fee plus the 1.5% monthly charges and the plaintiff raised the defense of usury. The Wilson court determined that the late charge was not usurious because the monthly charge was not compensation for the use of money. The court noted that there was no agreement that by paying 1.5% charge the plaintiff could extend the date for payment of the service fee. The court held that the defendant's damages for the loss of the use of money were readily ascertainable and that the 1.5% monthly charge was unenforceable. Mr. Tansey contends that as with the defendant's damages in the Wilson case, Embraer's actual damages for the use of money was readily ascertainable and certain, thus the charges Embraer seeks are not enforceable. Wilson has been cited and relied upon by the Tennessee Court of Appeals after enactment of the statutes in 1979, according to Mr. Tansey, pointing to Eastbrook v. Club Chalet of Gatlinburg, Inc., 1988 WL 1736, *7 (Tenn. Ct. App. 1988). Accordingly, the Debtor asks the Court to deny Embraer's request. Embraer Talks Back Derek W. Edwards, Esq., at Waller Lansden Dortch & Davis LLP, in Nashville, Tennessee, argues that Embraer's Contractual Default Rate constitutes an enforceable time-price differential because Tennessee courts look to the substance rather than the form of a transaction. He says that Mesaba unmistakably elected a credit sale for its purchase of the Embraer's maintenance services rather than a cash sale. The extension of credit by Embraer was neither a loan nor forbearance but a time-price differential, Mr. Edwards says. Mr. Edwards further contends that because Embraer's Contractual Default Rate is enforceable as a time-price differential under Tennessee law, the Court should enforce it, as a Tennessee court would, rather than find it to be an invalid penalty, as a matter of contract interpretation. Mr. Edwards also points out that the decision in Wilson was superseded by Tennessee Code Annotated Section 47-14-120 (2007), Time-price differential, which was enacted by the Tennessee General Assembly in 1979 (Acts 1979, ch. 203, Section 19) and applies to the sale of goods and services. Under Tenn. Code Ann. Section 47-14-102(11), Mr. Edwards says, the difference between the amount charged on a charge for services for cash and the amount charged if payment is deferred is a time-price differential however it is denominated or expressed. "Embraer's Contractual Default Rate is a time-price differential as a matter of law, however denominated or expressed in the Terms and Conditions," Mr. Edwards insists. In addition, Mr. Edwards says Eastbrook concerns liquidated damages under a sublease, rather than a credit sale of services, and the Eastbrook court cites Wilson for its holding regarding liquidated damages. For this reason, Mr. Edwards continues, Eastbrook is inapposite to Embraer's case and does not change the fact that Wilson is no longer good law in Tennessee concerning credit sales governed by Tennessee Code Annotated Section 47-14- 102( and 47-14-120. Accordingly, Embraer asks the Court to grant its requested relief. About Mesaba Aviation Based in Eagan, Minnesota, Mesaba Aviation Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines(OTC:NWACQ.PK). The company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represented the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represented the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. The U.S. Bankruptcy Court for the District of Minnesota confirmed Mesaba's Modified Plan of Reorganization on April 9, 2007. Mesaba exited from chapter 11 on April 24, 2007. (Mesaba Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) MILLER PLATING: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Miller Plating and Metal Finishing, L.L.C. 3200 North 6th Avenue Evansville, IN 47710 Bankruptcy Case No.: 07-71321 Type of Business: The Debtor specializes in plating metals such as magnesium, aluminum, zinc, copper, powdered metals, steel and various other substrates. See http://www.millerplating.com/ Chapter 11 Petition Date: October 31, 2007 Court: Southern District of Indiana (Evansville) Judge: Basil H. Lorch III Debtor's Counsel: Bruce D. Atherton, Esq. 455 South 4th Street, Suite 1450 Louisville, KY 40202 Tel: (502) 595-8500 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. MORGAN STANLEY: Fitch Assigns Low-B Ratings on $7.3MM Certificates ------------------------------------------------------------------ Fitch rates Morgan Stanley Mortgage Loan Trust mortgage pass- through certificates, series 2007-14AR as: Group I: -- $505.5 million classes 1-A-1 through 1-A-4, 2-A-1 through 2-A-12, 3-A-1 through 3-A-4, 4-A-1 through 4-A-4, and A-R 'AAA'; -- $4.6 million class I-B-4 'BB'; -- $2.7 million class I-B-5 'B'; Group II: -- $321.3 million classes 5-A-1 through 5-A-4, 6-A-1 through 6-A-6, 7-A-1 through 7-A-4, and 8-A-1 through 8-A-4 'AAA'. The 'AAA' rating on the Group I senior certificates reflects the 7.15% total credit enhancement provided by the 3.65% class I-B-1, the 0.90% class I-B-2, the 0.40% class I-B-3, the privately offered 0.85% class I-B-4, the privately offered 0.50% class I-B-5 and the privately offered 0.85% class I-B-6. Classes I-B-1, I-B-2, I-B-3 and I-B-6 are not rated by Fitch. The 'AAA' rating on the Group II senior certificates reflects the 13% total credit enhancement provided by the 6.50% class II-B-1, the 1.50% class II-B-2, the 0.75% class II-B-3, the privately offered 1.35% class II-B-4, the privately offered 1.20% class II- B-5 and the privately offered 1.70% class II-B-6. Classes II-B-1 through II-B-6 are not rated by Fitch. Fitch believes that the amount of credit enhancement will be sufficient to cover credit losses, including limited bankruptcy, fraud and special hazard losses. In addition, the ratings reflect the quality of the mortgage collateral, the strength of the legal and financial structures, and the master servicing capabilities of Wells Fargo Bank, National Association (rated 'RMS1' by Fitch). This transaction contains certain classes designated as exchangeable certificates and others as depositable (offered) certificates. Classes 1-A-3, 1-A-4, 2-A-1, 2-A-3, 2-A-4, 2-A-9 through 2-A-12, 3-A-3, 3-A-4, 4-A3, 4-A-4, 5-A-3, 5-A-4, 6-A-3 through 6-A-6, 7-A-3, 7-A-4, 8-A-3, and 8-A-4 are the exchangeable certificates. Classes 1-A-1, 2-A-5 through 2-A-8, 3-A-1, 4-A-1, 5-A-1, 6-A-1, 7-A-1, and 8-A-1 are the depositable certificates. All or a portion of certain classes of offered certificates may be exchanged for a proportionate interest in the related exchangeable certificates. All or a portion of the exchangeable certificates may also be exchanged for the related offered certificates in the same manner. This process may occur repeatedly. The classes of offered certificates and of exchangeable certificates that are outstanding at any given time, and the outstanding principal balances and notional amounts of these classes, will depend upon any related distributions of principal, as well as any exchanges that occur. Offered certificates and exchangeable certificates in any combination may be exchanged only in the proportions shown in the governing documents. Holders of exchangeable certificates will be the beneficial owners of a proportionate interest in the certificates in the related combination group and will receive a proportionate share of the distributions on those certificates. On each distribution date when exchangeable certificates are outstanding, principal distributions from the applicable related certificates are allocated to the related exchangeable certificates that are entitled to principal. The payment characteristics of the classes of exchangeable certificates will reflect the payment characteristics of their related classes of regular certificates. The Group I mortgage pool consists of 846 hybrid adjustable-rate, first lien residential mortgage loans, substantially all of which have original terms to stated maturity of 30 years. As of the cut-off date (Oct. 1, 2007), the mortgages have an aggregate principal balance of about $544,402,895 and an average principal balance of $643,502. The mortgage pool has a weighted average original loan-to-value ratio of 74.98%, a weighted average coupon of 6.408%, and a weighted average remaining term to maturity of 355 months. The Group II mortgage pool consists of 690 hybrid adjustable-rate, first lien residential mortgage loans, substantially all of which have original terms to stated maturity of 30 years. As of the cut-off date (Oct. 1, 2007), the mortgages have an aggregate principal balance of about $369,311,095 and an average principal balance of $535,233. The mortgage pool has a weighted average OLTV of 78.09%, a WAC of 6.852%, and a WAM of 355 months. The mortgage loans were primarily originated or acquired by Morgan Stanley Credit Corporation, American Home Mortgage Corp., and National City Mortgage Co. MOVIE GALLERY: Can Walk Away from 212 Unexpired Store Leases ------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Virginia gave authority to Movie Gallery, Inc. and its debtor-affiliates to reject 212 unexpired store leases and subleases, and several executory contracts related to the leases or their store operations subject to those leases, nunc pro tunc to the date of bankruptcy filing. The Debtors either ceased or are in the process of ceasing operations at a number of store locations as part of their restructuring efforts. According to Michael A. Condyles, Esq., at Kutak Rock LLP, in Richmond, Virginia, the Leases and the Executory Contracts are not a source of potential value for the Debtors' future operations, creditors or interest holders. Even if certain of the Vacant Store Leases constitute below-market leases, the Debtors' obligations to pay postpetition rent, real estate taxes, utilities, insurance and other related charges diminishes any potential value received from an assignment or sublease, specifically given the relatively short term remaining in each Lease. The Executory Contracts provide no further benefit to the Debtors. The terms of the Vacant Store Leases range from one month to nine years, excluding option periods, and generally the lease payments for the Vacant Store Leases range from $14,400 to $235,000 per year. In considering their options with respect to the Vacant Store Leases prior to the Petition Date, Mr. Condyles said the Debtors evaluated the possibility of one or more assignments or subleases of the Vacant Store Leases. The Debtors determined that the transactional costs and postpetition occupancy costs associated with marketing the Vacant Store Leases exceeds any marginal benefit received from potential assignments or subleases. In addition to their obligation to pay rent under the Vacant Store Leases, the Debtors also are obligated to pay for certain real estate taxes, utilities, insurance and other related charges associated with the leases. The Debtors examined the costs associated with their obligation to pay rent under the Vacant Store Leases and estimate that the annual net cost to them is roughly $15,400,000 per year. Section 365(a) of the Bankruptcy Code provides that a debtor "subject to the court's approval, may . . . reject any executory contract or unexpired lease of the debtor." Mr. Condyles noted that the standard courts apply to determine whether the rejection of an executory contract or unexpired lease should be authorized is the "business judgment" standard. Mr. Condyles pointed the Court to: -- In re Orion Pictures Corp., 4 F.3d 1095, 1098-99 (2d Cir. 1993); -- In re Lawson, 146 B.R. 663, 664-65 (Bankr. E.D. Va. 1992) ("[t]he Fourth Circuit adopted the 'business judgment' test as the appropriate standard in determining whether to permit a debtor to reject an executory contract . . . [and a] court will defer to a debtor's determination that rejection of a contract would be advantageous [to the estate] unless that decision is clearly erroneous") (citation omitted), aff'd in part, rev'd in part 14 F.3d 595 (4th Cir. 1993) (unpublished opinion); -- NLRB v. Bildisco & Bildisco, 465 U.S. 513, 523 (1984) (recognizing the "business judgment" standard used to approve rejection of executory contracts); and -- In re Klein Sleep Prods., Inc., 78 F.3d 18, 25 (2d Cir. 1996). The business judgment standard requires a court to approve a debtor's business decision unless that decision is the product of bad faith, whim or caprice, Mr. Condyles said, citing In re Lubrizon Enters., Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043, 1047 (4th Cir. 1985), cert. denied sub nom., Lubrizol Enters., Inc. v. Canfield, 475 U.S. 1057 (1986). According to Mr. Condyles, the Leases and the Executory Contracts constitute an unnecessary drain on the Debtors' resources. In granting the Debtors' request, Judge Tice said each counterparty to a Lease or Executory Contract may object to the rejection of its Lease or Executory Contract until Oct. 27, 2007. The Court may vacate the Rejection Order, modify it or make it final. If no timely Objection is filed -- or is filed and subsequently withdrawn -- the Rejection Order will become final at the conclusion of the objection period without further Court order. At the hearing on Oct. 16, 2007, counsel to Aronov Realty Management, Centro Properties Group, Federal Realty Investment Trust, Developers Diversified Realty Corp., General Growth Management, Inc. and Levin Management Corp.; and Foundation Fulton LLC objected to the Debtors' request. Judge Tice held that any objection will only affect the finality of the Rejection Order with respect to a particular Lease or Executory Contract. The Order will be final for all other purposes. A schedule of the 212 Unexpired Leases is available at no charge at http://researcharchives.com/t/s?24b3 A schedule of the Executory Contracts is available at no charge at http://researcharchives.com/t/s?24b4 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. 3; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) MOVIE GALLERY: Landlords React to the Auction of 508 Stores Leases ------------------------------------------------------------------ A number of managing agents for landlords of Movie Gallery, Inc. and its debtor-affiliates' stores object to an order from the U.S. Bankruptcy Court for the Eastern District of Virginia authorizing the Debtors to auction off 508 store leases and lease designation rights associated with those leases. As reported in the Troubled Company Reporter on Oct. 26, 2007, aside from approving the auction, the Court also approved competitive bidding procedures for the disposition of the Debtors' interests in the leases. The Debtors had announced the closure of roughly 520 store locations. They have examined the costs associated with their obligation to pay rent at the Phase 1 Locations, and estimate that the annual rental cost of the Phase 1 Locations is roughly $69,400,000 per year. In their reasonable business judgment, the Debtors determined that the costs, with the concomitant costs of operating the locations, constitute an unnecessary drain on their resources. The Debtors will hold the auction Nov. 15, 2007. The Court will also convene a hearing Nov. 28, 2007, at 10:00 a.m. (prevailing Eastern Time), to consider approval of any sale agreements, the sale of designation rights, or any lease termination agreements. Objections, if any, are due Nov. 26, 2007. Inland Entities React The Inland Management entities ask the Court to reconsider and vacate its order authorizing Movie Gallery, Inc., and its debtor affiliates to auction off 508 store leases and their associated lease designation rights, and approving competitive bidding procedures for the disposition of the Debtors' interests in the leases. The six Inland entities -- Inland Southwest Management, LLC; Inland American Retail Management, LLC; Inland US Management, LLC; Inland Pacific Property Services, LLC; Inland Continental Property Management, Corp.; and Inland Commercial Property Management, Inc. -- are managing agents for landlords who are parties to certain unexpired non-residential property leases with the Debtors. A schedule of the leased properties is available at no charge at: http://researcharchives.com/t/s?24b2 Craig B. Young, Esq., at Connolly, Bove, Lodge & Hutz, LLP, in Washington, D.C., argues that, among other things, the approved bid procedures: (i) are deficient and unreasonable; (ii) are not properly granted with respect to the Petition Date and are improper in context; and (iii) authorize the marketing and auction of certain leases that will expire before the proposed auction can be scheduled. Mr. Young further relates that although 508 leases are affected by the Debtors' request for bid procedures, only the top 30 creditors received the Debtors' notice. The Bidding Procedures provide that "landlords will be provided with adequate assurance of future performance information for any proposed assignee of their leases within two days of the conclusion of the auction." Inland maintains that this timetable is not acceptable, because: (a) it will only effect three days to evaluate assurance information in light of the holidays; and (b) it offers an insufficient time for Inland to determine their objections to a proposed assignee or a proposed use of a leased premise, and to find if an assignment of the Lease to a potential assignee will: -- violate any use provisions; -- violate the provisions of other tenants' leases located in shopping centers or any applicable restrictive easement assignments; and -- disrupt the tenant mix at the shopping center. Mr. Young further argues that the Bid Procedures do not require the Debtors to file with the Court a notice of proposed cure amounts to be made available to all landlords and serve the notices on the landlords' counsel. Mr. Young also contends that the provision for the termination of any Debtor-Guarantor's obligations under a lease "upon the execution of such sale agreement or lease termination agreement for that lease becoming effective" is inappropriate, and must be removed from the Bid Procedures, because: (a) no factual basis or legal authority is presented for the invalidation of the lease guarantees upon the sale or assumption and assignment of the tenant's rights under the lease; (b) the Debtors' estates have not been substantively consolidated, such that debtor guarantees of this kind may be terminated; and (c) pursuant to Section 365 of the Bankruptcy Code, a guaranty is not an unexpired lease or executory contract that may be rejected. More Objections The Strip Delaware LLC and Wal-Mart Stores, Inc. and Wal-Mart Real Estate Business Trust also ask the Court to reconsider and vacate an earlier order authorizing the Debtors to auction off certain leases and lease designation rights. Strip Delaware and Wal-Mart support the arguments raised by Inland Southwest Management LLC, et al. Strip Delaware leases store premises in Jackson Township, Ohio, to Hollywood Entertainment Corporation. On Oct. 5, 2007, Strip Delaware obtained a temporary restraining order in the Court of Common Pleas, in Stark County, Ohio, enjoining Hollywood Entertainment from conducting going out of business sales in violation of the parties' 1996 lease agreement. Wal-Mart leases to the Debtors certain premises located in Wal-Mart stores in Kentucky, Tennessee, Texas, Florida, West Virginia, and California. 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 and 6; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) NETBANK INC: Files List of 20 Largest Unsecured Creditors --------------------------------------------------------- NetBank Inc. submitted a list of its 20 largest unsecured creditors with the U.S. Bankruptcy Court for the Middle District of Florida. Entity Nature of Claim Claim Amount ------ --------------- ------------ NBI Trust IV Trust Preferred $20,620,000 c/o Wells Fargo Delaware (Contractually Trust Co. Subordinated) 919 North Market Street 7th Floor Wilmington, DE 19890 NBI Trust II Trust Preferred $4,382,000 c/o Wilmington Trust Company (Contractually 110 North Market Street Subordinated) Rodney Square Wilmington, DE 19890 NBI Trust I Trust Preferred $4,382,000 c/o Wilmington Trust Company (Contractually 110 North Market Street Subordinated) Rodney Square Wilmington, DE 19890 NBI Trust III Trust Preferred $3,093,000 c/o Wilmington Trust Company (Contractually 110 North Market Street Subordinated) Rodney Square Wilmington, DE 19890 Princeton Retirement Group Administrator of $1,237,570 400 Colony Square Non-Qualified Suite 2200 Benefit Plan 1201 Peachtree Street NE Atlanta, GA 30361 Maxwell, Lauren Deferred $438,497 2059 Trace Center Way Compensation Naples, FL 34109 Kosich, Linda M. Deferred $227,380 Compensation Richardson, Charles Deferred $213,694 Compensation Carroll, Barry W. Deferred $141,682 Compensation Gross, James P. Deferred $61,538 Compensation Burdsall, Russell Deferred $57,692 Compensation Munch, Richard A. Deferred $56,346 Compensation Mapson, Charles E. Deferred $47,976 Compensation Brauch, Theodore Deferred $40,385 Compensation Register, Chip S. Deferred $24,696 Compensation Irisawa, James C. Deferred $22,792 Compensation Giannone, Brian Deferred $18,579 Compensation Minnesota Dept. of Revenue Taxes $18,496 Madden, Ronald Deferred $13,235 Compensation Adcock, Johnny Holds Subordinate Unknown Claim under Section 510(b) Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and providing ATM and merchant processing services. The company filed for Chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). GGG, Inc., in Atlanta, Georgia, serves as the Debtor's restructuring manager. NETBANK INC: Holland & Knight Approved as Bankruptcy Counsel ------------------------------------------------------------ Netbank, Inc., obtained authority from the U.S. Bankruptcy Court for the Middle District of Florida to employ Holland & Knight LLP as its bankruptcy counsel. As Netbank's counsel, Holland & Knight is expected to: a. advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued management and operation of its business and properties; b. attend meetings and negotiate with representative of creditors and other parties-in-interest; c. take all necessary action to protect and preserve the Debtor's estate, including the prosecution of actions on the Debtor's behalf, the defense of any action commenced against the Debtor, negotiations concerning all litigation in which the Debtor is or may become involved, and objections to claims filed against the Debtor's estate; d. prepare on behalf of the Debtor all motions, application, answers, orders, reports, and papers necessary to the administration of the estate; e. negotiate and prepare on the Debtor's behalf any plan or plans of reorganization, disclosure statement, and all related agreements or documents, and take any necessary action on behalf of the Debtor to obtain confirmation of such plan; f. represent the Debtor in connection with obtaining post- petition financing; g. advise the Debtor in connection with any potential sale of assets, restructuring or recapitalization; h. appear before the Bankruptcy Court; any appellate court, and the U.S. Trustee and protect the interests of the Debtor's estate before such Courts and the U.S. Trustee; i. represent the Debtor before the Securities and Exchange Commission and in respect of all security filings; j. consult with the Debtor regarding tax matters; k. represent the Debtor with respect to general corporate and transactional matters; and l. perform all other necessary legal services and provide all other necessary legal advice to the Debtor in connection with the chapter 11 case. The Debtor tells the Court that the firm has received a $300,000 retainer. The Debtor discloses that the professionals who are expected to render services for this engagement bill: Professional Designation Hourly Rate ------------ ----------- ----------- Barbra R. Parlin, Esq. Partner $475 John J. Monaghan, Esq. Partner $480 Alan M. Weiss, Esq. Partner $375 Peter A Zisser, Esq. Senior Counsel $395 Lynne B. Xerras, Esq. Associate $350 Diane Rallis, Esq. Associate $260 Patrick P. Patangan, Esq. Associate $245 Wilfred Lancaster Paralegal $175 Mr. Weiss assures the Court that his firm does not represent any interest adverse to the Debtor or its estate. Mr. Weiss can be reached at: Alan M. Weiss, Esq. Holland & Knight LLP 50 North Laura Street, Suite 3900 Jacksonville FL 32202 Tel: (904) 798-5459 http://www.hklaw.com/ Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and providing ATM and merchant processing services. The company filed for Chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). GGG, Inc., in Atlanta, Georgia, serves as the Debtor's restructuring manager. NETBANK INC: Files Schedules of Assets and Liabilities ------------------------------------------------------ NetBank Inc. submitted to the U.S. Bankruptcy Court for the Middle District of Florida its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property $1,772,498 B. Personal Property $3,974,369 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding $62,855 Unsecured Priority Claims F. Creditors Holding $35,150,410 Unsecured Non-priority Claims ---------- ----------- TOTAL $5,746,867 $35,213,265 Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and providing ATM and merchant processing services. The company filed for Chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). GGG, Inc., in Atlanta, Georgia, serves as the Debtor's restructuring manager. NEUMANN HOMES: Files for Bankruptcy Protection in Illinois ---------------------------------------------------------- Neumann Homes Inc. has filed a chapter 11 petition with the United States Bankruptcy Court for the Northern District of Illinois more than a week after it announced to do so. As reported in the Troubled Company Reporter on Oct. 24, 2007, the company said that failure to keep up payments for its eight creditor banks forced it to consider bankruptcy protection. The homebuilder had recently shut down its offices and dismissed 110 of its 130 employees. The company further blamed its downfall on housing decline in Detroit, Chicago and Denver, its three largest markets as the source of its problems Headquartered in Warrenville, Illinois, Neumann Homes Inc. -- http://www.neumannhomes.com/-- develops and builds residential real estate throughout the Midwest and West. The company is an active builder in the Chicago area, southeastern Wisconsin, Colorado, and Michigan. It has built more than 11,000 homes in some 150 residential communities. NEUMANN HOMES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Neumann Homes, Inc. 4355 Weaver Parkway Suite 1070 Warrenville, IL 60555 Bankruptcy Case No.: 07-20412 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- N.D.C. Fabrications, L.L.C. 07-20413 NeuPro Co., L.L.C. 07-20414 Neumann Homes of Colorado, L.L.C. 07-20415 Neumann Homes of Wisconsin, L.L.C. 07-20416 Precision Framing Systems, L.L.C. 07-20417 Type of Business: The Debtors develop and build residential real estate throughout the Midwest and West US. They are active in the Chicago area, southeastern Wisconsin, Colorado, and Michigan. They have built more than 11,000 homes in some 150 residential communities. They offer formal business training to employees through classes, seminars, and computer-based training. See http://www.neumannhomes.com/ Chapter 11 Petition Date: November 1, 2007 Court: Northern District of Illinois (Chicago) Judge: Eugene R. Wedoff Debtors' Counsel: George Panagakis, Esq. Skadden, Arps, Slate, Meagher & Flom, L.L.P. 333 West Wacker Drive Chicago, IL 60606 Tel: (312) 407-0638 Fax: (312) 407-0711 Estimated Assets Estimated Debts ---------------- --------------- Neumann Homes, Inc. More than More than $100 Million $100 Million N.D.C. Fabrications, More than More than L.L.C. $100 Million $100 Million NeuPro Co., L.L.C. More than More than $100 Million $100 Million Neumann Homes of Colorado, More than More than L.L.C. $100 Million $100 Million Neumann Homes of Wisconsin, More than More than L.L.C. $100 Million $100 Million Precision Framing Systems, More than More than L.L.C. $100 Million $100 Million Debtors' Consolidated List of their 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Residential Funding Corp. bank loan $75,000,000 Attention: Legal Department 28 Bloomfield Avenue Pine Brook, NJ 07058 Attention: Legal Department 28 Bloomfield Avenue Pine Brook, NJ 07058 Fax: (973) 575-0882 Fidelity Deposit Co. of surety bond $19,424,194 Maryland Attention: Legal Department 1400 American Lane, Tower I, 19th Floor Schaumburg, IL 60196 Attention: Legal Department 1400 American Lane, Tower I Bond, 19th Floor Schaumburg, IL 60196 Fax: (847) 605-7768 Carolina Casualty Insurance surety bond $11,936,810 Co. Attention: Legal Department P.O. Box 2575 Jacksonville, FL 32203 Attention: Legal Department P.O. Box 2575 Jacksonville, FL 32203 Fax: (904) 363-8098 Lexon Insurance Co. surety bond $7,935,953 Attention: Legal Department 10002 Shelbyville Road, Suite 100 Louisville, KY 40223 Attention: Legal Department 10002 Shelbyville Road, Suite 100 Louisville, KY 40223 Fax: (515) 281-3059 Bank of America, N.A. bank loan $4,960,000 Attention: Legal Department 18 West 140 Butterfield Road Oak Brook Terrace, IL 60181 Attention: Legal Department 18 West 140 Butterfield Road Oak Brook Terrace, IL 60181 Fax: (813) 225-8322 Chicago Title title insurance $4,500,000 Attention: Paul Peterson 171 North Clark Street, 8th Floor Chicago, IL 60601 Attention: Paul Peterson 171 North Clark Street, 8th Floor Chicago, IL 60601 Fax: (312) 223-2960 Bond Safeguard Insurance Co. surety bond $4,064,344 Attention: Legal Department 10002 Shelbyville Road, Suite 100 Louisville, KY 40223 Attention: Legal Department 10002 Shelbyville Road, Suite 100 Louisville, KY 40223 Fax: (630) 495-9272 Platte River Insurance Co. surety bond $3,700,806 Attention: Legal Department P.O. Box 5900 Madison, WI 53705 Attention: Legal Department P.O. Box 5900 Madison, WI 53705 Fax: (800) 798-2029 Travelers Casualty and surety bond $1,416,574 Surety Co. Attention: Legal Department One Tower Square Hartford, CT 06183 Attention: Legal Department One Tower Square Hartford, CT 06183 Fax: (860) 954-3956 Landmark Title Co. title insurance $1,250,000 Attention: Legal Department P.O. Box 725 3501-30th avenue Kenosha, WI 53141 Attention: Legal Department P.O. Box 725 3501-30th avenue Kenosha, WI 53141 Fax: (262) 658-0913 Columbian Agency surety bond $500,000 Attention: Legal Department 1005 Laraway Road P.O. Box 39 New Lenox, IL 60451 Attention: Legal Department 1005 Laraway Road P.O. Box 39 New Lenox, IL 60451 Fax: (815) 485-2936 Land Title Guarantee Co. title insurance $315,000 Attention: Legal Department 3033 East First Avenue, Suite 600 Denver, CO 80206 Attention: Legal Department 3033 East First Avenue, Suite 600 Denver, CO 80206 Fax: (303) 331-0272 Brownstein Hyatt Farber legal fees $98,948 Schreck Attention: Engagement Partner 410 17th Street, Suite 2200 Denver, CO 80202 Fax: (303) 223-1111 Attention: Engagement Partner 410 17th Street, Suite 2200 Denver, CO 80202 Fax: (303) 223-1111 Wildman, Harrold, Allen & legal fees $90,316 Dixon, L.L.P. Attention: Engagement Partner 225 West Wacker Drive, Suite 3000 Chicago, IL 60606 Attention: Engagement Partner 225 West Wacker Drive, Suite 3000 Chicago, IL 60606 Fax: (312) 201-2555 Peregrine, Stime, Newman, legal fees $86,491 Ritzman & Brucker Attention: Engagement Partner 221 East Illinois Street P.O. Box 564 Wheaton, IL 60189 Attention: Engagement Partner 221 East Illinois Street P.O. Box 564 Wheaton, IL 60189 Fax: (630) 665-0407 Jaffe, Raitt, Heuer & Weiss, legal fees $77,479 P.C. Attention: Engagement Partner 500 Griswold, Suite 2400 Detroit, MI 48226 Attention: Engagement Partner 500 Griswold, Suite 2400 Detroit, MI 48226 Fax: (313) 961-1205 J.& E. Nursery trade debt $45,818 Attention: Katie Martinez 18852 West Peterson Libertyville, IL 60048 Attention: Katie Martinez 18852 West Peterson Libertyville, IL 60048 Fax: (847) 247-0870 D.&B. Advertising, Inc. trade debt $42,102 Attention: Legal Department 53 East St. Charles Road Villa Park, IL 60181 Attention: Legal Department 53 East St. Charles Road Villa Park, IL 60181 Fax: (630) 782-8340 Arthur J. Gallagher trade debt $34,724 Attention: Legal Department Two Pierce Place, 6th Floor Risk Management Services Itasca, IL 60143 Attention: Legal Department Two Pierce Place, 6th Floor Risk Management Services Itasca, IL 60143 Fax: (630) 694-5499 Denver Newspaper Agency trade debt $33,572 Attention: Legal Department Agency P.O. Box 17930 Denver, CO 80217 Attention: Legal Department Agency P.O. Box 17930 Denver, CO 80217 Fax: (303) 954-1635 NEWLAND INT'L: Moody's Rates Proposed $220 Mil. Notes at Ba3 ------------------------------------------------------------ Moody's Investors Service assigned a Ba3 rating to Newland International Properties Corp.'s proposed $220 million senior secured notes due 2014. This is the first time Moody's has rated Newland. The rating outlook is stable. Newland International Properties is a Panamanian corporation whose principal activity is the development, construction, operation and administration of a 66-story, mixed-use building known as the Trump Ocean Club, located in Punta Pacifica, Panama. The building will have a mix of residential condos, a hotel, retail space, restaurants, a casino and beach club. The notes will be secured by a first-priority mortgage lien on: (i) The Trump Ocean Club, the project, including all real estate, condos, commercial units, hotel and casino, (ii) cash in the company escrow accounts, (iii) an assignment of all receivables from the sale or rental of residential units and commercial space, including shops, restaurants, hotel and casino, and (iv) all insurance policies related to the project and any proceeds therefrom. Newland will pledge to the trustee all existing and future receivables for a minimum collateralization of 125% ($275 million) of the principal amount of notes issued. The collateralization ratio must be met within six months and maintained thereafter. The notes are senior secured obligations of Newland and will rank equally in right of payment with all of their existing and future senior indebtedness, and senior in right of payment to all of their existing and future subordinated debt. The notes contain certain covenants which include restricted payments and incurrence of debt. In looking at project such as the Trump Ocean Club, Moody's focuses on who the equity partners and ultimate buyers of the project are. Moody's also focuses on the project's current cashflows, the structure of the rated debt instrument, the amount and character of presales and deposits, and the location of the project including the economic environment of the project's location. "Moody's Ba3 senior secured debt rating recognizes that although the equity partners of Newland are private companies, the company has an experienced management team with decades of collective real estate development and construction experience," says Philip Kibel, Moody's analyst. Furthermore, the sales and marketing team has experience in selling luxury properties internationally and the property will be managed locally. The project is currently cash-positive, as it is currently 65% pre-sold with contracts that benefit the issuer in case of breach, and which require a 30% down-payment. "The pace and nature of pre-sales is a positive credit characteristic," notes Mr. Kibel. The land is 100% owned by the company, and there can be no other debt aside from the proposed issuance. The debt also has adequate collateral. Newland's primary credit challenges relate to asset concentration, as Newland is building a single project, which incorporates one building. However, the building is diversified in that it contains residences, a hotel, retail space and a casino. The company also has limited sales and operating history, and construction has just begun. Furthermore, condos will not be delivered until 2010, and so revenues will not be recognized until then. The project does involve speculative building and Newland bears all the risk of finding buyers. Competition is abundant, as there are numerous buildings and projects in various stages of development, while the success of this project can be affected by economic and political conditions in Panama, as well as normal construction challenges. Moody's stable rating outlook reflects Moody's expectation that Newland will at least meet its construction and sales projections. Moody's said that a ratings upgrade is unlikely as the project is not yet fully under construction. Despite the substantial pre- sales, much uncertainty remains regarding the ultimate construction and completion of the project, and total sales and sales proceeds. A downgrade would result from sales defaults exceeding 15%. Any missteps in construction that slow planned deliveries of units or sales by more that 12 months, economic difficulties in Panama, a natural disaster or other event that delays or damages the development would be negatives. This rating was assigned with a stable outlook: Newland International Properties Corp. -- $220 million senior secured debt at Ba3. Newland International Properties Corp. is a sociedad an�nima organized under the laws of the Republic of Panama. Newland is a real estate development company established to develop the "Trump Ocean Club International Hotel & Tower" in Panama City, Panama. Trump Ocean Club is being developed as a multi-use luxury tower, overlooking the Pacific Ocean, with luxury condominium residences, a hotel condominium, a limited number of offices, and premier leisure amenities. Trump Ocean Club will be located on the Punta Pacifica Peninsula in Panama City, on about 2.8 acres (11,200 square meters) of land, including about 295 lineal feet (90 lineal meters) of oceanfront. ODOM EXCAVATION: Section 341(a) Meeting Scheduled on November 19 ---------------------------------------------------------------- The U.S. Trustee for Region 13 will convene a meeting of Odom Excavation & Paving, Inc.'s creditors on Nov. 19, 2007, at 12:00 p.m., at Room 416, 35 East Mountain Street, Room 416 in Fayetteville, Arkansas. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Based in Siloam Springs, Arkansas, Odom Excavation & Paving, Inc., filed for chapter 11 protection on Oct. 4, 2007 (Bankr. W.D. Ark. Case No. 07-73210). When the Debtor filed for protection from its creditors, it disclosed estimated assets of less than $10,000 but estimated debts between $1 million to $100 million. The Debtor's list of its 16 largest unsecured creditors shows aggregate total of more than $30 million. OSG INC: S&P Places BB+ Corporate Credit Rating on Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'BB+' corporate credit rating, on Overseas Shipholding Group Inc. on CreditWatch with negative implications. "The CreditWatch placement reflects the company's increasing debt leverage and weakening credit measures because of acquisitions, share buybacks, and recently reduced earnings," said Standard & Poor's credit analyst Funmi Afonja. As of Sept. 30, 2007, OSG had about $3.3 billion of lease-adjusted debt outstanding. New York, New York-based OSG is one of the world's leading bulk shipping companies, engaged primarily in the ocean transportation of crude oil and petroleum products in both the international market and U.S. domestic trade. The company has expanded in recent years through acquisitions and chartering in vessels, and bought back $543 million of its shares in the first three quarters of 2007. OSG reported a net profit of $26.6 million in the third quarter of 2007, well below $90.8 million in the like period of 2006, as a result of lower charter rates, higher depreciation expense, and increased interest costs. Accordingly, total debt to capital is now in the mid-60% area, up from 50% a year earlier. Net debt to EBITDA is about 5x, compared with 3x for the 12 months ended Sept. 30, 2006. Still, OSG's credit profile continues to benefit from ongoing diversification into less volatile businesses such as liquefied natural gas shipping and U.S. domestic shipping, and from an increasing proportion of committed revenues from time charters. Liquidity remains satisfactory, with $541 million of cash at Sept. 30, 2007, $894.8 million in availability (after taking into account $65.2 million in letters of credit) under its $1.8 billion revolving credit agreement, and a high proportion of unencumbered owned vessels. OWENS CORNING: Completes $640 Mil. Buyout of Saint-Gobain's Biz --------------------------------------------------------------- Owens Corning has completed the acquisition of Saint-Gobain's Reinforcements and Composite Fabrics businesses for $640 million after approval by regulatory authorities in Europe and the United States. The acquisition is expected to accelerate Owens Corning's growth strategy and to strengthen its position in glass reinforcements and composites. The acquired business is comprised of 20 plants and more than 4,500 employees around the world. The acquisition, net of planned divestitures, will increase Owens Corning's glass fiber market position. In particular, the company acquires a substantial footprint in emerging markets like China, Russia, India, Mexico and Brazil. In addition, the acquisition of the Saint-Gobain Fabrics business will give Owens Corning a position in the fabrics industry. Owens Corning will divest its composite manufacturing facilities in Battice, Belgium, and Birkeland, Norway, in order to address regulatory concerns related to the transaction. The company also sold its Continuous Filament Mat business in Huntingdon, Pennsylvania. The Wichita Falls, Texas, facility of Saint-Gobain is not part of the transaction. Composites Expansion in China and Russia Owens Corning also intends to expand its glass reinforcements and composite fabrics production capabilities beginning in 2008 to support market growth in Asia and Eastern Europe, and specifically in the developing and emerging countries of China and Russia. The proposed expansion is designed to increase the company's capabilities at its newly acquired Hangzhou, China, and Gous- Khroustalny, Russia, plants within the next two years. It is the first step in a multi-phase plan to increase production of glass reinforcements and composite fabrics in these countries by 2010. The size and cost of the planned capacity additions were not disclosed. These investments will be subject to all necessary corporate and regulatory approvals. "The market for glass-reinforced composite materials is growing 5 to 7% per year globally and even faster in developing countries such as China and Russia, and in Eastern Europe," Chuck Dana, president of Owens Corning's Composite Solutions business, said. "Expanding our production platforms in China and Russia will position Owens Corning's Composites organization to serve a growing and diverse customer base in Asia and Eastern Europe with industry-leading products for key markets such as infrastructure, construction, automotive, electronics, and consumer goods," Mr. Dana said. "This is just one example of how this acquisition allows us to enhance our presence in growing markets around the world to create meaningful value for customers." The expansion will incorporate the company's advanced technologies including its patented Advantex(R) and advanced glass-melting technology platforms. These technologies bring world-class energy efficiency and emissions control, while providing customers with unique product benefits including corrosion resistance and high strength. About Saint-Gobain SA Headquartered in Courbevoie, France, Saint-Gobain SA (EPA:SGO) -- http://www.saint-gobain.com/-- is a producer, processor and distributor of materials, including glass, ceramics, plastics and cast iron. The company has five principal business activities: the distribution of building materials to professionals and consumers, which includes the subsidiaries Lapeyre and Point.P in France and Jewson and Graham in the United Kingdom; the production of high-performance materials, such as ceramics, plastics and abrasives; the manufacture of flat glass, notably for use in the automobile sector; the production of packaging, including glass jars and bottles for foodstuffs, pharmaceuticals and beauty products, and the manufacture of construction products, such as insulation and pipes. Saint-Gobain has over 1,000 consolidated companies in total, and is represented in 49 countries worldwide. About Owens Corning Headquartered in Toledo, Ohio, Owens Corning fka Owens Corning (Reorganized) Inc. (NYSE: OC) -- http://www.owenscorning.com/-- is a producer of residential and commercial building materials and glass fiber reinforcements, and other similar materials for composite systems. The company has operations in 26 countries. The company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. D. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represented the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Official Committee of Asbestos Creditors. James J. McMonagle served as the Legal Representative for Future Claimants and wass represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. On Sept. 28, 2006, the Honorable John P. Fullam, Sr., of the U.S. District Court for the Eastern District of Pennsylvania affirmed the order of Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware confirming Owens Corning's Sixth Amended Plan of Reorganization. The Plan took effect on Oct. 31, 2006, marking the company's emergence from Chapter 11. * * * Fitch placed Owens Corning's senior unsecured debt and preferred stock ratings at "D". The ratings, placed in October 2000, still hold to date. PHARMED GROUP: Wants to Hire Berger Singerman as Counsel -------------------------------------------------------- Pharmed Group Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of Florida for permission to employ Berger Singerman P.A., as their counsel, nunc pro tunc to Oct. 26, 2007. Berger Singerman will: a. give advice to the Debtors with respect to their power and duties as debtor-in-possession and the continued management of their business operations; b. advice the Debtors with respect to their responsibilities in complying with the U.S. Trustee's operating guidelines and reporting requirements and with the rules of the Court; c. prepare motions, pleadings, orders, applications, adversary proceedings, and other legal documents necessary in the administration of these cases; d. protect the interest of the Debtors in all matters pending before the Court; and e. represent the Debtors in negotiations with their creditors and in the preparation of a plan. The Debtors tell the Court that on Oct. 11, 2007, the firm received $20,000 for payments of the outstanding balance prepetition fees and expenses. Paul Steven Singerman, Esq., a shareholder of firm, will charge $475 per hour for this engagement, while Brian Rich, Esq., also a shareholder of the firm, bills $370 per hour. The firm's other professionals compensation rates are: Designations Hourly Rate ------------ ----------- Attorneys $250 - $475 Associates $250 - $370 Legal Assistants $75 - $160 Paralegals $75 - $160 Mr. Singerman assures the Court that the firm does not hold any interest adverse to the Debtors' estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Miami, Florida-based Pharmed Group Holdings Inc. -- http://www.pharmed.com/-- and its affiliates sends 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 Dynatronics, Welch Allyn, and Smith & Nephew. In addition to their distribution businesses, they make and distribute vitamins, minerals, nutraceuticals, and dietary supplements. The company and four debtor-affiliates filed for chapter 11 protection on Oct. 26, 2007 (Bankr. S.D. Fl. Case Nos. 07-19187 through 07-19191). The Debtors selected Trumbull Group LLC as claims and noticing agent. When the Debtors filed for bankruptcy, they listed assets between $1 million and $100 million and debts of more than $100 million. PYXIS ABS: Moody's Junks Ratings on Three Note Classes ------------------------------------------------------ Moody's Investors Service placed these notes issued by Pyxis ABS CDO 2006-1 Ltd. on review for possible downgrade: Class Descriptions: -- $900,000,000 Senior Swap Agreement Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $180,000,000 Class A-1 Senior Secured Floating Rate Variable Funding Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $113,500,000 Class A-2 Senior Secured Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $93,500,000 Class B Secured Floating Rate Notes Due 2046 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $89,000,000 Class C Secured Deferrable Floating Rate Notes Due 2046 Prior Rating: A2 Current Rating: Caa1, on review for possible downgrade -- $41,500,000 Class D Mezzanine Secured Deferrable Floating Rate Notes Due 2046 Prior Rating: Baa2 Current Rating: Caa2, on review for possible downgrade -- $61,875,000 Class X Subordinated Notes Due 2046 Prior Rating: Baa3 Current Rating: Caa3, 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. RAHWAY HOSPITAL: Moody's Affirms Series 1998 Bonds' Ba2 Rating -------------------------------------------------------------- Moody's Investors Service affirmed the Ba2 rating on Rahway Hospital's outstanding Series 1998 bonds ($19 million). The stable outlook reflects the recent trend of improved operating performance and patient volumes and expectations that the current level of operating performance will be maintained in the near term. Legal Security Series 1998 bonds are secured by a gross revenue pledge of Rahway Hospital. The Series 2003 bonds ($11 million) are backed by a Letter of Credit from Wachovia and rated Aa2/VMIG1. The Letter of Credit is due to expire in August 2008. Interest Rate Derivatives Floating-to-floating rate swap with Wachovia Bank based on $11 million notional amount; expires 2010; management reports that there are no collateral requirements. Strengths * Legal Affiliation with A2 rated Robert Wood Johnson University Hospital (New Brunswick) which has aided Rahway with its financial and strategic planning efforts * Continued improvement in operating performance in fiscal year 2006 (3% operating margin and 8% operating cash flow margin) and through eight months of FY 2007 (5.6% operating margin and 10.4% operating cash flow margin) * Improved liquidity position through eight months of FY 2007 with $24.4 million in unrestricted cash and investments (81 days cash on hand) compared to $20.4 million (70 days cash on hand) at fiscal year end 2006 Challenges * High reliance on Medicare, 60.2% of revenues, one of the highest in Moody's portfolio * Location in fragmented market of Union and Middlesex counties with other sizable community hospitals providing more array of services than Rahway; stagnant and aging population demographics in Rahway's primary service area * High age of plant (18.4 years) due to low level of capital spending the last several years ($2.3 million by FYE 2007) due in part to liquidity pressures related to required pension contributions of $6 million in FY 2006 and $3.4 million through eight months of FY 2007. * Management is currently working on its three year capital budget and reviewing funding options which could possibly stress its debt ratios Recent Developments/Results Rahway Hospital reported a second consecutive year of improved operating performance in fiscal year 2006 with an operating income of $3.4 million (3% operating margin) and operating cash flow of $9.1 million (8% operating cash flow margin) compared to an operating income of $237 thousand (0.2% operating margin) and $6.3 million operating cash flow (5.9% operating cash flow margin) in FY 2005. The improved operating performance was attributed to increases in both inpatient and outpatient volumes and slightly improved payor mix with increases in patients with commercial insurance. Expense growth was mitigated with a focus on reducing length of stay which allowed Rahway to trim nursing FTEs and significantly reduce the usage of agency labor. With improved operating performance, debt coverage measures also improved to above average levels with 3.56 times debt to cash flow and 2.80 times maximum annual debt service coverage. The trend of improved performance has continued through eight months of FY 2007 with $4.5 million in operating income (5.6% operating margin) and $8.4 million in operating cash flow (10.4% operating cash flow margin) compared to $1.3 million in operating income (1.8% operating margin) and $5.4 million in operating cash flow (7.3% operating cash flow margin) in the prior period. Moody's expects FY 2007 will show another year of favorable results. The improved volume trend was attributed to increased physician recruitment from Union Hospital, which recently closed. Management was able to recruit 60 physicians from Union starting in FY 2005 and bring additional volume to Rahway. In addition, management's strategy of increasing outpatient services with the opening of a new fitness center in the Westfield/Scotch Plains area in early 2007 was bearing fruit with the growth in physical therapy services which has more commercially insured patients. A new Wound Care Center opened in July of 2007 and was expected to be a loss leader, but is currently profitable. Outpatient surgery volumes, however, have declined in FY 2006 and continued to decline through eight months of FY 2007 due to competition from entrepreneurial physicians. Management is currently looking to attract surgeons in an effort to increase surgical volumes. Despite the improved operating performance in FY 2006, Rahway's unrestricted cash position at FYE 2006 declined slightly to $20.4 million (70 days cash on hand) from $22.2 million at FYE 2005. The decline in liquidity was attributed to Rahway's $6 million contribution towards the pension. Through eight months of FY 2007, Rahway contributed $3.4 million towards the pension and expects to have contributed a total of $3.8 million by FYE 2007. Despite this pension requirement, unrestricted cash position through eight months of FY 2007 improved to $24.4 million (81 days cash on hand). The improved liquidity position was attributed to improvements in A/R and improved operations. Management is currently working on its three year capital plan and exploring funding options. Despite the closure of Union Hospital, Rahway Hospital's service area remains crowded with many other community hospitals in Union and Middlesex counties. The immediate service area continues to age as evidenced by the above average Medicare exposure (60% of revenue). Rahway Hospital does not have any material service niche to distinguish itself in this market but its legal affiliation with A2 rated Robert Wood Johnson University Hospital continues to be a credit strength as RWJUH has aided Rahway with managed care negotiations, information technology needs and strategic planning. While not legally obligated on Rahway's debt, Moody's does not believe that RWJUH would allow Rahway to miss a debt service payment. Outlook Moody's stable outlook reflects the trend of improved operating performance the last two fiscal years and expectation of maintaining current level of performance. What could change the rating -- Up Significantly improved and sustained operating performance; increasing operating surpluses and cashflow generation; continued gains in liquidity What could change the rating - Down Decline in liquidity in the near term; significant decline in financial performance, Key Indicators Assumptions & Adjustments: -- Based on financial statements for Robert Wood Johnson University Hospital at Rahway And Affiliates -- First number reflects audit year ended Dec. 31, 2005 -- Second number reflects audit year ended Dec. 31, 2006 -- Investment returns normalized at 6% unless otherwise noted * Inpatient admissions: 7,491; 7,832 * Total operating revenues: $107.3 million; $114 million * Moody's-adjusted net revenue available for debt service: $7.6 million; $10 million * Total debt outstanding: $31.7 million; $29.9 million * Maximum annual debt service: $3.6 million; $3.6 million * Moody's-adjusted MADS Coverage with normalized investment income: 2.1 times; 2.8 times * Debt-to-cash flow: 5.39 times; 3.56 times * Days cash on hand: 78.9 days; 70 days * Cash-to-debt: 70%; 68.4% * Operating margin: 0.2%; 3% * Operating cash flow margin: 5.9%; 8% Outstanding bonds (as of Dec. 31, 2006) -- Series 1998: $19 million outstanding; Ba2 REABLE THERAPEUTICS: S&P Holds B Corporate Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Austin, Texas-based ReAble Therapeutics Inc. The rating outlook is stable. The corporate credit rating was affirmed despite the additional debt and integration risk associated with ReAble's proposed acquisition of DJO Inc. At the same time, Standard & Poor's assigned its bank loan and recovery ratings to ReAble's proposed $100 million senior secured revolving credit facility due 2013 and $1.055 billion term loan B due 2014. The credit facilities are rated 'BB-' (two notches higher than the corporate credit rating on the company), with a recovery rating of '1', indicating the expectation for very high (90%-100%) recovery in the event of a payment default. The credit facilities will be issued by ReAble Therapeutics Finance LLC, a subsidiary of ReAble Therapeutics Inc. Following the acquisition of DJO Inc., all ratings on DJO Inc. will be withdrawn. At that point, ReAble will assume the DJO name at its parent company and subsidiaries. S&P also assigned our 'CCC+' unsecured debt rating to ReAble Therapeutics Finance's proposed $575 million senior unsecured notes maturing in 2015 and affirmed our 'CCC+' subordinated debt rating on ReAble Therapeutics Finance's existing $200 million senior subordinated notes maturing in 2014. Again, ReAble Therapeutics Finance will become DJO Finance LLC following the close of the transaction. Proceeds from the financing as well as incremental cash equity from the financial sponsor The Blackstone Group will be used to fund the about $1.5 billion purchase of DJO Inc. ReAble Therapeutics Inc. is acquiring DJO Inc. However, the combined entity will assume the DJO Inc. name, and DJO's senior management will predominantly run the combined entity. "The ratings on ReAble overwhelmingly reflect the company's large debt burden and associated interest expense," said Standard & Poor's credit analyst Jesse Juliano. "The ratings also reflect the challenge of integrating the two entities and achieving much- needed cost synergies, the potential for increased competition or negative changes in third-party reimbursement, and the company's acquisition-based growth strategy." "These concerns are offset partially by ReAble's established position in its niche orthopedic device markets, improved product and customer diversity, long-standing customer relationships, and a respectable record of new product development and enhancements," said Mr. Juliano. REAL ESTATE: Section 341(a) Meeting Scheduled for December 4 ------------------------------------------------------------ The U.S. Trustee for Region 16 will convene a meeting of Real Estate Partners, Inc.'s creditors on Dec. 4, 2007, at 10:00 a.m., at Room 1-154, 411 West Fourth Street in Santa Ana, California. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Irvine, California, Real Estate Partners, Inc., dba Coldwell Banker Commercial R.E.P. -- http://www.realestatepartnersinc.com/-- is privately funded real estate investment and management services company specializing in the acquisition, repositioning, management and disposition of high growth properties. The company and seven of its affiliates filed for chapter 11 protection on Oct. 8, 2007 (Bankr. C.D. Calif. Case Nos. 07-13239 though 07-13246). Marc J. Winthrop, Esq., at Winthrop Couchot, P.A., represents the Debtors. When the Debtors filed for protection from their creditors, they disclosed estimated assets and debts between $1 million and $100 million. REAL ESTATE: Wants Until Nov. 20 to File Schedules and Statement ---------------------------------------------------------------- Real Estate Partners, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Central District of California to extend, until Nov. 20, 2007, their deadline to file schedules of assets and liabilities and statement of financial affairs. The Debtors tell the Court that they are aware of the importance of the Schedule and that it must be complete and accurate. The Debtors contend that they will be unable to prepare and file the said schedules by the prescribed time. The Debtors further say that since their bankruptcy filing, they have been expending a substantial amount of time preparing for emergency hearing on certain of their motions filed as will as dealing with the financial and operations issues. Headquartered in Irvine, California, Real Estate Partners, Inc., dba Coldwell Banker Commercial R.E.P. -- http://www.realestatepartnersinc.com/-- is privately funded real estate investment and management services company specializing in the acquisition, repositioning, management and disposition of high growth properties. The company and seven of its affiliates filed for chapter 11 protection on Oct. 8, 2007 (Bankr. C.D. Calif. Case Nos. 07-13239 though 07-13246). Marc J. Winthrop, Esq., at Winthrop Couchot, P.A., represents the Debtors. When the Debtors filed for protection from their creditors, they disclosed estimated assets and debts between $1 million and $100 million. REMY WORLDWIDE: Taps Greenberg Traurig as Special Counsel --------------------------------------------------------- Remy Worldwide Holdings Inc. and its debtor-affiliates ask authority from the U.S. Bankruptcy Court for the District of Delaware to employ Greenbert Traurig, LLP, as their special corporate advisory and litigation counsel nunc pro tunc Oct. 8, 2007. Kerry A. Shiba, senior vice president and chief financial officer of Remy Worldwide Holdings, Inc., relates that the Debtors currently do not employ an experienced attorney who serves in the role of "general counsel." That void, he notes, is filled by Greenberg Traurig, who, since 2006, has serviced the Debtors in connection with corporate advisory and litigation matters. As a result, Greenberg Traurig, has become familiar with the Debtors' business affairs. The Debtors, thus, believe that Greenberg Traurig's continued representation of them is essential to a successful Chapter 11 reorganization and will provide a substantial benefit to their bankrupt estates. Specifically, the Debtors have asked Greenberg Traurig to continue to render services in connection with: -- advising and counseling them in connection with corporate advisory matters, including, but not limited to, corporate, securities, financing, transactional, intellectual property, environmental, and insurance matters unrelated to the administration of the Chapter 11 cases; -- handling all aspects of non-bankruptcy litigation, as requested by the Debtors, including any pending prepetition litigation that would proceed in various forums postpetition; and -- any other corporate advisory or litigation services as requested by the Debtors. To note, the Debtors have chosen Shearman & Sterling LLP and Young Conaway Stargatt & Taylor LLP to provide them general bankruptcy services. Shearman & Sterling will chiefly be responsible for providing general bankruptcy and reorganization advice to the Debtors and Young Conaway will serve as the Debtors' local Delaware counsel, while Greenberg will generally focus on corporate advisory and litigation matters, Mr. Shiba relates. The Debtors assure the Court that they will undertake efforts to minimize duplication of the professionals' work. The Debtors will pay for Greenberg Traurig's services on an hourly basis in accordance with the firm's customary rates: Attorneys $235 to $750 Paraprofessionals $65 to $230 The Debtors will also reimburse Greenberg Traurig for all the necessary cost and expenses the firm incurs in connection with the contemplated services. Quinn P. Williams, Esq., a Greenberg Traurig professional, assures the Court that his firm does not hold or represent any interests adverse to the Debtors or their estates, in matters upon which it is to be engaged. Greenberg Traurig relates that it will conduct an ongoing review to ensure that it continues neither to hold nor represent any interests adverse to the Debtors or their estates. If the firm becomes aware of material information or relationships that it determines require further disclosure, it will promptly disclose that information to the Court on notice to the parties-in-interest and the U.S. Trustee. About Remy Worldwide Based in Anderson, Indiana, Remy Worldwide Holdings Inc. acts as a holding company of all the outstanding capital stock of Remy International Inc. Remy International --http://www.remyinc.com/- - manufactures, remanufactures and distributes Delco Remy brand heavy-duty systems and Remy brand starters and alternators, locomotive products and hybrid power technology. The company also provides a worldwide components core-exchange service for automobiles, light trucks, medium and heavy-duty trucks and other heavy-duty, off-road and industrial applications. Remy has operations in the United Kingdom, Mexico and Korea, among others. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 8, 2007 (Bankr. D. Del. Cases No. 07-11481 to 07-11509). Douglas P. Bartner, Esq., Fredric Sosnick, Esq., and Michael H. Torkin, Esq., at Shearman & Sterling LLP, represent the Debtors' in their restructuring efforts. Pauline K. Morgan, Esq., Edmon L. Morton, Esq., and Kenneth J. Enos, Esq., at Young Conaway Stargatt & Taylor, LLP, serve as co-counsels to the Debtors. The Debtors' claims agent is Kurtzman Carson Consultants LLC and their restructuring advisor is AlixPartners, LLC. At Sept. 30, 2006, Remy Worldwide's balance sheet showed total assets of $919,736,000 and total liabilities of $1,265,648,000. (Remy Bankruptcy News; Issue No. 5, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). REMY WORLDWIDE: Wants to Hire Ernst & Young as Accountant --------------------------------------------------------- Remy Worldwide Holdings Inc. and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the District of Delaware to employ Ernst & Young LLP as their accountant, auditor and tax services provider, nunc pro tunc Oct. 8, 2007. Remy Worldwide Holdings, Inc. Senior Vice President and Chief Financial Officer Kerry A. Shiba relates that the Debtors require the services of a seasoned accountant, auditor and tax services provider that is familiar with their businesses and the Chapter 11 process. In the course of performing services for the Debtors over the past years, Ernst & Young has developed a reserve of institutional knowledge related to the Debtors' business, finances, operations, systems, and capital structure, Mr. Shiba points out. Thus, Mr. Shiba relates, the services of Ernst & Young are necessary for the Debtors to maximize the value of their estates and to reorganize successfully. As the Debtors' accountant, Ernst & Young will: -- audit and report on the Debtors' consolidated financial statements for the year ended December 31, 2007; -- review the Debtors' unaudited interim condensed consolidated financial statements; and -- periodically perform research and consultations for the Debtors regarding financial accounting and auditing matters and participate in all scheduled meetings of the Debtors' Audit Committee, as requested. Ernst & Young will also perform various tax services on a project by project basis as authorized by the Debtors. The projects may include assistance with tax issues, transactional issues, or the Debtors' dealings with tax authorities. Specific tasks that may be required of Ernst & Young in connection with the Tax Services include: -- participation in meetings and telephone calls with the Debtors; -- participation in meetings and telephone calls with taxing authorities and other third parties; and -- review of transactional documentation, research of technical issues, and the preparation of technical memoranda, letters, e-mails, and other written documentation. The Debtors will pay for Ernst & Young's services on an hourly basis: Professionals Hourly Rate ------------- ----------- Partners and Principals $530 to $800 Senior Managers $435 to $540 Managers $275 to $340 Seniors $195 to $270 Staff $105 to $170 The Debtors will also reimburse the firm for any direct and reasonable out-of-pocket expenses it incurs in connection its retention with the Debtors. Mr. Shiba notes that as of Oct. 8, 2007, the Debtors don't owe Ernst & Young any outstanding balance with respect to services the firm provided prior to the Petition Date. The Debtors tell the Court that during the 90 days immediately preceding the Petition Date, they paid to Ernst & Young fees totaling $490,713. Ernst & Young has advised the Debtors that it will coordinate with the other retained professionals in the Debtors' bankruptcy cases to eliminate unnecessary duplication or overlap of work. Thomas R. Ertel, a partner of Ernst & Young, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm do not have an interest materially adverse to the Debtors' estates, according to Mr. Ertel. None of the services Ernst & Young rendered to other entities are related to the firm's contemplated services with the Debtors and their Chapter 11 cases, Mr. Ertel adds. About Remy Worldwide Based in Anderson, Indiana, Remy Worldwide Holdings Inc. acts as a holding company of all the outstanding capital stock of Remy International Inc. Remy International --http://www.remyinc.com/- - manufactures, remanufactures and distributes Delco Remy brand heavy-duty systems and Remy brand starters and alternators, locomotive products and hybrid power technology. The company also provides a worldwide components core-exchange service for automobiles, light trucks, medium and heavy-duty trucks and other heavy-duty, off-road and industrial applications. Remy has operations in the United Kingdom, Mexico and Korea, among others. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 8, 2007 (Bankr. D. Del. Cases No. 07-11481 to 07-11509). Douglas P. Bartner, Esq., Fredric Sosnick, Esq., and Michael H. Torkin, Esq., at Shearman & Sterling LLP, represent the Debtors' in their restructuring efforts. Pauline K. Morgan, Esq., Edmon L. Morton, Esq., and Kenneth J. Enos, Esq., at Young Conaway Stargatt & Taylor, LLP, serve as co-counsels to the Debtors. The Debtors' claims agent is Kurtzman Carson Consultants LLC and their restructuring advisor is AlixPartners, LLC. At Sept. 30, 2006, Remy Worldwide's balance sheet showed total assets of $919,736,000 and total liabilities of $1,265,648,000. (Remy Bankruptcy News; Issue No. 5, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). RMS LEASING: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: R.M.S. Leasing, L.L.C. 825 South 30th Avenue Phoenix, AZ 85009 Bankruptcy Case No.: 07-05751 Chapter 11 Petition Date: October 31, 2007 Court: District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Donald W. Powell, Esq. Carmichael & Powell, P.C. 7301 North 16th Street, Suite 103 Phoenix, AZ 85020 Tel: (602) 861-0777 Fax: (602) 870-0296 Total Assets: $3,078,618 Total Debts: $3,531,106 The Debtor does not have any creditors who are not insiders. ROADHOUSE GRILL: Section 341(a) Creditors Meeting Set for Nov. 19 ----------------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of Roadhouse Grill, Inc., and R.H.G. Acquisition Corp.'s creditors on Nov. 19, 2007, at 8:30 a.m., at the Flagler Waterview Building, 1515 North Flagler Drive, Room 870 in West Palm Beach, Florida. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Palm Beach, Florida, Roadhouse Grill, Inc. -- http://www.roadhousegrill.com/-- owned 57 restaurants and franchised 12 branches to five other companies. The company and its affiliate, R.H.G. Acquisition Corp., filed for chapter 11 protection on Oct. 8, 2007 (Bankr. S.D. Fla. Case Nos. 07-18410 and 07-18414). When the Debtors filed for protection from their creditors, they disclosed estimated assets and debts between $1 million and $100 million. ROADHOUSE GRILL: Court Okays Kelley & Fulton as Bankruptcy Counsel ------------------------------------------------------------------ Roadhouse Grill, Inc., and R.H.G. Acquisition Corp. obtained authority from the U.S. Bankruptcy Court for the Southern District of Florida to employ Kelley & Fulton P.A. as their bankruptcy counsel. As their counsel, Kelley & Fulton is expected to: a. advise the Debtors with respect to their powers and duties as debtors-in-possession and the continued management of their business operations; b. advise the Debtors with respect to its responsibilities in complying with the U.S. Trustee's Operating Guidelines and Reporting Requirements and with the rules of the Court; c. prepare motions, pleadings, orders, applications, adversary proceedings, and other legal documents necessary in the administration of the Debtors' cases; d. protect the interest of the Debtor in all matters pending before the Court; and e. represent the Debtors in the negotiation with its creditors in the preparation of a plan. The Debtors disclose that they have paid the firm a $75,000 retainer. Craig I. Kelley, Esq., a managing attorney of the firm, assures the Court that his firm does not represent any interest adverse to the Debtors or their estates and is a "disinterested person" as defined in the Bankruptcy Code. Mr. Kelley can be reached at: Craig I. Kelley, Esq. Kelley & Fulton P.A. 1665 Palm Beach Lakes Boulevard The Forum-Suite 1000 West Palm Beach, FL 33401 Tel: (561) 491-1200 Fax: (561) 684-3773 http://www.kelleylawoffice.com/ Headquartered in Palm Beach, Florida, Roadhouse Grill, Inc. -- http://www.roadhousegrill.com/-- owned 57 restaurants and franchised 12 branches to five other companies. The company and its affiliate, R.H.G. Acquisition Corp., filed for chapter 11 protection on Oct. 8, 2007 (Bankr. S.D. Fla. Case Nos. 07-18410 and 07-18414). When the Debtors filed for protection from their creditors, they disclosed estimated assets and debts between $1 million and $100 million. ROADHOUSE GRILL: U.S. Trustee Appoints Members to Creditors Panel ----------------------------------------------------------------- The U.S. Trustee for Region 21 appointed nine creditors to serve on an Official Committee of Unsecured Creditors in Roadhouse Grill, Inc., and R.H.G. Acquisition Corp.'s chapter 11 cases. The Committee members are: 1. Tonto Capital Partners GP c/o Ayman Sabi 1440 South Ocean Boulevard, Apartment 11-B Pompano Beach, FL 33062 Tele: (954) 868-2319 or (954) 783-4285 2. John Lewis, Jr. Sr. Managing Counsel The Coca-Cola Company P.O. Box 1734-Mail Stop NAT 2006 Atlanta, GA 30301 Tel: (404) 676-4016 Fax: (404) 598-4016 3. Francis Lee Kok Chuan Authorized Representative Berjaya Group (Cayman) Limited & Prime Gaming Phillipines, Inc. Level 12, Directorate 2 Berjaya Times Square, No. 1, Jalan, Imbi Tel: (603) 21491832 Fax: (603) 21449585 4. Ronald Buck Managing Member of the General Partner of Corsair Special Situations Fund, L.P. 747 Third Avenue, 38th Floor New York, NY 10017 Tel: (212) 351-5961 Fax: (212) 351-5969 5. Richard Hall Auto-Chlor Financial Director Johnson Diversey dba Auto-Chlor 746 Poplar Avenue Memphis, TN 38105 Tel: (901) 579-2310 Fax: (901) 544-9340 6. Marcos Lapciuc Lapciuc Group, Inc. 1430 Northwest 88th Avenue Miami, FL 33137 Tel: (305) 592-4500 Fax: (305) 592-0144 7. William Savickas Yankee Produce Co. P.O. Box 310327 Tampa, FL 33680 Tel: (813) 361-5866 Fax: (813) 237-4350 (call first) 8. Steve Saterbo 108 Campbell Drive Winter Haven, FL 33882 9. Lloyd W. Baldridge, Jr. ommissary Operations, Inc. dba COI Foodservice 2629 Eugenia Avenue Nashville, TN 37211 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Palm Beach, Florida, Roadhouse Grill, Inc. -- http://www.roadhousegrill.com/-- owned 57 restaurants and franchised 12 branches to five other companies. The company and its affiliate, R.H.G. Acquisition Corp., filed for chapter 11 protection on Oct. 8, 2007 (Bankr. S.D. Fla. Case Nos. 07-18410 and 07-18414). When the Debtors filed for protection from their creditors, they disclosed estimated assets and debts between $1 million and $100 million. ROCKY ROBINSON: Court Gives Nod to Tyler Bartl as Counsel --------------------------------------------------------- U.S. Bankruptcy Court for the Eastern District of Virginia gave Rocky Robinson permission to employ Tyler, Bartl, Gorman & Ramsdell, P.L.C., as its bankruptcy counsel. Tyler Bartl is expected to: a. act as the Debtor's general bankruptcy counsel; b. assist the Debtor with the preparation of its schedules; c. represent the Debtor at creditors' meetings; d. advise the Debtor of its duties and responsibilities under the Bankruptcy Code; e. assist in preparing monthly accounting forms; cash flow analysis and financial matters arising under the Code; f. assist and advise the Debtor in determining whether to assume or reject any executory contracts; g. draft documents to reflect any settlement/s reached with secured creditors; h. work for the resolution of motions for relief from stay and adequate protection; i. determine whether reorganization, dismissal, or conversion are in the best interests of the Debtor and its creditors; j. working with the Official Committee of Unsecured Creditors and other counsel, if any; k. work on any disclosure statement and plan of reorganization; and l. assist the Debtor in other matters that arise in the normal course of administration of its bankruptcy proceeding. The Debtor discloses that it has paid the firm a $20,000 retainer. The Debtor tells the Court that the firm's counsels bill at a range of $150 to $325 per hour. Thomas P. Gorman, Esq., an attorney of the firm, will bill $325 per hour for this engagement. TO the best of the Debtor's knowledge, the firm is disinterested as that term is defined in the Bankruptcy Code. Mr. Gorman can be reached at: Thomas P. Gorman, Esq. Tyler, Bartl, Gorman & Ramsdell, P.L.C. 700 South Washington Street, Suite 216 Alexandria, VA 22314 Tel: (703) 549-5000 http://www.tbgrlaw.com/ Based in Leesburg, Virginia, Rocky Robinson filed for chapter 11 protection on Sept. 26, 2007 (Bankr. E.D. Va. Case No. 07-12701). When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts between $1 million and $100 million. The Debtor's list of its 20 largest unsecured creditors showed claims aggregating to more than $20 million. SAGITTARIUS CDO: S&P Puts Four Low-B Rated Notes on CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Sagittarius CDO I Ltd.'s class A and B notes on CreditWatch with negative implications. Standard & Poor's noted that Sagittarius triggered an event of default on Oct. 24, 2007, under Section 5.1(j) of the indenture, dated March 15, 2007, and failed the default par value coverage ratio. In addition, Standard & Poor's has recently received notices of EODs on six other U.S. collateralized debt obligation of asset- backed securities transactions, which contain overcollateralization ratio EOD triggers that are tied to the ratings of the assets that make up the transaction's collateral pool. These EODs have been triggered by rating agencies' negative rating actions of certain U.S. residential mortgage-backed securities transactions and the subsequent reduction in the calculated par value of collateral in the O/C EOD ratio. Not all CDO transactions include these so-called "rating-based" O/C EOD triggers, which vary widely across CDOs that do include them. However, a breach of the O/C ratio threshold can change a transaction's priority of payments and lead to the CDO's early termination. Based on the transaction's unique terms, the EOD is either waived or rescinded (this may be driven by the votes of the deciding or "controlling" class of the senior-most or senior noteholders). If the EOD is not waived or rescinded, it may cause the transaction to accelerate, which means it can either remain in acceleration or liquidate the collateral. To the extent that the transaction is accelerated, it will typically change the priority of payments to a true sequential waterfall, which stops interest and principal payments to all classes of notes that are subordinate to the super senior swap or the senior-most class of notes outstanding. An acceleration could also lead to the transaction's early termination and a liquidation of the assets owned by the CDO. As Standard & Poor's receives notices of EODs, S&P will place all affected notes on CreditWatch with negative implications. Standard & Poor's will perform ongoing reviews based on the underlying assets' performance. If the EOD results in an acceleration, liquidation, or rescission, Standard & Poor's will evaluate the ratings in the transaction by performing a cash flow analysis and considering any changes to the priority of payments. Standard & Poor's will adjust each liability's rating, if appropriate, to reflect the opinion that the liability will be paid on or before its respective legal final maturity date. Standard & Poor's will publish further details and guidance on EODs in CDOs in a forthcoming commentary. Ratings Placed on Creditwatch Negative Sagittarius CDO I Ltd. Class Rating ----- ------ A AAA/Watch Neg B AA/Watch Neg Ratings Outstanding on Creditwatch Negative Transaction Class Rating ----------- ----- ------ ACA ABS 2007-2 Ltd. A1J AAA/Watch Neg ACA ABS 2007-2 Ltd. A1M AAA/Watch Neg ACA ABS 2007-2 Ltd. A2 AA/Watch Neg ACA ABS 2007-2 Ltd. A3 A/Watch Neg ACA ABS 2007-2 Ltd. B1 BBB/Watch Neg ACA ABS 2007-2 Ltd. B2 BBB-/Watch Neg Adams Square Funding I Ltd. A AAA/Watch Neg Adams Square Funding I Ltd. B-1 AA/Watch Neg Adams Square Funding I Ltd. B-2 AA-/Watch Neg Adams Square Funding I Ltd. C A/Watch Neg Adams Square Funding I Ltd. D BBB/Watch Neg Adams Square Funding I Ltd. E BB+/Watch Neg Carina CDO Ltd. A-2 AAA/Watch Neg Carina CDO Ltd. B-1 AA/Watch Neg Carina CDO Ltd. B-2 AA-/Watch Neg Carina CDO Ltd. C-1 A/Watch Neg Carina CDO Ltd. C-2 A-/Watch Neg Carina CDO Ltd. D-1 BBB+/Watch Neg Carina CDO Ltd. D-2 BBB/Watch Neg Carina CDO Ltd. D-3 BBB-/Watch Neg Carina CDO Ltd. X-1 BBB/Watch Neg Carina CDO Ltd. X-2 BBB-/Watch Neg Sagittarius CDO I Ltd. C A/Watch Neg Sagittarius CDO I Ltd. D-1 BBB+/Watch Neg Sagittarius CDO I Ltd. D-2 BBB/Watch Neg Sagittarius CDO I Ltd. D-3 BBB-/Watch Neg Sagittarius CDO I Ltd. E BBB-/Watch Neg Sagittarius CDO I Ltd. X BBB-/Watch Neg Sherwood III ABS CDO Ltd. A1J AAA/Watch Neg Sherwood III ABS CDO Ltd. A2 AA/Watch Neg Sherwood III ABS CDO Ltd. A3 A/Watch Neg Sherwood III ABS CDO Ltd. B BBB/Watch Neg Sherwood III ABS CDO Ltd. C BB/Watch Neg Vertical ABS CDO 2007-1 Ltd. A1J AAA/Watch Neg Vertical ABS CDO 2007-1 Ltd. A2 AA/Watch Neg Vertical ABS CDO 2007-1 Ltd. A3 A/Watch Neg Vertical ABS CDO 2007-1 Ltd. B1 BBB/Watch Neg Vertical ABS CDO 2007-1 Ltd. B2 BBB-/Watch Neg Vertical ABS CDO 2007-1 Ltd. C BB/Watch Neg Vertical ABS CDO 2007-1 Ltd. I BBB-/Watch Neg Webster CDO I Ltd. A-1LB AAA/Watch Neg Webster CDO I Ltd. A-2L AA/Watch Neg Webster CDO I Ltd. A-3L A/Watch Neg Webster CDO I Ltd. A-4L BBB+/Watch Neg Webster CDO I Ltd. B-1L BBB/Watch Neg Webster CDO I Ltd. B-2L BBB-/Watch Neg Webster CDO I Ltd. B-3L BB+/Watch Neg SEALY MATTRESS: S&P Rates $440 Million Senior Loans at BB+ ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its bank loan and recovery ratings to Sealy Mattress Co.'s $440 million senior secured term loans. At the same time, S&P raised the rating on Sealy Mattress Co.'s existing $125 million revolving credit facility that matures in 2010. The term loan facility, consisting of a $300 million term loan A due 2011 and a $140 million term loan E due 2012, was rated 'BB+', two notches above the corporate credit rating on Sealy Mattress Co.'s parent, Sealy Corp., and was assigned a recovery rating of '1', indicating expectations of very high (90%-100%) recovery in a the event of a payment default. The rating on the existing revolver was raised to 'BB+' from 'BB-', and the recovery rating was revised to '1' from '2', reflecting the amended financing structure and our revised issue rating framework. The proceeds of the term loans were used to repay the outstanding balance on the company's prior term loan, and the ratings on this loan have been withdrawn. Ratings List Sealy Corp. Corporate Credit Rating BB-/Stable/-- Ratings Assigned: Sealy Mattress Co. Senior Secured Debt BB+ Recovery Rating 1 Ratings Action: Sealy Mattress Co. To From -- ---- Senior Secured Revolver BB+ BB- Recovery Rating 1 2 SMURFIT-STONE: Solid Performance Prompts S&P to Lift Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating on Smurfit-Stone Container Corp. and its subsidiaries to 'B+' from 'B'. The outlook is stable. At the same time, S&P raised the senior secured ratings of the company's subsidiaries to 'BB' from 'BB-' and senior unsecured debt ratings to 'B-' from 'CCC+'. "The upgrade reflects the combination of the company's continued solid operating performance and meaningful debt reduction as a result of improved containerboard market conditions," said Standard & Poor's credit analyst Pamela Rice. "In addition, balanced supply and demand fundamentals should continue to support favorable pricing, and the company's strategic initiatives are improving profitability. These factors, along with lower debt and interest expense, have resulted in credit measures that are reaching levels more appropriate for the higher rating." Smurfit-Stone had total debt of $4.7 billion and debt to EBITDA of 5.3x at Sept. 30, 2007. Smurfit-Stone is the largest containerboard producer and maker of corrugated containers in North America. "We could revise the outlook to negative if market conditions reverse the progress of the last year because of worse-than- expected U.S. economic conditions, price declines, or greater- than-expected cost pressures," Ms. Rice said. "We could revise the outlook to positive if the company can improve its cost structure beyond current expectations and further reduce its heavy debt burden." SOLOMON DWEK: Case Summary & 253 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Solomon Dwek 311 Crosby Avenue Deal, NJ 07723 Bankruptcy Case No.: 07-11757 Debtor-affiliate filing separate Chapter 11 petition on October 31, 2007: Entity Case No. ------ -------- Monmouth Consulting Services, L.L.C. 07-25913 Debtor-affiliate filing separate Chapter 11 petition on October 22, 2007: Entity Case No. ------ -------- Dwek Land, L.L.C. 07-25349 Dwek Motors, L.L.C. 07-25350 Debtor-affiliate filing separate Chapter 11 petition on October 15, 2007: Entity Case No. ------ -------- 170 Broad, L.L.C. 07-24922 Debtor-affiliate filing separate Chapter 11 petition on October 12, 2007: Entity Case No. ------ -------- Copper Gables, L.L.C. 07-24829 Dwek Homes, L.L.C. 07-24832 Myrtle Avenue Land, L.L.C. 07-24835 Dwek Wall Gas, L.L.C. 07-24836 Grant Avenue Estates, L.L.C. 07-24837 Neptune City Stores, L.L.C. 07-24839 Debtor-affiliate filing separate Chapter 11 petition on September 27, 2007: Entity Case No. ------ -------- Tinton Falls Land, LLC 07-23872 Debtor-affiliates filing separate Chapter 11 petitions on September 4, 2007: Entity Case No. ------ -------- WLB Center, LLC 07-22630 Asbury Gas, LLC 07-22632 Jemar Enterprises, LLC 07-22633 Melville Dwek, LLC 07-22634 Newport WLB, LLC 07-22635 Red Bank Gas, LLC 07-22636 WLB Highway, LLC 07-22638 Debtor-affiliates that filed separate Chapter 11 petitions before August 24, 2007: Entity Case No. ------ -------- Dwek Branches, L.L.C. 07-22035 Dwek Assets, L.L.C. 07-22036 WLB Center, LLC 07-21752 Dwek Properties, LLC 07-20939 Neptune Medical, LLC 07-18766 Dwek Raleigh, L.L.C. 07-18316 Greenwood Plaza Acquisitions, L.L.C. 07-18317 Sinking Springs II, L.L.C. 07-18318 Sinking Springs, L.P. 07-18320 1631 Highway 35, L.L.C. 07-16041 167 Monmouth Road, L.L.C. 07-16045 2100 Highway 35, L.L.C. 07-16048 230 Broadway, L.L.C. 07-16049 264 Highway 35, L.L.C. 07-16052 374 Monmouth Road, L.L.C. 07-16053 55 North Gilbert, L.L.C. 07-16054 601 Main Street, L.L.C. 07-16055 6201 Route 9, L.L.C. 07-16057 Aberdeen Gas, L.L.C. 07-16058 Bath Avenue Holdings, L.L.C. 07-16060 Belmar Gas, L.L.C. 07-16061 Berkeley Heights Gas, L.L.C. 07-16062 Brick Gas, L.L.C. 07-16064 Dover Estates, L.L.C. 07-16065 Dwek Gas, L.L.C. 07-16066 Dwek Hopatchung, L.L.C. 07-16067 Dwek Income, L.L.C. 07-16068 Dwek Ohio, L.L.C. 07-16069 Dwek Pennsylvania, L.P. 07-16071 Dwek Wall, L.L.C. 07-16072 Dwek Woodbridge, L.L.C. 07-16073 Kadosh, L.L.C. 07-16074 Lacey Land, L.L.C. 07-16075 Monmouth Plaza, L.L.C. 07-16076 P&Y Holdings, L.L.C. 07-16077 Sugar Maple Estates, L.L.C. 07-16078 West Bangs Avenue, L.L.C. 07-16079 Beach Mart, L.L.C. 07-16104 Dwek Trenton Gas, LLC 07-12794 Neptune Gas, LLC 07-12796 Route 33 Medical, LLC 07-12798 1111 Eleventh Avenue 07-12799 Dwek North Olden, LLC 07-12800 Dwek State College, LLC 07-12802 Creditors who filed involuntary chapter 7 petitions against Solomon Dwek: Entity Nature of Claim Claim Amount ------ --------------- ------------ PNC Bank, N.A. Loans $22,993,731 5th Avenue and Wood Street Pittsburgh, PA 15222 Washington Mutual Bank Loans $22,660,558 1301 2nd Avenue WMC 3501 Seattle, WA 98101 Four Star Builders Indemnification of $58,387 1301 Route 33, Suite 3E Claim on Home Neptune, NJ 07753 Buyer's Warranty Type of Business: The Debtors are properties of real estate developer Solomon Dwek. Mr. Dwek was accused of defrauding P.N.C. Bank by depositing a bad $25-million check on April 24, 2006 and then transferring out most of the money the next day. An involuntary chapter 7 petition was filed against Mr. Dwek on Feb. 9, 2007 with the U.S. Bankruptcy Court for the District of New Jersey. On Feb. 22, 2007, the Court converted the case to a chapter 11 reorganization under supervision of a trustee. Chapter 11 Petition Date: May 5, 2007 Court: District of New Jersey (Trenton) Debtors' Counsel: Timothy P. Neumann, Esq. Broege, Neumann, Fischer & Shaver, LLC 25 Abe Voorhees Drive Manasquan, NJ 08736 Tel: (732) 223-8484 Fax: (732) 223-2416 Financial condition of debtor-affiliate that filed on October 31, 2007: Total Assets Total Debts ------------ ----------- Monmouth Consulting Services, L.L.C. $1,100,198 $0 Financial condition of debtor-affiliate that filed on October 22, 2007: Total Assets Total Debts ------------ ----------- Dwek Land, L.L.C. $4,415,000 $619,085 Dwek Motors, L.L.C. $1,290,000 $7,044 Financial condition of debtor-affiliate that filed on October 15, 2007: Total Assets Total Debts ------------ ----------- 170 Broad, L.L.C. $2,900,000 $1,400,518 Financial condition of debtor-affiliates that filed on October 12, 2007: Total Assets Total Debts ------------ ----------- Copper Gables, L.L.C. $1,100,000 $5,393,910 Dwek Homes, L.L.C. $11,508,847 $6,623,529 Myrtle Avenue Land, L.L.C. $1,251,362 $73,744 Dwek Wall Gas, L.L.C. $375,000 $0 Grant Avenue Estates, L.L.C. $6,200,100 $31,896,093 Neptune City Stores, L.L.C. $1,100,000 $5,393,910 Financial condition of debtor-affiliates that filed on September 27, 2007: Total Assets Total Debts ------------ ----------- Tinton Falls Land, LLC $800,000 $10,266,876 Financial condition of debtor-affiliates that filed on September 4, 2007: Total Assets Total Debts ------------ ----------- WLB Center, LLC $6,012,081 $3,652,480 Asbury Gas, LLC $500,000 $132,298 Jemar Enterprises, LLC $2,200,000 $924,538 Melville Dwek, LLC $425,000 $7,224 Newport WLB, LLC $5,500,297 $4,903,989 Red Bank Gas, LLC $1,030,000 $46,008 WLB Highway, LLC $1,411,615 $7,000,000 Financial condition of debtor-affiliates that filed before August 24, 2007: Total Assets Total Debts ------------ ----------- Dwek Branches, LLC $14,638,167 $18,125,863 Dwek Assets, LLC $21,096,393 $16,510,850 WLB Center, LLC $6,012,081 $3,652,480 Dwek Properties, LLC $17,809,448 $23,403,588 Neptune Medical, LLC $3,206,961 $2,865,749 Dwek Raleigh, L.L.C. $6,250,291 $5,120,286 Greenwood Plaza $7,384,944 $5,332,924 Acquisitions LLC Sinking Springs II, L.L.C. $4,317,585 $2,676,477 Sinking Springs, L.P. $3,958,181 $3,919,222 1631 Highway 35, L.L.C. $969,824 $235,379 167 Monmouth Road, L.L.C. $2,010,780 $782,872 2100 Highway 35, L.L.C. $3,364,561 $20,126,806 230 Broadway, L.L.C. $1,024,775 $5,411,444 264 Highway 35, L.L.C. $804,745 $422,973 374 Monmouth Road, L.L.C. $756,984 $5,115,620 55 North Gilbert, L.L.C. $5,100,907 $3,618,102 601 Main Street, L.L.C. $2,486,713 $5,000,000 6201 Route 9, L.L.C. $1,500,048 $1,136,975 Aberdeen Gas, L.L.C. $300,100 $75 Bath Avenue Holdings, L.L.C. $427,386 $5,002,253 Belmar Gas, L.L.C. $902,777 $7,000,000 Berkeley Heights Gas, L.L.C. $3,765,774 $9,590,389 Brick Gas, L.L.C. $569,110 $0 Dover Estates, L.L.C. $5,000,000 $2,078,935 Dwek Gas, L.L.C. $3,909,148 $3,000,000 Dwek Hopatchung, L.L.C. $901,509 $645,506 Dwek Income, L.L.C. $8,491,631 $12,071,262 Dwek Ohio, L.L.C. $630,065 $504,185 Dwek Pennsylvania, L.P. $1,505,779 $1,142,160 Dwek Wall, L.L.C. $4,283,804 $2,213,029 Dwek Woodbridge, L.L.C. $4,995,979 $2,863,687 Kadosh, L.L.C. $900,121 $750,395 Lacey Land, L.L.C. $850,027 $290,075 Monmouth Plaza, L.L.C. $752,829 $399,380 P&Y Holdings, L.L.C. $637,630 $338,640 Sugar Maple Estates, L.L.C. $7,520,388 $5,472,159 West Bangs Avenue, L.L.C. $500,536 $248,343 Beach Mart, L.L.C. $855,318 $5,468,135 A list of 180 largest unsecured creditors for the debtor- affiliates that filed before August 24, 2007, is available for free at http://researcharchives.com/t/s?232f A. WLB Center, LLC's List of its Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Property $1,310 Management, LLC Management 167 Monmouth Road Oakhurst, NJ 07755 JCP&L Unknown P.O. Box 3687 Akron, OH 44309-3687 NJ American Water Co. Unknown P.O. Box 371331 Pittsburgh, PA 15250-7331 NJNG Unknown P.O. Box 1378 Belmar, NJ 07715-0001 B. Asbury Gas, LLC's List of its Seven Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Brinkerhoof Environmental Environmental $122,415 Services Services at former 1913 Atlantic Avenue Gulf Service Suite R5 Station Manasquan, NJ 08736 Capital Property Property Management $4,000 Management, LLC 167 Monmouth Road Oakhurst, NJ 07755 Dickstein Associates Agency Insurance $2,844 4001 Asbury Avenue Neptune, NJ 07753 JCP&L Utilities $129 NJ DEP Unknown Township of Neptune $785 Sewer Authority Rent-A-Fence, Inc. $196 C. Jemar Enterprises, LLC's List of its Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Coastal Property Property $120 Maintenance, LLC Maintenance 167 Monmouth Road Oakhurst, NJ 07755 Cutting Edge Lawn Service, LLC $350 17 Tall Oaks Drive Hazlet, NJ 07730 NJ DEP Unknown 401 East State Street Trenton, NJ 08625 D. Melville Dwek, LLC's List of its Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Property $4,000 Management, LLC Management 167 Monmouth Road Oakhurst, NJ 07755 NJ DEP Unknown 401 East State Street Trenton, NJ 08625 E. Newport WLB, LLC's List of its 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Penn Federal Savings Bank $45,074 [unknown address] Key Equipment Finance Co. $4,824 P.O. Box 203901 Houston, TX 77216-3901 NJ American Water Co. $2,011 P.O. Box 371331 Pittsburgh, PA 15250-7331 Cutting Edge Lawn $1,696 Service, LLC Kleen Rite $1,353 Morris County Elevator $198 NJ Natural Gas Co. $171 JRG Termite & Pest Control Tenant $128 Dew Drop Lawn Sprinklers, LLC $53 Meridian Health Realty Corp. Tenant Unknown Dr. Christian Pierson Tenant Unknown Sovereign Bank Tenant Unknown F. Red Bank Gas, LLC's List of its Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Property $4,000 Management, LLC Management 167 Monmouth Road Oakhurst, NJ 07755 DMR Lawns & Landscapes, Inc. Landscaping $1,160 28 Broad Street Eatontown, NJ 07724 Coastal Property Property $883 Maintenance, LLC Management 167 Monmouth Road Oakhurst, NJ 07755 NJ DEP Unknown 401 East State Street Trenton, NJ 08625 G. WLB Highway, LLC and Tinton Falls Land, LLC do not have any creditors who are not insiders. D. Copper Gables, LLC's List of its Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Shore Mechanical Services $1,541 407 N. Riverside Drive Neptune, NJ 07753 N.J. American Water Co. Utilities $1,072 Box 371331 Pittsburgh, PA 15250-7331 J.C.P.&L. Utilities $1,070 P.O. Box 3687 Akron, OH 44309-3687 Cutting Edge Lawn Service, Landscaping $1,070 L.L.C. Coastal Property Maintenance, Property $389 L.L.C. Maintenance E. Dwek Homes, LLC's List of its 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Township of Lakewood 1745 Ridge Unknown 212 Fourth Street Avenue, Lakewood, NJ 08701 Lakewood, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement Agreement; value of security: $345,000 178 Williamsburg Unknown Lane, Lakewood, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement Agreement; value of security: $165,000 335 Woodlake Unknown Manor Drive, Lakewood, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement Agreement; value of security: $155,000 627 River Avenue, Unknown Lakewood, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement Agreement; value of security: $275,000 Coventry Square Condominium $1,085 Association 445 East Kennedy Boulevard Lakewood, NJ 08701 Coastal Property Maintenance, $963 L.L.C. 167 Monmouth Road Oakhurst, NJ 07755 N.J. Natural Gas Co. $28 David Shoenfeld Lease Unknown Oscar Rugama Lease Unknown Pablo Ortega Lease Unknown Raul Gonzalez Lease Unknown Rosalina Vega Lease Unknown Senaia Rosonicic Lease Unknown Tia Askew Lease Unknown Tiffany Strand Lease Unknown Tisha Covington Lease Unknown Capital Property Management, Property Unknown L.L.C. Management Dickstein Associates Agency insurance Unknown F. Myrtle Avenue Land, LLC does not have any creditors who are insiders. G. Dwek Wall Gas, LLC's List of its Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Management, Property Unknown L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 Dickstein Associates Agency insurance Unknown 4001 Asbury Avenue Neptune, NJ 07753 H. Grant Avenue Estates, LLC's List of its Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Management, Property $4,000 L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 Franey Muha Alliant $3,939 Hochberg, Addeo & Associates, $670 L.L.C. Coastal Property Maintenance, Property $264 L.L.C. Maintenance Dickstein Associates Agency $250 I. Neptune City Stores, LLC's largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Management, Property $6,200 L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 J. 170 Broad, LLC's largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tax Collector Commercial unknown Township of Red Bank Building located 90 Monmouth Street at 170 Broad Red Bank, NJ 07701 Street, Red Bank, NJ Property held by Joseph Dwek and Yeshua, L.L.C., transferred pursuant to Interim Settlement; value of security: $2,900,000; value of senior lien: $1,394,810 J.C.P.&L. Utilities $4,923 P.O. Box 3687 Akron, OH 44309-3687 Fly by Night Cleaning Service Trade debt $786 K. Dwek Land, LLC's Eight largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Property Management, Property $4,000 L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 The Hartford $1,931 P.O. Box 580 Hartford, CT 06104-2907 Miller Lawn Care Service, $481 L.L.C. 200 Court Place Brick, NJ 08723 Dickstein Associates Agency $100 Brick Township Municipal Utilities $91 Authorities New Jersey American Water Co. $8 New Jersey Natural Gas Co. $5 J.C.P.&L. $2 L. Dwek Motors, LLC's Five largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Coastal Property Maintenance, Property $749 L.L.C. Maintenance - J. 167 Monmouth Road Dwek Oakhurst, NJ 07755 Capital Property Management, Property $500 L.L.C. Management 167 Monmouth Road Oakhurst, NJ 07755 Cutting Edge Lawn Service, Landscaping,- J. $428 L.L.C. Dwek 17 tall Oaks Drive Hazlet, NJ 07730 The Cumberland Insurance Group Property insurance $352 - J. Dwek Atlantic Lock & Safe J. Dwek $80 M. Monmouth Consulting Services, LLC's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Township of Neptune 1335 -10th Avenue Unknown 25 Neptune Boulevard Neptune, NJ; Neptune, NJ 07753 value of security: $600,000 SPX CORP: Earns $92.9 Million in Third Quarter Ended Sept. 30 ------------------------------------------------------------- SPX Corporation reported Wednesday results for the third quarter ended Sept. 30, 2007. Net income was $92.9 million compared with a loss of $48.1 million in the year-ago quarter. The year-ago quarter included a loss from discontinued operations of $98.8 million related primarily to the loss on the discontinuance of Contech. The current quarter included $19.1 million of income tax benefits from the settlement of certain tax matters and reductions in certain foreign statutory tax rates, which contributed to an effective tax rate for the quarter of 13.1%. Revenues increased 19.3% to $1.23 billion from $1.03 billion in the year-ago quarter. Organic revenue growth was 13.2%, while completed acquisitions and the impact of currency fluctuations increased reported revenues by 3.4% and 2.7%, respectively. Segment income and margins were $166.3 million and 13.5%, compared with $137.4 million and 13.3% in the year-ago quarter. The increase in segment income and margins was driven primarily by increased demand for the company's power and energy infrastructure products. Net cash from continuing operations was $37.1 million, compared with $108.5 million in the year-ago quarter. Free cash flow from continuing operations was $18.6 million, compared with $91.0 million in the year-ago quarter. The decline in cash flow was due primarily to investments in working capital to support growth. Chris Kearney, chairman, president and chief executive officer said, "Our focus on power and energy infrastructure continued to drive strong organic growth in the third quarter, and we are pleased with the solid margin improvement in three of our four segments. As expected, our Test and Measurement segment continues to experience difficulties related to the domestic automotive market." Kearney continued, "We exceeded our earnings per share expectations for the third quarter, and are raising our full year adjusted diluted net income per share guidance range to $4.70 to $4.80 from the previous range of $4.50 to $4.70." "In addition, we have announced a definitive agreement to acquire APV, a global manufacturer of process equipment and engineering solutions, from Invensys PLC. This will expand our global reach and footprint, particularly for the sanitary flow markets. We expect this acquisition, along with our growing exposure to global infrastructure, to drive significant value for SPX in 2008 and beyond," Kearney concluded. Discontinued Operations During the third quarter of 2007, the company committed to a plan to divest its air filtration product line, which was previously reported in the Flow Technology segment. It is anticipated that a sale will be completed in the first half of 2008. The financial condition, results of operations, and cash flows of the air filtration product line have been reported as discontinued operations. As a result of the planned divestiture, the company recorded a net charge of $11.0 million during the quarter to "Loss on disposition of discontinued operations, net of tax" in order to reduce the net assets to be sold to their estimated realizable value. In addition, during the third quarter of 2007, the company recognized an income tax benefit of $11.8 million to "Loss on disposition of discontinued operations, net of tax" relating to corrections to income taxes associated primarily with gains on certain dispositions during 2005. At Sept. 30, 2007, the company's consolidated balance sheet showed $5.30 billion in total assets, $3.46 billion in total liabilities, $7.8 million in minority interest, and $1.83 billion in total shareholders' equity. Credit Facility Refinancing On Sept. 21, 2007, the company disclosed that it had entered into new syndicated senior secured credit facilities in an aggregate amount of $2.3 billion, comprised of the following: - a five year term loan facility in an aggregate principal amount of $750 million, - a five year global multi-currency revolving credit facility available for loans up to the equivalent of $200 million, - a five year domestic revolving credit facility, available for loans and letters of credit, in an aggregate principal amount up to $400 million, and - a five year foreign credit instrument facility, available for performance letters of credit and guarantees, in an aggregate principal amount up to the equivalent of $950 million. The new committed facilities replaced the existing senior secured credit facilities of SPX, which have been terminated. In connection with the termination of the previous facilities, the company incurred charges of $3.3 million in the quarter, including $2.3 million for the write-off of deferred financing fees, $200,000 for an early termination fee, and $800,000 for costs associated with the termination of then-existing interest rate swaps. Share Repurchases During the third quarter of 2007, the company repurchased 2.7 million shares of its common stock for $234.1 million. Year-to-date, the company has repurchased 9.0 million shares of its common stock for $715.9 million. The company's 10b5-1 trading plan announced in May 2007 has been completed. About SPX Corp Headquartered in Charlotte, North Carolina, SPX Corporation (NYSE:SPW) -- http://www.spx.com/-- is a global multi-industry manufacturing company. It provides flow technology, test and measurement products and services, thermal equipment and services, and industrial products and services. Its infrastructure-related products and services include wet and dry cooling systems, thermal service and repair work, heat exchangers and power transformers into the global power market. It has four business segments: Flow Technology, Test and Measurement, and Thermal Equipment and Services, and Industrial Products and Services. SPX CORP: Inks Definitive Pact to Acquire APV from Invensys PLC --------------------------------------------------------------- SPX Corporation disclosed Wednesday that it has entered into a definitive agreement to acquire APV. APV is a division of Invensys PLC, an international industrial automation, transportation and controls group located in London. APV will become a part of SPX's Flow Technology segment. APV's primary products include pumps, valves, heat exchangers and homogenizers for the food, dairy, beverage and pharmaceutical industries. SPX expects the transaction to close by year-end 2007, subject to customary regulatory approvals and closing conditions. SPX has agreed to pay approximately GBP250 million for APV (approximately $510 million). Revenues for APV were about $800 million for the fiscal year ending March 31, 2007. SPX plans to fund the acquisition with a mixture of borrowings and cash on hand. About SPX Corp Headquartered in Charlotte, North Carolina, SPX Corporation (NYSE:SPW) -- http://www.spx.com/-- is a global multi-industry manufacturing company. It provides flow technology, test and measurement products and services, thermal equipment and services, and industrial products and services. Its infrastructure-related products and services include wet and dry cooling systems, thermal service and repair work, heat exchangers and power transformers into the global power market. It has four business segments: Flow Technology, Test and Measurement, and Thermal Equipment and Services, and Industrial Products and Services. SPX CORP: Fitch Affirms BB+ Issuer Default Rating ------------------------------------------------- Fitch Ratings affirmed SPX Corporation's ratings and revised the Rating Outlook to Stable from Positive. -- Issuer Default Rating at 'BB+'; -- Senior secured bank debt at 'BB+'; -- Senior unsecured debt at 'BB+'. At Sept. 30, 2007 SPX had about $1.2 billion of debt outstanding. The revision of the Rating Outlook to Stable reflects the announcement from SPX earlier today regarding its agreement to acquire APV for about $510 million. SPX plans to fund the acquisition with cash and debt which will boost leverage modestly above its target range. APV, a division of Invensys PLC, makes process equipment such as pumps and valves and will become part of SPX's flow technology segment. The transaction is expected to close before the end of 2007. Earlier this year, Fitch had revised the Rating Outlook to Positive based on expectations for continued operating improvements, stronger cash flow and SPX's disciplined financial policies. Fitch's view of SPX's fundamental performance has not changed, but the acquisition of APV will temporarily increase SPX's leverage and delay the company's attainment of a stronger credit profile. SPX is maintaining its long-term leverage target for gross debt/EBITDA at 1.5x to 2x, as defined in its bank agreement. This range is somewhat understated when compared to unadjusted measures. The company plans to reduce gross debt/EBITDA to 2x or less by early 2009 which Fitch believes is realistic given the company's solid operating results and expected benefits from the integration of APV. The ratings also incorporate SPX's diverse business portfolio, its ongoing implementation of comprehensive and more-effective business practices across the company, and solid demand in many of its infrastructure and energy markets. SPX has been focused on developing its key markets, and the APV acquisition is consistent with this strategy. During 2007 acquisitions have been relatively modest, but the company made a substantial amount of share repurchases through the first nine months of the year. Future share repurchases are likely to be minimal until SPX reduces leverage. Rating concerns include integration risk related to acquisitions, competitive end-markets, and challenging conditions in the Test & Measurement segment which is exposed to weak demand from North American automotive customers. Additional acquisitions could potentially pressure SPX's ratings, but the company has ample liquidity and cash flow. Fitch anticipates that SPX will continue to maintain a disciplined approach to managing its financial position. In September 2007, SPX refinanced its bank facilities to provide additional liquidity for future growth. The new five-year secured facilities, which total $2.3 billion, include $600 million of revolving credit facilities, a $750 million term loan, and a $950 million foreign letter of credit facility. SPX's liquidity also included $283 million of cash at Sept. 30, 2007. SPX's bank facilities continue to be secured by capital stock which would become secured by substantially all assets if credit ratings on the facilities were to fall to certain levels as defined in the bank agreement. STACK 2006-1: Moody's Junks Rating on $5 Mil. Class VII Notes ------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible downgrade these notes issued by Stack 2006-1 Ltd.: Class Descriptions: -- $55,000,000 Class II Senior Floating Rate Notes due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $49,500,000 Class III Senior Floating Rate Notes due 2046 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade Moody's also Downgrades and Places on review for possible downgrade these notes: -- $11,000,000 Class IV Senior Floating Rate Notes due 2046 Prior Rating: Aa3 Current Rating: A3, on review for possible downgrade -- $11,500,000 Class V Mezzanine Floating Rate Deferrable Notes due 2046 Prior Rating: A2 Current Rating: Ba1, on review for possible downgrade -- $24,000,000 Class VI Mezzanine Floating Rate Deferrable Notes due 2046 Prior Rating: Baa2 Current Rating: B1, on review for possible downgrade -- $5,000,000 Class VII Mezzanine Floating Rate Deferrable Notes due 2046 Prior Rating: Ba1, on review for possible downgrade Current Rating: Caa1, 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 subprime RMBS securities. STONEYBROOK TOWNHOMES: Case Summary & Five Largest Creditors ------------------------------------------------------------ Debtor: Stoneybrook Townhomes, L.L.C. 734 Ordnance Drive Church Hill, TN 37642 Bankruptcy Case No.: 07-51561 Type of Business: The Debtor owns and manages apartments. Chapter 11 Petition Date: October 31, 2007 Court: Eastern District of Tennessee (Greeneville) Debtor's Counsel: Mark S. Dessauer, Esq. Hunter, Smith & Davis 1212 North Eastman Road P.O. Box 3740 Kingsport, TN 37664 Tel: (423) 378-8840 Fax: (423) 378-8801 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Rodger D. Stewart, Jr. loan $1,575,386 Deanna L. Stewart, Kevin S. Stewart, Tonya S. Stewart. Timothy Stewart 214 Reno Street Rogersville, TN 37857 County Clerk 2006 real estate $4,410 Hawkins County, Tennessee taxes 110 East Main Street, Room 204 Rogersville, TN 37857 Tel: (423) 272-7002 City of Church Hill, 2006 real estate $1,589 Tennessee taxes P.O. Box 366 Church Hill, TN 37642 The Citizens Bank of lienholder $0 East Tennessee Thomas Peters, Esq. attorney's fees unknown SUSSER HOLDINGS: Prices $150MM Offering of 10-5/8% Sr. Notes ------------------------------------------------------------ Susser Holdings LLC and Susser Finance Corporation, the subsidiaries of Susser Holdings Corporation, have priced their private offering of $150 million aggregate principal amount of 10-5/8% Senior Notes due 2013. The Notes will be sold to investors at a price of 102.5% of the principal amount thereof, plus accrued interest from June 15, 2007. The Notes will have identical terms to the Issuers' existing 10-5/8% Senior Notes due 2013, of which $120 million aggregate principal amount are currently outstanding. The Notes will bear interest at an annual rate of 10-5/8% and mature on Dec. 15, 2013. The first interest payment on the Notes will be payable on Dec. 15, 2007, and interest will accrue on the Notes from June 15, 2007. The issuers will use the net proceeds from the sale of the Notes, together with borrowings under the Issuers' new revolving credit and term loan facilities, a concurrent sale/leaseback transaction and cash on hand, to fund the acquisition by Susser of TCFS Holdings Inc., a Texas corporation and the parent of the Town & Country Food Stores chain of convenience stores. The Notes offering is scheduled to close on Nov. 13, 2007, subject to satisfaction and waiver of certain conditions, including the concurrent closing of the acquisition of TCFS by Susser Holdings Corporation and the other related financing transactions. About Susser Holdings Corporation Based in Corpus Christi, Texas, Susser Holdings Corporation (NASDAQ: SUSS) -- http://www.susser.com/-- operates more than 320 convenience stores in Texas and Oklahoma under the Stripes and Circle K brands, offering motor fuel, merchandise, food service (under its own Laredo Taco Company brand) and other services. Its wholesale segment purchases branded and unbranded motor fuels from refiners and distributes it to the company's retail convenience stores, contracted independent operators of convenience stores, unbranded convenience stores and commercial users. Susser Holdings Corporation indirect subsidiaries are Susser Holdings LLC and Susser Finance Corporation. * * * As reported in the Troubled Company Reporter on Oct. 31, 2007, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Susser Holdings LLC. At the same time, S&P lowered the company's senior unsecured debt rating to 'B' from 'B+'. All ratings have been removed from CreditWatch, where they were placed with negative implications on Sept. 21, 2007. The outlook is negative. Additionally, Moody's Investors Service confirmed the corporate family rating of Susser Holdings LLC at B1, downgraded the $120 million 10.625% senior note (2013) issue to B3 (LGD-5, 78%) to be consistent with Moody's loss given default methodology following the change in the capital structure, and rated the proposed $150 million add-on to the 2013 notes at B3 (LGD-5, 78%). The rating outlook is stable and the speculative grade liquidity rating remains SGL-2. TALLSHIPS FUNDING: Moody's Cuts Ratings on Two Notes to Low-B ------------------------------------------------------------- Moody's Investors Service placed these notes issued by Tallships Funding, Ltd. on review for possible downgrade: Class Descriptions: -- $360,000,000 Class A-1 Floating Rate Senior Secured Notes due 2047 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $65,000,000 Class A-2 Floating Rate Senior Secured Notes due 2047 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade In addition, Moody's also downgraded and left on review for possible downgrade these notes: -- $50,000,000 Class B Floating Rate Subordinate Secured Deferrable Notes due 2047 Prior Rating: A2 Current Rating: Baa3, on review for possible downgrade -- $37,500,000 Class C Floating Rate Junior Subordinate Secured Deferrable Notes due 2047 Prior Rating: Baa2 Current Rating: Ba2, on review for possible downgrade -- $30,000,000 Class D Floating Rate Junior Subordinate Secured Deferrable Notes due 2047 Prior Rating: Ba1 Current Rating: B2, 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. TARPON INDUSTRIES: Reduces Debt with Sale of Steelbank Unit ----------------------------------------------------------- Tarpon Industries, Inc. had netted $1.3 million in proceeds from the sale of machinery and equipment at its Canadian subsidiary, Steelbank. The proceeds will be used to reduce existing company debt. As reported in the Troubled Company Reporter on Sept. 21, 2007, Tarpon disclosed that Steelbank had filed a Notice of Intention to make a Proposal pursuant to the Bankruptcy & Insolvency Act for the purpose of conducting a sale or liquidation of Steelbank. Steelbank, a producer of mechanical and structural steel tubing, had experienced continuing declining sales and operating losses. For 2006 and the first 6 months of 2007, Steelbank had operating losses of approximately $5,590,000, accounting for approximately 53% of Tarpon's operating loss for the same period. "We are pleased to report that by paying off 100% of Steelbank's debt, Tarpon has improved its balance sheet and has eliminated ongoing operating losses by closing that subsidiary." said James W. Bradshaw, CEO of Tarpon. "More importantly, our company' s attention and energies are galvanized and focused on growing our profitable engineered steel racking systems business, SpaceRak. "Over the last year, Tarpon has broadened its market penetration, particularly within national accounts, by providing quality engineered and customized steel racking solutions and attentive customer service. With the improvements to our balance sheet and operating performance, we can now better harness our resources to take advantage of solid market opportunities to expand our markets and grow Tarpon's SpaceRak business." About Tarpon Industries Headquartered in Marysville, Michigan, Tarpon Industries Inc. (AMEX: TPO) -- http://www.tarponind.com/-- through its wholly owned subsidiaries within the United States and Canada, manufactures and sells structural and mechanical steel tubing and engineered steel storage rack systems. Going Concern Doubt As reported in the Troubled Company Reporter on April 26, 2007, Rehman Robson expressed substantial doubt about Tarpon Industries Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2006. The auditor pointed to the company's sustained recurring net losses since its inception, negative working capital, and default of its principle loan agreements due to its violation of specific financial and non-financial debt covenants. TESORO PETROLEUM: Fitch Says Tracinda Offer Won't Affect Ratings ---------------------------------------------------------------- Fitch Ratings does not anticipate an immediate ratings impact on Tesoro Petroleum Corporation's ratings following the announcement that Tracinda Corporation, led by Kirk Kerkorian, has launched a cash tender for 21.9 million Tesoro shares. If accepted, the tendered shares, added to Tracinda's current 4% stake, would increase Tracinda's total holdings to 20% of Tesoro's common stock. Fitch's current ratings for Tesoro are: -- Issuer Default Rating 'BB+'; -- Bank facility 'BBB-'; -- Senior unsecured notes/debentures 'BB+'. The rating outlook is stable. While the announcement of the tender is not enough to warrant a change in Tesoro's Rating Outlook at this point in time, Fitch notes that the risks to the down side have increased for Tesoro's ratings. Fitch anticipates that the tender, if successful, could raise pressure on management to redirect its free cash flow toward shareholder-friendly activities, an action which could ultimately weaken bondholder protection levels. For the latest 12 months ending June 30, 2007, Tesoro's free cash flow (cash flow from operations - capex - dividends) stood at nearly $1 billion while share buybacks were well below $100 million. While Fitch believes that the announcement is not a positive for bondholders, Fitch also acknowledges that there are many current uncertainties as to how an increased Tracinda stake in the company would ultimately play out, including the ultimate motivations of the buyer, the willingness of the board to fund increased shareholder activities or future acquisitions through leverage, and the refining crack spread environment going forward. As a result, Fitch's Outlook for Tesoro remains Stable at this point. Tesoro's ratings are supported by its improving debt metrics, the scale and diversification benefits created by its recent acquisition of Shell's 100,000 barrels per day Wilmington refinery and retail assets, and the favorable outlook for refining margins, especially in the supply-constrained West Coast market. Offsetting factors include high future capital spending requirements, the possibility of additional leveraging transactions, and the volatility of refining margins. Tesoro owns and operates seven crude oil refineries with a rated crude oil capacity of about 663,000 bpd, including the recently acquired Wilmington refinery in California. Five of Tesoro's refineries are on the West Coast, with facilities in California, Alaska, Hawaii, and Washington. Tesoro also has refineries in Salt Lake City, Utah, and Mandan, North Dakota. Tesoro sells refined products wholesale or through its network of branded retail outlets. THORPE INSULATION: Section 341(a) Creditors Meeting Set on Nov. 27 ------------------------------------------------------------------ The U.S. Trustee for Region 16 will convene a meeting of Thorpe Insulation Co.'s creditors on Nov. 27, 2007, at 10:00 a.m., at 725 South Figueroa Street, Room 2610 in Los Angeles, California. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Based in Long Beach, California, Thorpe Insulation Co. supplied and distributed asbestos thermal insulation in Southern California. The company's products included pipe and boiler insulation, asbestos cloth and insulating mud. The Company filed for chapter 11 protection on Oct. 15, 2007 (Bankr. C.D. Calif. Case No. 07-19271). Jeremy V. Richards, Esq., and Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl & Jones, L.L.P., represent the Debtor. When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts of more than $100 million. TOPANGA CDO: Moody's Lowers Ratings on Three Notes to Low-B ----------------------------------------------------------- Moody's Investors Service placed these notes issued by Topanga CDO II, Ltd. on review for possible downgrade: Class Descriptions: -- $650,000,000 Class S Floating Rate Senior Secured Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $161,000,000 Class A-1 Floating Rate Senior Secured Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: -- $60,000,000 Class A-2 Floating Rate Senior Secured Notes Due 2046 Prior Rating: Aa2 Current Rating: A3, on review for possible downgrade -- $45,000,000 Class B Floating Rate Subordinate Secured Deferrable Notes Due 2046 Prior Rating: A2 Current Rating: Ba2, on review for possible downgrade -- $42,000,000 Class C Floating Rate Junior Subordinate Secured Deferrable Notes Due 2046 Prior Rating: Baa2 Current Rating: B1, on review for possible downgrade -- $20,000,000 Class D Floating Rate Junior Subordinate Secured Deferrable Notes Due 2046 Prior Rating: Ba2 Current Rating: B3, 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. UNITED RENTALS: Provides Update on Unit's Tender Offer ------------------------------------------------------ United Rentals, Inc. disclosed the Total Consideration to be paid with respect to the tender offers and consent solicitations of United Rentals (North America), Inc., the company's wholly owned subsidiary, for URNA's: * outstanding 6-1/2% Senior Notes due 2012, * outstanding 7-3/4% Senior Subordinated Notes due 2013, and * outstanding 7% Senior Subordinated Notes due 2014. The calculation of the Total Consideration is subject to the terms and conditions of the tender offers and consent solicitations, which are being conducted pursuant to URNA's Offer to Purchase and Consent Solicitation Statement and related Consent and Letter of Transmittal, each dated Oct. 16, 2007. The tender offers and consent solicitations are being made in connection with the anticipated merger of RAM Acquisition Corp., an entity indirectly controlled by affiliates of Cerberus Capital Management, L.P., with and into the Company. The consent payment deadline relating to the Notes expired on Oct. 29, 2007 at 5:00 p.m., New York City time. As of the Consent Date, URNA had received tenders of notes and deliveries of related consents from holders of approximately $998 million or 99.8% of the $1 billion aggregate principal amount of the 6-1/2 % Notes outstanding, approximately $517 million or 98.4% of the $525 million aggregate principal amount of the 7-3/4 % Notes outstanding, and approximately $371 million or 99.0% of the $375 million aggregate principal amount of the 7% Notes outstanding. The company reported that, subject to the terms and conditions of the tender offers and consent solicitations, the Total Consideration to be paid by URNA for each $1,000 principal amount of: (i) 6-1/2% Notes validly tendered and not properly withdrawn on or prior to the Consent Date has been fixed at $1,036.83, (ii) 7-3/4% Notes validly tendered and not properly withdrawn on or prior to the Consent Date has been fixed at $1,069.02, and (iii) 7% Notes validly tendered and not properly withdrawn on or prior to the Consent Date has been fixed at $1,064.30. The Total Consideration amounts include the consent payment of $30.00 per $1,000 principal amount of notes tendered. Holders will also be entitled to accrued interest up to, but not including, the settlement date. Holders who have tendered or will validly tender their Notes after the Consent Date, but at or prior to 12:00 midnight November 13, 2007 will not be eligible to receive the Consent Fee. The Total Consideration amounts described above were determined based upon the pricing formula set forth in the Statements and assume a settlement date of Nov. 14, 2007 (which settlement date is subject to change in the event the Expiration Date is extended). The consents are sufficient to effect all proposed amendments to the indentures governing the Notes, as set forth in the Statements. The company anticipates that URNA will execute supplemental indentures effecting the proposed amendments to the indentures governing the Notes shortly. These supplemental indentures will become operative only if URNA accepts the Notes of the applicable series for payment pursuant to the terms of the applicable tender offer. When the amendments become operative, they will be binding on the holders of Notes regardless of whether they have been tendered for purchase in the tender offers. URNA has retained Credit Suisse Securities (USA) LLC, Banc of America Securities LLC, Morgan Stanley & Co. Incorporated and Lehman Brothers Inc. to serve as the Dealer Managers and Solicitation Agents for the tender offers and consent solicitations. Requests for documents may be directed to D.F. King & Co., Inc., the Tender Agent and Information Agent, by telephone at (800) 488-8095 (toll-free) or (212) 269-5550 (collect). Questions regarding the tender offers and consent solicitations may be directed to Credit Suisse Securities (USA) LLC, at (212) 325-4951 (collect), Banc of America Securities LLC, at (888) 292- 0070 (toll-free) or (704) 388-9217 (collect), Morgan Stanley & Co. Incorporated, at (800) 624-1808 (toll-free) or (212) 761-1864 (collect), or Lehman Brothers Inc. at (800) 438-3242 (toll-free) or (212) 528-7581 (collect). About United Rentals Greenwich, Connecticut-based United Rentals Inc. (NYSE: URI) -- http://unitedrentals.com/-- is an equipment rental company with an integrated network of over 690 rental locations in 48 states, 10 Canadian provinces and Mexico. The company's more than 12,000 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent over 20,000 classes of rental equipment with a total original cost of $4.0 billion. United Rentals is a member of the Standard & Poor's MidCap 400 Index and the Russell 2000 Index(R). * * * As reported in the Troubled Company Reporter on Oct. 11, 2007, Fitch Ratings affirmed the long-term Issuer Default Rating at 'BB-' for United Rentals Inc. and United Rentals (North America), Inc. Fitch removed all ratings from Rating Watch negative. The rating outlook is stable. About $2.6 billion in debt was affected by the action. VISTEON CORP: Sept. 30 Balance Sheet Upside-Down by $162 Million ---------------------------------------------------------------- Visteon Corporation disclosed Wednesday third quarter 2007 results. The company's consolidated balance sheet at Sept. 30, 2007, showed $7.119 billion in total assets, $6.993 billion in total liabilities, and $288 million in minority interests in consolidated subsidiaries, resulting in a $162 million total shareholders' deficit. Third quarter 2007 net loss of $109 million was reduced by $68 million compared to the third quarter 2006 net loss of $177 million. Third quarter 2007 results include $14 million of non-cash asset impairments. EBIT-R of negative $33 million was an improvement of $94 million over the negative $127 million EBIT-R reported in the third quarter 2006. These improvements were primarily driven by favorable cost performance resulting from the company's ongoing restructuring and cost-reduction efforts. EBIT-R represents net loss before net interest expense, provision for income taxes and extraordinary item and excludes impairment of long-lived assets and net unreimbursed restructuring charges. For the third quarter 2007, total sales were $2.55 billion, including favorable foreign currency of approximately $100 million. Sales from continuing operations for the third quarter 2006 were $2.58 billion. Product sales to Ford Motor Co. declined 15%, or $163 million, to $893 million, primarily reflecting divestitures, sourcing actions and product mix. Product sales to other customers increased 9%, or $126 million, to $1.52 billion and represented 63% of total product sales. "Our third quarter results show the fundamental improvement we have achieved across our business," said Michael F. Johnston, chairman and chief executive officer. "We are making progress in every aspect of our improvement plan by implementing our restructuring actions as planned and continuing to improve and grow our operations to position Visteon for long-term success." Restructuring Visteon has completed 17 of the 30 previously identified restructuring activities under its three-year improvement plan and has disclosed three additional actions. During the third quarter 2007, Visteon completed the sale of its non-core powertrain operation located in Chennai, India for cash proceeds of $30 million. Visteon made progress implementing the previously disclosed closures of its Connersville and Bedford, Ind., facilities. During the third quarter of 2007, the company reached an agreement with the local labor union at Bedford to cease operations by mid-2008. The company remains on track to cease production at Connersville in December of this year. On Oct. 18, 2007, Visteon disclosed that it had entered into a non-binding memorandum of understanding for the sale its non-core chassis facility located in Swansea, Wales, United Kingdom. The completion of the transaction is subject to customary agreements and approvals and is expected to close by the end of 2007. Upon the completion of the Bedford, Connersville and Swansea actions, 20 of the 30 facilities actions included in the company's restructuring plan will have been addressed. "Our continued success in winning new business from customers around the world speaks to the strength of Visteon's product capability and global engineering and manufacturing footprints," said Donald J. Stebbins, president and chief operating officer. Nine Month 2007 Results For the first nine months of 2007, sales from continuing operations were $8.41 billion including favorable foreign currency of approximately $400 million. Sales from continuing operations for the same period in 2006 were $8.45 billion. During 2007, product sales to Ford declined 14%, or $525 million, to $3.15 billion, reflecting lower North American production volumes, divestitures, sourcing actions and product mix. Sales to other customers increased 11%, or $494 million, to $4.85 billion and represented 61% of total product sales. Visteon reported a net loss of $329 million for the first nine months of 2007 compared with a net loss of $124 million for the same period a year ago. 2007 results include $77 million of non- cash asset impairments compared with $22 million in the same period a year ago. EBIT-R of negative $64 million for the first nine months of 2007 was lower by $128 million when compared to positive $64 million in the same period of 2006. Lower 2007 EBIT-R primarily reflects the non-recurrence of 2006 benefits attributable to the settlement of various post-retirement benefit obligations and customer commercial negotiations, 2007 costs associated with the company's restructuring activities and lower customer volumes and product mix, principally in North America. These factors were partially offset by cost performance and benefits from restructuring actions. Cash Flow and Liquidity Cash used by operating activities totaled $53 million for the third quarter 2007 compared with $34 million a year ago. The increase in cash used by operating activities is primarily a result of an approximately $70 million reduction in receivable sales under the company's European securitization facility. Free cash flow was negative $141 million for third quarter 2007 compared with negative $116 million for the same period in 2006. Visteon used $38 million of cash from operations for the first nine months of 2007 compared with $42 million of cash provided by operations for the first nine months of 2006. For the first nine months of 2007, free cash flow was a use of $270 million, compared with a use of $223 million for the same period a year ago. As of Sept. 30, 2007, Visteon had cash balances totaling $1.4 billion and total debt of $2.7 billion. Additionally, no amounts were drawn on the company's $350 million asset-based U.S. revolving credit facility, and the company had availability under its $325 million European receivables securitization facility of about $140 million. About Visteon Corporation Based in Van Buren Township, Michigan, Visteon Corp. (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic, and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company's other corporate offices are in Shanghai, China; and Kerpen, Germany. The company has facilities in 26 countries and employs approximately 43,000 people. * * * In November 2006, Moody's Investor Service placed Visteon Corp.'s long term corporate family and probability of default ratings at 'B3'. The ratings still hold to date. WACHOVIA AUTO: Fitch Affirms BB Rating on Class E Notes ------------------------------------------------------- Fitch Ratings affirmed all outstanding classes of the Wachovia Auto Loan Owner Trust 2006-2 transaction, as: -- Class A-2 notes at 'AAA'; -- Class A-3 notes at 'AAA'; -- Class A-4 notes at 'AAA'; -- Class B notes at 'AA'; -- Class C notes at 'A'; -- Class D notes at 'BBB+'; -- Class E notes at 'BB'. The securities are backed by a pool of new and used automobile and light-duty truck installment loans originated by Wachovia Bank N.A. The collateral continues to perform within Fitch's expectations. Currently under the credit enhancement structure, the securities can withstand stress scenarios consistent with the rating categories and still make full payments of interest and principal in accordance with the term of the documents. The ratings reflect the servicing capabilities of Wachovia, the high quality of retail auto receivables originated by Wachovia, and the sound legal and cash flow structures. WELLMAN INC: S&P Junks Corporate Credit Rating ---------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Wellman Inc. to 'CCC+' from 'B-' and lowered other ratings on the company. At the same time, S&P placed the ratings on Wellman on CreditWatch with developing implications following the company's announcement that it has engaged an investment bank to explore strategic alternatives. "We will resolve the CreditWatch listing when further information becomes available about the company's plans, including any potential changes in ownership that result from the process," said Standard & Poor's credit analyst Paul Kurias. The CreditWatch with developing implications means that we could raise, lower, or affirm the ratings, depending on developments. "We could raise the rating if a substantially stronger entity were to acquire Wellman or purchase a material ownership interest that supports credit quality," Mr. Kurias said. "Conversely, we could lower the ratings if management were unable to find an interested buyer for the entire business or if Wellman's credit fundamentals deteriorate further during this review process." The downgrade reflects the deterioration in Wellman's financial profile, especially in the third quarter of 2007, following ongoing weakness in key markets for polyethylene terephthalate resin and polyester staple fiber. S&P is also concerned that the ongoing weakness in these markets may further erode the financial profile and constrain liquidity needed to meet Wellman's onerous interest burden, including quarterly cash interest payments of about $13 million. WELLMAN INC: Poor Operating Results Cue Moody's to Junk Rating -------------------------------------------------------------- Moody's Investors Service downgraded Wellman Inc.'s corporate family rating to Caa2 from B3. The downgrade reflects recent deterioration in operating results and potential adverse consequences if the company is not able to refinance its first lien term loan due 2009. The outlook remains negative. This summarizes the ratings changes: Wellman Inc. -- Corporate family rating -- to Caa2 from B3 -- Probability of default rating -- to Caa2 from B3 -- $185mm First lien term loan due 2009 -- to B3 (LGD2, 29%) from B1 (LGD2, 32%) -- $265mm Second lien term loan due 2010 -- to Caa3 (LGD5, 79%) from Caa1 (LGD5, 78%) The downgrade of the corporate family rating reflects the deterioration in operating performance that continued in the third quarter of 2007, after a modest improvement in the second quarter of 2007, and concerns over liquidity and the ability of the company to refinance its term loans. Wellman's third quarter 2007 sales declined 12% year-over-year and the company produced no gross profit during the quarter. Liquidity under its revolving credit facility has declined in the third quarter due to elevated and volatile raw material costs, despite the company having sold its European fibers business in July. The company must refinance its first lien term loan due Feb. 11, 2009, and second lien term loan due Feb. 11, 2010, at least three months prior to their maturities to avoid accelerating the maturity of its revolving credit facility. The negative outlook reflects uncertainties about Wellman's ability to improve its low margins and sufficiently reduce debt with free cash flow and asset sales, maintain sufficient levels of availability under its revolving credit facility (based on third quarter results its availability can not be below $45 million for eight consecutive days) and refinance its first lien term loan due 2009. The outlook also reflects Moody's beliefs that the PET resin industry cash margins may remain depressed due to new capacity additions, the threat of Asian imports and volatile raw material costs. Although the company's liquidity could improve modestly due to one-time cash inflows and low capital expenditure requirements, depressed margins and deteriorating market conditions will likely prevent the company from keeping its fixed charge coverage ratio (as defined in the revolving credit facility) above 1x and when the fixed charge coverage ratio is below 1x, the company is not permitted to have availability under its $225 million revolver lower than $45 million for eight consecutive days or it could result in an event of default under the credit agreement, if not waived by the banks. In Moody's opinion, given the strong collateral coverage on the revolver, Wellman should be able to obtain such a waiver, if required. However, the collateral coverage does not guarantee that they will receive a waiver, especially if the company remains free cash flow negative. The outlook might be moved to stable if the company were successful in refinancing existing debt prior to its maturity, improving liquidity, selling non-core assets, reducing debt, improving its operating margins and industry conditions were supportive of a higher rating. Wellman announced this week that it has hired investment bankers to look at strategic alternatives for the company, which may benefit debtholders. Additionally, the company is expecting to benefit from ongoing restructuring, receipt of insurance proceeds in connection with the damages from Hurricane Katrina and asset sales. While these one-time items would greatly improve the company's liquidity, Wellman ultimately needs to improve its margins and operating cash flows which remain susceptible to raw material volatility and pressure on prices and margins from lower cost competitors and imports. There is little upward pressure on the ratings currently and any future upgrade would require the company to generate meaningful levels of free cash flow and largely reduce the outstanding revolver balance with cash from the one-time items mentioned above. If Wellman remains free cash flow negative, does not generate meaningful cash from the one-time items mentioned above, and was not successful in refinancing its first lien term loan due 2009, Moody's could lower the company's ratings. Wellman manufactures and markets PET (polyethylene terephthalate) packaging resins under the PermaClear brand name and polyester staple fibers under the Fortrel brand name. Wellman operates three manufacturing sites in the US. The company divested the last of its international operations in July 2007 when it sold its European fibers business. Wellman is headquartered in Fort Mill, South Carolina and had revenues from continuing operations of $1.2 billion for the LTM ended Sept. 30, 2007. WENDY'S INT'L: Banks Propose "Highly Conditional" Financing ----------------------------------------------------------- Sale of Wendy's International Inc. could be affected by a financing package its lenders -- J.P. Morgan Chase & Co. and Lehman Brothers Holdings Inc. -- recently disclosed, Janet Adamy of The Wall Street Journal reports, citing a person familiar with the matter. According to WSJ's source, the package, which is anchored by a securitization of the royalty fees franchisees pay Wendy's, allows the lenders to back out should financing conditions worsen. Calling the financing as "highly conditional," WSJ's source believes such term could lower bids or make bidders think twice about proceeding. The Troubled Company Reporter earlier said that among the entities interested in buying the company is Cedar Enterprises Inc., a Columbus, Ohio-based franchisee which owns 134 Wendy's restaurants. A group formed by Fidelity National Financial Inc., Thomas H. Lee Partners LP, Oaktree Capital Management LP, and Ares Management LLC also joined to bid for the company, which group, WSJ says, is expected to rely on the banks' financing package. Further in the list is Mr. Nelson Peltz, the chairman of Triarc Companies Inc., who said Triarc's offer could range from $37.00 to $41.00 per share, and which could increase further depending on due diligence results. Wendy's decided to sell the business in June 2007 to "minimize disruption to the company and its operations." 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+'. WEST TRADE: Moody's Lowers Ratings on Two Notes to Low-B -------------------------------------------------------- Moody's Investors Service placed these notes issued by West Trade Funding CDO II Ltd. on review for possible downgrade: Class Descriptions: -- $375,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $50,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $103,000,000 Class A-4 Fourth Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $26,000,000 Class B Fifth Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade -- $11,000,000 Class C Sixth Priority Senior Secured Floating Rate Notes due 2051 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: -- $13,000,000 Class D Seventh Priority Secured Deferrable Floating Rate Notes due 2051 Prior Rating: A2 Current Rating: Ba2, on review for possible downgrade -- $13,000,000 Class E Eighth Priority Mezzanine Deferrable Floating Rate Notes due 2051 Prior Rating: Baa2 Current Rating: B2, on review for possible downgrade -- $4,500,000 Class F Ninth Priority Mezzanine Deferrable Floating Rate Notes due 2051 Prior Rating: Ba1 Current Rating: Caa2, 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. WETCO RESTAURANT: Section 341(a) Creditors Meeting Set for Nov. 20 ------------------------------------------------------------------ The U.S. Trustee for Region 5 will convene a meeting of WETCO Restaurant Group, LLC's creditors on Nov. 20, 2007, at 11:00 a.m., at 214 Jefferson Street, Room 341, 3rd Floor in Lafayette, Louisiana. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Baton Rouge, Louisiana, WETCO Restaurant Group, LLC -- http://www.wetcorestaurantgroup.com/-- operates Quick- Service Restaurants. The company owns and operates 34 Church's Chicken restaurants: three in Chattanooga, Tennessee, and 31 in Louisiana. The company filed for chapter 11 protection on Sept. 28, 2007 (Bankr. W.D. La. Case No. 07-51169). When the Debtor filed for protection from its creditors, it listed total assets of $3,761,051 and total debts of $15,308,635. WETCO RESTAURANT: Wants Tom St. Germain as Bankruptcy Counsel ------------------------------------------------------------ WETCO Restaurant Group, LLC, asks the U.S. Bankruptcy Court for the Western District of Louisiana for permission to employ the Law Offices of Tom St. Germain, LLC, as its bankruptcy counsel. The Debtor tells the Court that John Haas Weinstein, Esq., and Tom St. Germain, Esq., both attorneys of the firm, will be the lead professionals for this engagement. As counsel, the firm will: (a) give the Debtor legal advice with respect to the Debtor's powers and duties as debtor-in-possession in the continued operation of the Debtor's business and management of the Debtor's property and (b) perform all legal services for the debtor-in-possession as may be necessary herein. The Debtor discloses that the firm has received as $51,079 retainer. Mr. Weinstein assures the Court that his firm is a "disinterested person" as that term is defined in the Bankruptcy Code. Headquartered in Baton Rouge, Louisiana, WETCO Restaurant Group, LLC -- http://www.wetcorestaurantgroup.com/-- operates Quick- Service Restaurants. The company owns and operates 34 Church's Chicken restaurants: three in Chattanooga, Tennessee, and 31 in Louisiana. The company filed for chapter 11 protection on Sept. 28, 2007 (Bankr. W.D. La. Case No. 07-51169). When the Debtor filed for protection from its creditors, it listed total assets of $3,761,051 and total debts of $15,308,635. WILLIAMS SCOTSMAN: Moody's Withdraws B1 Corporate Family Rating --------------------------------------------------------------- Moody's Investors Service withdrew all ratings on Williams Scotsman, Inc. upon the announcement of the completion of the merger of a subsidiary of Ristretto Group S.a.r.l. with and into Williams Scotsman International Inc. As a part of the transaction, the company has fully redeemed the $450 million 8.5% Senior Notes due 2015. In addition, the company's $650 million senior secured bank credit facility will be paid-off and terminated. As noted in the Moody's press release dated July 19, 2007, a potential outcome of the review was a withdrawal of all ratings if all of the rated debt at the company was redeemed as a result of the merger. These ratings were withdrawn: Williams Scotsman Inc. -- Corporate Family (previously rated B1) -- Senior Secured Credit Facility (previously rated B1) -- Senior Unsecured Notes (previously rated B2) Williams Scotsman International Inc. is headquartered in Baltimore, Maryland, and is a provider of modular space solutions in North America and Europe. WILLIAMS SCOTSMAN: Ristretto Deal Cues S&P to Withdraw Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services removed its 'BB-' long-term corporate credit and other ratings on Williams Scotsman Inc. from CreditWatch with developing mplications and withdrew all ratings on the company. The rating action follows Williams Scotsman's Oct. 31, 2007, merger with Ristretto Acquisition Corp., a wholly owned subsidiary of unrated Ristretto Group S.a.r.l. Williams Scotsman International Inc. will be the surviving corporation. Ratings were withdrawn upon the redemption of Williams Scotsman's outstanding rated debt in conjunction with the merger. WP EVENFLO: Moody's Affirms B2 Corporate Family Rating ------------------------------------------------------ Moody's Investors Service affirmed WP Evenflo Holdings Inc.'s B2 corporate family rating. Moody's also affirmed the B1 rating on the company's first lien senior secured credit facilities and the Caa1 rating on its second lien senior secured term loan. This ratings action follows the company announcement that it plans to acquire Ameda Breastfeeding Products from Hollister Incorporated. Ameda is a leading provider of professional grade breast pumps and accessories for hospitals and other institutional channels. Evenflo will fund the transaction with a combination of cash, revolving credit facility borrowings, and through the issuance of preferred and common equity. The transaction is expected to close in January 2008. The ratings outlook remains stable. Ratings affirmed: -- Corporate family rating at B2; -- Probability-of-default rating at B2; -- $40 million senior secured revolving credit facility due 2012 at B1 (LGD3, 36%). Point estimate revised from (LGD3, 34%); -- $120 million first lien senior secured term loan due 2013 at B1 (LGD3, 36%). Point estimate revised from (LGD3, 34%); -- $45 million second lien senior secured term loan due 2014 at Caa1 (LGD5, 83%). Point estimate revised from (LGD5, 80%). The affirmation of Evenflo's B2 the rating is supported by Moody's estimate that the acquisition will not worsen Evenflo's credit metrics with pro forma debt to EBITDA standing at 7 times as of June 30, 2007 (including Moody's standard analytical adjustments, assumed EBITDA from the acquisition, and treating 50% of the preferred equity as debt). The rating is also supported by the strong strategic rationale for the acquisition, which diversifies Evenflo's customer channels, expands the company's presence in premium products, and provides access to a recognized brand name within the hospital and institutional channel. However, Moody's notes that the transaction weakens the company's financial flexibility, including its liquidity. Specifically, on a pro forma basis (adjusting for the acquisition), Moody's expects the company would only have $8 million available under its $40 million revolving credit facility, after factoring in $20 million of planned revolver borrowings and $12 million in commitments for standby letters of credit. Moreover, the size of this transaction is significant given the full purchase price and the fact that it's occurring so soon after the leveraged buyout by Weston Presidio earlier this year. As such, Moody's is concerned that the transaction reduces the company's financial flexibility at a time when the credit market is weak. Moody's understands that the company should have a significant cash balance and undrawn revolving credit facility prior to closing the transaction. As per the credit agreement, the company is allowed to add back Ameda's assumed EBITDA in calculating the financial covenants governing the credit facilities. The B2 rating is driven by Evenflo's highly leveraged profile, weak interest coverage, material qualitative risks that include substantial customer concentration, the mature nature of the juvenile/infant product category, competition from well capitalized companies, and its somewhat narrow, albeit significantly improved, operating margins. Additional concerns include the potentially high cost associated with product recalls (although recognizing that the company has not had any major recalls over the last few years), general product liability risk, and the potential media influence on brand equity. Notwithstanding these concerns, the rating favorably considers Evenflo's leading position as a seller of infant and juvenile products with number one and two positions in many product categories, a comprehensive product portfolio that addresses a variety of infant/juvenile needs, strong brand recognition among expectant mothers, improvements in operating performance over the last few years, long-standing relationships with key retail customers, and organic growth opportunities with existing customers and internationally, notably in Mexico. The stable ratings outlook reflects Moody's expectation that revenue growth and productivity initiatives will translate into improved earnings, such that Evenflo will sustain a debt to EBITDA below 7 times and EBITA coverage of interest expense above 1 times. The outlook also reflects Moody's expectation that the company will sustain at least breakeven levels of free cash flow and maintain adequate liquidity, including availability under its revolving credit facility. Headquartered in Vandalia, Ohio, Evenflo is a leading provider of infant and juvenile products to key retailers such as Toys "R" Us, Wal-Mart, Target, and K-Mart. The company operates under one operating segment and products are classified within four different categories: car seats, on-the-go, feeding, and playtime. Sales were $353 million for the twelve months ended June 30, 2007. * BOOK REVIEW: Dangerous Pursuits - Mergers and Acquisitions in the Age of Wall Street --------------------------------------------------------------- Authors: Walter Adams and James W. Brock Publisher: Beard Books Softcover: 222 pages List Price: $34.95 http://www.amazon.com/exec/obidos/ASIN/1587981890/internetbankrupt First published in 1989, Dangerous Pursuits - Mergers and Acquisitions in the Age of Wall Street analyzes central concerns raised by the flurry of mergers, acquisitions, takeovers, and buyouts as the twentieth century drew to a close. This was a period of great economic vitality that challenged conventional theories and practices. Economists battled over the best way forward. It was a period of time when "coalition capitalism" was offered as an alternative to "cowboy capitalism" - that is, the belief in economic laissezfaire. As set forth by the authors, "Coalition capitalism, grounded in 'industrial policy,' is the neoliberal Left's riposte to the cowboy capitalism of the Right." Coalition capitalism takes the approach that "planning can be used to improve [a country's] market performance." The authors strive to present a balanced portrayal of the engineers of this economic growth - those individuals behind the mergers and acquisitions. To some, they were "predators, piranhas, greenmailers." Others, however, see T. Boone Pickens, Carl Icahn, Ivan Boesky, and others as "necessary catalysts for shaking up stodgy managements and for restoring giant corporations to their owners, the shareholders." Even the term "greed" is subject to debate. As a motivation for mergers, "greed is good" - as notably voiced by the character Gordon Gekko in the movie Wall Street - was an opinion apparently shared by Ivan Boesky, who told a college graduating class that "greed is all right." On the other hand, Henry Kravis, a top Wall Street leveraged-buyout strategist is quoted as saying, "Greed really turns me off." In discussing the many opinions regarding mergers and acquisitions, Dangerous Pursuits gives the reader a complete picture of a time when the American economy, workplace, and society were transformed. But the authors make no secret that they are concerned that mergers are weakening American business and society. Their position is substantiated in chapters on the effects of mergers from a macro and micro perspective. In a chapter entitled "The Macro Record," Adams and Brock step back from viewing mergers in terms of the parochial interest of the players and look at the "merger game" through the lens of the national interest. Shorn of media hype, the authors find that the "merger game" undermines advances in productivity, obstructs technological development, and weakens competitiveness. What the "game" does do is earn outsized, quick profits for the specialists, lawyers, financiers, and bankers who engage in it. In the chapter "The Micro Record," the authors look at how mergers have affected particular airlines, steel companies, and conglomerates. From this micro perspective, they find that the benefits touted by those with "parochial interests" do not materialize. At best, the mergers, acquisitions, takeovers, and buyouts are seen as impeding the economy from moving ahead. At worst, Taylor and Brock see an "addiction to mergeritis." No one argues that mergers did not produce large profits for some. The authors warn, however, that such success is a "slow and secret poison" to the U.S. economy. One-time President of Michigan State University where he also taught, Walter Adams also taught at European universities, appeared as an expert on economics before Congressional committees, and published other books. James W. Brock has been a member of the economics department faculty at Miami University in Ohio for more than 20 years, and is the coauthor with Walter Adams on several books. ********* 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. Chapman, Editors. Copyright 2007. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***