/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/071112.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, November 12, 2007, Vol. 11, No. 268 Headlines ABFC TRUST: S&P Downgrades Ratings on 26 Certificate Classes ACCESS PHARMA: Arranges a $19.5 Million Recapitalization ALLTEL CORP: Increased Leverage Cues S&P to Cut Rating to B+ ALPHA MEZZ: Moody's Puts B1 Rating Under Review for Likely Cut ALTIUS III: Poor Credit Quality Cues Moody's to Review Ratings AMERIQUEST MORTGAGE: Delinquent Loans Cue Moody's to Junk Ratings AMP AA: Moody's Junks Note Ratings Due to Credit Quality Decline AMP AA: Poor Credit Quality Prompts Moody's to Junk Note Ratings AMP CDO: Moody's Downgrades Rating on $200 Million Notes to Ba1 APP PHARMACEUTICALS: Moody's Assigns Ba3 Corporate Family Rating APP PHARMACEUTICALS: High Debt Leverage Cues S&P's "BB" Rating ARCA 2006: Poor Credit Quality Cues Moody's to Junk Note Ratings ARCA FUNDING: Moody's Puts Six Junk-Rated Notes Under Neg. Watch ARINC INC: S&P Rates $575 Million Credit Facility at B+ ASSET SECURITIZATION: Loan Payoff Cues Fitch to Lift Ratings AVADO BRANDS: Selling All Assets Without Stalking Horse Bidder AVENTINE HILL: Moody's May Further Cut B2 Rating on $19.5MM Notes BANC OF AMERICA: Moody's Holds Ba3 Rating on $2 Mil. Certificates BARCLAYS CAPITAL: S&P Puts 'BB+' Rating Under Developing Watch BERNOULLI HIGH: Moody's Puts Ba3-Rated Notes Under Negative Review BI-LO LLC: S&P Holds 'B' Rating and Removes Developing Watch BLUE JAY: Moody's Rates Proposed Senior Credit Facility at B1 BOMBAY CO: Sells Headquarters to Goff Capital for $16.35 Million BON-TON STORES: Weak Sales Cue S&P to Lower Credit Rating to B BRANDYWINE REALTY: Inks $245.4 Million Deal with DRA Advisors BRISTOW GROUP: Prices $50 Mil. Offering of 7-1/2% Senior Notes BUCKINGHAM CDO: Moody's Cuts Rating on $13.5 Million Notes to Ba2 BUFFETS INC: Higher Default Risks Prompt Moody's to Junk Ratings CABLEVISION SYS: Sept. 30 Balance Sheet Upside-Down by $5.13 Bil. CAIRN MEZZ: Moody's Places Ba3-Rated Notes Under Negative Watch CALLIDUS DEBT: S&P Puts 'BB' Preliminary Rating on $25.5MM Notes CAPITAL AUTO: Fitch To Put BB Rating on $7.963MM Class D Trust CAPITAL AUTO: Moody's Rates $7,963,000 Class D Notes at (P)Ba1 CAPITAL AUTO: S&P Assigns 'BB' Prelim. Rating on $7.963MM Notes CAREEL BAY: Moody's May Further Cut Caa3 Rating on $10 Mil. Notes CARINA CDO: S&P Junks Ratings on 10 Certificate Classes CARMIKE CINEMAS: Moody's Holds B2 Corporate Family Rating CASH TECHNOLOGIES: Receives Noncompliance Notice from AMEX CENTRE SQUARE: Moody's Junks Rating on $30 Million Class E Notes CHARLES FORT: Moody's Places Caa3 Rating Under Negative Review CHARTER COMMS: Sept. 30 Balance Sheet Upside-Down by $7.334 Bil. CHRYSLER LLC: S&P Holds 'B' Rating and Removes Positive Watch CLASS V FUNDING: Moody's Junks Ratings on $90 Million Notes CLEAR CHANNEL: Earns $279.7 Million in 3rd Quarter Ended Sept. 30 CLEAR CHANNEL: Providence Mulls Rescinding $1.2 Billion Contract CLIFTON I: Moody's Places Caa3-Rated Notes Under Negative Review COMPASS DIVERSIFIED: Earns $4.4 Million in 3rd Qtr. Ended Sept. 30 COMPASS DIVERSIFIED: Moody's Assigns Ba3 Corporate Family Rating COMPASS MINERALS: Sept. 30 Balance Sheet Upside-Down by $769 Mil. CONNACHER OIL: Pod 1 Commissioning Cues S&P to Lift Rating COOKSON SERIES: Poor Credit Quality Cues Moody's Negative Action CORONA BOREALIS: Moody's Lowers Rating on $70 Million Notes to B1 DALTON CDO: Moody's Pares Rating on $18 Million Notes to Ba2 DEAN FOODS: Earns $6.5 Million in Third Quarter Ended Sept. 30 DELPHI CORP: Disclosure Statement Hearing Continued to Nov. 29 DIOGENES CDO: Moody's Junks Rating on $6.5 Million Class E Notes DUKE FUNDING: Moody's Puts Ba3-Rated Notes Under Negative Review DUNMORE HOMES: Files for Chapter 11 Protection in New York DUNMORE HOMES: Case Summary & 20 Largest Unsecured Creditors DURA AUTOMOTIVE: Court Approves $425 Million Exit Financing EMISPHERE TECH: Earns $3 Million in Quarter Ended September 30 FAB US: Poor Credit Quality Prompts Moody's Junk Note Ratings FEDERAL-MOGUL: Court Confirms Fourth Amended Reorganization Plan FIRST UNION: Credit Support Erosion Cues S&P to Lower Ratings FORD MOTOR: Post $380 Million Net Loss in 3rd Qtr. Ended Sept. 30 FREMONT GENERAL: Earns $18.3 Million in 3rd Quarter Ended Sept. 30 G-I HOLDINGS: Court OK's Appointment of Examiner to Probe Tersigni GEOKINETICS INC: Completes $25 Mil. Lease Facility with CIT Group GEORGIA GULF: Decline in PVC Unit Cues Moody's to Take Neg. Action GREEN TREE: S&P Puts Default Rating on Cl. B-1 Senior Certificates GSAMP TRUST: Moody's Junks Ratings on Four Certificate Classes GSR MORTGAGE: Moody's Puts Low-B Ratings on Two Cert. Classes HALCYON SECURITIZED: Moody's Rates Three Cert. Classes at Low-B HARRAH'S ENT: Indiana Gaming Commission Approves Apollo Buyout HOBOKEN WOOD: Opts to Liquidate Assets Under Chapter 7 HOBOKEN WOOD: Voluntary Chapter 7 Case Summary HOMBANC CORP: Wants Exclusive Plan Filing Period Moved to April 7 HOMEBANC CORP: Court Okays Drinker Biddle as Panel's Del. Counsel HOMEBANC CORP: Judge Carey Approves $61 Million Loan Sale to EMC HOUT BAY: Moody's Holds Low-B Ratings on $10 Million Notes HSPI DIVERSIFIED: Moody's Junks Rating on $6 Million Notes IMAC CDO: Bad Credit Quality Spurs Moody's Junk Note Rating IMAC CDO: Moody's May Further Cut Junk Rating on $20 Million Notes INGRAM MICRO: Board Approves $300 Million Repurchase of Shares INVERNESS MEDICAL: To Publicly Offer 7 Million of Common Stock INPHONIC INC: Files Ch. 11 Petition to Implement Versa Sale Deal INPHONIC INC: Case Summary & 20 Largest Unsecured Creditors ISCHUS MEZZANINE: Moody's Junks Ratings on $37.5 Million Notes IXION PLC: Moody's Junks 5 Note Ratings Over Poor Credit Quality JUPITER HIGH: Moody's Junks Ratings on Three Classes of Notes LAWRENCE SALANDER: Files for Bankruptcy in New York LAWRENCE SALANDER: Case Summary & 19 Largest Unsecured Creditors LB UBS: Moody's Lifts Rating on $3 Million Class T Certs. to Caa2 LEVITT & SONS: Files Chapter 11 Petition in Florida LEVITZ FURNITURE: Files for Chapter 11 Protection in New York LEVITZ FURNITURE: Case Summary & 20 Largest Unsecured Creditors LIBERTAS PREFERRED: Moody's Puts Ba3-Rated Notes Under Neg. Watch LONGPORT FUNDING: Moody's Junks Ratings on $38,250,000 Notes LOUISIANA LOCAL: Moody's Puts Ba3 Rating on $250 Million Bonds MARCAL PAPER: Wants Proposed Asset Sale Procedure Approved MARS CDO: Poor Loan Quality Prompts Moody's to Junk Note Ratings MARSICO PARENT: S&P Assigns 'B' Credit Rating with Stable Outlook MEDIACOM COMMS: S&P Places 'BB-' Rating Under Negative Watch MEZZANINE PORTFOLIO: Moody's Junks Rating on $7.5 Million Notes MOVIE GALLERY: Committee Opposes Debtors' Pact w/ Sopris Advisors MOVIE GALLERY: 8 Landlords Object to Lease Rejection Procedures MOVIE GALLERY: Landlords & Committee Object to $150MM DIP Loan MORGAN STANLEY: Moody's Holds Low-B Ratings on Five Cert. Classes NABI BIOPHARMA: Stockholders OK Sale of Assets for $185 Million NEO CDO: Moody's Junks Ratings on Three Certificate Classes NEW ENGLAND CENTER: Moody's Keeps Ba2 Rating on Long-Term Bonds NORDIC VALLEY: May Further Downgrade Low-B Ratings on Three Notes OCTONION I: Moody's Junks Ratings on Four Floating Rate Notes ORION 2006-2: S&P Retains Nine Ratings Under Negative Watch OXFORD INDUSTRIES: Board Approves $60 Million Stock Repurchase PAC-WEST TELECOMM: Plan Confirmation Hearing Deferred to Nov. 19 PAETEC HOLDING: Good Liquidity Cues Moody's to Assign SGL-2 Rating PAUL HOWARD: Case Summary & 19 Largest Unsecured Creditors PHH MORTGAGE: Fitch Rates $200,000 Class B-5 Certificates at B PINE MOUNTAIN: Moody's Places Low-B Ratings Under Negative Watch PLETTENBERG BAY: Moody's Junks Ratings on $19.5 Million Notes POTTSVILLE HOSPITAL: Weak Balance Sheet Cues S&P to Cut Rating PROGRESSIVE BAPTIST: Case Summary & 19 Largest Unsecured Creditors QUAKER FABRIC: Wants To Reject Unexpired Leases Under Gordon Pact QUEBECOR WORLD: Paying Preferred Shares Dividends on December 1 QUEBECOR WORLD: Posts $315 Mil. Net Loss in 2006 Third Quarter RASC SERIES: Moody's Puts Ratings On Neg. Watch Over Expected Loss RESMAE MORTGAGE: Moody's Puts Low-B Ratings on Two Cert. Classes RCN CORPORATION: Moody's Assigns B1 Rating on $200 Mil. Term Loan RIDGEWAY COURT: Moody's Cuts Ratings on Two Cert. Classes to Low-B ROCKBOUND CDO: Moody's Junks Ratings on $65MM Floating Rate Notes SALANDER-O'REILLY: Involuntary Chapter 7 Case Summary SEQUA CORP: Wants to Redeem 2008 Unsecured Notes by December 21 SEQUA CORPORATION: Earns $18,113,000 in Third Qtr. Ended Sept. 30 SEQUA CORPORATION: Moody's Rates Proposed Sr. Debt Facility at B1 SEQUA CORP: S&P Rates Proposed $1.35BB Secured Financing at BB- SHEFFIELD CDO: Moody's Pares Rating on $21.4 Million Notes to Ba3 SOLAR TRUST: Moody's Affirms Low-B Ratings on Four Cert. Classes SOLUTIA INC: Judge Beatty Approves $25 Million Backstop Deal SOTHEBY'S: Experts Link Low Art Sale Proceeds on Credit Crisis SPECTRUM BRANDS: Posts $333 Million Net Loss in Fourth Quarter STATION CASINOS: Completed Deal Prompts S&P to Lower Ratings STEVE PINKSTAFF: Case Summary & 17 Largest Unsecured Creditors STOCKTON CDO: Moody's May Further Cut Low-B Ratings on Four Notes STRUCTURED ASSET: Losses Cue Moody's to Take Neg. Rating Actions TASMAN CDO: Bad Loan Quality Cues Moody's to Junk Note Rating TAZLINA FUNDING: Moody's Junks Rating on $6 Million Class E Notes TEREX CORP: Moody's Holds Low-B Ratings on $1.1 Billion Notes THEATER XTREME: Closes Pennsylvania and Delaware Retail Stores THOMAS BAYLY: Case Summary & 19 Largest Unsecured Creditors TRENTON CONVALESCENT: Organizational Meeting Set for November 14 TRICADIA CDO: Moody's Junks Ratings on Three Certificate Classes UAL CORP: Issues 600,000+ Shares to Eligible Claimholders WACHOVIA BANK: Moody's Holds Ba1 Ratings on Three Cert. Classes WCI COMMUNITIES: Financial Woes Prompt Moody's to Junk Ratings WESTLAKE CHEMICAL: Moody's Rates $250 Mil. Revenue Bonds at Ba3 ZAIS INVESTMENT: Moody's Cuts Rating on $50 Million Notes to Ba1 * Fitch Completes Review of U.S. Subprime RMBS Transactions * Stephen Jones Joins Mesirow as Executive Vice President * BOND PRICING: For the Week of Nov. 5 - Nov. 9, 2007 ********* ABFC TRUST: S&P Downgrades Ratings on 26 Certificate Classes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 26 classes of asset-backed certificates from nine ABFC Trust series. At the same time, S&P placed its rating on one class on CreditWatch with negative implications. Concurrently, S&P affirmed its ratings on the remaining 76 classes from 15 ABFC Trust transactions issued between 2002 and 2004. The downgrades affect nine of the 15 transactions S&P reviewed: one of the four deals from the 2002 vintage; two of the three from the 2003 vintage; and six of the eight from the 2004 vintage. The downgraded classes reflect a high amount of severe delinquencies (90-plus days, foreclosures, and REOs) and a reduction in credit enhancement as a result of monthly realized losses. As of the October 2007 remittance period, severe delinquencies for series 2002-NC1 were 28.23% of the current pool balance, while losses outpaced excess interest by approximately 2.5x over the past six months. The downgraded 2003 and 2004 transactions had weighted average severe delinquencies of 10.43% and 13.52% of their current pool balances, respectively, and losses outpaced excess interest by an average of approximately 2.0x and 2.4x over the past six months. The overcollateralization target is 50 basis points for all transactions and is currently 22 bps below target for the downgraded 2002 transaction (series 2002-NC1), 16 bps and 17 bps below target for both downgraded 2003 transactions (series 2003- AHL1 and 2003-OPT1, respectively), and as high as 35 bps (series 2004-opt1) and as low as 7 bps (series 2004-ff1) below target for the downgraded 2004 transactions. The affirmations reflect sufficient credit enhancement levels to support the current ratings. The classes with affirmed ratings have actual and projected credit support percentages that are in line with their original levels. All ratings from transactions that did not experience downgrades (series 2002-OPT1, 2002-WF1, 2002-WF2, 2003-WMC2, 2004-OPT3, and 2004-OPT5) are currently at or above their original levels. The weighted average severe delinquencies for these transactions, as a percentage of the current pool balances, were 15.42% for the 2002 vintages, 10.43% for the 2003 vintages, and 12.48% for the 2004 vintages. Subordination, overcollateralization, and excess spread provide credit support for these transactions. Five of these series-- 2003-OPT1, 2004-OPT2, 2004-OPT3, 2004-OPT4, and 2004-OPT5--have mortgage insurance for a percentage of their loans. The insurance is issued by PMI Mortgage Insurance Co., which has a financial strength rating of 'AA/Watch Neg'. The collateral consists primarily of adjustable- and fixed-rate mortgage loans. Ratings Lowered ABFC Trust Asset-backed certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-NC1 M-2 BBB A 2002-NC1 M-3 CCC BBB 2002-NC1 M-4 CCC BBB- 2003-AHL1 M-3 BBB+ AA 2003-AHL1 M-4 BB A 2003-AHL1 M-5 B BBB 2003-OPT1 M-5 BB BBB 2003-OPT1 M-6 B BBB- 2004-AHL1 M-6 BB- BBB- 2004-AHL1 M-7 B BB+ 2004-HE1 M-5 BB A 2004-HE1 M-6 B BBB+ 2004-HE1 M-7 B BBB+ 2004-HE1 M-8 CCC BBB 2004-OPT1 M-5 BB BBB 2004-OPT1 M-6 B BBB- 2004-OPT1 B CCC BB 2004-OPT4 M-5 BB BBB+ 2004-OPT4 M-6 B BBB 2004-OPT4 M-7 B- BBB 2004-FF1 M-4 BB BBB+ 2004-FF1 M-5 B BBB 2004-FF1 M-6 CCC BBB- 2004-FF1 M-7 CCC BBB- 2004-OPT2 M-6 BB BBB 2004-OPT2 B BB BBB- Rating Placed on Creditwatch Negative ABFC Trust Asset-backed certificates Rating ------ Series Class To From ------ ----- -- ---- 2004-FF1 M-3 A-/Watch Neg A- Ratings Affirmed ABFC Trust Asset-backed certificates Series Class Rating ------ ----- ------ 2002-OPT1 AIO-INV AAA 2002-OPT1 M-1 AA+ 2002-OPT1 M-2 AA- 2002-OPT1 M-3 A 2002-OPT1 M-4 BBB 2002-OPT1 M-5 BBB- 2002-NC1 M-1 AA+ 2002-WF1 M-1 AAA 2002-WF1 M-2 A 2002-WF1 M-3 BBB 2002-WF1 B BBB- 2002-WF2 A-2 AAA 2002-WF2 M-1 AA+ 2002-WF2 M-2 A 2002-WF2 M-3 BBB 2003-AHL1 AI, M-1, M-2 AAA 2003-OPT1 A-1, A-1A, A-3 AAA 2003-OPT1 M-1 AA+ 2003-OPT1 M-2 AA 2003-OPT1 M-3 A+ 2003-OPT1 M-4 A- 2003-WMC1 M-1 AA+ 2003-WMC1 M-2 A 2003-WMC1 M-3 A- 2003-WMC1 M-4 BBB+ 2003-WMC1 M-5 BBB 2003-WMC1 M-6 BBB- 2004-AHL1 M-1 AAA 2004-AHL1 M-2 AA 2004-AHL1 M-3 A+ 2004-AHL1 M-4 BBB+ 2004-AHL1 M-5 BBB 2004-HE1 M-1 AA+ 2004-HE1 M-2 AA 2004-HE1 M-3 AA- 2004-HE1 M-4 A+ 2004-OPT1 M-1 AA 2004-OPT1 M-2 A 2004-OPT1 M-3 A- 2004-OPT1 M-4 BBB+ 2004-OPT3 A-1, A-4 AAA 2004-OPT3 M-1 AA 2004-OPT3 M-2 A 2004-OPT3 M-3 A- 2004-OPT3 M-4 BBB+ 2004-OPT3 M-5 BBB 2004-OPT3 M-6 BBB- 2004-OPT4 A-1, A-2 AAA 2004-OPT4 M-1 AA 2004-OPT4 M-2 A+ 2004-OPT4 M-3 A 2004-OPT4 M-4 A- 2004-FF1 M-1 AA 2004-FF1 M-2 A 2004-OPT2 A-1, A-1A, A-2 AAA 2004-OPT2 M-1 AA 2004-OPT2 M-2 A+ 2004-OPT2 M-3 A 2004-OPT2 M-4 A- 2004-OPT2 M-5 BBB+ 2004-OPT5 A-1, A-4 AAA 2004-OPT5 M-1 AA+ 2004-OPT5 M-3 AA- 2004-OPT5 M-4 A 2004-OPT5 M-5 A- 2004-OPT5 M-6 BBB+ 2004-OPT5 M-7 BBB- ACCESS PHARMA: Arranges a $19.5 Million Recapitalization -------------------------------------------------------- Access Pharmaceuticals Inc. has executed arrangements for a $19.5 million recapitalization. The company has entered into agreements with institutional investors to purchase an aggregate of $9.5 million in gross proceeds of the company's newly issued Series A Convertible Preferred Stock. Lead investors in the placement transaction include SCO Capital Partners and Perceptive Life Sciences. In addition SCO Capital Partners, Oracle Partners and certain of their affiliates have agreed to exchange $10 million principal amount of senior debt into Series A Convertible Preferred Stock. "We are delighted to complete this placement to high-quality institutional investors," Stephen R. Seiler, Access' president and CEO, said. "The new capital will enable us to further a number of key objectives including pursuing and expanding our clinical trial program for Access' anti-cancer compound, ProLindac, a novel, proprietary DACH platinum which is in Phase 2 development." "The exchange of convertible debt for Series A Convertible Preferred Stock also allows us to achieve what was one of our major corporate goals for 2007, which is to simplify our capital structure and replace debt having a short-term maturity with permanent capital," Mr. Seiler added. Pursuant to the securities purchase agreements, the company will, subject to the completion of the closing, issue to the new investors Series A Convertible Preferred Stock initially convertible into 3,179,999 shares of the company's common stock. The investors will also receive warrants to purchase an additional 1,590,000 shares of the company's common stock at an exercise price of $3.50. In exchange for their outstanding $10 million principal amount of convertible notes presently convertible into 6,257,544 shares of common stock, the company will, after the closing, issue to SCO Capital Partners, Oracle Partners and certain of their affiliates, Series A Convertible Preferred Stock initially convertible into 6,792,877 shares of common stock. In addition, the current note holders will receive warrants to purchase 1,669,167 shares of common stock at an exercise price of $3.50. Closing of the transaction is subject to the fulfillment of customary and usual closing conditions. Rodman & Renshaw LLC, a wholly owned subsidiary of Rodman & Renshaw Capital Group Inc. acted as the exclusive placement agent for the transaction. About Access Pharmaceuticals Headquartered in Dallas, Texas, Access Pharmaceuticals Inc. (OTC BB: ACCP.OB) -- http://accesspharma.com/-- is an emerging biopharmaceutical company developing products for use in the treatment of cancer, the supportive care of cancer, and other disease states. The company's product for the management of oral mucositis, MuGard(TM) has received marketing clearance by the FDA as a device. The company's lead clinical development program for the drug candidate ProLindac(TM) is in Phase II clinical testing. Access also has advanced drug delivery technologies including Cobalamin(TM) mediated oral drug delivery and targeted delivery. Access Pharmaceuticals reported total assets of $3.6 million and total liabilities of $19.1 million at June 30, 2007, resulting in a $15.5 million total stockholders' deficit. Going Concern Doubt As reported in the Troubled Company Reporter on Sept. 13, 2007, Whitley Penn LLP, in Dallas, expressed substantial doubt about Access Pharmaceuticals Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's recurring losses from operations, net working capital deficiency and accumulated deficit. ALLTEL CORP: Increased Leverage Cues S&P to Cut Rating to B+ ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Little Rock, Arkansas-based wireless carrier ALLTEL Corp., including its corporate credit rating, which was lowered to 'B+' from 'BB'. The ratings were removed from CreditWatch where they had been placed with negative implications since Feb. 23, 2007. The outlook is negative. "The downgrade is due to an expected substantial increase in the company's leverage to around 8x when its leveraged buyout is completed," said Standard & Poor's credit analyst Catherine Cosentino. At the same time, S&P assigned its 'BB-' rating and '2' recovery rating to a $16.25 billion senior secured credit facility being issued by intermediate holding company ALLTEL Communications Inc. The '2' recovery rating indicates S&P's expectation of substantial (70%-90%) recovery in the event of a payment default. S&P also assigned a 'B-' rating to ALLTEL Communications' proposed $2 billion of senior unsecured notes, and lowered the rating on the existing $2.3 billion of senior unsecured notes at ALLTEL Corp. to 'B-' from 'BB'. The rating on the subordinated notes at Western Wireless LLC was lowered as well to 'B-' from 'BB'. The unsecured and subordinated debt ratings are two notches below the corporate credit rating because of the substantial concentration of priority debt in the capital structure, primarily $14 billion of term loan B secured bank debt. Proceeds from the secured and unsecured debt issuances, together with planned draws on $5.7 billion of cash pay and paid-in-kind toggle senior unsecured bridge facilities, will be used to fund the company's buyout by sponsors TPG Capital and Goldman Sachs, as well as repurchase about $389 million in existing ALLTEL debt issues at ALLTEL Communications Inc. and ALLTELOhio L.P. The ratings on these existing issues were not lowered, and S&P will withdraw these ratings when the financing transactions are completed. S&P also did not lower the 'BB' rating on the company's $1.5 billion unsecured revolving credit facility, but will withdraw this rating upon completion of the transactions. However, S&P withdrew the 'A-2' short-term and commercial paper ratings on ALLTEL. Pro forma for the LBO, the company will have about $24 billion of total debt outstanding. The ratings on ALLTEL reflect the company's satisfactory business position, characterized by a stable to moderately growing subscriber and revenue base and a good market position in the wireless services sector. While company's leverage is high at around 8x, the favorable characteristics of its business support the rating. As a result of its very aggressive financial profile, the company is expected, at best, to generate very modest net free cash flow after capital expenditures in the next few years. In particular, capital expenditures for this business continue to be significant, at about $1 billion annually, to accommodate subscriber growth, improved network coverage and quality, and new data applications. Moreover, increases in postpaid churn and accelerated price competition from the national wireless carriers would further weaken the company's cash flow. ALLTEL is the largest regional wireless carrier in the U.S., with more than 12 million customers in 35 states. Its network covers nearly 80 million population equivalents. ALPHA MEZZ: Moody's Puts B1 Rating Under Review for Likely Cut -------------------------------------------------------------- Moody's Investors Service placed these notes issued by Alpha Mezz CDO 2007-I, Ltd. on review for possible downgrade: Class Description: $70,000,000 Class II Senior Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $30,000,000 Class III Senior Floating Rate Notes Due 2047 -- Prior Rating: Aa2 -- Current Rating: Aa2, on review for possible downgrade Class Description: $5,000,000 Class IV Senior Floating Rate Notes Due 2047 -- 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: Class Description: $23,000,000 Class V Mezzanine Floating Rate Deferrable Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $22,500,000 Class VI Mezzanine Floating Rate Deferrable Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: Ba2, on review for possible downgrade Class Description: $7,000,00 Class VII Mezzanine Floating Rate Deferrable Notes Due 2047 -- 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. ALTIUS III: Poor Credit Quality Cues Moody's to Review Ratings -------------------------------------------------------------- Moody's Investors Service placed these notes issued by Altius III Funding, Ltd. on review for possible downgrade: Class Description: $88,000,000 Class B Floating Rate Notes Due 2041 -- Prior Rating: Aa2 -- Current Rating: Aa2, on review for possible downgrade Class Description: $23,000,000 Class C Floating Rate Deferrable Notes Due 2041 -- Prior Rating: A2 -- Current Rating: A2, on review for possible downgrade Class Description: $19,000,000 Class D Floating Rate Deferrable Notes Due 2041 -- Prior Rating: Baa2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $6,000,000 Class E Floating Rate Deferrable Notes Due 2041 -- Prior Rating: Ba1 -- 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. AMERIQUEST MORTGAGE: Delinquent Loans Cue Moody's to Junk Ratings ----------------------------------------------------------------- Moody's downgrades ratings of 16 tranches of RMBS backed by scratch and dent collateral issued by Ameriquest Mortgage Securities, Inc. Moody's Investors Service has downgraded the ratings of 16 tranches issued in four separate Ameriquest Mortgage Securities, Inc. mortgage transactions. The collateral backing each tranche consists primarily of first-lien, fixed- and adjustable-rate scratch and dent mortgage loans. Each deal being reviewed has experienced an increasing proportion of severely delinquent loans while the amount of available credit enhancement has been reduced from losses. Downgrades for the 2004-X1 transaction have resulted from a significant slowdown of prepayment speeds and the rapid pace of losses resulting from a higher than anticipated delinquency pipeline build-up and higher severities of losses upon liquidation of small balance mortgage collateral. Complete rating actions are: Issuer: Ameriquest Mortgage Securities Inc., Quest Trust 2004-X1 -- Cl. M-1; Downgraded from A2 to Ba2 -- Cl. M-2; Downgraded from Ba3 to Caa2 -- Cl. M-3; Downgraded from B3 to C -- Cl. M-4; Downgraded from Caa3 to C Issuer: Ameriquest Mortgage Securities Inc., Quest Trust 2004-X2 -- Cl. M-4; Downgraded from Baa2 to Ba3 -- Cl. M-5; Downgraded from Baa3 to B3 Issuer: Ameriquest Mortgage Securities Inc., Quest Trust 2004-X3 -- Cl. M-4; Downgraded from Baa2 to Ba3 -- Cl. M-5; Downgraded from Baa3 to Caa1 -- Cl. M-6; Downgraded from Ba2 to Caa3 -- Cl. M-7; Downgraded from B1 to C Issuer: Ameriquest Mortgage Securities Inc., Quest Trust 2005-X2 -- Cl. M-1; Downgraded from A2 to Baa2 -- Cl. M-2; Downgraded from A3 to Baa3 -- Cl. M-3; Downgraded from Baa1 to Ba2 -- Cl. M-4; Downgraded from Baa2 to B1 -- Cl. M-5; Downgraded from Baa3 to B3 -- Cl. M-6; Downgraded from Ba1 to Caa1 AMP AA: Moody's Junks Note Ratings Due to Credit Quality Decline ---------------------------------------------------------------- Moody's Investors Service downgraded these notes issued by AMP AA CDO 2.5-4.5 Notes: Class Description: $16,000,000 AMP AA CDO 2.5-4.5 Notes -- Prior Rating: A1 -- Current Rating: Ca 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. AMP AA: Poor Credit Quality Prompts Moody's to Junk Note Ratings ---------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade these notes issued by AMP AA CDO 4.5-9.0 Notes: Class Description: $9,000,000 AMP AA CDO 4.5-9.0 Notes -- Prior Rating: Aa2 -- 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. AMP CDO: Moody's Downgrades Rating on $200 Million Notes to Ba1 --------------------------------------------------------------- Moody's Investors Service placed these notes issued by AMP CDO 2006-1 on review for possible downgrade: Class Description: $200,000,000 Variable Notes due 2053 -- Prior Rating: Aa3 -- 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. APP PHARMACEUTICALS: Moody's Assigns Ba3 Corporate Family Rating ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 Corporate Family Rating to APP Pharmaceuticals, LLC, a subsidiary of APP Pharmaceuticals, Inc. Moody's also assigned a Ba3 rating to APP's proposed offering of $1.15 billion of senior secured credit facilities, consisting of a $150 million revolving credit facility and $1.0 billion of term loans. In addition, Moody's assigned a Speculative Grade Liquidity rating of SGL-2, reflecting Moody's belief that the company will have good liquidity for the twelve months ending December 2008. The outlook for the ratings is stable. This is the first time Moody's has assigned ratings to APP. The rated debt is approximately $1.2 billion. The ratings are constrained by the increase in financial leverage and deterioration of credit metrics resulting from the incremental debt. In addition, Moody's believes there is event risk associated with the complex and highly regulated manufacturing and supply processes in the injectable pharmaceutical industry. In the past the company has experienced events of this nature including a voluntary plant shut-down in 2005 in order to upgrade and re-validate a manufacturing facility and constraints on the availability of certain products. The ratings are also constrained by the limited scale of the company. However, the ratings are supported by Moody's expectation for improvement in credit metrics over the next twelve to eighteen months resulting from debt repayment, the launch of new products from a strong pipeline, and favorable industry fundamentals. In addition, APP benefits from very high barriers to entry in the injectable, generic pharmaceutical industry and has demonstrated a track record of competing successfully with larger pharmaceutical companies. Moody's also believes that infrastructure investments in recent years should support increased manufacturing capacity and could reduce the likelihood of a manufacturing or supply event. All ratings are subject to review of final documentation. Ratings assigned are: APP Pharmaceuticals: -- $150 million senior secured revolving credit facility due 2012; Ba3, LGD3, 34% -- $500 million senior secured Tranche A term loan due 2013; Ba3, LGD3, 34% -- $500 million senior secured Tranche B term loan due 2013; Ba3, LGD3, 34% -- Corporate Family Rating; Ba3 -- Probability of Default Rating; B1 -- Speculative Grade Liquidity Rating; SGL-2 The outlook for the ratings is stable. APP will be a newly formed entity resulting from the separation of Abraxis BioScience Inc. (NASDAQ: ABBI) into two independent, publicly traded companies. APP is a leading developer, manufacturer and supplier of injectable generic pharmaceuticals used primarily in hospitals, long-term care facilities and clinics within North America. The company supplies injectable drugs in four main therapeutic categories, including oncology, anti- infective, critical care and anesthesia/analgesic. APP PHARMACEUTICALS: High Debt Leverage Cues S&P's "BB" Rating -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' corporate credit rating to Schaumburg, Illinois-based generic drug maker APP Pharmaceuticals Inc. The outlook is stable. At the same time, S&P assigned its bank loan and recovery ratings to APP's $1.15 billion proposed financing, comprising a $500 million term loan A and $500 million term loan B, both due 2013, and a $150 million revolving credit facility due 2012. The senior secured credit facilities are rated 'BB+', with a recovery rating of '2', indicating the expectation for substantial (70%-90%) recovery in the event of a payment default. "The ratings on APP reflect the company's high debt leverage and niche position in the generic drug industry," said Standard & Poor's credit analyst Arthur Wong. "These factors are offset partially by the company's solid industry position, well-stocked product pipeline, and expected steady deleveraging over the intermediate term." APP is the injectable generic drug business of Abraxis Bioscience, which is spinning off its proprietary biotechnology business into a separate, publicly traded company. APP will use the proceeds of the debt offering to repay existing Abraxis debt and capitalize Abraxis' spun-off biotechnology business. ARCA 2006: Poor Credit Quality Cues Moody's to Junk Note Ratings ---------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade these notes issued by Arca 2006-II, Ltd: Class Description: $70,000,000 Class II Funded Senior Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $56,000,000 Class III Funded Senior Notes Due 2047 -- Prior Rating: Aa2 -- Current Rating: Ba1, on review for possible downgrade Class Description: $28,500,000 Class IV-A Funded Mezzanine Deferrable Notes Due 2047 -- Prior Rating: A2 -- Current Rating: B1, on review for possible downgrade Class Description: $11,000,000 Class IV-B Funded Mezzanine Variable Notes Due 2047 -- Prior Rating: A2 -- Current Rating: B1, on review for possible downgrade Class Description: $36,500,000 Class V Funded Mezzanine Deferrable Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: Caa2, on review for possible downgrade Class Description: $7,000,000 Class VI Funded Mezzanine Deferrable Notes Due 2047 -- Prior Rating: Baa3 -- Current Rating: Caa3, on review for possible downgrade In addition, Moody's also downgraded these notes: Class Description: $10,000,000 Class VII Funded Mezzanine Deferrable Notes Due 2047 -- Prior Rating: Ba1 -- Current Rating: Ca According to Moody's, the rating actions are the results of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. ARCA FUNDING: Moody's Puts Six Junk-Rated Notes Under Neg. Watch ---------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade these notes issued by Arca Funding 2006-I, Ltd: Class Description: $99,500,000 Class II Funded Senior Notes Due 2046 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $59,500,000 Class III Funded Senior Notes Due 2046 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Class Description: $17,000,000 Class IV Funded Senior Notes Due 2046 -- Prior Rating: A3 -- Current Rating: Caa3, on review for possible downgrade In addition, Moody's also downgraded these notes: Class Description: $17,000,000 Class V Funded Mezzanine Notes Due 2046 -- Prior Rating: Baa3 -- Current Rating: Ca Class Description: $17,000,000 Class VI Funded Mezzanine Notes Due 2046 -- Prior Rating: Ba2 -- Current Rating: Ca Class Description: $7,000,000 Class VII Funded Mezzanine Notes Due 2046 -- Prior Rating: Ba3 -- Current Rating: Ca Class Description: $7,000,000 Class VIII Funded Mezzanine Notes Due 2046 -- Prior Rating: Caa1 -- Current Rating: Ca According to Moody's, the rating actions are the results of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. ARINC INC: S&P Rates $575 Million Credit Facility at B+ ------------------------------------------------------- Standard & Poor's Ratings Services assigned bank loan and recovery ratings to ARINC Inc.'s $770 million secured credit facility. The $575 million first-lien credit facility is assigned a 'B+' rating and '2' recovery rating, indicating expectations of substantial (70%-90%) recovery of principal in the event of payment default. The $195 million second-lien credit facility is assigned a 'CCC+' rating and '6' recovery rating, indication expectations of negligible (0%-10%) recovery. The proceeds from the credit facilities were used to partially finance the acquisition of the company by the Carlyle Group. See the recovery report, "ARINC Inc.'s $770 Million Bank Financing," to be published on RatingsDirect immediately following release of this article, for the full recovery analysis. Annapolis, Maryland-based ARINC (B/Stable/--) is a leading provider of engineering services to the U.S. military and other government agencies (59% of 2006 revenues), mission-critical communications and IT services to the global aviation industry (24%), and communications and information systems for airports and surface transportation systems (17%). The corporate credit rating on ARINC is 'B' and the outlook is stable. "The rating reflects its weak credit protection measures as a result of very high debt leverage following the acquisition by Carlyle, which more than offset the company's leading position in niche markets and adequate profitability and liquidity," said Standard & Poor's credit analyst Christopher DeNicolo. Ratings List ARINC Inc. Corporate Credit Rating B/Stable/-- Ratings Assigned $575 Mil. 1st-Lien Credit Facility B+ Recovery Rating 2 $195 Mil. 2nd-Lien Credit Facility CCC+ Recovery Rating 6 ASSET SECURITIZATION: Loan Payoff Cues Fitch to Lift Ratings ------------------------------------------------------------ Fitch upgrades these classes of Asset Securitization Corporation's commercial mortgage pass-through certificates, series 1996-MD VI: -- $56.0 million class A-7 to 'AAA' from 'A+'; -- $35.8 million class B-1 to 'AAA from 'BB'; -- $1,000 class B-1H to 'AAA from 'BB'. Classes A-4, A-5, and A-6 have been paid in full. Classes A-1C, interest only class CS-3, A-2 and A-3 are not rated by Fitch. The upgrades are due to the October 2007 payoff of two loans, MHP Portfolio and Palmer Square. One defeased loan remains in the pool: The Columbia Sussex. The security is scheduled to mature on August 11, 2016, but has an optional prepayment date of August 11, 2011. AVADO BRANDS: Selling All Assets Without Stalking Horse Bidder -------------------------------------------------------------- Avado Brands Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for authority to sell substantially all of their assets free and clear of all liens and interests. The Debtors disclose that they are selling their assets without a stalking horse bidder, however, 14 bidders have qualified as potential buyers as of Nov. 7, 2007. The aggregate purchase price for the assets is yet to be determined. To participate in the auction, bids must be accompanied by a cash deposit up to 5% more than the value of the bid; provided that the Debtors' DIP lender, DDJ Capital Management LLC, is not required to post any cash deposit in order to qualify to purchase the assets. In addition, DDJ Capital is entitled to a credit bid of its entire secured claim up to approximately $51.5 million pursuant to Section 363(k) of the Bankruptcy Code. However, the Court has yet to confirm approval of DDJ Capital's credit bid right. On Oct. 16, 2007, the Court approved the Debtors' proposed bidding procedure regarding the sale of their assets. The Debtors have proposed an auction to be held on Nov. 14, 2007. A hearing to consider approval of the sale of the Debtors' assets is scheduled to be held on Nov. 20, 2007, at 11:30 a.m, 824 Market Street, 5th Floor, Courtroom 4 in Wilmington, Delaware. The Debtors said that Lane Berry & Co. International LLC, as financial advisors, will assist them to market and sell all of their assets. About Avado Brands Madison, Georgia-based Avado Brands Inc., aka Applesouth, -- http://www.avado.com/-- operates about 120 casual dining restaurants under the banners Don Pablo's Mexican Kitchen and Hops Grillhouse & Brewery. The restaurants are located in 22 states in the U.S. As of Sept. 5, 2007, the Debtors employed about 9,970 people. For the year ended July 31, 2007, the Debtors generated about $227.8 million in revenues and a negative EBITDA of $7.8 million. The Debtor filed for chapter 11 protection on Feb. 4, 2004 (Bankr. N.D. Tex. Case No. 04-1555). On April 26, 2005, Judge Steven Felsenthal confirmed Avado's Modified Plan of Reorganization and that Plan became effective on May 19, 2005. On Sept. 5, 2007, Avado filed a voluntary chapter 22 petition (Bankr. D. Del. Case No. 07-11276) to complete an orderly sale of its assets, via Section 363 of the Bankruptcy Code. About 10 of Avado's affiliates also filed for bankruptcy protection on the same date (Bankr. D. Del. Case Nos. 07-11277 through 07-11286). Michael Tuchin, Esq., and Stacia A. Neeley, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, represent the Debtors. Donald J. Detweiler, Esq., at Greenberg Traurig, LLP, is the Debtors' local counsel. Kurtzman Carson Consultants LLC acts as the Debtors claims and noticing agent. In their second filing, the Debtors disclosed estimated assets and debts between $1 million to $100 million. Scott L Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and David B. Stratton, Esq., at Pepper Hamilton LLP, represent the Official Committee of Unsecured Creditors. AVENTINE HILL: Moody's May Further Cut B2 Rating on $19.5MM Notes ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Aventine Hill CDO I, Ltd. on review for possible downgrade: Class Description: $414,000,000 Class A1S Variable Funding Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $111,000,000 Class A1J Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $12,375,000 Class I Subordinated Notes Due 2047 -- Prior Rating: Ba3 -- Current Rating: Ba3, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: Class Description: $96,750,000 Class A2 Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa2 -- Current Rating: A2, on review for possible downgrade Class Description: $39,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Baa3, on review for possible downgrade Class Description: $28,500,000 Class B1 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: Ba3, on review for possible downgrade Class Description: $19,500,000 Class B2 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Baa3 -- 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. BANC OF AMERICA: Moody's Holds Ba3 Rating on $2 Mil. Certificates ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of eight classes and affirmed the ratings of nine classes of Banc of America Large Loan, Inc., Commercial Mortgage Pass-Through Certificates, Series 2006-BIX1 as: -- Class A-1, $68,257,627, Floating, affirmed at Aaa -- Class A-2, $223,462,130, Floating, affirmed at Aaa -- Class X-1A, Notional, affirmed at Aaa -- Class X-1B, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class X-3, Notional, affirmed at Aaa -- Class X-4, Notional, affirmed at Aaa -- Class X-5, Notional, affirmed at Aaa -- Class B, $15,035,235, Floating, upgraded to Aaa from Aa1 -- Class C, $43,214,117, Floating, upgraded to Aaa from Aa2 -- Class J-CP, $4,285,492, Floating, upgraded to A1 from Baa1 -- Class K-CP, $6,353,866, Floating, upgraded to A2 from Baa2 -- Class L-CP, $12,459,759, Floating, upgraded to Baa1 from Baa3 -- Class J-CA, $1,374,209, Floating, upgraded to A1 from Baa1 -- Class K-CA, $941,439, Floating, upgraded to A2 from Baa2 -- Class L-CA, $1,094,685, Floating, upgraded to A3 from Baa3 -- Class M-MC, $2,000,000, Floating, affirmed at Ba3 Approximately $378.5 million of structured securities are affected. The Certificates are collateralized by three whole loans and 11 senior participation interests secured by 58 properties. The loans range in size from 1.7%to 34.2% of the pool based on current principal balances. As of the October 15, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 53.5% to $576.0 million from $1.2 billion at securitization as the result of the payoff of four loans, partial property releases associated with three loans and amortization associated with three loans. Classes A-1, A-2, B and C are pooled classes which benefit from pool diversity, while classes non- pooled Classes J-CP, K-CP, L-CP, J-CA, K-CA, L-CA and M-MC depend on the performance of the CarrAmerica - Pool 3 National Portfolio Loan, the CarrAmerica - Pool 2 Portfolio Loan and the 770 M Street Loan respectively for debt service and ultimate repayment. Moody's current weighted average loan to value ratio ("LTV") is 68.2%, compared to 72.3% at securitization. Moody's is upgrading Classes B and C due to increased credit support. Classes J-CP, K- CP, L-CP, J-CA, K-CA and L-CA have been upgraded due to decreased leverage from property releases. The CarrAmerica - Pool 3 National Portfolio Loan ($196.7 million - - 34.2%) represents the 40.0% portion of a $491.8 million pari passu loan. There is also a $202.0 million non-trust junior secured loan and a $217.9 million mezzanine loan. The loan is secured by 37 office properties located in eight major office markets located in six states. The portfolio contains approximately 12.4 million square feet, of which 7.2 million square feet represents the loan sponsor's wholly-owned interests and its percentage ownership interests in joint venture properties. At securitization the portfolio contained 19.4 million square feet, of which 13.9 million square feet was collateral for the loan. The outstanding pool balance has decreased by 68.7% since securitization due to property releases and the related release premiums. A portion of the debt (allocated to 15 properties) is not secured by real estate but is secured by a pledge of an assignment of cash flow, refinance and sale proceeds. These properties represent 59.5% of the total net rentable area and 18.4% of the allocated loan balance. As of June 2007 the portfolio had a weighted average occupancy of 84.9%, compared to 89.1% at securitization for the original portfolio and 87.8% for the current portfolio. At securitization the Blackstone Group, the loan sponsor provided a guaranty to expend $88.5 million on capital improvements, tenant improvements and leasing commissions. Moody's LTV is 64.8%, compared to 74.7% at securitization. Moody's current shadow rating is A1, compared to A3 at securitization. The Greece Ridge Center Loan ($72.0 million - 12.5%) is secured by 872,198 square feet of space of a 1.6 million square foot regional mall located in Greece, New York. The mall is shadow anchored by J.C. Penney (Moody's senior unsecured rating Baa3; stable outlook), The Bon-Ton (Moody's senior unsecured rating B3; stable outlook), Sears and Kaufmann's (parent Macy's Inc. - Moody's senior unsecured shelf rating (P)Baa2; stable outlook). As of April 2007 occupancy was 87.2%, compared to 88% at securitization. Vacancy includes the second floor of the former Montgomery Ward space that is considered functionally obsolete. In-line tenant sales for calendar year 2006 were $293 per square foot, compared to $299 at securitization. In-line tenant sales for the first six months of 2007 were approximately 4.3% higher than the same period in 2006. The loan sponsor is The Macerich Partnership LP. The mall is managed by Wilmorite Inc. Moody's LTV is 73.9%, the same as at securitization. Moody's current shadow rating is Baa3, the same as at securitization. The Desert Sky Mall Loan ($40.0 million - 6.9%) is secured by 444,551 square feet of retail space in a 899,190 square foot regional mall located in Phoenix, Arizona. The mall is shadow anchored by Sears, Dillard's (Moody's senior unsecured rating B1; stable outlook), Burlington Coat Factory (Moody's senior unsecured rating B3; stable outlook) and La Curacao, which opened in September 2007. The addition of La Curacao is part of the mall's redevelopment that includes both interior and exterior upgrades. As of July 2007 in-line space was 85.5% occupied, compared to 84.8% at securitization. For the trailing 12-month period ending June 2007 mall shop sales were $308 per square foot, compared to $327 per square foot at securitization. The loan sponsor is The Macerich Partnership LP. Moody's LTV is 70.0%, the same as at securitization. Moody's current shadow rating is Baa3, the same as at securitization. The One Pepsi Way Loan ($40.0 million -- 6.9%) is secured by a 520,000 square foot office building located in Somers, New York. As of June 2007 the property was leased to two tenants, Pepsi Bottling Group (69.2% of NRA) and General Motors (8.8% of NRA). The leases expire in December 2010 and February 2011 respectively. The building's leasing status has not changed since securitization. Moody's LTV is 64.7%, the same as at securitization. Moody's current shadow rating is Baa3, the same as at securitization. The JER Denver Office Portfolio Loan ($38.5 million -- 6.7%) is secured by four office properties located in the southeast Denver, Colorado submarkets of Greenwood Village and Centennial. The properties contain a total of 788,318 square feet. Since securitization two additional office properties that were originally in the portfolio were released from the loan security. The outstanding trust debt has decreased by approximately 23.8% since securitization due to property releases. As of August 2007 the portfolio was 88.4% occupied, compared to 92.0% at securitization. Comcast Cable Communications Inc. (September 2008 lease expiration; Moody's senior unsecured rating (P)Baa2; stable outlook) and Time Warner Telecom Inc. (October 2015 lease expiration; Moody's senior unsecured rating Caa1; stable outlook) account for 20.0% and 16.0% of total rentable area, respectively. Moody's LTV is 73.3%, compared to 73.0% at securitization. Moody's shadow rating is Ba1, the same as at securitization. The CarrAmerica -- Pool 2 Portfolio Loan ($23.7 million -- 4.1%) represents the 40.0% portion of a $59.2 million pari passu loan. There is also a $22.8 million non-trust junior secured loan and a $21.6 million mezzanine loan. The loan is secured by four office properties located in San Mateo, California, Mountain View, California and Austin, Texas (2 properties). The portfolio contains approximately 719,027 square feet, compared to 2.1 million square feet in 11 properties at securitization. The outstanding pool balance has decreased by approximately 73.7% since securitization due to property releases and the related release premiums. As of June 2007 the portfolio had a weighted average occupancy of 96.5%, compared to 92.0% at securitization for the original portfolio and 95.5% for the current portfolio. At securitization the Blackstone Group, the loan sponsor, provided a guaranty to expend $9.8 million on capital improvements, tenant improvements and leasing commissions. Moody's LTV is 60.3%, compared to 70.8% at securitization. Moody's current shadow rating is A1, compared to A3 at securitization. BARCLAYS CAPITAL: S&P Puts 'BB+' Rating Under Developing Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on six classes of the Barclays Capital Commercial Real Estate LLC Grantor Trust certificates from Terra LNR I Ltd. on CreditWatch with developing implications. The class A-1 and A-2 certificates, both rated 'AAA', are not affected by this action. The CreditWatch placements follow the Nov. 2, 2007, downgrades of Centex Corp. (to 'BBB-' from 'BBB'), Lennar Corp. (to 'BB+ from 'BBB'), and Pulte Homes (to 'BB+' from 'BBB-'). The ratings on the certificates from Terra LNR 1 depend partially on the ratings on these three companies, which provide two types of financial guarantees to the loan collateral. Aside from the downgrades of these three U.S. homebuilders, the Terra LNR I trust has benefited from increased credit support levels due to loan payoffs and principal balance reductions in the remaining three loans. As a result, the placement of the ratings on CreditWatch with developing implications could lead to both positive and negative actions. Based on the Oct. 15, 2007, trust remittance report, the three remaining loans are collateralized by West Park Master Planned Community, Potomac Yards, and Stetson Valley. As of the October trust remittance, the trust had a remaining principal balance of $206.9 million, down from $569.8 million at issuance. The loans are secured by mortgaged parcels of land that are being developed into residential home sites for sale to affiliates of the three homebuilders noted above. The repayment of the mortgage loans depends on the pace and price at which the home sites are sold. The loan is current. Standard & Poor's is currently evaluating the collateral performance of these three projects and the impact that the lowered ratings on Centex, Lennar, and Pulte could have on their ability to meet required financial guarantees. S&P will resolve the CreditWatch placements affecting the Terra LNR I certificates once S&P complete its evaluation. Ratings Placed on Creditwatch Developing Terra LNR I Ltd. Barclays Capital Commercial Real Estate LLC Grantor Trust certificates Rating ------ Class To From ----- -- ---- B AA/Watch Dev AA C A/Watch Dev A D A-/Watch Dev A- E BBB/Watch Dev BBB F BBB-/Watch Dev BBB- G BB+/Watch Dev BB+ Other Ratings Outstanding Terra LNR I Ltd. Barclays Capital Commercial Real Estate LLC Grantor Trust certificates Class Rating ----- ------ A-1 AAA A-2 AAA BERNOULLI HIGH: Moody's Puts Ba3-Rated Notes Under Negative Review ------------------------------------------------------------------ Moody's Investors Service placed these notes issued by Bernoulli High Grade CDO II, Ltd. on review for possible downgrade: Class Description: $555,000,000 Class A-1B Second Priority Senior Secured Floating Rate Notes due October 2054 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $56,000,000 Class B Third Priority Senior Secured Floating Rate Notes due October 2054 -- Prior Rating: Aa2 -- Current Rating: Aa2, on review for possible downgrade Class Description: $103,000,000 Class C Fourth Priority Senior Secured Floating Rate Notes due October 2054 -- Prior Rating: Aa3 -- Current Rating: Aa3, on review for possible downgrade Class Description: $4,000,000 Class D Fifth Priority Mezzanine Deferrable Secured Floating Rate Notes due October 2054 -- Prior Rating: A3 -- Current Rating: A3, on review for possible downgrade Class Description: $3,000,000 Class E Sixth Priority Mezzanine Deferrable Secured Floating Rate Notes due October 2054 -- Prior Rating: Baa2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $10,500,000 Class F Seventh Priority Mezzanine Deferrable Secured Floating Rate Notes due October 2054 -- Prior Rating: Baa3 -- Current Rating: Baa3, on review for possible downgrade Class Description: $4,500,000 Class G Eighth Priority Mezzanine Deferrable Secured Floating Rate Notes due October 2054 -- Prior Rating: Baa3 -- Current Rating: Baa3, on review for possible downgrade Class Description: $14,000,000 Income Notes due October 2054 -- Prior Rating: Ba3 -- 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. BI-LO LLC: S&P Holds 'B' Rating and Removes Developing Watch ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed the 'B' rating on BI- LO LLC and removed it from CreditWatch, where it was placed with developing implications on April 11, 2007. This action reflects S&P's belief that while Greenville, South Carolina-based BI-LO remains up for sale, S&P do not anticipate Lone Star Funds LLC closing on a sale in the near term. The outlook is stable. "We would likely consider a negative outlook if EBITDA declines due to increased pricing competition and weaker margins, resulting in weaker credit metrics with lease-adjusted debt to EBITDA reaching 5x," said Standard & Poor's credit analyst Stella Kapur. BLUE JAY: Moody's Rates Proposed Senior Credit Facility at B1 ------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Blue Jay Merger Corporation's proposed senior secured credit facilities, consisting of a revolving credit facility due 2013 and a term loan facility due 2014, and a Caa2 rating to the company's proposed senior unsecured notes due 2015. Blue Jay Merger Corporation will be merged into Sequa Corporation on the close of the proposed acquisition. The Corporate Family Rating was assigned at B3 with a stable outlook. Approximately $2 billion of debt securities were rated. The purpose of the proposed debt offerings is to partially finance the $2.8 billion acquisition of Sequa by private equity sponsor, Carlyle Group. Upon the consummation of the merger Sequa will be the surviving corporation and will assume all of Blue Jay Merger's obligations. Sequa's existing 8-7/8% and 9% notes are subject to redemption requirements under their current indentures, and it is anticipated that they will be redeemed in their entirety upon close of the acquisition financing transactions. Moody's intends to withdraw all of Sequa's pre LBO ratings, including its B1 Corporate Family Rating and B2 senior notes ratings when the acquisition financing is completed. Sequa's B3 Corporate Family Rating reflects high leverage and weak interest coverage pro forma the Carlyle LBO. Near term negative free cash flow resulting from continued investment across business lines is also a constraint on the rating. Despite improving fundamentals, particularly in the company's aerospace segment, high debt levels resulting from the transaction are expected to keep credit metrics weak over the near term. Sequa's Corporate Family Rating benefits from a diverse revenue base across industries and geography, which provides stability through individual industry cycles. However, the credit profiles of a number of key customers in Sequa's two largest segments, commercial aerospace (legacy airlines in particular) and automotive (especially Delphi which is seeking to emerge from bankruptcy protection) remain of concern. While the airline industry is experiencing a modest recovery, the auto business continues to experience on-going economic difficulties. The stable ratings outlook reflects Moody's expectations that the company will continue to grow its revenue base while maintaining or modestly improving margins from current levels. The company is also expected to begin to generate modest amounts of positive free cash flow as its investment phase winds down over the near term, which should be applied to modest debt reduction. Ratings or their outlook may be adjusted upward if operating results continue to improve such that these metrics are achieved: Leverage: Debt/EBITDA of less than 6.0 times; Interest Coverage: EBIT/Interest of greater than 1.5 times; Cash Flow: RCF/Debt greater than 8% with sustained positive free cash flow. Downward ratings pressure may also occur if free cash flow were to continue to remain negative such that the company's liquidity profile would be impaired, if the company were to increase debt materially for any reason, or if operating results were to deteriorate resulting in these metrics: Leverage: Debt/EBITDA of greater than 8.0 times; Interest Coverage: EBIT/Interest remaining less than 1.0 time; Cash Flow: RCF/Debt less than 5% with continued negative free cash flow. Assignments: Issuer: Blue Jay Merger Corporation -- Probability of Default Rating, Assigned B3 -- Corporate Family Rating, Assigned B3 -- Senior Secured Revolving Credit Facility due 2013, Assigned B1 (LGD3-30) -- Senior Secured Bank Term Loan due 2014, Assigned B1 (LGD3-30) -- Senior Unsecured Notes due 2015, Assigned Caa2 (LGD5-83) -- Senior Unsecured Discount Notes due 2015, Assigned Caa2 (LGD5-83) Sequa Corporation, headquartered in New York, NY, is a diversified industrial company. Its operations manufacture and repair jet engine components, perform metal coating, produce automotive airbag inflators, cigarette lighters, power outlets and sensors, and manufacture chemical detergent additives, auxiliary printing press equipment, emissions control systems and men's formalwear. Sequa had LTM 9/30/2007 revenues of approximately $2.2 billion. BOMBAY CO: Sells Headquarters to Goff Capital for $16.35 Million ---------------------------------------------------------------- Goff Capital Inc. will acquire The Bombay Company Inc.'s corporate headquarters for $16.35 million, Sheryl Jean of the Star Telegram reports. The property is a seven-story, 122,000-square-foot building and a parking garage at 550 Bailey Avenue in Fort Worth, Texas. The building, the report says, had been appraised at around $9 million. Headquartered in Fort Worth, Texas, The Bombay Company Inc., (OTC Bulletin Board: BBAO) -- http://www.bombaycompany.com/ -- designs, sources and markets a unique line of home accessories, wall decor and furniture through 384 retail outlets and the Internet in the U.S. and internationally, including Cayman Islands. The company and five of its debtor-affiliates filed for Chapter 11 protection on Sept. 20, 2007 (Bankr. N.D. Tex. Lead Case No. 07-44084). Robert D. Albergotti, Esq., John D. Penn, Esq., Ian T. Peck, Esq., and Jason B. Binford, Esq., at Haynes and Boone, L.L.P., represent the Debtors. As of May 5, 2007, the Debtors listed total assets of $239,400,000 and total debts of $173,400,000. Attorneys at Cooley, Godward, Kronish LLP acts as counsel for the Official Committee of Unsecured Creditors. Forshey & Prostok LLP is the Committee's local counsel. BON-TON STORES: Weak Sales Cue S&P to Lower Credit Rating to B -------------------------------------------------------------- Standard & Poor's Ratings Services lowered the corporate credit rating on York, Pennsylvania-based Bon-Ton Stores Inc. to 'B' from 'B+', and the senior unsecured debt rating to 'CCC+' from 'B-'. The two-notch rating differential on the unsecured notes takes into account the relatively high potential secured debt in the capital structure. About $1.27 billion of debt was outstanding at Aug. 4, 2007. The outlook is stable. "The rating action follows a trend of weaker-than-expected same- store sales, our expectation that the retail environment will continue to be extremely challenging, and our projection that EBITDA interest coverage will deteriorate to about 2.1x for 2007, with debt leverage at about 5x," said Standard & Poor's credit analyst Gerald Hirschberg. In conjunction with its release of October 2007 sales results, which showed another monthly decline, management substantially lowered its guidance for EBITDA (to $285 million) and earnings per share. When S&P revised the outlook to negative in August 2007, S&P indicated that a downgrade could follow if EBITDA fell below $300 million and coverage declines to 2.1x. Although sales and margins might remain under pressure well into 2008, S&P expect that Bon-Ton Stores will sustain credit measures that are appropriate for the 'B' rating category. However, if EBITDA continues to slide and working capital and fixed capital spending have to be substantially supplemented by additional debt, both leverage and cash flow protection could deteriorate further and lead to a negative outlook. A period of sustained improvement in sales and earnings would be necessary for Standard & Poor's to consider a positive outlook. BRANDYWINE REALTY: Inks $245.4 Million Deal with DRA Advisors ------------------------------------------------------------- Brandywine Realty Trust has signed a definitive agreement to enter into a joint venture with DRA Advisors LLC. Under the terms of the agreement, the joint venture will acquire 29 suburban Philadelphia office properties in a transaction valued at approximately $245.4 million. The transaction amount represents a capitalization rate of approximately 7.4% GAAP and 7.2% cash based on trailing twelve month net operating income through Sept. 30, 2007, and approximately a 7.9% cash yield based on 2008 projections. The 29 properties, comprise approximately 1.6 million square feet and were 95.3% occupied and 96.4% leased as of Sept. 30, 2007. The transaction is expected to close by year-end 2007, and is subject to customary closing conditions, well as the joint venture's completion of approximately $184 million of secured property financing. As a result of the transaction and certain associated financial transactions, Brandywine expects to realize total proceeds of approximately $235.2 million less transaction expenses and will receive a 20% interest in the joint venture at the closing of the transaction. Brandywine will use the net proceeds from the transaction to reduce outstanding indebtedness under its unsecured revolving credit facility. A subsidiary of Brandywine will be responsible for the management and leasing of the joint venture properties under a separate agreement. Assuming a 2007 closing, Brandywine does not currently expect that it will declare a special distribution on account of this transaction, subject to a final review of its calendar year 2007 taxable income. "We are thrilled to undertake this transaction with DRA Advisors," Gerard H. Sweeney, president and chief executive officer of Brandywine Realty Trust, stated. "DRA is a high-quality financial institution with an extremely strong track record. Our team did an outstanding job to structure this co-investment vehicle which will allow us to recycle capital to higher growth opportunities in our target markets with a particular emphasis on our current and planned development projects." "By retaining a 20% ownership stake and managing the properties, we will share in the upside from this portfolio and contribute to its future success," Mr. Sweeney added. "We believe that this transaction creates significant value for our stockholders with both a meaningful gain on sale and the retention of a significant amount of net cash proceeds." The Philadelphia office of CB Richard Ellis served as Brandywine's exclusive marketing advisor for the transaction. Three properties, aggregating 260,000 square feet, were excluded from the joint venture transaction and will be retained by Brandywine. About DRA Advisors LLC Headquartered in New York City, DRA Advisors LLC - http://www.draadvisors.com/-- is a registered investment advisor specializing in real estate investment management services for institutional and private investors, including pension funds, university endowments, foundations, and insurance companies. Founded in 1986, the firm currently manages over $9 billion in assets, consisting of over 20 million square feet of office/industrial space, 32 million square feet of retail space and over 19,000 residential units. About Brandywine Realty Trust Headquartered in Radnor, Pennsylvania, Brandywine Realty Trust (NYSE: BDN), http://www.brandywinerealty.com/-- is one of the full-service, integrated real estate companies in the United States and is focused primarily on the ownership, management and development of class A, suburban and urban office buildings in selected markets aggregating approximately 42 million square feet. * * * Fitch assigned a 'BB+' rating on Brandywine Realty Trust's Preferred Stock. The outlook is positive. BRISTOW GROUP: Prices $50 Mil. Offering of 7-1/2% Senior Notes -------------------------------------------------------------- Bristow Group Inc. has priced its private offering of $50 million of senior notes due 2017. The notes priced at 101.25, plus accrued interest from Sept. 15, 2007, and will carry an interest rate of 7-1/2%. The notes offered and Bristow's existing $300 million in principal amount of 7-1/2% senior notes due 2017 will have identical terms and will be treated as a single class of securities under the same indenture. Bristow intends to use the net proceeds from the offering to fund additional aircraft purchases under commitments and options and for general corporate purposes. Interest is payable on March 15 and September 15 of each year, beginning March 15, 2008. The closing of the senior notes offering is expected to occur on Nov. 13, 2007, and is subject to the satisfaction of customary closing conditions. About Bristow Group Inc. Headquartered in Houston, Texas, Bristow Group Inc. (NYSE:BRS) -- http://www.bristowgroup.com/-- fka Offshore Logistics Inc., provides helicopter transportation services to the worldwide offshore oil and gas industry with operations in the United States Gulf of Mexico and the North Sea. The company also has operations, both directly and indirectly, in offshore oil and gas producing regions of the world, including Australia, Brazil, China, Mexico, Nigeria, Russia and Trinidad. The company also provides production management services for oil and gas production facilities in the United States Gulf of Mexico. * * * Standard & Poor's Ratings Services placed Bristow Group Inc.'s long term corporate family and senior unsecured debt ratings at 'Ba2' in January 2006. The ratings still hold to date with a negative outlook. BUCKINGHAM CDO: Moody's Cuts Rating on $13.5 Million Notes to Ba2 ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Buckingham CDO III Ltd. on review for possible downgrade: Class Description: Class A CP Notes -- Prior Rating: P-1 -- Current Rating: P-1, on review for possible downgrade Class Description: $67,500,000 Class B Secured Floating Rate Notes Due 2051 -- 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: Class Description: $37,500,000 Class C Secured Floating Rate Notes Due 2051 -- Prior Rating: Aa2 -- Current Rating: A2, on review for possible downgrade Class Description: $21,000,000 Class D Deferrable Floating Rate Notes Due 2051 -- Prior Rating: A2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $13,500,000 Class E Deferrable Floating Rate Notes Due 2051 -- Prior Rating: Baa2 -- 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. BUFFETS INC: Higher Default Risks Prompt Moody's to Junk Ratings ---------------------------------------------------------------- Moody's Investors Service lowered Buffets Inc.'s corporate family rating to Caa2 from Caa1, senior secured credit facilities rating to Caa1 from B2, and senior unsecured notes rating to Caa3 from Caa2. The rating outlook remains negative. Approximately $940 million of debt securities are affected. The rating action reflects Buffets' heightened probability of default as the company approaches a covenant violation on its maximum leverage ratio, primarily stemming from a further deterioration in its operating performance. The action also reflects increasing uncertainty over the company's capital structure now that the company has engaged Houlihan, Lokey, Howard & Zukin Capital to review its capital structure and business plan. HLHZ is an investment banking firm that specializes in advising distressed companies. Buffets' EBITDA as defined by its credit agreement deteriorated further to $142 million as of Sept. 19, 2007, resulting in a leverage ratio of 5.98x as compared to the required maximum leverage level of 6.00x. The maximum leverage will step down to 5.75x at the end of current quarter (ending December 2007). In absence of a 'hockey-stick' improvement in its operating performance and EBITDA, which Moody's views as unlikely at this time, Buffets will likely breach this covenant. "Buffets might get a covenant relief/waiver from its senior lenders but this could prove to be costly given the current lending environment," said Moody's analyst John Zhao, CFA. "Further, we caution that the unsecured bond holders could incur substantial losses if the company were to default on its debt obligations, while the losses on the senior secured bank debt will be modest per Moody's estimate." The negative outlook reflects the company's declining operating result and Moody's view that free cash flow will likely be negative in the near term. The outlook also reflects the company's weak liquidity as well as uncertainty surrounding its capital structure and the potential impact of changes following HLHZ's review on the balance sheet and all classes of debt holders. These ratings are affected: Buffets Inc. -- corporate family rating, downgraded to Caa2 from Caa1 -- probability of default rating, downgraded to Caa2 from Caa1 -- $40 million revolver maturing in 2011, downgraded to Caa1(LGD2, 29%) from B2(LGD2, 28%) -- $70 million synthetic letter of credit facility maturing in 2013, downgraded to Caa1(LGD2, 29%) from B2(LGD2, 28%) -- $530 million term loan B maturing in 2013, downgraded to Caa1(LGD2, 29%) from B2(LGD2, 28%) -- $300 million senior unsecured notes, downgraded to Caa3(LGD4, 69%) from Caa2(LGD5, 82%) Buffets Inc., headquartered in Eagan, Minnesota, operates and franchises steak-buffet style restaurants principally under the "Old Country Buffet", "Hometown Buffet" brand names and grill/buffet format restaurants under the brand names "Ryan's" and "Fire Mountain". The company is the second largest family dining restaurant in the industry, operating 643 restaurants in 42 states. Total reported revenues as of Sept. 19, 2007 were approximately $1.55 billion. CABLEVISION SYS: Sept. 30 Balance Sheet Upside-Down by $5.13 Bil. ----------------------------------------------------------------- Cablevision Systems Corporation reported Thursday financial results for the third quarter ended Sept. 30, 2007. At Sept. 30, 2007, the company's consolidated balance sheet showed $9.81 billion in total assets and $14.94 billion in total liabilities, resulting in a $5.13 billion total shareholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $2.26 billion in total current assets available to pay $2.89 billion in total current liabilities. The company reported a net loss of $79.3 million for the third quarter of 2007, compared with a net loss of $59.2 million in the corresponding quarter of 2006. Third quarter consolidated net revenue grew 9.4% to $1.51 billion compared to the prior year period, reflecting solid revenue growth in Telecommunications Services and Rainbow. Consolidated adjusted operating cash flow increased 15.5% to $494.3 million and consolidated operating income grew 59.1% to $202.1 million. Cablevision president and chief executive officer James L. Dolan commented: "For the third quarter, Cablevision experienced solid revenue and AOCF growth. This was primarily fueled by the continuing growth of our digital video, voice and high-speed data customers, which helped to maintain Cablevision's industry-leading penetration rates. Rainbow Media also helped drive the company's third quarter results with an impressive double-digit gain in revenue, due largely to a significant increase in both advertising and affiliate revenue, while MSG and Rainbow both had double-digit gains in AOCF," concluded Mr. Dolan. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2523 Other Matters On May 2, 2007, Cablevision entered into a merger agreement with Central Park Holding Company LLC, an entity owned by the Dolan Family Group, and Central Park Merger Sub Inc. On Oct. 24, 2007, the proposed merger was submitted to a vote of Cablevision's shareholders and did not receive shareholder approval. Subsequently, the parties terminated the merger agreement pursuant to its terms. About Cablevision Systems Headquartered in Bethpage, New York, Cablevision Systems Corporation (NYSE: CVC) -- http://www.cablevision.com/-- is an entertainment and telecommunications company. Its cable television operations serve more than 3 million households in the New York metropolitan area. The company's advanced telecommunications offerings include its iO: Interactive Optimum digital television, Optimum Online high-speed Internet, Optimum Voice digital voice-over-cable, and its Optimum Lightpath integrated business communications services. Cablevision's Rainbow Media Holdings LLC operates several successful programming businesses, including AMC, IFC, WE tv and other national and regional networks. In addition to its telecommunications and programming businesses, Cablevision owns Madison Square Garden and its sports teams, the New York Knicks, Rangers and Liberty. The company also operates New York's famed Radio City Music Hall and the Beacon Theatre, and owns and operates Clearview Cinemas. * * * As reported in the Troubled Company Reporter on Nov. 1, 2007, Moody's Investors Service confirmed the 'B1' corporate family rating of Cablevision Systems Corporation. However, given the uncertainty regarding the company's fiscal plan following the rejected offer to take the company private, Moody's assigned a developing outlook to Cablevision and Rainbow pending a more thorough understanding of its strategy going forward. CAIRN MEZZ: Moody's Places Ba3-Rated Notes Under Negative Watch --------------------------------------------------------------- Moody's Investors Service placed these notes issued by Cairn Mezz ABS CDO IV, Ltd. on review for possible downgrade: Class Description: $292,000,000 Class A1S Variable Funding Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $78,000,000 Class A1J Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $52,000,000 Class A2 Senior Secured Floating Rate 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: Class Description: $30,500,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $20,000,000 Class B1 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: Ba2, on review for possible downgrade Class Description: $8,500,000 Class B2 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Baa3 -- 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. CALLIDUS DEBT: S&P Puts 'BB' Preliminary Rating on $25.5MM Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Callidus Debt Partners CLO Fund VII Ltd./Callidus Debt Partners CLO Fund VII Inc.'s $545 million floating-rate notes due January 2021. The preliminary ratings are based on information as of Nov. 8, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes, and by the subordinated notes and overcollateralization; -- The cash flow structure, which was subjected to various stresses requested by Standard & Poor's; and -- The transaction's legal structure, including the issuer's bankruptcy remoteness. Preliminary Ratings Assigned Callidus Debt Partners CLO Fund VII Ltd./ Callidus Debt Partners CLO Fund VII Inc. Class Rating Amount ----- ------ ------ A AAA $443,000,000 B AA $24,000,000 C A $33,000,000 D BBB $19,500,000 E BB $25,500,000 Subordinated notes NR $55,000,000 NR - Not rated. CAPITAL AUTO: Fitch To Put BB Rating on $7.963MM Class D Trust -------------------------------------------------------------- Fitch Ratings expects to assign these ratings to Capital Auto Receivables Asset Trust 2007-4: -- $333,000,000 class A-1 'F1+'; -- $376,000,000 class A-2 'AAA'; -- $486,000,000 class A-3 'AAA'; -- $309,946,000 class A-4 'AAA'; -- $51,757,000 class B 'A'; -- $23,888,000 class C 'BBB'; -- $7,963,000 class D 'BB'. CAPITAL AUTO: Moody's Rates $7,963,000 Class D Notes at (P)Ba1 -------------------------------------------------------------- Moody's Investors Service assigned provisional ratings to Capital Auto Receivables Asset Trust 2007-4. The complete rating actions are: Issuer: Capital Auto Receivables Asset Trust 2007-4 -- $333,000,000 Class A-1 Asset Backed Notes, rated (P)P-1 -- $376,000,000 Class A-2 Asset Backed Notes, rated (P)Aaa -- $486,000,000 Class A-3 Asset Backed Notes, rated (P)Aaa -- $309,946,000 Class A-4 Asset Backed Notes, rated (P)Aaa -- $51,757,000 Class B Asset Backed Notes, rated (P)A2 -- $23,888,000 Class C Asset Backed Notes, rated (P)Baa2 -- $7,963,000 Class D Asset Backed Notes, rated (P)Ba1 The ratings are based on the quality of the underlying auto loans and their expected performance, the strength of the transaction's structure, the enhancement provided by subordination, overcollateralization of 0.25% as a percentage of the initial aggregate receivables principal balance, a fully funded non- declining 0.50% reserve account (also expressed as a percentage of the initial aggregate receivables balance), available excess spread, and the experience of GMAC LLC as servicer. CAPITAL AUTO: S&P Assigns 'BB' Prelim. Rating on $7.963MM Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Capital Auto Receivables Asset Trust 2007-4's $1.589 billion asset-backed notes series 2007-4. The preliminary ratings are based on information as of Nov. 8, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The credit quality of the underlying pool, which has a weighted average FICO score of 704.36 and consists of prime automobile loans; -- The timely interest and principal payments made under stressed cash flow modeling scenarios consistent with the ratings assigned to each class of notes; -- The credit enhancement; and -- The sound legal structure. Preliminary Ratings Assigned Capital Auto Receivables Asset Trust 2007-4 Class Rating Type Interest Amount** Legal final rate* maturity ----- ------ ---- -------- ------- ----------- A-1*** A-1+ Senior N.A. $333,000,000 Nov. 2008 A-2 AAA Senior N.A. $376,000,000 May 2010 A-3 AAA Senior N.A. $486,000,000 Nov. 2011 A-4 AAA Senior N.A. $309,946,000 May 2014 B*** A Sub N.A. $51,757,000 May 2014 C*** BBB Sub N.A. $23,888,000 May 2014 D*** BB Sub N.A. $7,963,000 May 2014 * The interest rate of each class of notes will be a fixed rate, a floating rate, or a combination of both if that class has both a fixed-rate tranche and a floating-rate tranche. If the interest rate is floating, the rate will be tied to one-month LIBOR, and the trust will enter into a swap agreement with the swap counterparty. ** To be determined at pricing. *** The class A-1 notes will be sold in one or more private placements, and the class B, C, and D notes may be initially retained by the depositor or sold in one or more private placements. N.A. - Not available. CAREEL BAY: Moody's May Further Cut Caa3 Rating on $10 Mil. Notes ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Careel Bay CDO Limited on review for possible downgrade: Class Description: $52,000,000 Class A2 Senior Secured Floating Rate 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: Class Description: $46,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Baa3, on review for possible downgrade Class Description: $32,000,000 Class B Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: B1, on review for possible downgrade Class Description: $10,000,000 Class C Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Ba2 -- 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. CARINA CDO: S&P Junks Ratings on 10 Certificate Classes ------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the notes issued by Carina CDO Ltd. On Nov. 1, 2007, Standard & Poor's received a notice stating that the majority of the controlling noteholders of Carina were directing the trustee to proceed with the sale/liquidation of the collateral supporting the notes. This notice followed a previous notice declaring an event of default as of Oct. 22, 2007, under Section 5.1(h) of the indenture, which occurred after the class A overcollateralization ratio fell below 101%. While the trustee has not informed us when the collateral will be liquidated, S&P believe the liquidation process has begun. The rating actions reflect Standard & Poor's opinion of the impact of the liquidation of the collateral at what will most assuredly be depressed prices. The controlling class' election to liquidate the collateral is likely to result in collateral valuation risk, potentially affecting all classes of notes. Therefore, these rating actions are more severe than would be justified based solely on the underlying collateral's credit deterioration. The rating actions also reflect Standard & Poor's opinion that there is a high potential for material losses to the noteholders based on the collateral's current market value and S&P's view that market prices may not recover during the liquidation period. As previously stated, these rating actions are based on S&P's expectation that the collateral will be liquidated. If the liquidation notice is rescinded, S&P estimate that they would lower the ratings on the class A and B notes by one to two notches based on their analysis of the decline in the collateral's credit quality, rather than the collateral pool's liquidation value. Carina is a hybrid collateralized debt obligation transaction backed by asset-backed securities. State Street Global Advisors, a division of State Street Bank and Trust Co., is the investment manager. To date, Standard & Poor's has received EOD notices on 14 U.S. CDO of ABS transactions, which contain overcollateralization ratio EOD triggers that are tied to the ratings on the assets that make up the transaction's collateral pool. S&P have not received notices of liquidation for the remaining 13 transactions. If S&P receive notices of acceleration, liquidation, or rescission of any previous actions for any transaction, S&P will adjust its ratings as appropriate. Rating Lowered and Placed on Creditwatch Negative Carina CDO Ltd. Rating ------ Class To From ----- -- ---- A-1 BB/Watch Neg AAA Ratings Lowered and Remains on Creditwatch Negative Carina CDO Ltd. Rating ------ Class To From ----- -- ---- A-2 CCC-/Watch Neg AAA/Watch Neg B-1 CCC-/Watch Neg AA/Watch Neg Ratings Lowered and Removed from Creditwatch Negative Carina CDO Ltd. Rating ------ Class To From ----- -- ---- B-2 CC AA-/Watch Neg C-1 CC A/Watch Neg C-2 CC A-/Watch Neg D-1 CC BBB+/Watch Neg D-2 CC BBB/Watch Neg D-3 CC BBB-/Watch Neg X-1 CC BBB/Watch Neg X-2 CC BBB-/Watch Neg CARMIKE CINEMAS: Moody's Holds B2 Corporate Family Rating --------------------------------------------------------- Moody's Investors Service affirmed the B2 corporate family rating, the B3 probability of default rating, and the B1 senior secured bank rating for Carmike Cinemas Inc. but changed the rating outlook to negative. Notwithstanding improvement in some areas during the third quarter, Carmike continues to under-perform relative to expectations. Another recently executed amendment to its bank credit agreement improves Carmike's flexibility under its bank financial covenants but demonstrates the challenge in meeting forecasts and suggests some lack of visibility on the part of management. Approximately $375 million of rated debt are affected. Carmike Cinemas Inc. -- Affirmed B2 Corporate Family Rating -- Affirmed B3 Probability of Default Rating -- Affirmed B1 Senior Secured Bank Credit Facility Rating, LGD2, 28% Outlook: Changed to Negative from Stable Absent fundamental improvement that contributes to an increase in free cash flow and a decline in Moody's-defined leverage to the low 6 times level or below, or if liquidity tightens, Moody's would likely downgrade the corporate family rating to B3. The B2 corporate family rating continues to reflect Carmike's high leverage, sensitivity to product from movie studios and lack of scale, as well as a weak industry growth profile. The company's dominant position in targeted smaller markets, good liquidity, strong concession margins and expectations for modest cash flow growth from both the digital rollout and the moderation of professional fees related to its restatement support the rating. Carmike operates approximately 2,500 screens and 300 theaters and annual maintains its headquarters in Columbus, Georgia. Its annual revenue is approximately $500 million. CASH TECHNOLOGIES: Receives Noncompliance Notice from AMEX ---------------------------------------------------------- The American Stock Exchange has notified Cash Technologies Inc. that it does not meet certain of the Exchange's continued listing standards as stated in part 10 of the AMEX Company Guide. Specifically, Cash Tech is not in compliance with: -- Section 1003(a)(i) of the company guide with shareholders' equity of less than $2 million and losses from continuing operations and/or net losses in two out of its three most recent years; -- Section 1003(a)(ii) of the company guide with shareholders' equity of less than $4 million and losses from continuing operations and/or net losses in three out of its four most recent years; -- Section 1003(a)(iii) of the company guide for having shareholders' equity of less than $6 million and losses from continuing operations and/or net losses in its five most recent fiscal years; -- Section 1003(a)(iv) of the company guide in that it has sustained such losses which are so substantial to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, as to whether such company will be able to continue operations and/or meet its obligations as they mature; and -- Section 301 of the company guide in that Cash Tech issued or authorized its transfer agent or registrar to issue or register, additional securities of a listed class prior to receiving notification from the Exchange that the securities have been approved for listing. In addition, in accordance with Section 610(b) of the company guide, a company that receives an audit opinion that contains a going concern qualification must make a public statement through the news media disclosing the receipt of such qualified opinion. In its Form 10-KSB for the fiscal year ended May 31, 2007, Cash Tech received an audit opinion that contained such a qualification but did not issue such a press statement in a timely manner. Accordingly, notice is hereby given of the going concern qualification in the May 31, 2007, audited financial statements. To maintain its listing, Cash Tech must submit a plan by Dec. 3, 2007, advising the Exchange of actions it has taken, or will take, that would bring Cash Tech into compliance with the continued listing standards above by Feb. 1, 2008. The Exchange will evaluate the plan and make a determination as to whether Cash Tech has made a reasonable demonstration in the plan of an ability to regain compliance with the Continued Listing Standards by Feb. 1, 2008, in which case the plan will be accepted. If the Exchange does not accept the plan or if Cash Tech fails to meet the targets of the plan, the Exchange may initiate delisting procedures. If the plan is accepted, Cash Tech may be able to continue its listing during the plan period, during which time Cash Tech is required to make progress consistent with the plan and to regain compliance with the listing standards. The company intends to submit a plan to AMEX that shows Cash Tech's ability to regain compliance with all of the AMEX listing requirements. Specifically, to address liquidity issues the company has raised $750,000 in new working capital of which $250,000 has funded and the remainder is scheduled to fund on Tuesday, Nov. 13, 2007. Furthermore, the company has engaged New York investment banking firm HPC Capital Management Corp. to arrange an additional $2,000,000 in working capital. Such financings, if completed, are anticipated to carry the company to a cash flow breakeven point. In addition, the company is pursuing plans to restore its stockholders' equity to meet the AMEX requirements. In particular, the company is negotiating equity investments in complimentary businesses in the healthcare industry. Also the company has submitted an offer to acquire the assets of Champion Parts Inc. through its pending bankruptcy action. The default by Champion of its $9.5 million note to Cash Tech was the primary cause of the reduction of the company's stockholders' equity. If successful, these actions would, in the opinion of management, bring the company back into compliance with the AMEX listing standards. "We have a successful track record of increasing stockholder equity," Bruce Korman, Cash Tech's CEO, stated. "In 2005 and 2006 we successfully met targets to increase equity by more than $16 million to regain compliance with AMEX requirements. We are again taking aggressive action to protect our AMEX listing." "In addition we are continuing to grow our core business and believe that positive developments in the marketing of our products will begin to generate increased market support and share value," Mr. Korman added. About Cash Technologies Headquartered in Los Angeles, Cash Technologies Inc. (AMEX: TQ) -- http://www.cashtechnologies.com/-- develops and markets innovative data processing solutions in the healthcare and financial services industries. Cash Technologies Inc.'s consolidated balance sheet at Aug. 31, 2007, showed $6.5 million in total assets, $10.6 million in total liabilities, and $105,188 in minority interest, resulting in a $4 million total stockholders' deficit. Going Concern Doubt Vasquez & Company LLP expressed substantial doubt about Cash Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended May 31, 2007. The auditing firm noted that the company has suffered significant recurring losses and is in immediate need of substantial working capital to continue its business and operations. CENTRE SQUARE: Moody's Junks Rating on $30 Million Class E Notes ---------------------------------------------------------------- Moody's Investors Service placed these notes issued by Centre Square CDO, Ltd. on review for possible downgrade: Class Description: $150,000,000 Class A-1 First Priority Senior Secured Floating Rate Delayed Draw Notes due 2051 -- 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: Class Description: $97,500,000 Class A-2A Second Priority Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $97,500,000 Class A-2B Second Priority Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $25,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aaa -- Current Rating: Baa2, on review for possible downgrade Class Description: $50,000,000 Class B Fourth Priority Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aa2 -- Current Rating: Ba1, on review for possible downgrade Class Description: $22,000,000 Class C Fifth Priority Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aa3 -- Current Rating: B1, on review for possible downgrade Class Description: $20,000,000 Class D Sixth Priority Senior Secured Floating Rate Deferrable Interest Notes due 2051 -- Prior Rating: A2 -- Current Rating: Caa1, on review for possible downgrade In addition Moody's also downgraded these notes: Class Description: $30,000,000 Class E Seventh Priority Senior Secured Floating Rate Deferrable Interest Notes due 2051 -- Prior Rating: Baa2 -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. CHARLES FORT: Moody's Places Caa3 Rating Under Negative Review -------------------------------------------------------------- Moody's Investors Service placed these notes issued by Charles Fort CDO I, Ltd. on review for possible downgrade: Class Description: $220,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $60,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $50,000,000 Class B Third Priority Senior Secured Floating Rate 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: Class Description: $24,000,000 Class C Fourth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $6,000,000 Class D-1 Fifth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2047 -- Prior Rating: Baa1 -- Current Rating: Ba3, on review for possible downgrade Class Description: $13,000,000 Class D-2 Sixth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: B1, on review for possible downgrade Class Description: $10,000,000 Class E Seventh Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2047 -- Prior Rating: Ba1 -- 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. CHARTER COMMS: Sept. 30 Balance Sheet Upside-Down by $7.334 Bil. ---------------------------------------------------------------- Charter Communications Inc. reported Thursday its third-quarter 2007 financial and operating results. At Sept. 30, 2007, Charter Communications Inc.'s consolidated balance sheet showed $14.919 billion in total assets, $22.052 billion in total liabilities, $196 million in minority interest, and $5 million in redeemable preferred stock, resulting in a $7.334 billion total shareholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $344 million in total current assets available to pay $1.410 billion in total current liabilities. The company reported a net loss of $407 million on revenues of $1.525 billion for the third quarter of 2007, compared with a net loss of $133 million on revenues of $1.388 billion in the same period last year. Third-quarter revenues increased 9.9% and operating costs and expenses increased 10.2% compared to year-ago results. Net loss increased primarily due to non-recurring gains in the third quarter of 2006 when the company recognized a $128 million gain on a debt exchange and a $200 million gain on the sale of discontinued operations. Operating income from continuing operations increased to $107 million in the third quarter of 2007 from $66 million in the third quarter of 2006, primarily due to revenue growth exceeding operating costs and expense growth by $43 million. Expenditures for property, plant, and equipment for the third quarter of 2007 were $311 million, compared to third-quarter 2006 expenditures of $256 million. The increase in capital expenditures primarily reflects year-over-year increases in customer premise equipment, support capital, and scalable infrastructure. Nine-Months Results Revenues for the first nine months of 2007 were $4.449 billion, an increase of 8.8% year over year. Operating costs and expenses were $2.903 billion, an increase of 8.3% compared to year-ago actual results. Adjusted EBITDA for the first nine months of 2007 was $1.546 billion, a 9.6% increase compared to the year-ago period. Operating income from continuing operations more than doubled to $463 million in the first nine months of 2007, compared to $204 million in the first nine months of 2006. The primary drivers of the increase include revenue growth exceeding operating costs and expense growth during the period by $135 million, and depreciation and amortization expenses declining by $25 million year over year. In addition, asset impairment charges of $159 million were recorded in the first nine months of 2006, while similar charges of $56 million were taken in the 2007 nine-month period. Net loss for the first nine months of 2007 was $1.148 billion. For the first nine months of 2006, Charter reported a net loss of $974 million. Expenditures for property, plant, and equipment for the first nine months of 2007 were $890 million, compared to $795 million in the first nine months of 2006. Charter expects that approximately three-quarters of its projected $1.2 billion of 2007 capital expenditures will be directed toward success-based activities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2524 Net cash flows from operating activities for the first nine months of 2007 were $327 million, compared to $348 million for the first nine months of 2006. As of Sept. 30, 2007, Charter had $19.7 billion in long-term debt and $59 million of cash on hand. Charter expects that cash on hand, cash flows from operating activities, and amounts available under its credit facilities will be adequate to meet its cash needs through 2008. In October of 2007 Charter successfully completed an exchange of $364 million of its existing convertible senior notes due 2009 into $479 million of new convertible senior notes due in 2027, subject to earlier redemption at the option of the company or repurchase at the option of the holders. This transaction resulted in 88% of the convertible senior notes being exchanged, leaving outstanding $49 million of convertible senior notes due 2009. Also, effective Nov. 1, 2007, Charter swapped its West Sacramento, California cable system serving 19,000 analog video customers for WaveDivision's Los Angeles area cable systems serving the communities of Cerritos and Ventura, serving 14,200 analog video customers. This trade reflects the company's continued effort to further strengthen its strategic clusters. About Charter Communications Headquartered in St. Louis, Missouri, Charter Communications Inc. (NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband communications company and a publicly traded cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. * * * As reported in the Troubled Company Reporter on Oct. 5, 2007, Fitch Ratings assigned a 'CCC/RR4' rating to Charter Communications Inc.'s $479 million issuance of 6.5% convertible senior notes due 2027. Charter's Issuer Default Rating is 'CCC'. The Rating outlook for Charter and its subsidiaries is Stable. CHRYSLER LLC: S&P Holds 'B' Rating and Removes Positive Watch ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. The outlook is negative. The CreditWatch placement resulted from the announcement that day by General Motors Corp. that it had reached a contract agreement with its main labor union, the United Auto Workers. As S&P expected, Chrysler reached a largely similar agreement that caused S&P to review the company's rating and outlook. Also, S&P assigned its bank loan and recovery ratings to Chrysler's $7.5 billion, secured first-lien term loan. The loan is rated 'BB-', with a recovery rating of '1', indicating that lenders can expect very high (90% to 100%) recovery in the event of a payment default. S&P also raised the rating on the $2 billion, second-lien term loan to 'B' from 'B-', and the recovery rating was revised to '4', indicating that lenders can expect average (30% to 50%) recovery in the event of a payment default, from '5'. The negative outlook on the corporate credit rating reflects S&P's view that Chrysler's exposure to weakening industry conditions in North America remains a key risk factor, which could cause greater-than-expected cash outflows during 2008. "We still view the company's liquidity as substantial for now and the new labor contract with the UAW as a significant long-term positive for the company's efforts to return its North American automotive operations to positive cash flow generation," said Standard & Poor's credit analyst Robert Schulz. "However, the greatest portion of cash benefits from the contract will not begin to accrue to Chrysler until 2010. The health care cost savings are subject to final court approval, but S&P do not expect this to be an issue," he continued. Chrysler faces several serious challenges during the next two years. First and foremost is the weak outlook for U.S. light- vehicle sales, which are expected to be flat at best in 2008 versus 2007. The current rating reflects the assumption that Chrysler will use cash in 2008 and 2009, but it does not reflect the much sharper use of cash that would result from the type of decline in U.S. light-vehicle sales that would accompany a recession. S&P expect U.S. light-vehicle sales to be about 16 million units in 2008, virtually flat with sales in 2007, which turned out to be a weaker year for sales than initially expected. Other uses of cash will include cash restructuring costs (including the cost of attrition plans, which Chrysler may negotiate with the UAW) and Chrysler's need to fund certain UAW contract provisions prior to 2010. S&P expect over time to place greater weight on the substantial health care and other cash savings that will begin in 2010 as stipulated in the current UAW contract. But it is important to note that Chrysler's automotive results, industry conditions, and the economic outlook will be crucial components of any such future review, and accordingly, the threshold for an outlook revision to stable in 2008 is fairly high, given the current lack of visibility into prospective results in North America. The rating on Chrysler reflects the wide-ranging challenges the company faces in North America, where the vast majority of its automotive operations are located. The company is more heavily reliant on North American sales of light trucks than either of its other Michigan-based competitors, but it benefits from its strong presence in the minivan segment and ownership of the iconic Jeep brand. Although the company has been profitable in recent years, S&P expect it to remain unprofitable into 2009 and perhaps longer. Chrysler's new management team is moving quickly to respond to the massive challenges of excess capacity and headcount and adverse product mix trends by instituting additional headcount reductions, closing plants, and reducing the number of models, in addition to implementing a restructuring plan that was first announced in February 2007. However, as with past restructurings, the ultimate success depends largely on whether the company can maintain its market share at a level consistent with its future capacity. In addition, near-term success will rest at least partly on the U.S. economy's avoiding a recession in 2008. The fate of Chrysler's restructuring also depends greatly on how the company's product mix, vehicle pricing, and market share evolve--and there is greater uncertainty in these areas, given the vagaries of consumer demand. Chrysler's U.S. light-vehicle market share has been more stable than that of its other Michigan-based competitors. Furthermore, Chrysler's sales mix of light trucks (crossover utility vehicles [CUVs], SUVs, vans, and pickups) and cars is more truck-weighted than those of its competitors, making the company more vulnerable to further adverse shifts in many of these segments. One key variable into 2008 will be the U.S. full-size pickup truck market, which is soft because of the weak housing market and high gas prices. In addition, formidable competitor Toyota Motor Corp. has a new full-size pickup truck that is manufactured in Texas. Chrysler has a fairly distant No. 3 position (17% share through October 2007 versus 41% and 30% for GM and Ford, respectively) in this market, which generates a disproportionate share of profits. Chrysler is underrepresented in the growing CUV segment; it had only an 8% share through the first 10 months of 2007. Although it will be introducing more models into this already well-populated segment, garnering critical market share will not be easy. CUVs are generally not as profitable as SUVs or full-size pickups, so the increasing customer substitution of CUVs for larger vehicles will likely reduce total profit contribution. As with its overall market share, Chrysler's share in the passenger car segment has been more stable than that of its Michigan-based competitors, but the company is underrepresented here, too (cars represent about 27% of Chrysler's product mix), compared with GM (39%) and Ford (34%). Chrysler's car sales are also highly concentrated among a few models. The weakness in Chrysler's automotive performance and the costs of executing a turnaround will reduce cash balances that were sizable at the close of the Chrysler purchase. Chrysler's pension funding position has improved in recent years, and this is less of a concern currently, as the U.S. hourly and salaried plans collectively were overfunded at the end of 2006. DCFS is expected to continue performing its primary function of providing retail and wholesale financing of Chrysler vehicles. S&P expect DCFS to remain profitable. Its portfolio is considered high quality, and S&P expect it to remain so. However, the financial affiliate is not expected to be a source of cash dividends for Chrysler. The outlook on Chrysler and DCFS is negative. S&P's primary concern is Chrysler's need to return its North American automotive operations--the vast majority of the company's business--to profitability. The ratings could be lowered, despite the health care savings that will start to accrue in 2010, if S&P came to expect that Chrysler's substantial cash outflow would fail to continue moderating or begins to worsen because of setbacks, whether Chrysler-specific or stemming from market conditions. S&P do not expect to revise the outlook to stable or positive within the next several quarters, given the uncertain economic outlook and ongoing execution risk in its turnaround plan. CLASS V FUNDING: Moody's Junks Ratings on $90 Million Notes ----------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade these notes issued by Class V Funding III, Ltd.: Class Description: $39,200,000 Class S Notes due 2015 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $500,000,000 Class A1 Floating Rate Notes due 2052 -- Prior Rating: Aaa -- Current Rating: Baa1, on review for possible downgrade Class Description: $200,000,000 Class A2 Floating Rate Notes due 2052 -- Prior Rating: Aaa -- Current Rating: Baa2, on review for possible downgrade Class Description: $120,000,000 Class A3 Floating Rate Notes due 2052 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $75,000,000 Class A4 Floating Rate Notes due 2052 -- Prior Rating: Aa2 -- Current Rating: B2, on review for possible downgrade Class Description: $50,000,000 Class B Deferrable Floating Rate Notes due 2052 -- Prior Rating: A2 -- Current Rating: Caa2, on review for possible downgrade Moody's also announced that is has downgraded these notes: Class Description: $35,000,000 Class C Deferrable Floating Rate Notes due 2052 -- Prior Rating: Baa2 -- Current Rating: Ca Class Description: $5,000,000 Class Q Combination Notes due 2052 -- Prior Rating: Baa3 -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. CLEAR CHANNEL: Earns $279.7 Million in 3rd Quarter Ended Sept. 30 ----------------------------------------------------------------- Clear Channel Communications Inc. reported Thursday results for its third quarter ended Sept. 30, 2007. Clear Channel's net income increased 51% to $279.7 million in the third quarter of 2007 as compared to $185.9 million in the third quarter of 2006. The company reported revenues of $1.7 billion in the third quarter of 2007, an increase of 5% from the $1.6 billion reported for the third quarter of 2006. Included in the company's revenue is a $32.4 million increase due to movements in foreign exchange; excluding the effects of these movements in foreign exchange, revenue growth would have been 3%. Clear Channel's operating expenses increased 6% to $1.1 billion during the third quarter of 2007 compared to 2006. Included in the company's 2007 expenses is a $27.0 million increase due to movements in foreign exchange; excluding the effects of these movements in foreign exchange, growth in expenses would have been 3%. Clear Channel's income before discontinued operations increased 51% to $256.3 million, as compared to $169.8 million for the same period in 2006. The company's OIBDAN was $583.5 million in the third quarter of 2007, a 4% increase from 2006. The company defines OIBDAN as net income adjusted to exclude non-cash compensation expense, income or loss from discontinued operations, minority interest expense, net of tax, income tax benefit or expense, other income or expense - net, equity in earnings of nonconsolidated affiliates, interest expense, gain or loss on disposition of assets - net, and depreciation and amortization. Mark P. Mays, chief executive officer of Clear Channel Communications, commented, "Our third quarter revenue and OIBDAN growth was fueled by another exceptional performance from our outdoor advertising business, which continues to post consistent growth on a global basis. Once again, our radio management team delivered results that outperformed the rest of the industry. Going forward, we remain committed to strengthening the value proposition we deliver to our audiences and advertisers as we continue to prudently invest in our brands, our content and our multi-channel distribution. Merger Transaction The company's shareholders approved the adoption of the merger agreement, as amended, with a group led by Thomas H. Lee Partners L.P. and Bain Capital Partners LLC on Sept. 25, 2007. Under the terms of the merger agreement, as amended, the company's shareholders will receive $39.20 in cash for each share they own plus additional per share consideration, if any, if the closing of the merger occurs after Dec. 31, 2007. As an alternative to receiving the $39.20 per share cash consideration, the company's unaffiliated shareholders were offered the opportunity on a purely voluntary basis to exchange some or all of their shares of Clear Channel common stock on a one-for-one basis for shares of Class A common stock in the new company formed by the private equity group to acquire the company (subject to aggregate and individual caps), plus the additional per share consideration, if any. Holders of shares of the company's common stock (including shares issuable upon conversion of outstanding options) in excess of the aggregate cap provided in the merger agreement, as amended, elected to receive the stock consideration. As a result, unaffiliated shareholders of the company will own an aggregate of 30,612,245 shares of CC Media Holdings Inc. Class A common stock upon consummation of the merger. The consummation of the merger is subject to antitrust clearances, FCC approval and other customary closing conditions. Liquidity and Financial Position For the nine months ended Sept. 30, 2007, cash flow provided by operating activities was $984.7 million, cash flow used by investing activities was $261.3 million, cash flow used by financing activities was $872.7 million, and net cash provided by discontinued operations was $157.4 million for a net increase in cash of $8.1 million. As of Nov. 7, 2007, the company had approximately $1.3 billion available on its bank credit facility. About Clear Channel Clear Channel Communications Inc. -- http://www.clearchannel.com/ -- (NYSE: CCU) is a global media and entertainment company specializing in "gone-from-home" entertainment and information services for local communities and premiere opportunities for advertisers. Based in San Antonio, Texas, the company's businesses include radio, television and outdoor displays. * * * As reported in the Troubled Company Reporter on Sept. 27, 2007, Fitch Ratings said it expects to downgrade Clear Channel Communications Inc.'s Issuer Default Rating to 'B' from 'BB-'. The rating outlook is expected to be stable. Existing ratings remain on rating watch negative pending the closing of the merger transaction and review of final documentation. CLEAR CHANNEL: Providence Mulls Rescinding $1.2 Billion Contract ---------------------------------------------------------------- Clear Channel Communications Inc.'s merger agreement with Thomas H. Lee Partners LP and Bain Capital Partners LLC faces another complication after Providence Equity Partners Inc. considered backing out from a $1.2 billion deal to acquire 56 of Clear Channel's television stations, The Wall Street Journal reports. The merger agreement, entered into in November 2006 by Clear Channel and the private equity group, was approved by Clear Channel shareholders on Sept. 25, 2007. The transaction has yet to close pending regulatory approval. According to WSJ, the Providence deal, although not related to the buyout, is expected to slow down the pace of the merger process in the event Providence walks away. A person familiar with the transaction told WSJ that Providence has reservations about the transaction because of its view of the long-term prospects of Clear Channel's local TV stations. Providence, WSJ's source adds, may try to renegotiate the purchase price, and should the deal fails, it would have to pay a $45 million break-up fee. Based in San Antonio, Texas, Clear Channel Communications Inc. (NYSE:CCU) -- http://www.clearchannel.com/-- is a media and entertainment company specializing in "gone from home" entertainment and information services for local communities and premiere opportunities for advertisers. The company's businesses include radio, television and outdoor displays. Outside U.S., the company operates in 11 countries -- Norway, Denmark, the United Kingdom, Singapore, China, the Czech Republic, Switzerland, the Netherlands, Australia, Mexico and New Zealand. * * * As reported in the Troubled Company Reporter on Sept. 27, 2007, Fitch Ratings said it expects to downgrade Clear Channel Communications Inc.'s Issuer Default Rating to 'B' from 'BB-'. The rating outlook is expected to be stable. Existing ratings remain on rating watch negative pending the closing of the merger transaction and review of final documentation. CLIFTON I: Moody's Places Caa3-Rated Notes Under Negative Review ---------------------------------------------------------------- Moody's Investors Service placed these notes issued by Clifton I CDO, Ltd. on review for possible downgrade: Class Description: $55,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $65,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes Due 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $67,000,000 Class A-4 Fourth Priority Senior Secured Floating Rate Notes Due 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $65,000,000 Class B Fifth Priority Senior Secured Floating Rate Notes Due 2052 -- 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: Class Description: $24,000,000 Class C Sixth Priority Senior Secured Deferrable Floating Rate Notes Due 2052 -- Prior Rating: A2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $9,000,000 Class D Seventh Priority Mezzanine Deferrable Floating Rate Notes Due 2052 -- Prior Rating: Baa2 -- Current Rating: B1, on review for possible downgrade Class Description: $15,000,000 Income Notes -- Prior Rating: Ba2 -- 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. COMPASS DIVERSIFIED: Earns $4.4 Million in 3rd Qtr. Ended Sept. 30 ------------------------------------------------------------------ Compass Diversified Holdings and Compass Group Diversified Holdings LLC (collectively, "CODI" or the "company") disclosed Friday the consolidated results of operations for the three and nine months ended Sept. 30, 2007. CODI reported net income of $4.4 million on net sales of $235.3 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $3.9 million on net sales of $159.1 million in the same quarter in 2006. For the nine-months ended Sept. 30, 2007, net sales were $629.8 million compared to $239.3 million in the same period last year. Net income was $43.8 million compared with a net loss of $1.8 million in the nine-months ended Sept. 30, 2006. CODI reported cash flow available for distribution of $12.8 million for the quarter ended Sept. 30, 2007, compared to $7.9 million in the prior year quarter. For the nine-months ended Sept. 30, 2007, CAD was $28.6 million. Cumulatively, from its initial public offering on May 16, 2006, through Sept. 30, 2007, CODI has reported CAD of $52.3 million and a coverage ratio of approximately 1.3x on all distributions paid through Oct. 26, 2007. The CAD for the quarter ended and nine months ended Sept. 30, 2007 only reflects the cash flows of American Furniture Manufacturing Inc. since its date of acquisition on Aug. 31, 2007, and the cash flows of Halo Branded Solutions Inc. and Aeroglide Corporation from the date of their acquisition on Feb. 28, 2007. On Oct. 9, 2007, CODI's Board of Directors declared a distribution of $0.325 per share, which was paid on Oct. 26, 2007, to all shareholders of record as of Oct. 23, 2007. Commenting on the company's performance, Joe Massoud, chief executive officer of Compass Diversified Holdings, stated, "We are pleased with the performance of each of our seven subsidiary businesses, including the three acquired platform subsidiaries added in 2007. Their contributions have allowed us to increase our quarterly cash distribution by approximately 24% since our initial public offering in May of 2006. While there is evidence that the economy appears to be softening, we believe that our diversified mix of subsidiaries will continue to perform well and anticipate the combined operating results for our seven subsidiary businesses will continue to be in line with our expectations for the remainder of 2007. On the whole, our businesses serve numerous domestic and international geographic markets, participate in a wide variety of industries and have limited exposure to individual customers. Even the most cyclical of our businesses, our staffing company, has substantially outperformed its industry and its competitors in revenue maintenance and growth over the course of 2007. "We are excited about the opportunity presented by the current economic environment and financing conditions in our markets. Our business model allows us to finance add-on or new platform acquisitions efficiently without specific transaction financing, giving us a significant advantage as compared to other potential acquirors. We are confident in our ability to capitalize on this advantage over the coming twelve to eighteen months. Mr. Massoud added, "In preparing for what we consider to be a potentially attractive acquisition environment, we are considering the potential issuance of up to $200 million of term debt to raise additional capital. If raised, this term debt would supplement our current revolver, increasing our capacity to pursue interesting add-on and platform subsidiary opportunities. Accordingly, we have asked S&P and Moody's to rate the company as well as the potential term debt issuance. We received a corporate credit rating and a term debt rating of BB- from S&P and a Ba3 corporate credit rating and a term loan rating of B1 from Moody's. "One other recent item on which I would like to comment is our recent filing of two registration statements. One of these enables our board to implement a distribution reinvestment plan for our shareholders, and the other registers CODI shares held by Compass Group Investments Ltd., Concorde Equity Inc. and Pharos Inc. This was done under a contractual commitment that we made at the time of the issuance of the shares and not in response to any specific demand made by any of these shareholders. To our knowledge, there are currently no plans by any of these parties to sell any of their owned shares," concluded Massoud. As of Sept. 30, 2007, the company had approximately $6.4 million in cash and cash equivalents. The company had $24.0 million in revolving loans outstanding and approximately $228 million in availability under its revolving credit facility with Madison Capital Funding LLC. On Aug. 31, 2007, the company acquired American Furniture for approximately $95.6 million, representing under five and a half times American Furniture's current earnings before interest, taxes, depreciation and amortization. Balance Sheet At Sept. 30, 2007, CODI's consolidated balance sheet showed $708.2 million in total assets, $231.4 million in total liabilities, $30.4 million in minority interests, and $446.5 million in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2527 About Compass Diversified Holdings Headquartered in Westport, Conn., Compass Diversified Holdings (Nasdaq GS: CODI) -- www.compassdiversifiedholdings.com/ -- is a Delaware statutory trust that was formed on Nov. 18, 2005, to acquire and manage a group of middle market businesses that are headquartered in North America. CODI provides public investors with an opportunity to participate in the ownership and growth of companies which have historically been owned by private equity firms, wealthy individuals or families. Compass Group Diversified Holdings LLC, a Delaware limited liability company, was also formed on Nov. 18, 2005. In accordance with the Trust Agreement, Compass Diversified Holdings is the sole owner of 100% of the trust's Interests of Compass Group Diversified Holdings LLC. Compass Group Diversified Holdings LLC is the operating entity with a board of directors and other corporate governance responsibilities, similar to that of a Delaware corporation. Compass Diversified Holdings is managed by Compass Group Management LLC, which was established in 1998 as a private equity manager for an offshore philanthropic foundation established by J. Torben Karlshoej, the late founder of Teekay Shipping Corporation. * * * As reported in the Troubled Company Reporter on Nov. 9, 2007, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Compass Group Diversified Holdings LLC. The outlook is stable. At the same time, S&P assigned bank loan and recovery ratings to Compass's $200 million first-lien term loan due 2013. The loan is rated 'BB-' with a recovery rating of '4', indicating S&P's expectation of average (30%-50%) recovery in the event of a payment default. COMPASS DIVERSIFIED: Moody's Assigns Ba3 Corporate Family Rating ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 first time corporate family rating and a B1 probability of default rating to Compass Diversified Holdings. At the same time, Moody's assigned a Ba1 rating to the $300 million undrawn senior secured revolving credit facility, a B1 rating to the $200 million senior secured term loan and a speculative grade liquidity rating of SGL 1. The proceeds from the proposed $200 million term loan will be used to refinance roughly $40 million of existing indebtedness and to partially fund future acquisitions. The ratings outlook is stable. Approximately $500 million of rated debt are affected. Compass' credit profile benefits from its strong industry diversification with seven majority owned subsidiaries operating in essentially seven unrelated industries. There largest subsidiaries comprise CBS Personnel (employee staffing services), Advanced Circuit (prototype circuit boards) and American Furniture Manufacturing (upholstered furniture manufacturing). Compass' business strategy is to acquire and manage businesses that operate in industries with long-term macroeconomic growth opportunities, generate positive and stable cash flows, face minimal threats of technological or competitive obsolescence and have strong management teams largely in place. "The company's Ba3 rating is supported by its strong cash flow relative to debt with proforma consolidated retained cash flow to adjusted debt of over 30% for the twelve months ended June 2007 and free cash flow to adjusted debt in the mid single digits for the same period," said Kevin Cassidy, Vice President/Senior Credit Officer at Moody's Investors Service. Retained cash flow is calculated as cash flow from operations less working capital changes and distributions (dividends) and free cash flow is computed as cash flow from operations less distributions and CAPEX. Debt is adjusted for the capitalization of leases. Compass' ratings also benefit from other strong credit metrics with leverage under 3x (measured as adjusted debt/EBITDA) and interest coverage (measured as EBITA/interest) approaching 4x. Compass' ratings are constrained by the high level of cash distributions to its shareholders and the lack of significant geographic diversification outside of the United States. "The ratings are also tempered by the company's limited track record and the inherent risks/uncertainties of Compass' business model of periodically selling its operating subsidiaries and making acquisitions to increase shareholder returns." noted Cassidy. The Ba1 rating for the revolver and the B1 term loan rating reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B1, and a loss given default of LGD 2, 13%, for the revolver and LGD 4, 52%, for the term loan. Moody's used a 65% recovery rate as there is only first lien bank debt in the company's capital structure. The term loan contains a "last out" provision whereby any payments, including in liquidation, are required to be applied to the revolver before the term loan. The term loan and revolver are issued by Compass Diversified Holdings and are not guaranteed by it operating subsidiaries, but are secured on a first lien basis by Compass' assets, including intercompany loans, which are secured on a first lien basis by each subsidiary's assets. Despite the lack of upstream guarantees by the operating subsidiaries, the intercompany loans at each subsidiary are structurally senior to the operating subsidiaries trade payables and operating leases. The final credit agreement is anticipated to contain customary limitations, an excess cash flow sweep of 50% if leverage, as defined, is lower than 3.25x and financial covenants governing maximum leverage (3.5x), minimum interest coverage (2.75x) and minimum fixed charge coverage (1.5x). The SGL 1 speculative grade liquidity rating reflects Compass' strong liquidity profile with operating cash flow of around $50 million, access to an undrawn $300 million revolver and sufficient cushion under its proposed financial covenants. The company's liquidity profile also benefits from its ability to sell its subsidiaries to raise cash. The speculative grade liquidity rating also assumes that the revolver will not be used to fund any acquisitions through the end of 2008. These ratings/assessments were assigned: -- Corporate Family Rating, rated Ba3; -- Probability of Default Rating, rated B1; -- $200 Million Senior Secured Term Loan, rated B1 (LGD4, 52%); -- $300 Million Senior Secured Revolving Credit Facility, rated Ba1 (LGD2, 13%); -- Speculative grade liquidity rating, SGL 1 The company holds majority ownership interests in seven distinct unrelated operating subsidiaries: CBS Personnel Holdings, Advanced Circuits, American Furniture Manufacturing, Aeroglide Corp., Halo Branded Solutions, Silvue Technologies and Anodyne Medical Devices. Its strategy is to acquire and manage businesses that operate in industries with long-term macroeconomic growth opportunities and have positive and stable cash flows. Proforma revenue for the 12 months ended June 30, 2007, approximated $1 billion. COMPASS MINERALS: Sept. 30 Balance Sheet Upside-Down by $769 Mil. ----------------------------------------------------------------- Compass Minerals International Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $721.6 million in total assets and $769.9 million in total liabilities, resulting in a $48.3 million total shareholders' equity. Compass Minerals International Inc. reported net earnings of $6.7 million, including a $4.1 million non-cash benefit from the partial release of a tax reserve, in the third quarter of 2007. Excluding the one-time benefit, net earnings were $2.6 million, compared to net earnings of $2.3 million in the 2006 quarter. Sales for the third quarter of 2007 of $139.5 million increased $15.9 million, or 13% compared to $123.6 million for the same quarter of 2006. Product sales for the third quarter of 2007 of $99.2 million increased $8.1 million, or 9% compared to $91.1 million for the same period in 2006 primarily reflecting price improvements for North American salt products and specialty potash fertilizer products and increased sales volumes for our North American highway deicing products. Gross profit for the third quarter of 2007 of $32.5 million increased $2.9 million or 10% compared to $29.6 million in the third quarter of 2006, mainly reflecting product sales price improvements partially offset by higher production costs for salt and specialty fertilizer products. As a percent of sales, the gross margin percent decreased slightly to 23% from 24% due to lower margins on the company's highway deicing products. Operating earnings declined to $16.3 million compared to operating earnings of $16.9 million in the 2006 quarter. SG&A expenses for the third quarter of 2007 of $16.2 million increased $3.5 million, or 28% compared to $12.7 million for the same period of 2006. The increase in expense for 2007 reflects higher consulting and professional service costs, higher employee costs including compensation, benefits and training programs, additional expenses from the newly consolidated records management business and higher depreciation expense attributable to newly installed information systems. Cash flows from operations for the nine months ended Sept. 30, 2007 improved by $7.8 million, or 10% percent, over the comparable prior-year period. "Compass Minerals continues to strengthen its summer-season sales through pricing and mix-improvement strategies," said Angelo Brisimitzakis, Compass Minerals president and chief executive officer. "Our results this quarter also reflect our continuing investments in initiatives that will enable Compass Minerals to deliver profitable long-term growth and sustainable shareholder value creation." Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?251c About Compass Minerals Based in the Kansas City, Compass Minerals International Inc. (NYSE: CMP) -- http://www.compassminerals.com/-- is a producer of inorganic minerals, including salt, sulfate of potash specialty fertilizer and magnesium chloride. The company provides highway deicing salt to customers in North America and the United Kingdom, and produces and distributes consumer deicing and water conditioning products, ingredients used in consumer and commercial foods, specialty fertilizers, and products used in agriculture and other consumer and industrial applications. Compass Minerals also provides records management services to businesses throughout the U.K. * * * As reported in the Troubled Company Reporter on Oct. 11, 2007, Standard & Poor's Ratings Services raised its ratings on Compass Minerals Group Inc. and its holding company, Compass Minerals International Inc., including raising its corporate credit rating to 'BB-' from 'B+'. In addition, Standard & Poor's assigned a 'BB' rating and '2' recovery rating to the company's proposed $130 million term loan B-2. At the same time, the 'BB' rating on the company's existing senior secured bank credit facility was affirmed. However, the recovery rating was revised to '2' from '1', indicating the expectation of substantial (70%- 90%) recovery in the event of a payment default. The outlook is stable. As reported in the Troubled Company Reporter on Oct. 8, 2007, Moody's Investors Service affirmed the Ba3 corporate family rating of Compass Minerals Group Inc. and downgraded the issue ratings on the company's revolving credit facility and term loan to Ba2 from Ba1 after the company's statement that it is tendering for its 12.75% Senior Discount Notes due 2012. CONNACHER OIL: Pod 1 Commissioning Cues S&P to Lift Rating ---------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit rating on Calgary, Alberta-based Connacher Oil and Gas Ltd. to 'BB-' from 'B+'. At the same time, Standard & Poor's assigned its 'BB' debt rating, with a recovery rating of '2', to Connacher's proposed $600 million second-lien senior secured eight-year notes. The '2' recovery rating indicates an expectation of substantial (70%-90%) recovery in a default scenario. The outlook is stable. Connacher will use the proceeds from the notes to repay its $180 million term loan and amounts drawn under its existing revolving credit facilities, fund a one-year interest reserve on the notes, and fund the construction of its Algar project. "Our decision to raise the corporate credit rating is based on Connacher's recent commissioning of Pod 1 of its Great Divide project, and Standard & Poor's assessment that the company will achieve projected profitability, thus strengthening its business risk profile," said Standard & Poor's credit analyst Jamie Koutsoukis. "Although Connacher's debt levels will increase and spending will exceed operating cash flows through 2009 as they proceed with Pod 2 construction, the cash flow generated by the operations of Pod 1, the Montana refinery, and its conventional production will support the increased capital commitments within the current rating," Ms. Koutsoukis added. The stable outlook reflects S&P's expectation that Pod 1 of Connacher's Great Divide project reaches production at its design capacity in mid-2008, and internally generated cash flows will meet the company's debt and sustaining capital expenditure commitments for its operating assets. Furthermore, it incorporates S&P's expectation that Connacher will complete the development of its Pod 2 Algar project on schedule without any material cost increases or any need for significant additional funding. S&P do not expect, however, that Connacher's balance sheet will materially improve in the near-to-medium term as it begins spending on its Algar project. An outlook revision to positive depends on Connacher's ability to significantly reduce its debt, combined with improvements in free cash flow generation, which is unlikely in the near term. Conversely, should the company not maintain its current financial risk profile as it proceeds with the Algar project, S&P could revise the outlook to negative. COOKSON SERIES: Poor Credit Quality Cues Moody's Negative Action ---------------------------------------------------------------- Moody's Investors Service downgraded and placed these notes issued by Cookson Series 2007-19 on review for possible downgrade: Class Description: $150,000,000 Series 2007-19 Variable Rate Notes Due 2047 -- Prior Rating: Aaa -- 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. CORONA BOREALIS: Moody's Lowers Rating on $70 Million Notes to B1 ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Corona Borealis CDO, Ltd. on review for possible downgrade: Class Description: $50,500,000 Class S Senior Secured Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $150,000,000 Class A-1B Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $45,000,000 Class A-1C Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $168,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $111,000,000 Class B Secured Floating Rate 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: Class Description: $111,000,000 Class C Secured Deferrable Floating Rate Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Ba1, on review for possible downgrade Class Description: $70,000,000 Class D Secured Deferrable Floating Rate Notes Due 2047 -- 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. DALTON CDO: Moody's Pares Rating on $18 Million Notes to Ba2 ------------------------------------------------------------ Moody's Investors Service announced today that it has placed these notes issued by Dalton CDO Ltd. on review for possible downgrade: Class Description: $50,000,000 Class A-1a2 Floating Rate Notes Due June 2050 -- Prior Rating: Aaa Current Rating:Aaa, on review for possible downgrade Class Description: $36,000,000 Class A-1b1 Floating Rate Notes Due June 2050 -- Prior Rating: Aaa Current Rating:Aaa, on review for possible downgrade Class Description: $40,000,000 Class A-1b2 Floating Rate Notes Due June 2050 -- Prior Rating: Aaa Current Rating:Aaa, on review for possible downgrade Class Description: $40,000,000 Class A-2 Floating Rate Notes Due June 2052 -- Prior Rating: Aaa Current Rating:Aaa, on review for possible downgrade Class Description: $57,400,000 Class B Floating Rate Notes Due June 2052; -- 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: Class Description: $19,600,000 Class C Deferrable Floating Rate Notes Due June 2052 -- Prior Rating: A2 -- Current Rating: Baa3, on review for possible downgrade Class Description: $18,000,000 Class D Deferrable Floating Rate Notes Due June 2052 -- Prior Rating: Baa2 -- 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. DEAN FOODS: Earns $6.5 Million in Third Quarter Ended Sept. 30 -------------------------------------------------------------- Dean Foods Company reported Thursday net income of $6.5 million for the third quarter ended Sept. 30, 2007, compared with net income of $70.8 million in the corresponding quarter last year. Income from continuing operations was $6.5 million for the third quarter ended Sept. 30, 2007, compared with net income of $74.5 million in the prior year's third quarter. Net sales for the third quarter totaled $3.1 billion, an increase of 24% from net sales for the third quarter of 2006, due to the pass-through of higher commodity dairy costs and increased sales at WhiteWave Foods. Adjusted net income for the third quarter was $18.7 million, compared to adjusted net income of $77.9 million in the third quarter of 2006. The decrease in adjusted net income is primarily related to a decline in operating results in the quarter and the increase in interest expense as a result of the recapitalization connected to the special cash dividend of $15 per share that was paid in early April. Interest expense in the quarter totaled $89.7 million, compared to $48.0 million in the third quarter of 2006. Total debt, net of $45 million in cash on hand, at Sept. 30, 2007, was approximately $5.3 billion. Adjusted results exclude facility closing, reorganization, and other nonrecurring charges. "In the third quarter, we were faced with the most difficult operating environment in our history," said Gregg Engles, chairman and chief executive officer. "Raw milk prices rose rapidly to record highs and we were challenged to increase our pricing fast enough to keep pace. Additionally, as retail prices spiked, rising an average of seventy-five cents per gallon over the course of this year, volumes softened and our sales mix skewed more heavily toward private label milk. At the same time, we continued to work to overcome the negative effects of the increase in the cost of shrink, lower offsets to cost of goods sold from excess cream sales, and continued increased investment behind the Horizon Organic brand." Consolidated operating income in the third quarter totaled $103.3 million, a decrease of 39% from $168.7 million in the third quarter of 2006. Adjusted third quarter consolidated operating income totaled $123.1 million, a decrease of 29.3% from $174.2 million in the third quarter of 2006. Nine Month Results Net sales for the nine months ended Sept. 30, 2007, totaled $8.6 billion, an increase of 14% from net sales for the same period of last year, due to the passthrough of higher dairy commodity costs and increased sales at WhiteWave Foods. Net income from continuing operations for the first nine months of the year totaled $97.9 million, compared with $204.0 million in the first nine months of 2006. On an adjusted basis, net income from continuing operations for the nine months totaled $127.4 million, compared to $211.8 million in the same period of 2006. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $7.14 billion in total assets, $7.13 billion in total liabilities, and $10.8 million in total shareholders' equity. Cash Flow Cash flow from continuing operations through the first nine months of 2007 totaled $220.7 million, compared to $427.0 million in the first nine months of 2006. The decline in cash flow from operations is due primarily to lower operating results, higher year over year interest expense, and the increase in working capital requirements. Capital expenditures through the first three quarters of 2007 totaled $165.2 million, compared to $174.9 million in capital expenditures in the first nine months of 2006. Forward Outlook "Looking ahead to the fourth quarter for the Dairy Group, we expect record high raw milk prices will continue to pressure results. Milk cost stabilization should help in terms of price realization; but, other costs tied to milk costs such as shrink, lower cost of goods sold offsets from excess cream sales, and the potential for continued unfavorable mix shift away from our regional brands will likely continue to challenge earnings," said Jack Callahan, chief financial officer. "At WhiteWave, we will continue to invest to protect the Horizon Organic brand from aggressive competition through this period of industry oversupply, which will negatively affect WhiteWave profitability. Therefore, we expect fourth quarter adjusted earnings to be approximately $0.30 per share. About Dean Foods Headquartered in Dallas, Texas, Dean Foods Company (NYSE: DF) -- http://www.deanfoods.com/-- is a food and beverage company in the United States. Its Dairy Group division is the largest processor and distributor of milk and other dairy products in the country, with products sold under more than 50 familiar local and regional brands and a wide array of private labels. The company's WhiteWave Foods subsidiary markets and sells a variety of well- known dairy and dairy-related products, such as Silk(R) soymilk, Horizon Organic(R) milk and other dairy products, International Delight(R) coffee creamers, and Land O'Lakes(R) creamers and other fluid dairy products. WhiteWave Foods' Rachel's Organic(R) brand is the largest organic milk brand and third largest organic yogurt brand in the United Kingdom. * * * As reported in the Troubled Company Reporter on Aug. 29, 2007, Standard & Poor's Ratings Services revised its outlook to negative from stable on Dean Foods Co. and its wholly owned subsidiary, Dean Holding Co. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating and other ratings on the companies. DELPHI CORP: Disclosure Statement Hearing Continued to Nov. 29 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has agreed to continue until Nov. 29 a hearing previously scheduled for Nov. 8 to consider potential amendments to Delphi Corp. and its debtor-affiliates' Joint Plan of Reorganization and related Disclosure Statement as well as an amendment to the company's Investment Agreement. As reported in the Troubled Company Reporter on Nov. 6, 2007, Delphi Corp. asked the Court to adjourn until later this month a hearing currently scheduled for Nov. 8. The purpose of the adjournment is to continue discussions with Delphi's Statutory Committees, both of which filed objections on Nov. 2 to the Disclosure Statement and Investment Agreement amendment approval motions, and other stakeholders, some of which also filed objections. Consistent with the company's expectations previously disclosed, the conditions to the effectiveness of the Investment Agreement amendment reported on Oct. 30 were not satisfied prior to the Nov. 8 scheduled hearing. As a result, Delphi's Plan Investors are no longer obligated to execute the Oct. 30 amendment, although the underlying Investment Agreement remains effective in accordance with its terms as approved by the Bankruptcy Court in August 2007. The adjournment, which was approved by the Bankruptcy Court on Nov. 7, will permit the company to continue discussions with its principal stakeholders, including Delphi's Statutory Committees, Plan Investors and General Motors Corp. In order to proceed with the Nov. 29 hearings, the Bankruptcy Court's supplemental scheduling order requires Delphi to use commercially reasonable efforts to file additional potential amendments to the Company's Disclosure Statement, Plan of Reorganization, Investment Agreement with the Plan Investors and Global Settlement Agreement with GM by Nov. 16. Delphi continues to expect that it will emerge from chapter 11 during the first quarter of 2008. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) - - http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Mar. 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on Dec. 31, 2007. On Sept. 6, 2007, the Debtors filed their Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan. (Delphi Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DIOGENES CDO: Moody's Junks Rating on $6.5 Million Class E Notes ---------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade the notes issued by Diogenes CDO II Ltd.: Class Description: Up to $364,800,000 Class A-1 Floating Rate Notes Due June 15, 2049; -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $90,000,000 Class A-2 Floating Rate Notes Due June 15, 2049; -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $60,000,000 Class B Floating Rate Notes Due June 15, 2049; -- Prior Rating: Aa2 -- Current Rating: Ba2, on review for possible downgrade Class Description: $22,800,000 Class C Deferrable Floating Rate Notes Due June 15, 2049; -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Class Description: $32,100,000 Class D Deferrable Floating Rate Notes Due June 15, 2049; -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $8,000,000 Combination Securities Due 2014; -- Prior Rating: Aa3 -- Current Rating: Ba3, on review for possible downgrade In addition Moody's also downgraded these notes: Class Description: $6,300,000 Class E Deferrable Floating Rate Notes Due June 15, 2049; -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of residential mortgage-backed securities. DUKE FUNDING: Moody's Puts Ba3-Rated Notes Under Negative Review ---------------------------------------------------------------- Moody's Investors Service placed these notes issued by Duke Funding XIII, Ltd. on review for possible downgrade: Class Description: $944,000,000 Class A1SVF Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $321,000,000 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 downgraded and left on review for possible downgrade these notes: Class Description: $185,000,000 Class A2S Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa2 -- Current Rating: A3, on review for possible downgrade Class Description: $55,000,000 Class A2J Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa3 -- Current Rating: Baa1, on review for possible downgrade Class Description: $125,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Baa3, on review for possible downgrade Class Description: $50,000,000 Class B1 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Baa1 -- Current Rating: Ba2, on review for possible downgrade Class Description: $55,000,000 Class B2 Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 -- 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. DUNMORE HOMES: Files for Chapter 11 Protection in New York ---------------------------------------------------------- Granite bay, California-based Dunmore Homes, Inc., filed for protection under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York on Nov. 8, 2007. According to Jim Wasserman of the Sacramento Bee, the filing comes just around six weeks after Comstock Mortgage senior loan consultant Michael A. Kane bought the company from Sid Dunmore. Citing John Slaughter, Dunmore vice-president of construction and operations, the Bee relates that the bankruptcy filing was done in response to a lawsuit by a creditor. Mr. Slaughter however did not name the creditor. The Central Valley Business Times reports, citing Mr. Kane, that the company has engaged its lenders in talks to restructure its debts. Although some of the creditors required the company to file for chapter 11, the company will continue to focus on its restructuring and make sure that all creditors are treated equally, Mr. Kane adds, the CVBT discloses. Dunmore Homes, Inc., is a privately-owned homebuilder. DUNMORE HOMES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Dunmore Homes, Inc. 8781 Sierra College Boulevard, Suite 100 Granite Bay, CA 95746 Bankruptcy Case No.: 07-13533 Type of Business: The Debtor is a privately-owned homebuilder. Chapter 11 Petition Date: November 8, 2007 Court: Southern District of New York (Manhattan) Judge: Martin Glenn Debtor's Counsel: Maria A. Bove, Esq. Debra I. Grassgreen, Esq. Pachulski Stang Ziehl & Jones LLP 780 Third Avenue, 36th Floor New York, NY 10017-2024 Tel: (212) 561-7700 Fax: (212) 561-7777 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million Debtor's list of its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ JPMorgan Chase Bank, N.A. Junior Sub. $20,000,000 as Indenture Trustee Notes 600 Travis, 50th Floor Houston, TX 77002 Attn: Maria D. Calzado Fax: (713) 216-2101 and Chase Bank USA, N.A. 500 Stanton Christiana Road Building 4, 3rd Floor Newark, DE 19713 Attn: Sarika M. Sheth Fax: (302) 552-6280 Travelers Cas. & Surety Surety Bonds $9,147,084 Co. of America 33650 6th Avenue Street Suite 200 Federal Way, WA 98003 Attn: Christopher E. Butler Tel: (253) 943-5806 Fax: (866) 842-9201 Cal Sierra Construction, Inc. Trade/Construction $4,159,269 5904 Van Alstine Avenue Carmichale, CA 95608 Attn: Patsy Kobtzke and Marco Lucich Tel: (916) 485-3909 Fax: (916) 485-3906 and Downey Brannd LLP Frank R. Perrott, Esq. Matthew J. Weber, Esq. 3425 Brookside Road, Suite A Stockton, CA 95219-1757 Tel: (209) 473-6450 Fax: (209) 473-6455 The Aleco Corporation Trade/Construction $2,382,851 2202 Zeus Court Bakersfield, CA 93380 Attn: Jay Marks Tel: (661) 393-9030 Fax: (661) 393-9034 and Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, LLP 4550 California Avenue 2nd Floor Bakersfield, CA 93309 Tel: (661) 395-1000 Fax: (661) 326-0418 JMP Securities Loan $2,000,000 600 Montgomery Street Suite 1100 c/o Jim Fowler Tel: (415) 835-8941 Fax: (415) 835-8986 Teichert Construction, Inc. Trade/Construction $1,639,197 P.O. Box 13557 Sacramento, CA 95853 c/o Ken McCurdy Tel: (916) 484-3011 Fax: (916) 484-6506 MacKay & Somps - Sacramento Trade/Construction $1,523,812 1771 Tribute Road, Suite E Sacramento, CA 95815 c/o Paul Hart Tel: (916) 929-6092 Fax: (916) 923-5625 Pacific Paving Co., Inc. Trade/Construction $871,225 3498 West Ashcroft Avenue Fresno, CA 93722 c/o David Sumpter Tel: (559) 438-1744 Fax: (559) 438-1742 Hemington Landscape Service Trade/Construction $827,942 4170 Business Drive Cameron Park, CA 95682 c/o Mark Hemington Tel: (530) 677-9290 Fax: (530) 677-0590 and Howard S. Nevins, Esq. Hefner Stark & Marois, LLP 2150 River Plaza Drive Suite 450 Sacramento, CA 95833-3883 Tel: (916) 925-6620 Fax: (916) 925-1127 Granite Construction Company Trade/Construction $737,835 2716 Granite Court Fresno, CA 93706 c/o Jodie Leemann Tel: (559) 441-5744 Fax: (559) 441-5791 MCH Electric, Inc. Trade/Construction $641,467 31084 South Highway 33 Tracy, CA 95304 c/o Jim Humphrey Tel: (209) 835-9755 Fax: (209) 835-9745 De Silva Gates Construction Trade/Construction $623,636 11555 Dublin Boulevard Dublin, CA 94568 c/o Don Holmes Tel: (925) 829-9220 Fax: (925) 803-4294 PML Landscape, Inc. Trade/Construction $495,978 4991 East McKinley, Suite 103 Fresno, CA 93727 c/o Aaron McCauley Tel: (559) 292-4998 Fax: (559) 292-4773 Kern Masonry Structures, Inc. Trade/Construction $490,926 P.O. Box 80334 Bakersfield, CA 93308 c/o Rebecca Deufel Tel: (661) 399-6006 Fax: (661) 399-6090 SGN Nelson Construction Trade/Construction $391,236 5047 Robert J. Mathews Parkway El Dorado Hills, CA 95762 c/o Stuart Nelson Tel: (916) 933-7891 Fax: (916) 933-7893 Valley Utility Services Inc. Trade/Construction $368,055 1779 Tribute Road Sacramento, CA 95815 c/o John Benedict Tel: (916) 924-9113 Fax: (916) 924-3488 Cooper, White and Cooper, LLP Legal Fees $339,058 1333 North California Boulevard Suite 450 c/o Kathleen Carpenter Tel: (925) 935-0700 Fax: (925) 256-9428 Beutler Corporation Trade/Construction $286,376 P.O. Box 515015 Sacramento, CA 95851 c/o Gary Beutler Tel: (916) 646-2222 Fax: (916) 646-2267 B&D Plumbing (CVC Construction) Trade/Construction $276,616 P.O. Box 2590 Rancho Cordova, CA 95741 c/o Ron Ghoede Tel: (916) 852-8561 Fax: (916) 852-8183 Palumbo Beergstrom LLP Legal Fees $251,838 18301 Von Karman Avenue Suite 850 Irvine, CA 92612 c/o David Wasson Tel: (949) 442-0300 Fax: (949) 251-1331 DURA AUTOMOTIVE: Court Approves $425 Million Exit Financing ----------------------------------------------------------- DURA Automotive Systems Inc. and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware of an engagement letter and a fee letter entered into with Goldman Sachs Credit Partners, L.P., and Barclays Capital, the investment banking division of Barclays Bank, PLC, for a $425 million financing to emerge from Chapter 11. DURA expects $300 million of the loan to be funded on the effective date of its Plan of Reorganization. The Court has approved the Engagement Letter and the Fee Letter in all respects. The Court's order did not specify whether the U.S. Trustee's concerns were addressed. Pursuant to the Engagement Letter, Goldman Sachs and Barclays, as arrangers, have offered to syndicate exit financing for Dura Operating Corp.: (a) a senior secured revolving credit facility in an amount up to $125 million; (b) a senior secured first-lien tranche B term loan facility in amount up to $225 million; and (c) a senior secured second-lien term loan facility in an amount up to $75 million. Goldman Sachs will be the administrative agent for the First Lien Term Facility, and Barclays Capital will be administrative agent for the Revolving Facility. Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, noted that the Debtors' emergence from bankruptcy is predicated on funding from two key sources -- the exit facility and the $140 million to $160 million rights offering backstopped by Pacificor, LLC. The backstop deal with Pacificor has already been approved by the Court. The Debtors, with the assistance of their investment banker, Miller Buckfire & Co., initiated discussions with, and solicited exit financing proposals from, a variety of potential exit lenders. The Debtors have decided to pursue a joint proposal from Goldman Sachs and Barclays. The Debtors are not yet seeking approval of the exit financing. The documents submitted for the Bankruptcy Court's approval do not constitute not a commitment, and do not oblige the Barclays and Goldman Sachs, or their affiliates to provide the exit facility or any other financing. The Debtors only sought Judge Kevin Carey's approval to pay fees and reimburse the expenses of, and to grant indemnification to, the Arrangers. The Debtors did not specify the fees to be paid to the Arrangers or the amount of expenses they will reimburse. The Debtors have redacted the Fee Letter filed with the Court. The Debtors said that the indemnification, fees and expense reimbursements are necessary to compensate the Arrangers for their time and efforts in soliciting lender interest for the exit facility and are customary for transactions of similar nature. The Debtors asked the Court hear their proposal on an expedited basis and have scheduled a November 8 hearing on the matter. The Debtors' proposal faced opposition from the U.S. Trustee. Kelly Beaudin Stapleton, the United States Trustee for Region 3, warned that the Debtors may be improperly retaining Barclays, et al., as estate professionals under Section 327(a) of the Bankruptcy Code. She said that it appears that Barclays, et al., have been tasked to act as investment bankers with respect to the exit facility when the Debtors have employed Miller Buckfire as their investment bankers. The U.S. Trustee also disputed the filing of the Fee Letter under seal on grounds that it stops the public from viewing certain economic terms of the arrangement. About DURA Automotive Based in Rochester Hills, Michigan, DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Del. Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors' exclusive plan-filing period expired on Sept. 30, 2007. On Aug. 22, 2007, the Debtors' filed their Plan of Reorganization and the Disclosure Statement explaining that Plan was approved on Oct. 3, 2007. The hearing to consider confirmation of the plan is set for Nov. 26, 2007. (Dura Automotive Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). EMISPHERE TECH: Earns $3 Million in Quarter Ended September 30 -------------------------------------------------------------- Emisphere Technologies Inc. reported financial results for the third quarter ended Sept. 30, 2007. Third quarter 2007 net income was $3 million, compared to a net loss of $8.2 million for the third quarter of 2006. Factors affecting the third quarter financial results were: -- operating expenses for the third quarter of 2007 were $9 million, compared to $8.8 million in the third quarter of 2006; -- net proceeds from the settlement of lawsuit of $11.9 million in the three months ended Sept. 30, 2007, is the result of the settlement of the litigation against Eli Lilly and company; -- other expense third quarter 2007 was $0.5 million, compared to income of $0.5 million in the third quarter of 2006; -- third quarter 2007 operating income of $3.5 million, compared to an operating loss of $8.7 million for the third quarter of 2006; -- as of Sept. 30, 2007, Emisphere had $21.4 million in cash and investments. At Sept. 30, 2007, the company's balance sheet showed total assets of $27.1 million and total liabilities of $37.5 million, resulting to a shareholders' deficit of $10.4 million. About Emisphere Technologies Inc. Headquartered in Tarrytown, New York, Emisphere Technologies Inc. (NasdaqGM: EMIS) -- http://www.emisphere.com/-- is a biopharmaceutical company charting new frontiers in drug delivery. The company develops oral forms of injectable drugs, either alone or with corporate partners, by applying its proprietary eligen(R) technology to these drugs. Going Concern Doubt PricewaterhouseCoopers LLP expressed substantial doubt about Emisphere Technologies Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006 and 2005. The auditing firm pointed to the company's operating losses, limited capital resources and significant future commitments. FAB US: Poor Credit Quality Prompts Moody's Junk Note Ratings ------------------------------------------------------------- Moody's Investors Service placed the notes issued by FAB US 2006-1 PLC on review for possible downgrade: Class Description: $215,800,000 Class A1 Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $59,000,000 Class A2 Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $31,000,000 Class A3 Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $33,500,000 Class A4 Floating Rate 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: Class Description: $24,500,000 Class B Deferrable Floating Rate Notes Due 2047 -- Prior Rating: A3 -- Current Rating: Caa1, on review for possible downgrade Class Description: $18,100,000 Class C Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Baa2 -- 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. FEDERAL-MOGUL: Court Confirms Fourth Amended Reorganization Plan ---------------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware confirmed the Fourth Amended Joint Plan of Reorganization of Federal-Mogul Corporation and its debtor affiliates, as modified, on Nov. 8, 2007. As part of the ruling, the Court approved the Plan B Settlement between Cooper Industries, Ltd., and Federal-Mogul. The Bankruptcy Court noted that its ruling does not preclude further deliberations and supplementing the order with approval of Plan A. Judge Fitzgerald found that the Fourth Amended Plan, as modified, satisfies the 13 requirements for confirmation under Section 1129(a) of the Bankruptcy Code: * In accordance with Section 1129(a)(1), the Plan complies with all applicable provisions of the Bankruptcy Code. * In accordance with Section 1129(a)(2), the Debtors and the rest of the Plan Proponents have complied with all applicable provisions of the Bankruptcy Code. * As required under Section 1129(a)(3), the Plan Proponents proposed the Plan in "good faith," within the meaning of Section 1125(e), and is not by any means forbidden by law. Judge Fitzgerald noted that the Plan: -- has been proposed with the legitimate purpose of reorganizing the Debtors' affairs and maximizing the returns available to creditors and holders of equity interests; and -- achieves a global resolution of Asbestos Personal Injury Claims through the assumption of those claims by the Asbestos Personal Injury Trust. * No payment for services or costs and expenses of professionals in connection with the bankruptcy cases and the Plan has been or will be made by the Debtors other than payments that have been authorized by the Court in compliance with Section 1129(a)(4). * Pursuant to Section 1129(a)(5), the Debtors have disclosed all necessary information regarding the Reorganized Debtors' directors and officers, including those that may constitute insiders and the nature of compensation for those insiders. * The Debtors' current businesses do not involve the establishment of rates over which any regulatory commission has or will have jurisdiction after Confirmation, as set forth under Section 1129(a)(6). * In accordance with Section 1129(a)(7), each holder of an impaired claim or equity interest that has not accepted the Plan will receive or retain property valued at not less than the amount that holder would receive or retain if the Debtors were liquidated under Chapter 7 of the Bankruptcy Code. * All Classes of Claims and Equity Interests that voted on the Plan have either accepted the Plan or are unimpaired as required under Section 1129(a)(8). * The Plan also meets the requirements regarding the payment of Administrative Claims and Priority Claims as set forth in Section 1129(a)(9). The Plan provides that each holder of an allowed Administrative Claim will receive cash equal to the allowed claim amount except to the extent that the holder agrees to a different treatment, Judge Fitzgerald notes. * At least one Class of Claims or Equity Interests that is impaired under the Plan has voted to accept the Plan in compliance with Section 1129(a)(10). * As demonstrated by the Debtors' financial projections and other evidence in record, confirmation of the Plan is not likely to be followed by the liquidation, or the need for further financial reorganization of the Debtors and the Reorganized Debtors in accordance with Section 1129(a)(11). * As provided under Section 1129(a)(12), all fees payable pursuant to Section 1930 of the Judiciary and Judicial Procedure Code will be paid on or before the Effective Date. * Pursuant to Section 1129(a)(13), the Plan provides that the payment of all retiree benefits under retiree benefit plans to which Section 1114 is applicable will be continued absent the termination of the retiree benefit plans. The Plan also complies with other provisions of the Bankruptcy Code, including Section 1122 and 1123: -- Consistent with Section 1122, the Plan classifies claims and equity interests into a class containing only substantially similar claims or equity interests; -- In accordance with Section 1123(a)(1), the Plan properly classifies all claims and equity interests that require classification; -- The Plan identifies and describes each class of claims or equity interests that are not impaired in compliance with Section 1123(a)(2); -- As required under Section 1123(a)(3), the Plan identifies and describes the classes of claims or interests that are impaired. -- The treatment of each claim or equity interest within a Class, in accordance with Section 1123(a)(4), is the same as the treatment of the other claims or equity interests in that Class unless the holder of a claim or equity interest agrees to a less favorable treatment under the Plan. -- As set forth under Section 1123(a)(5), the Plan provides adequate means for its implementation, including: * the continued corporate existence of the Debtors and the vesting of the Debtors' assets in the Reorganized Debtors; * the cancellation of the existing notes, other debt securities, indentures, and Federal-Mogul Corp. common stock and the surrender of existing securities and instruments; * the issuance of Reorganized Federal-Mogul common stock, warrants, and junior secured PIK notes; * detailed provisions for making Plan distributions; * the implementation of various settlements under the Plan; and * the creation of the Asbestos PI Trust, the assumption of all Asbestos PI Claims by the Trust, and the discharge of the Debtors' obligations and liabilities on account of the Asbestos PI Claims. -- Pursuant to Section 1123(a)(6), the Reorganized Debtors' charters, bylaws or similar constituent documents contain provisions prohibiting the issuance of nonvoting equity securities and provide for the appropriate distribution of voting power among all classes of equity securities authorized for issuance; -- The Reorganized Debtors' charters, bylaws and similar constituent documents regarding the manner of selection of the Reorganized Debtors' officers and directors are consistent with the interests of creditors and equity security holders and with public policy as required under Section 1123(a)(7); -- As permitted by Section 1123(b)(1), the Plan provides for the impairment of certain Classes of Claims and Equity Interests, while leaving other Classes unimpaired; -- The Plan provides for the assumption or rejection of the Debtors' executory contracts and unexpired leases that have not yet been assumed, assigned, or rejected in compliance with Section 1123(b)(2); -- Pursuant to Section 1123(b)(3), the Plan provides that with certain exceptions, the Reorganized Debtors will retain and have the exclusive right to enforce, sue, settle, or compromise all claims, proceedings, and causes of action arising under the Bankruptcy Code that are commenced prior to the closing of the Chapter 11 cases; -- The Plan, as required under Section 1123(b)(5), modifies or leaves unaffected, the rights of holders of each Class of Claims and Equity Interests; -- In accordance with Section 1123(b)(6), the Plan includes other provisions that comply with applicable provisions of the Bankruptcy Code, including provisions governing the treatment of claims and equity interests, the disposition of contracts and unexpired leases, the implementation of the Plan, and the injunctions, releases and discharges to be effected by the Plan; -- The Plan further provides for the satisfaction of cure amounts in connection with each executory contract and unexpired lease to be assumed consistent with Section 1123(d). -- The purpose of the Plan is not the avoidance of taxes or requirements under the Securities Act of 1933. Thus, the Plan complies with the provisions of Section 1129(d). In addition, the Bankruptcy Court held that the Plan comports with Section 524(g) regarding the issuance of an injunction to enjoin entities from taking legal action to recover payment in respect of Asbestos PI Claims against the Reorganized Debtors. The issuance of the Injunction is necessary to preserve and promote the settlements contemplated by and provided for in the plan, Judge Fitzgerald said. All objections to the Plan have been consensually resolved or were otherwise voluntarily withdrawn. Insurer Settlements Approved As reported in the Troubled Company Reporter on Nov. 7, 2007, to recall, certain insurance carriers strongly opposed the Plan to the extent of its liability coverage of the Debtors' asbestos claims. In an effort to resolve the remaining confirmation objections, the Debtors entered into separate settlement agreements with those insurers. Accordingly, the Bankruptcy Court also approved the Asbestos Bodily Injury Coverage in Place Agreement among Felt Products Manufacturing Co., Federal-Mogul Corp., and certain insurers, as well as the Debtors' settlements with five insurer parties: * OneBeacon America Insurance; * Seaton Insurance Company; * Stonewall Insurance Company; * TIG Insurance Company; * The ACE USA Companies comprised of Century Indemnity Company, Pacific Employers Insurance Company, Central National Insurance Company of Omaha, U.S. Fire Insurance Company, Insurance Company of North America, St. Paul Mercury Insurance Company, and ACE property and Casualty Insurance Company; and * The Travelers Indemnity Company and Travelers Casualty and Surety Company. Judge Fitzgerald clarified that the Insurer Settlements do not negatively impact the rights of non-party insurance companies. Moreover, the Bankruptcy Court approved the Stipulation on the Asbestos Assignment and Preemption Issues between the Debtors and certain signatory insurers. In accordance with the Stipulation, the Signatory Insurers withdrew their objections to the assignment of policy rights to the Asbestos PI Trust. To the extent not already listed, the Signatory Insurers have been included in the list of Settling Asbestos Insurance Companies. Pursuant to a Court-approved stipulation with the Debtors, Certain Underwriters at Lloyd's, London, and Certain London Market Companies reserve their right to appeal the order approving the Stipulation. The Underwriters agree that they will not seek a reconsideration or review of the Plan Confirmation Order with respect to the Stipulation. Non-Material Plan Modifications As previously reported, the Plan Proponents delivered to the Bankruptcy Court on Nov. 5, 2007, a further modified Fourth Amended Plan to clarify certain provisions of the Asbestos Bodily Injury Coverage in Place Agreement among Felt Products Manufacturing Co., Federal-Mogul Corp., and certain signatory insurers. Among other things, the Plan Proponents restated the Fourth Amended Plan to provide that the requirement of the Trustees of the Asbestos PI Trust to obtain the consent of the Trust Advisory Committee and the Future Claimants Representative in carrying out certain of their duties is subject to the provisions of the CIP Agreement with respect to the Fel-Pro Subfund, the Vellumoid Subfund, Fel-Pro Claims, Vellumoid Claims or Federal-Mogul Asbestos Claims. Robert L. Katz, Esq., senior vice president and general counsel to Federal-Mogul Corp., elaborates that the U.S. Asbestos Trust is required to provide Columbia Casualty Company, Continental Casualty Company, and The Continental Insurance Company with information related to any lawsuit involving a Fel-Pro Claim or a Vellumoid Claim contemporaneously with the provision of that information to the lead insurer. The Asbestos PI Trust will not withdraw that tender to either CNA or the Lead Insurer without withdrawal as to the other, Mr. Katz relates. The handling of Fel-Pro or Vellumoid Claims in accordance with the CIP Agreement, Mr. Katz says, will be without prejudice to: -- CNA's right to participate in the defense and resolution of the Fel-Pro or Vellumoid Claims; and -- the Trust's rights to: * pursue coverage from CNA for the Fel-Pro or Vellumoid Claims; and * seek contribution or reimbursement from CNA in its capacity as successor to the Debtors' rights or as assignee of the contribution rights of the CIP Insurers. Judge Fitzgerald finds that all of the Plan Modifications proposed by Debtors at several instances do not materially and adversely affect or change the treatment of any claim or equity interest in any Debtor. A full-text copy of the Nov. 5 Modified Federal-Mogul Fourth Amended Plan is available for free at: http://ResearchArchives.com/t/s?252c Federal-Mogul's Statement Federal-Mogul Corp. is seeking the affirmation by the U.S. District Court, the Honorable Joseph H. Rodriguez presiding, which must also take place for the company to emerge from bankruptcy. Federal-Mogul voluntarily filed in 2001 for Chapter 11 in the U.S. and Administration in the U.K. in order to separate its asbestos liabilities from its true operating potential. These restructuring proceedings provided the company the opportunity to emerge from bankruptcy as a leading global automotive supplier. Chairman, president and chief executive officer Jose Maria Alapont said emergence from Chapter 11 will be instrumental in the company's drive to generate growth in key markets, and develop innovative technologies at competitive cost, creating value for its global customers. "We thank our employees, customers and stakeholders for their continued support," said Mr. Alapont. "The Federal-Mogul team has been relentless in its dedication to service excellence, and remains focused on our successful operating performance and the implementation of our sustainable global profitable growth strategy." About Federal-Mogul Based in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is an automotive parts company with worldwide revenue of some $6 billion. Federal-Mogul also has operations in Mexico and the Asia Pacific Region, which includes, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The confirmation hearing started on June 18, 2007. (Federal-Mogul Bankruptcy News, Issue No. 152; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). FIRST UNION: Credit Support Erosion Cues S&P to Lower Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three classes of commercial mortgage pass-through certificates from First Union National Bank Commercial Mortgage Trust's series 2002-C1. Concurrently, S&P affirmed its ratings on 13 other classes from the same transaction. The lowered ratings reflect the expected erosion of credit support upon the resolution of the Central Medical loan, which is in special servicing. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The Central Medical loan has a balance of $10.3 million (2%). It is secured by a 102,070-sq.-ft. medical office property in St. Paul, Minnesota. The loan is 60 days delinquent and was transferred to the special servicer due to imminent default. The debt service coverage was 0.76x as of June 30, 2007, while occupancy was 54.1% as of Sept. 17, 2007. A monthly appraisal subordinated entitlement reduction totaling $38,639 is in effect for this loan. The resolution of the asset may result in a significant loss to the trust, which will materially affect the credit enhancement levels of the lowered classes. As of the Oct. 12, 2007, remittance report, the collateral pool consisted of 97 loans with an aggregate principal balance of $646.3 million, down from 106 loans with a balance of $728.3 million at issuance. The master servicer, Wachovia Bank N.A., reported financial information for 98% of the nondefeased loans. Ninety-two percent of the servicer-reported information was full-year 2006 data. Using this information, Standard & Poor's calculated a weighted average DSC of 1.48x, up from 1.35x at issuance. In addition to Central Medical, there is one other loan in the pool with the special servicer, CWCapital Asset Management LLC. The loan is 60 days delinquent. To date, the trust has experienced six losses totaling $9.4 million. The top 10 exposures have an aggregate outstanding balance of $172.6 million (27%). The weighted average DSC for the top 10 exposures is 1.66x, up from 1.35x at issuance. Despite the increase in DSC, one of the top 10 exposures appears on the master servicer's watchlist, and one is with the special servicer. Standard & Poor's reviewed property inspections provided by the master servicer for the properties securing the top 10 exposures, and all were characterized as either "good" or "excellent." Amaretto at North Tampa ($3.8 million, 1%) is the other loan with the special servicer. The collateral for this loan is a 96-unit multifamily property in Tampa, Florida. The loan was transferred to the special servicer in October 2007 because of payment delinquency. The DSC was 0.61x as of year-end 2006. The loan was previously in special servicing for a similar payment delinquency. Wachovia reported a watchlist with an aggregate outstanding balance of $89.8 million (14%) consisting of 16 loans, including the third-largest exposure in the pool, which was placed on the watchlist because of property maintenance issues. The loan ($23.5 million, 4%) is secured by 14 U-Haul self-storage properties located across the U.S. The year-end 2005 DSC was 2.04x, and combined occupancy was 89% as of Sept. 19, 2001. Standard & Poor's stressed the specially serviced and watchlisted loans, as well as any other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels support the lowered and affirmed ratings. Ratings Lowered First Union National Bank Commercial Mortgage Trust Commercial mortgage pass-through certificates series 2002-C1 Rating ------ Class To From Credit enhancement ----- -- ---- ----------------- L B+ BB- 2.76% M CCC+ B 1.64% N CCC- B- 1.07% Ratings Affirmed First Union National Bank Commercial Mortgage Trust Commercial mortgage pass-through certificates series 2002-C1 Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 24.32% A-2 AAA 24.32% B AAA 20.23% C AAA 15.16% D AA+ 13.75% E AA 12.48% F AA- 10.51% G A- 8.96% H BBB+ 6.71% IO-I AAA N/A IO-II AAA N/A J BBB- 4.45% K BB+ 3.61% N/A - Not applicable. FORD MOTOR: Post $380 Million Net Loss in 3rd Qtr. Ended Sept. 30 ----------------------------------------------------------------- Ford Motor Company reported Thursday a net loss of $380 million for the third quarter of 2007. This compares with a net loss of $5.2 billion in the third quarter of 2006. Ford's third-quarter revenue was $41.1 billion, up from $37.1 billion a year ago. The increase primarily reflected higher net pricing, changes in currency exchange rates, and improved product mix. Ford's third-quarter loss from continuing operations, excluding special items, was $24 million, compared with a loss of $850 million in the same period a year ago. Special items reduced pre-tax results by $350 million in the third quarter. These special items were associated with the previously disclosed Trust Preferred Securities exchange offer, and charges associated with Ford Europe and PAG personnel reductions and other restructuring actions. Favorable cost adjustments associated with Ford North America personnel reduction programs were a partial offset. Automotive gross cash, which includes cash and cash equivalents, net marketable securities, loaned securities and short-term VEBA assets, was $35.6 billion at Sept. 30, 2007, an increase of $1.7 billion from year-end 2006. The company continues to explore in greater detail the potential sale of Jaguar and Land Rover with interested parties and anticipates these discussions will culminate in an agreement no later than early next year. In addition, the company has been conducting a strategic review of Volvo, and has developed a plan. The first priority of the plan is to improve financial performance at Volvo. The plan also includes: enhancing Volvo's position as a global producer of premium vehicles; establishing appropriate business arrangements between Volvo and Ford-brand operations to allow Volvo to operate on a more stand-alone basis in the absence of the PAG structure; and, continuing to achieve synergies between Ford-brand operations and Volvo in areas such as product development and purchasing. The company plans to disclose Volvo's financial performance beginning with 2008 results. "Our third quarter performance is very encouraging," said Ford president and chief executive officer Alan Mulally. "We can see our plan taking hold with significant improvement continuing in our core Automotive operations. We remain committed to executing the four priorities of our plan - restructuring the business to operate profitably, accelerating the development of new products that our customers want and value, funding our plan and improving our balance sheet, and working even more effectively together as one Ford team, leveraging our global assets." Automotive Sector On a pre-tax basis, worldwide Automotive sector losses in the third quarter were $362 million. This compares with a pre-tax loss of $1.9 billion during the same period a year ago. The improvements were more than explained by higher net pricing, lower costs, and improved volume and mix, partially offset by higher interest expense, and unfavorable changes in currency exchange rates. Vehicle wholesales in the third quarter were 1,487,000, up from 1,467,000 a year ago. Worldwide Automotive revenue for the third quarter was $36.3 billion, up from $32.5 billion in the same period last year. The increase primarily reflected higher net pricing, changes in currency exchange rates, and improved product mix. Ford North America: In the third quarter, Ford North America reported a pre-tax loss of $1.0 billion, compared with a pre-tax loss of $2.1 billion a year ago. The improvement primarily reflected higher net pricing and improved product mix, partially offset by unfavorable changes in currency exchange rates. Revenue was $16.5 billion, up from $15.4 billion for the same period a year ago. Ford South America: Ford South America reported a third-quarter pre-tax profit of $386 million, compared with a pre-tax profit of $201 million a year ago. The improvement was primarily explained by higher net pricing and higher volume. Third quarter revenue improved to $2.1 billion from $1.5 billion in 2006. Ford Europe: Ford Europe third-quarter pre-tax profit was $293 million, compared with a pre-tax loss of $13 million during the same period in 2006. The improvement was more than explained by lower costs and higher net pricing, partially offset by lower volume and less favorable mix. During the third quarter of 2007, Ford Europe's revenue was $8.3 billion, compared with $7.3 billion during the third quarter of 2006. Premier Automotive Group (PAG): PAG reported a pre-tax loss of $97 million for the third quarter, compared with a pre-tax loss of $508 million for the same period in 2006. The third-quarter 2007 result reflected a loss at Volvo, partially offset by a small profit at the combined Jaguar and Land Rover operation. The year- over-year improvement was primarily explained by cost reductions across all brands, including the non-recurrence of adverse 2006 adjustments to warranty reserves. Higher volumes and higher net pricing were partially offset by the effect of the continued weakening of the U.S. dollar against key European currencies. Third-quarter 2007 revenue was $7.4 billion, compared with $6.5 billion a year ago. Ford Asia Pacific and Africa: For the third quarter, Ford Asia Pacific and Africa reported a pre-tax profit of $30 million, compared with a pre-tax loss of $56 million a year ago. The improvement primarily reflected cost reductions and higher net pricing, partially offset by adverse product mix, mainly in Australia. Revenue was $1.8 billion for the third quarter of 2007, compared with $1.6 billion in 2006. Mazda: For the third quarter, Ford earned $18 million from its investment in Mazda and associated operations, compared with $40 million during the same period a year ago. Other Automotive: Third-quarter results included a pre-tax profit of $29 million, compared with a profit of $553 million a year ago. The year-over-year deterioration primarily reflected the non- recurrence of last year's tax-related interest. Financial Services Sector For the third quarter, the Financial Services sector earned a pre- tax profit of $556 million, compared with a pre-tax profit of $750 million a year ago. Ford Motor Credit Company: On a pre-tax basis from continuing operations, Ford Motor Credit Company earned $546 million in the third quarter compared with $730 million in the previous year. The decrease in earnings was more than explained by the non- recurrence of prior-year credit loss reserve reductions, higher depreciation expense for leased vehicles and higher borrowing costs. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $276.163 billion in total assets, $273.606 billion in total liabiities, $1.394 billion in minority interests, and $1.163 billion in tota shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2520 Outlook The company is ahead of its 2007 plan both on a pre-tax and net income basis, and anticipates substantial year-over-year improvement in fourth quarter results. Fourth quarter Automotive and cmpany pre-tax results are expected to be a loss, more than explained by North America. Full-year pre-tax results excluding special items are expected to be in the range of a small loss to breakeven, which would be a significant improvement from a year ago. Excluding gains or losses from future divestitures, special items for full-year 2007 are expected to be a charge in the range of $1 billion to $2 billion, including a one-time, non-cash charge estimated to be approximately $1.4 billion relating to a proposed change in business practice for offering and announcing retail variable marketing incentives to our dealers. Ford Motor Credit expects to earn $1.3 billion to $1.4 billion this year on a pre-tax basis, excluding the impact of gains and losses related to market valuation adjustments from derivatives, consistent with the previous estimate. The company is on track to meet its North American cost reduction target of $5 billion by 2008 as compared with 2005. Progress is being made on achieving U.S. market share goals, and the company is ahead of its $17 billion cash outflow target for the 2007 to 2009 period. "Our third-quarter and year-to-date performance indicate that our plan is working,"" said Mulally. "Our full-year pre-tax outlook excluding special items is to be substantially better than 2006. We remain committed to improving our business and delivering our plan." About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 250,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo and Mazda. The company provides financial services through Ford Motor Credit Company. * * * As reported in the Troubled Company Reorter on Nov. 7, 2007, Standard & Poor's Ratings Services said its 'B' long-term corporate credit rating on Ford Motor Co. and Ford Motor Credit Co. remains on CreditWatch with positive implications, following the agreement between Ford and the United Auto Workers of a new labor contract. Ford's UAW workers are expected to vote on ratification of the contract in the coming days, and S&P expect the required approval level to be obtained. The ratings were placed on CreditWatch on Sept. 26, 2007, based on S&P's belief that Ford would reach a deal similar to the one General Motors Corp. reached with the UAW on that date. Ford's 'B-3' short-term rating was not on CreditWatch. FREMONT GENERAL: Earns $18.3 Million in 3rd Quarter Ended Sept. 30 ------------------------------------------------------------------ Fremont General Corporation, doing business primarily through its wholly-owned industrial bank, Fremont Investment & Loan, reported Thursday results for the third quarter ended Sept. 30, 2007. Third quarter results reflect the sale of the company's commercial real estate lending business and related loan portfolio to iStar Financial Inc. on July 2, 2007. The company reported net income of $18.3 million for the third quarter ended Sept. 30, 2007, compared with net income of $29.5 million in the corresponding quarter in 2006. On July 2, 2007, Fremont Investment completed the sale of its commercial real estate lending business and related loan portfolio to iStar pursuant to an Asset Purchase Agreement entered into on May 21, 2007. Fremont Investment sold its entire $6.27 billion commercial real estate loan portfolio to iStar and received $1.89 billion in cash plus a $4.21 billion participation interest in the sold portfolio. The company recorded a $65.6 million gain during the third quarter of 2007 related to the iStar sale. Primarily as a result of this gain, income from continuing operations for the third quarter of 2007 was $32.2 million. Fremont Investment is entitled to receive 70% of all principal payments on the loans sold to iStar, including payments on the unfunded commitments that are subsequently funded by iStar. The terms of the agreement call for iStar to provide the company with principal paydowns on a monthly basis plus interest payments on the unpaid principal balance at LIBOR + 150 basis points. The company received $580 million in principal during the quarter, leaving a remaining principal balance of $3.62 billion as of Sept. 30, 2007. The company recognized $70.7 million in interest income on this participation interest during the quarter. Discontinued Residential Mortgage Operations Stabilize The company continued to reduce its portfolio of residential real estate loans held for sale in the third quarter and realized a loss of $4.1 million, net of valuation reserves, related to the sale of $243.9 million of residential real estate loans during the quarter. During the nine months ended Sept. 30, 2007, the company recognized a loss of $881.1 million, net of valuation reserves, related to the sale of $8.75 billion of residential real estate loans. The company continues to service residential real estate loans, recognizing loan servicing income of $26.6 million as compared to $26.4 million during the third quarter of 2006. As a result of these factors, losses from discontinued residential mortgage operations were reduced to $13.9 million for the quarter. The company had $995.9 million in residential real estate loans held for sale as of Sept. 30, 2007, with a valuation reserve that totaled $484.3 million as of that date. The company's consolidated cash and cash equivalents at Sept. 30, 2007 totaled $2.7 billion and the cash position of the holding company at Sept. 30, 2007, totaled $42.2 million. The company's compensation and related expense totaled $14.4 million for the third quarter of 2007 as compared to $25.1 million for the third quarter of 2006, a 42.9% decrease. At Sept. 30, 2007, the company had 984 employees compared to 3,500 employees at Dec. 31, 2006. Fremont Investment, as of Sept. 30, 2007, had $8.72 billion in total assets, $7.96 billion in FDIC-insured deposits and $549.9 million in stockholder's equity, with a total Risked-Based Capital ratio of 10.46%. Fremont Investment serviced $16.64 billion of residential real estate loans as of Sept. 30, 2007, of which $15.38 billion were being serviced to maturity. Balance Sheet At Sept. 30, 2007, Fremont General Corp.'s consolidated balance sheet showed $8.79 billion in total assets, $8.49 billion in total liabilities, and $305.0 million in total shareholders' equity. About Fremont General Headquartered in Santa Monica, California, Fremont General Corporation (NYSE: FMT) -- http://www.fremontgeneral.com/-- is a financial services holding company which is engaged in deposit gathering through a retail branch network in Central and Southern California and residential real estate mortgage servicing through its wholly owned subsidiary Fremont Investment & Loan. Fremont Investment funds its operations primarily through deposit accounts sourced through its 22 retail banking branches which are insured up to the maximum legal limit by the Federal Deposit Insurance Corporation. * * * As reported in the Troubled Company Reporter on Nov. 6, 2007 Fitch Ratings downgraded Fremont General Corp.'s Long-term Issuer Default Rating to 'CC' from 'CCC' and Long-term senior debt to 'C/RR6' from 'CC/RR5'. At the same time,Fitch affirmed Fremont General Corp.'s Short-term IDR at 'C', Individual Rating at 'E', Support Rating at '5', and Support Floor at 'NF'. The downgrade follows the company's announcement that it was unable to reach an agreement with the Gerald J. Ford group with respect to its investment in FMT and that discussions have terminated. G-I HOLDINGS: Court OK's Appointment of Examiner to Probe Tersigni ------------------------------------------------------------------ Chief Judge Rosemary Gambardella of the U.S. Bankruptcy Court for the District of New Jersey approved the request of Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, for the appointment of an examiner in the chapter 11 cases of G-I Holdings, Inc., and its debtor-affiliate, ACI Inc. The examiner will investigate the conduct of L. Tersigni Consulting, P.C, and determine whether the Debtors or the estate have any causes of action against the firm. Tersigni's retention as financial advisor to the Official Committee of Asbestos Personal Injury Claimants was approved on March 2, 2001. Request for Examiner In her request, the U.S. Trustee disclosed that a preliminary investigation of the firm's billing practices in the Debtor's case revealed that it improperly billed this estate for time that it did not work. Further, it also appeared that the firm engaged in a systematic effort to improperly increase its bills in not only this case, but in many other bankruptcy cases in which it was employed. While the preliminary investigation uncovered improper billings as it related to certain former employees of Tersigni, the total scope, extent and effect of the firm's actions has not been determined and thus the need for an examiner, the U.S. Trustee added. The U.S. Trustee contended that this issue is of vital importance as it involves allegations of a professional who has violated its fiduciary obligation to the estate and its duty of candor to the court. The appointment of an independent fiduciary to investigate these serious allegations of fraud and dishonesty related to the affairs of the Debtors is both warranted and necessary. The appointment of an examiner, the Trustee further contended, is a benefit to all creditors and the estate because it serves to uncover the extent of Tersigni's conduct and determine the causes of action for this estate that exist against the firm. Allegations Against Tersigni The Trustee related that in April 2006, it came to her attention that Loreto Tersigni, the sole owner and principal of the firm, was allegedly improperly marking up the time charges on Tersigni's fee applications filed in not only this case, but numerous bankruptcy cases in which it was employed. Specifically, it was alleged that prior to filing fee applications with the court, Mr. Tersigni would receive internal time records from employees at the firm who worked on the case. It was also alleged that when preparing the fee applications, Mr. Tersigni would subsequently add on time for services that were not performed by employees of Tersigni. These actions would have the effect of improperly raising the fees in their filed fee applications and causing the estates to pay fees that were not earned. After this information was initially discovered, the Trustee said it conducted a preliminary investigation and discovered that the fee applications filed by Tersigni in this case since at least 2002 were improper because time that was not worked was added to those fee applications. Through a sample review of three professionals at Tersigni, it was uncovered that the internal invoices for those professionals had time improperly added to them by Mr. Tersigni when the fee applications were filed. Other Chapter 11 Cases As reported in the Troubled Company Reporter Oct. 11, 2007, the Hon. Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware refused to appoint a Court examiner to probe on the bills paid by W.R. Grace & Co. and its debtor affiliates to L. Tersigni Consulting until the Office of the U.S. Trustee for Region 3 can explain why it took them more than a year to inform the Court of the investigation initiated by the Department of Justice on Loreto Tersigni and the Tersigni firm As reported in the Troubled Company Reporter on Oct. 12, 2007, the Trustee also asked the New Jersey Bankruptcy Court to appoint an examiner in Congoleum Corp. and its debtor-affiliates chapter 11 cases. About G-I Holdings Based in Wayne, New Jersey, G-I Holdings, Inc., is a holding company that indirectly owns Building Materials Corporation of America, a manufacturer of premium residential and commercial roofing products. The company filed for chapter 11 protection on Jan. 5, 2001 (Bankr. D. N.J. Case No. 01-30135). An affiliate, ACI, Inc., filed its own voluntary chapter 11 petition on Aug. 3, 2001. The cases were consolidated on Oct. 10, 2001. Dennis J. O'Grady, Esq., and Mark E. Hall, Esq., at Riker, danzig, Scherer, Hyland & Perretti LLP; and Martin J. Bienenstock, Esq., and Shai Y. Waisman, Esq., at Weil, Gotshal & Manges LLP, represent the Debtors. C. Judson Hamlin was appointed by the Court as the Legal Representative for Present and Future Holders of Asbestos Related Demands. Lowenstein Sandler PC represents the Official Committee of Unsecured Creditors. GEOKINETICS INC: Completes $25 Mil. Lease Facility with CIT Group ----------------------------------------------------------------- Geokinetics Inc. closed a new $25 million capital lease facility with CIT Group/Equipment Financing Inc. This facility adds $25 million of additional capacity to the company's existing capital lease with CIT that closed on July 25, 2006, for an original amount of $6 million. "I am happy to report the expansion of our relationship with CIT," Richard Miles, president and CEO of Geokinetics, said. "This facility will serve as a major cornerstone for the future growth of Geokinetics." "We have experienced record levels of backlog and that, along with ever-increasing demand from our customers to deliver world-class data in some of the world's toughest environments, has fueled our significant capital investment program for this year," Mr. Miles added. "This facility will help us to finance our equipment on a long-term basis and support our growth plans going forward." Headquartered in Houston, Texas, Geokinetics Inc. (AMEX:GOK) -- http://www.Geokinetics.com/-- is a provider of seismic acquisition and high-end seismic data processing services to the oil and gas industry. Geokinetics has strong operating presence in North America and is focused on key markets internationally. Geokinetics operates in some of the most challenging locations in the world from Arctic to mountainous jungles to transition zone environments. * * * Standard and Poor's rated the company's long-term foreign and local issuer credits at 'B-'. GEORGIA GULF: Decline in PVC Unit Cues Moody's to Take Neg. Action ------------------------------------------------------------------ Moody's Investors Service placed Georgia Gulf Corporation under review for possible downgrade due to continuing weakness in its downstream PVC fabricated products businesses that were acquired from Royal Group Technologies Ltd in 2006. Due to the expectation of further weakness in the US housing market and a potential slowdown in the US economy, Moody's believes that the company's credit metrics will continue to underperform prior projections and that the company will need to renegotiate the financial covenants in its bank facilities over the next three to six months. Approximately $1.3 billion of debt securities are affected. Moody's expects an accelerated review, which will examine the potential negative impact of declining demand in downstream markets, further volatility in feedstock and energy prices, as well as the potential positive impact of additional (estimated at $27 million per year by the first quarter of 2008) synergies and shifting additional production volumes to the US. The review will also evaluate the company's ability to increase free cash flow and improve its liquidity in 2008. On Review for Possible Downgrade: Issuer: Georgia Gulf Corporation -- Probability of Default Rating, Placed on Review for Possible Downgrade, currently B1 -- Corporate Family Rating, Placed on Review for Possible Downgrade, currently B1 -- Senior Subordinated Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B3 -- Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently Ba2 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently B2 Outlook Actions: Issuer: Georgia Gulf Corporation -- Outlook, Changed To Rating Under Review From Stable Georgia Gulf Corporation, headquartered in Atlanta, Georgia, is a producer of commodity chemicals including chlorovinyls (chlorine, caustic soda, vinyl chloride monomer, vinyl resins and vinyl compounds), PVC fabricated products (pipe, siding, window profiles, plastic lumber, etc.), and aromatics (cumene, phenol and acetone). The company generated revenues of $3.1 billion for the LTM ending September 30, 2007. GREEN TREE: S&P Puts Default Rating on Cl. B-1 Senior Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on the class B-1 senior/subordinated pass-through certificates from Green Tree Financial Corp. Manufactured Housing Trust 1996-9 to 'D' from 'CCC-'. The lowered rating reflects the reduced likelihood that investors will receive timely interest and the ultimate repayment of their original principal investment. This transaction reported an outstanding liquidation loss interest shortfall for its class B-1 certificates on the October 2007 payment date. Standard & Poor's believes that interest shortfalls for this transaction will continue to be prevalent in the future, given the adverse performance trends displayed by the underlying pool of collateral, as well as the location of subordinate class write- down interest at the bottom of the transaction's payment priorities (after distributions of senior principal). As of the October 2007 payment date, series 1996-9 had experienced cumulative net losses of 14.29% of its initial pool balance. Standard & Poor's will continue to monitor the outstanding ratings associated with this transaction in anticipation of future defaults. GSAMP TRUST: Moody's Junks Ratings on Four Certificate Classes -------------------------------------------------------------- Moody's Investors Service downgraded 11 classes of certificates from four deals issued by GSAMP Trust in 2002 and 2004. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to expected losses. GSAMP Trust 2002-HE is backed by subprime, fixed and adjustable-rate mortgage loans. The pool factor is less than 6%, and nearly a third of the pool is over 60 days delinquent. Losses have eroded the overcollateralization (OC), leaving the rated bonds less protected. As of October 2007, OC was below target, providing $0.7 million protection against $3.7 million worth of loans in foreclosure and REO. Stepdown allowed repayment of the junior-most tranche, Class B-3, and most of Class B-2, leaving less protection for the next tranches up the loss priority. GSAMP Trust 2004-HE1 and GSAMP Trust 2004-HE2 are backed by subprime, fixed and adjustable-rate mortgage loans, and have lost credit enhancement provided by subordination due to stepdown. GSAMP Trust 2004-SEA2 is backed by subprime, fixed-rate seasoned mortgage loans. As of October 2007, both the OC and the junior- most Class B-2 were completely written down, and Class B-1 was mostly written down. Complete rating actions are: Issuer: GSAMP Trust 2002-HE -- Cl. M-1, Downgraded to Aa3 from Aaa -- Cl. M-2, Downgraded to Baa2 from A2 -- Cl. B-1, Downgraded to Caa1 from Ba2 -- Cl. B-2, Downgraded to Caa2 from B1 Issuer: GSAMP Trust 2004-HE1 -- Cl. B-1, Downgraded to Baa3 from Baa2 -- Cl. B-2, Downgraded to Ba3 from Baa3 Issuer: GSAMP Trust 2004-HE2 -- Cl. B-4, Downgraded to B3 from Ba2 Issuer: GSAMP Trust 2004-SEA2 -- Cl. M-2, Downgraded to Ba2 from Baa2 -- Cl. M-3, Downgraded to B3 from Ba2 -- Cl. M-4, Downgraded to Caa3 from B3 -- Cl. M-5, Downgraded to Ca from Caa2 GSR MORTGAGE: Moody's Puts Low-B Ratings on Two Cert. Classes ------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by GSR Mortgage Loan Trust 2007-OA2 and ratings ranging from Aa1 to B2 to the subordinate certificates in the deal. The securitization is backed by first lien, adjustable-rate, negative amortization residential mortgage loans acquired by Goldman Sachs Mortgage Company. The collateral was originated by Quicken Loans Inc., and Residential Funding Company, LLC and other originators, none of which originated more than 10% of the mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination. Moody's expects collateral losses to range from 1.90% to 2.10%. Wells Fargo Bank, N.A. will act as master servicer. Moody's has assigned Wells Fargo Bank, N.A. its top servicer quality rating of SQ1 as a master servicer. The complete ratings action are: GSR Mortgage Loan Trust 2007-OA2 Mortgage Pass-Through Certificates, Series 2007-OA2 -- Cl. 1A-1, Assigned Aaa -- Cl. 2A-1, Assigned Aaa -- Cl. A-2, Assigned Aaa -- Cl. 1-X, Assigned Aaa -- Cl. 2-X, Assigned Aaa -- Cl. B-1, Assigned Aa1 -- Cl. B-2, Assigned Aa2 -- Cl. B-3, Assigned Aa3 -- Cl. B-4, Assigned A2 -- Cl. B-5, Assigned Baa1 -- Cl. B-6, Assigned Ba2 -- Cl. B-7, Assigned B2 HALCYON SECURITIZED: Moody's Rates Three Cert. Classes at Low-B --------------------------------------------------------------- Moody's Investors Service placed these notes issued by Halcyon Securitized Products Investors ABS CDO II Ltd. on review for possible downgrade: Class Description: Up to $225,000,000 Class A-1(a) Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $75,000,000 Class A-1(b) Senior Secured Floating Rate 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: Class Description: $82,500,000 Class A-2 Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $36,000,000 Class B Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: Aa2 -- Current Rating: A2, on review for possible downgrade Class Description: $27,500,000 Class C Senior Secured Deferrable Interest Floating Rate Notes Due 2046 -- Prior Rating: A2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $21,500,000 Class D-1 Senior Secured Deferrable Interest Floating Rate Notes Due 2046 -- Prior Rating: Baa2 -- Current Rating: Ba2, on review for possible downgrade Class Description: $6,000,000 Class D-2 Senior Secured Deferrable Interest Floating Rate Notes Due 2046 -- Prior Rating: Baa3 -- Current Rating: B1, on review for possible downgrade Class Description: $4,000,000 Class E Senior Secured Deferrable Interest Floating Rate Notes Due 2046 -- 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. HARRAH'S ENT: Indiana Gaming Commission Approves Apollo Buyout -------------------------------------------------------------- Harrah's Entertainment Inc. received approval from the Indiana Gaming Commission for the proposed acquisition of Harrah's by affiliates of Apollo Management L.P. and TPG Capital. As reported in the Troubled Company Reporter on Dec. 20, 2006, Harrah's Entertainment has entered into a definitive agreement for affiliates of Texas Pacific Group and Apollo Management L.P. to acquire Harrah's in an all-cash transaction valued at approximately $27.8 billion, including the assumption of approximately $10.7 billion of debt. Under the terms of the agreement, Harrah's stockholders will receive $900 in cash for each outstanding Harrah's share. The Harrah's board of directors, based on the recommendation of a special committee of non-management directors, which conducted a thorough review of Harrah's strategic alternatives, has approved the agreement and has recommended that Harrah's stockholders vote in favor of the agreement. The transaction remains subject to approval by other jurisdictions in which Harrah's subsidiaries operate and other conditions to closing set forth in the agreement and plan of merger entered into on Dec. 19, 2006. About Apollo Management L.P. Based in New York, Apollo Management L.P. is a private equity L.P. firm, founded in 1990 by Leon Black. It also has offices in Los Angeles and London. It has invested over $16 billion in companies inside and outside the of the United States. About TPG Capital Headquartered in Fort Worth, Texas, TPG Capital, also known as Texas Pacific Group - http://www.texaspacificgroup.com/-- has staked its claim on the buyout frontier. The company, which does not get involved in the day-to-day operations of the companies in which it invests, usually holds onto an investment for at least five years, although consistent moneymakers may be kept indefinitely. About Harrah's Entertainment Headquartered in Las Vegas, Nevada, Harrah's Entertainment Inc.(NYSE: HET) -- http://www.harrahs.com/-- has grown through development of new properties, expansions and acquisitions, and now owns or manages casino resorts on four continents and hosts over 100 million visitors per year. The company's properties operate under the Harrah's, Caesars and Horseshoe brand names; Harrah's also owns the London Clubs International family of casinos and the World Series of Poker. Harrah's also owns the London Clubs International family of casinos. * * * Harrah's Entertainment Inc. continues to carry Standard & Poor's long term foreign and local issuer credit ratings at "BB" which was placed in December 2006. HOBOKEN WOOD: Opts to Liquidate Assets Under Chapter 7 ------------------------------------------------------ Hoboken Wood Flooring LLC and three affiliates last week filed for Chapter 7 liquidation with the U.S. Bankruptcy Court for the District of Delaware. The affiliates include SPI Floors LLC, Garden State Supplies LLC, and WFA, LLC. Craig S. Dean, Chief Restructuring Officer, says that the company had considered an orderly liquidation under Chapter 11 of the Bankruptcy Code. Mr. Dean relates however that after review, the company opted to file under Chapter 7 of the Bankruptcy Code in light of: (a) that the cash needs of the company in order to pursue the orderly liquidation of its remaining assets in a commercially reasonable manner under the circumstances; (b) its inability to obtain other financing in the event that it pursued an orderly liquidation; (c) its inability to generate cash while operating as a debtor and debtor-in-possession under chapter 11; and (d) the company's inability to fund payroll for its existing employees. Court records show that Jeoffrey L. Burtch has been appointed as Chapter 7 Trustee. The Hon. Christopher S. Sontchi has set a section 341(a) creditors meeting on Dec. 11, 2007. based in Wayne, New Jersey, Hoboken Wood Flooring LLC -- http://www.hobokenfloors.com/-- is the largest independent distributor of hardwood flooring in the U.S. HOBOKEN WOOD: Voluntary Chapter 7 Case Summary ---------------------------------------------- Debtors: Hoboken Wood Flooring LLC dba Hoboken Wood Flooring Corp-South dba Hoboken Wood Flooring LLC-South dba Hoboken Floors 70 Demarest Drive Wayne, NJ 07470 Bankruptcy Case No.: 07-11658 Debtor-affiliates filing separate Chapter 7 petitions: Entity Case No. ------ -------- SPI Floors LLC 07-11659 Garden State Supplies LLC 07-11660 WFA, LLC 07-11661 Type of Business: Hoboken Wood is the largest independent distributor of hardwood flooring in the U.S. See http://www.hobokenfloors.com/ Chapter 7 Petition Date: November 7, 2007 Court: District of Delaware Judge: Christopher S. Sontchi Debtors' Counsel: Mark S. Chehi, Esq. Skadden, Arps, Slate, Meagher & Flom One Rodney Square, P.O. Box 636 Wilmington, DE 19899-0636 Tel: (302) 651-3000 Fax: (302) 651-3160 Estimated Assets Estimated Debts ---------------- --------------- Hoboken Wood More than More than Flooring LLC $100 Million $100 Million SPI Floors LLC $1 Million to More than $100 Million $100 Million Garden State Less than $10,000 $1 Million to Supplies LLC $100 Million WFA, LLC $100,000 to $1 Million to $1 Million $100 Million The Debtors did not file a list of their 20 Largest Unsecured Creditors. HOMBANC CORP: Wants Exclusive Plan Filing Period Moved to April 7 ----------------------------------------------------------------- HomeBanc Mortgage Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware to extend their exclusive periods to: -- file a Chapter 11 plan, which expires on Dec. 7, 2007, through and including April 7, 2008; and -- solicit acceptances of the plan, which expires on Feb. 5, 2008, through and including June 4, 2008. The Debtors have been in Chapter 11 for over three months. During this time, the Debtors have attempted to conduct an orderly liquidation of their assets in order to maximize the value of the assets for the benefit of their creditors, Joseph M. Barry, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates. The wind-down process and sale of assets has been extremely difficult in light of the fact that the Debtors have many fewer resources available, Mr. Barry says. Among numerous other things, the Debtors have worked to: -- transition the Servicing Business to JPMorgan Chase Bank, N.A., on an interim basis; -- market the Servicing Business to potential buyers; -- conduct a public auction of the Servicing Business assets and seek Court approval of the sale; -- sell miscellaneous assets; -- file schedules and statements; -- reject leases; -- return leased equipment; and -- establish a bar date. According to Mr. Barry, the Debtors have communicated regularly with legal and financial advisors to their major creditor constituencies to report upon, and solicit input regarding, the sale process, as well as other potential means for maximizing the value of the estates. The Debtors believe that an extension of the Exclusive Periods is necessary to enable them to complete the sale of the Servicing Business and other assets, and then to formulate the terms of a Chapter 11 plan and seek input from their various creditor constituencies regarding same. Mr. Barry asserts that cause exists for an extension of the Exclusive Periods because: * The Debtors' cases are large and complex; * The Debtors have not had sufficient time to negotiate and prepare adequate information; * The Debtors have been working in good faith toward maximizing the value of their assets; * The Debtors continue to pay their postpetition debts as they come due; * The Debtors expect to file a viable plan of liquidation; * The Debtors have been successful in negotiations with their creditors; * The Debtors' cases have only been pending for just over three months; * The Debtors are not seeking an extension to pressure creditors; and * Unresolved contingencies exist in the Debtors' Chapter 11 cases. The Debtors ask that the order be without prejudice to the Debtors' right to seek additional extensions of the Exclusive Periods. Robert K. Malone, Esq., a partner at Drinker Biddle, assured the Court that the firm does not hold or represent any interest adverse to the Committee or the Debtors' estate and has no connection with any parties-in-interest. He adds that the firm is a disinterested person as that phrase is defined in Section 101(14) of the Bankruptcy Code. A hearing on the matter is set for Nov. 27, 2007, at 3:00 p.m. Headquartered in Atlanta, Ga., HomeBanc Mortgage Corporation -- http://www.homebanc.com/-- is a mortgage banking company focused on originating primarily prime purchase money residential mortgage loans in the Southeast United States. Headquartered in Atlanta, Ga., HomeBanc Mortgage Corporation -- http://www.homebanc.com/-- is a mortgage banking company focused on originating primarily prime purchase money residential mortgage loans in the Southeast United States. HomeBanc Mortgage together with five affiliates filed for chapter 11 protection on Aug. 9, 2007 (Bankr. D. Del. Case Nos. 07-11079 through 07-11084). Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor was selected by the Debtors to represent them in these cases. The Debtors' financial condition as of June 30, 2007, showed total assets of $5,100,000,000 and total liabilities of $4,900,000,000. The Debtors' exclusive period to file a plan ends on Dec. 7, 2007. (HomeBanc Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). HOMEBANC CORP: Court Okays Drinker Biddle as Panel's Del. Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors in HomeBanc Mortgage Corporation and its debtor-affiliates' cases obtained authority from the United States Bankruptcy Court for the District of Delaware to retain Drinker Biddle & Reath LLP as its co-counsel and Delaware counsel. As reported in the Troubled Company Reporter on Oct. 16, 2007, the firm is expected to: a. advise the Creditors committee with respect to its rights, powers, and duties in the cases; b. assist and advise the Creditors Committee in its consultations with the Debtors relative to the administration of the cases; c. assist in negotiating with the creditors and analyzing their claims; d. assist in the investigation of the acts, conducts, assets, liabilities and financial condition of the Debtors, as well as the operation the Debtors' businesses; e. assist in analyzing and negotiating with the Debtors or any third party concerning matters related to, among other things, the terms of a plan of reorganization or plan orderly liquidation; f. advise and assist the Creditors Committee with respect to any communications with the general creditor body regarding significant matters in the cases; g. commence and prosecute actions and proceedings on behalf of the Creditors Committee; h. review, analyze and prepare legal papers; i. represent the Creditors Committee at all hearings and other proceedings; j. confer with other advisors retained by the Creditors Committee to provide advice to its members; and k. perform all other legal services as may be requested. The Creditors Committee requested that Drinker Biddle be paid on an hourly basis for the legal services, and out-of-pocket disbursements incurred. The hourly rates for the firm's professionals are: Designation Hourly Rate ----------- ----------- Director $195-$225 Partners $415-$725 Counsel and Associates $225-$495 Para professionals $85-$230 Robert K. Malone, Esq., a partner at Drinker Biddle, assured the Court that the firm does not hold or represent any interest adverse to the Committee or the Debtors' estate and has no connection with any parties-in-interest. He adds that the firm is a disinterested person as that phrase is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Atlanta, Ga., HomeBanc Mortgage Corporation -- http://www.homebanc.com/-- is a mortgage banking company focused on originating primarily prime purchase money residential mortgage loans in the Southeast United States. Headquartered in Atlanta, Ga., HomeBanc Mortgage Corporation -- http://www.homebanc.com/-- is a mortgage banking company focused on originating primarily prime purchase money residential mortgage loans in the Southeast United States. HomeBanc Mortgage together with five affiliates filed for chapter 11 protection on Aug. 9, 2007 (Bankr. D. Del. Case Nos. 07-11079 through 07-11084). Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor was selected by the Debtors to represent them in these cases. The Debtors' financial condition as of June 30, 2007, showed total assets of $5,100,000,000 and total liabilities of $4,900,000,000. The Debtors' exclusive period to file a plan ends on Dec. 7, 2007. (HomeBanc Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). HOMEBANC CORP: Judge Carey Approves $61 Million Loan Sale to EMC ---------------------------------------------------------------- The Honorable Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware ruled that EMC Mortgage Corporation's offer for HomeBanc Mortgage Corporation and its debtor-affiliates' mortgage loans servicing business is the highest or otherwise best offer and is approved. The servicing rights sold to Bear Stearns Cos. affiliate under the Court-approved purchase agreement excludes the loans being serviced by the Debtors for Federal Home Loan Mortgage Corporation. EMC is expected to pay $61,000,000 for the assets, according to Bloomberg News. The Debtors' interests in the Non-Freddie Mac Servicing Rights will be transferred to EMC and, as of the sale date, free and clear of, among others, any claim and any interest, mortgage, pledge, security interest, right of first refusal, option, encumbrance, lien o charge of any kind. EMC will not be considered a successor to the Debtors or the Debtors' estates. The Sale does not amount to a consolidation, merger or de facto merger of EMC and the Debtors or the Debtors' estate. There is no continuity of enterprise between the Debtors and the Purchaser, Judge Carey says. All liens and interests will be, and are, without further action by any person or entity, released with respect to the Debtors' interests in the Non-Freddie Mac Servicing Rights, as of the sale Date. Payment of the applicable cure amounts in the assumption and assignment notice, or as otherwise set forth in the Sale Order, will occur on the Sale Date. Judge Carey decides that EMC's promise to perform the Servicing Agreements from and after the Sale Date constitutes adequate assurance of future performance within the meaning of Section 365(f) of the Bankruptcy Code. Upon the assumption of the Servicing Agreements related to the Non-Freddie Mac Servicing Rights on the Sale Date, each Servicing Agreement will be assigned to EMC and will be in full force, and all non-Debtor parties are barred and enjoined from asserting against EMC any defaults, breaches or claims of pecuniary losses existing as of the Sale Date or by reason of the Non-Freddie Mac Servicing Rights sale. Judge Carey finds it fair and reasonable to the Debtors and the securitization trusts to establish a cure account to pay any and all amounts due or servicing defaults with regard to all Servicing Rights, excluding the Freddie Mac Servicing Rights and the Fannie Mae Servicing Rights, arising before the Sale Date, including trustee fees and expenses, master servicer fees and expenses and professional fees and expenses, subject to review by the Debtors, the Official Committee of Unsecured Creditors and the United States Trustee. The Debtors will segregate $630,000 into a separate interest bearing Cure Account. An additional $220,000 will be segregated into a separate, interest-bearing account to pay for the fees and expenses of the Debtors' professionals to assist the Debtors with producing and delivering to applicable recipients assessments of compliance with servicing criteria and servicer compliance statements required by the Servicing Agreements, and to issue and deliver attestation reports regarding the assessments of compliance with servicing criteria. Judge Carey orders the Debtors to pay Fannie Mae on the Sale Date $1,928,920 out of the proceeds of the NFM Sale. Upon assumption and assignment to EMC, and payment of Fannie Mae's settlement amount, the claimed cure amount of Fannie Mae in its objection will be deemed fully resolved; the "regular servicing option loans" encompassed within Fannie Mae's Servicing Rights will be deemed to be automatically converted to "special servicing option loans" and the consideration payable to Fannie Mae will be deemed fully paid by the settlement amount; and neither EMC nor the Debtors will be responsible for selling representations or warranties with respect to any mortgage loan encompassed within the Fannie Mae Servicing Rights. Notwithstanding anything to the contrary contained in the final debtor-in-possession order, any proceeds from the NFM Sale, other than those required to pay certain amounts, will, at the option of JPMorgan Chase Bank, N.A., be paid immediately upon the closing of the NFM Sale to JPMorgan, to be held in a segregated, interest-bearing account pending the closing on the sale of the Freddie Mac Servicing Rights. Upon closing of the Freddie Mac Sale, both the Non-Freddie Mac Sale and Freddie Mac Sale proceeds may be applied to the debt outstanding under the Servicing Loan Agreement -- MSR Debt. If the Servicing Sale proceeds are equal to or less than the amount of the MSR Debt, the aggregate amount of the costs necessary, after giving effect to anticipated reductions of workforce, to wind down the operations of the Debtors will be deducted from the Servicing Sale Proceeds, before their application to the MSR Debt. If the Servicing Sale Proceeds are greater than the amount of the MSR Debt, the excess proceeds will be held by JPMorgan, for the benefit of certain buyers, to satisfy any actual deficiency claim of the Buyers under the Warehouse Facility, subject to the Debtors' right to seek return of their estates of any amounts not necessary to satisfy deficiency claims and the Buyers' rights under Section 507(b) of the Bankruptcy Code. However, if the Freddie Mac Sale does not close on or before Dec. 17, 2007, the Non-Freddie Mac Proceeds may, subject to approval of a wind- down budget, immediately be applied to the MSR Debt. The Wind-Down Budget reflecting agreement among the Debtors, JPMorgan, the prepetition secured lenders and the Creditors Committee as to the nature and amount of the Wind-Down costs will be presented for consideration and approval within five business days of the closing of the Freddie Mac Sale. The budget must be approved by the Court no later than December 31. If JPMorgan makes the "early payment election," the Wind-Down Budget will be presented for consideration on or before December 21. All objections and responses to the Debtors' Motion that have not been overruled, withdrawn, waived, settled or resolved, and all reservations of rights, are denied and overruled on the merits with prejudice. The next highest bidder is Midland Mortgage Co. Judge Carey states that to the extent the Debtors are unable to consummate the NFM Sale with EMC, the Debtors will, without further Court order, be allowed to proceed with consummation of the contemplated NFM Sale with Midland. Any of the master servicers and trustees may request a hearing to determine whether Midland is able to provide adequate assurance of future performance under the relevant Servicing Agreements. Midland has agreed to maintain its Next Highest Bidder status until the earlier of Dece. 31, 2007, or the date in which the NFM Sale is consummated with EMC, after which the status will terminate and Midland's deposit will be returned. Robert K. Malone, Esq., a partner at Drinker Biddle, assured the Court that the firm does not hold or represent any interest adverse to the Committee or the Debtors' estate and has no connection with any parties-in-interest. He adds that the firm is a disinterested person as that phrase is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Atlanta, Ga., HomeBanc Mortgage Corporation -- http://www.homebanc.com/-- is a mortgage banking company focused on originating primarily prime purchase money residential mortgage loans in the Southeast United States. Headquartered in Atlanta, Ga., HomeBanc Mortgage Corporation -- http://www.homebanc.com/-- is a mortgage banking company focused on originating primarily prime purchase money residential mortgage loans in the Southeast United States. HomeBanc Mortgage together with five affiliates filed for chapter 11 protection on Aug. 9, 2007 (Bankr. D. Del. Case Nos. 07-11079 through 07-11084). Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor was selected by the Debtors to represent them in these cases. The Debtors' financial condition as of June 30, 2007, showed total assets of $5,100,000,000 and total liabilities of $4,900,000,000. The Debtors' exclusive period to file a plan ends on Dec. 7, 2007. (HomeBanc Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). HOUT BAY: Moody's Holds Low-B Ratings on $10 Million Notes ---------------------------------------------------------- Moody's Investors Service placed these notes issued by Hout Bay 2006-1 Ltd. on review for possible downgrade: Class Description: $4,000,000 Class E Deferrable Floating Rate Notes Due 2041 -- Prior Rating: Ba1 -- Current Rating: Ba1, on review for possible downgrade Class Description: $6,000,000 Subordinated Notes, Due 2041 -- Prior Rating: Ba3 -- Current Rating: Ba3, on review for possible downgrade According to Moody's, the rating action[s] [is/are] the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. HSPI DIVERSIFIED: Moody's Junks Rating on $6 Million Notes ---------------------------------------------------------- Moody's Investors Service placed these notes issued by HSPI Diversified CDO Fund II, Ltd. on review for possible downgrade: Class Description: $26,500,000 Class S Senior Secured Floating Rate Notes due July 2015 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $350,000,000 Class A-1 Senior Secured Floating Rate Notes due July 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $105,000,000 Class A-2 Senior Secured Floating Rate Notes due July 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $63,000,000 Class A-3 Senior Secured Floating Rate Notes due July 2052 -- 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: Class Description: $85,000,000 Class A-4 Senior Secured Floating Rate Notes due July 2052 -- Prior Rating: Aa2 -- Current Rating: A3, on review for possible downgrade Class Description: $26,000,000 Class B-1 Senior Subordinate Secured Floating Rate Notes due July 2052 -- Prior Rating: A1 -- Current Rating: Ba1, on review for possible downgrade Class Description: $35,000,000 Class B-2 Senior Subordinate Secured Floating Rate Notes due July 2052 -- Prior Rating: A3 -- Current Rating: Ba3, on review for possible downgrade Class Description: $5,000,000 Class C Senior Subordinate Secured Floating Rate Notes due July 2052 -- Prior Rating: Baa2 -- Current Rating: B3, on review for possible downgrade Class Description: $6,000,000 Class D Subordinate Secured Floating Rate Notes due July 2052 -- Prior Rating: Ba1 -- Current Rating: Caa3, on review for possible downgrade Class Description: $7,500,000 Composite Obligations due July 2052 -- 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. IMAC CDO: Bad Credit Quality Spurs Moody's Junk Note Rating ----------------------------------------------------------- Moody's Investors Service placed these notes issued by IMAC CDO 2007-2, Ltd. on review for possible downgrade: Class Description: $150,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes due 2050 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $150,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2050 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $29,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes due 2050 -- 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: Class Description: $83,750,000 Class B Fourth Priority Senior Secured Floating Rate Notes due 2050 -- Prior Rating: Aa2 -- Current Rating: A2, on review for possible downgrade Class Description: $18,750,000 Class C Fifth Priority Senior Secured Floating Rate Notes due 2050 -- Prior Rating: Aa3 -- Current Rating: A3, on review for possible downgrade Class Description: $11,000,000 Class D Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2050 -- Prior Rating: A1 -- Current Rating: Ba3, on review for possible downgrade Class Description: $25,000,000 Class E Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes due 2050 -- Prior Rating: A2 -- Current Rating: B1, on review for possible downgrade Class Description: $7,500,000 Class F Eighth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2050 -- Prior Rating: A3 -- Current Rating: B2, on review for possible downgrade Class Description: $13,000,000 Class G Ninth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2050 -- 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. IMAC CDO: Moody's May Further Cut Junk Rating on $20 Million Notes ------------------------------------------------------------------ Moody's Investors Service placed these notes issued by IMAC CDO 2006-1, Ltd. on review for possible downgrade: Class Description: $75,000,000 Class A-1 First Priority Senior Secured Floating Rate Delayed Draw Notes due 2051 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $110,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: Class Description: $16,000,000 Class B Third Priority Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $35,000,000 Class C Fourth Priority Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aa2 -- Current Rating: Baa3, on review for possible downgrade Class Description: $5,500,000 Class D Fifth Priority Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aa3 -- Current Rating: Ba1, on review for possible downgrade Class Description: $20,000,000 Class E Sixth Priority Senior Secured Deferrable Floating Rate Notes due 2051 -- Prior Rating: A2 -- Current Rating: Caa2, on review for possible downgrade Moody's also downgraded these notes: Class Description: $20,000,000 Class F Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes due 2051 -- Prior Rating: Baa2 -- Current Rating: Ca Class Description: $3,500,000 Class G Eighth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2051 -- Prior Rating: Baa3 -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. INGRAM MICRO: Board Approves $300 Million Repurchase of Shares -------------------------------------------------------------- Ingram Micro Inc.'s board of directors authorized a share repurchase program, through which the company may purchase up to $300 million of its outstanding common stock over three years. Under the program, the company may repurchase shares in the open market and through privately negotiated transactions. The repurchases will be funded with available borrowing capacity and cash. The timing and amount of specific repurchase transactions will depend upon market conditions, corporate considerations and applicable legal and regulatory requirements. "The goal of all our capital programs is to enhance shareholder value," Gregory M. Spierkel, chief executive officer, Ingram Micro Inc., said. "We have confidence in our business after several years of growth and solid performance, which allows us to repurchase shares while maintaining the financial flexibility to pursue our strategic objectives." "We expect to have an active pipeline of initiatives -- both potential acquisition candidates and greenfield investments -- designed to fuel growth and enhance profitability," added Mr. Spierkel. "Our ability to repurchase shares while investing for the future demonstrates our commitment to leveraging our financial strength to drive long-term value for our shareholders." About Ingram Micro Inc. Headquartered in Santa Ana, California, Ingram Micro Inc. (NYSE: IM) -- http://www.ingrammicro.com/-- together with its subsidiaries, distributes information technology products and supply chain solutions worldwide. Its IT products include peripherals, networking, software, and systems. * * * Standard & Poor's placed Ingram Micro Inc.'s long term foreign and local issuer credit ratings at 'Ba1' in September 2006. The ratings still hold to date with a stable outlook. INVERNESS MEDICAL: To Publicly Offer 7 Million of Common Stock -------------------------------------------------------------- Inverness Medical Innovations Inc. is offering to sell, 7,000,000 shares of its common stock pursuant to an effective shelf registration statement in an underwritten public offering, subject to market and other conditions. Certain selling stockholders of the company are also offering to sell up to 165,698 shares of common stock in the offering. The company expects to grant the underwriters a 30-day option to purchase up to an additional 1,074,854 shares of common stock to cover over-allotments, if any. The company will not receive any proceeds from the sale of the shares by the selling stockholders. Inverness intends to use the net proceeds from the offering for working capital and other general corporate purposes, including the financing of potential acquisitions or other investments, if and when suitable opportunities arise, and for capital expenditures. Inverness also may use a portion of the net proceeds to fund its pending acquisition of Panbio Ltd. UBS Investment Bank, Jefferies & Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as joint book- running managers for the offering. Leerink Swann LLC and Stifel, Nicolaus & Company, Incorporated are acting as co-managers for the offering. A copy of the preliminary prospectus supplement and accompanying prospectus related to this offering may be obtained by contacting the Prospectus Department at: a) UBS Investment Bank 299 Park Avenue New York, NY 10171 Tel (888) 827-7275 ( toll-free) b) Jefferies & Company Inc. 12th Floor, 520 Madison Avenue New York, NY 10022 Tel (212) 284-2342 Fax (212) 284-2208 c) Merrill Lynch & Co. 4 World Financial Center Ground Floor, 250 Vesey Street New York, NY 10080 Tel (212) 449-1000 About Inverness Medical Based in Waltham, Massachusetts, Inverness Medical Innovations Inc. (AMEX: IMA) -- http://www.invernessmedical.com/-- develops, manufactures and markets in vitro diagnostic products for the over-the-counter pregnancy and fertility/ovulation test market and the professional rapid diagnostic test markets. * * * Moody's placed Inverness Medical's subordinated debt rating at 'Caa1' as well as the company's long term corporate family and probability of default ratings at 'B2' in June 2007. The ratings still hold to date with a stable outlook. INPHONIC INC: Files Ch. 11 Petition to Implement Versa Sale Deal ---------------------------------------------------------------- InPhonic Inc. has filed a voluntary Chapter 11 petition with the United States Bankruptcy Court for the District of Delaware to implement an agreement selling substantially all of its assets to an affiliate of Versa Capital Management, a Philadelphia based private equity firm. InPhonic's Board of Directors has unanimously determined that the Chapter 11 process will provide an efficient environment for completion of the sale. The sale is subject to higher and better offers, and InPhonic anticipates completing the sale before the end of the year, subject to court approval. InPhonic will continue to conduct normal business operations at all of its facilities consistent with its obligations as a Chapter 11 debtor- in-possession. Versa will also be providing a Debtor-in-Possession financing facility to provide working capital and financial resources necessary to fund the transition in operations to new ownership pending court approval of the sale to Versa. The company's recently appointed management team believes that this expedited process is necessary to promptly institute its improved business plan and that the filing and sale are in the best long-term interest of the Company, as well as its customers, partners, vendors and employees. Lazard Middle Market, the company's financial advisor, is assisting the board through this process. "We intend to use this filing to take the actions necessary to position InPhonic for future success. We want to assure our customers, our employees and our partners that InPhonic is operating business as usual during this transition," said Andy Zeinfeld, InPhonic's Chief Executive Officer. "I am confident in InPhonic's business model and with the cost-cutting measures and profit-driving initiatives we have implemented across the organization. The new direction I have set is comprehensive and our dedication to customer, partner and employee satisfaction is unwavering. InPhonic plays a critical role as a leader in the wireless marketplace and through this sale to Versa, it will operate on stable financial footing and its leading role will be preserved." Ken Schwarz, InPhonic's Chief Financial Officer added, "This sale will strengthen the Company and foster a sustained turnaround for InPhonic. This milestone marks a fundamental, comprehensive and systemic change at InPhonic. Our customers, partners and employees want the Company to succeed because of InPhonic's significant value in the wireless marketplace. We expect to proceed quickly with this sale and that the business will have a significantly improved balance sheet, greater operating flexibility and a swift path to profitability." The company expects that shares of its common stock will have no value as a result of the Chapter 11 filing. The filings were made Thursday in the federal courts in Wilmington, Delaware. More information about InPhonic's reorganization is available at a special website: www.inphonic.com/reorg About Versa Capital Management Philadelphia-based Versa Capital Management Inc., -- http://www.versafund.com/-- formerly known as Chrysalis Capital Partners LP, is a private equity investment firm which focuses on special situation investments including turnarounds, restructurings, reorganizations and recapitalizations in a wide range of industries and circumstances throughout the United States. About InPhonic Headquartered in Washington, D.C., InPhonic Inc. NASDAQ:INPC)-- http://www.inphonic.com/-- is an online seller of wireless services in the United States. The company operates its business through three business segments: wireless activation and services; mobile virtual network enabler services, and data services. Through the WAS segment, InPhonic sells services plans, including satellite television services, devices and accessories through its own branded Websites, including Wirefly.com, A1 Wireless.com and VMCsatellite.com, and through Websites for third parties. Under MVNE agreements, the company offers marketers the ability to sell mobile virtual network operator (MVNO) services to their customers under their own brands using the same e-commerce platform, operational infrastructure and marketing relationships that was developed for its WAS segment. INPHONIC INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: InPhonic, Inc. 1010 Wisconsin Avenue Northwest Suite 600 Washington, DC 20007 Bankruptcy Case No.: 07-11666 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- CAIS Acquisition,LLC 07-11667 CAIS Acquisition II, LLC 07-11668 SimIPC Acquisition Corp. 07-11669 Star Number, Inc. 07-11670 Mobile Technology Services, LLC 07-11671 FON Acquisition, LLC 07-11672 1010 Interactive, LLC 07-11673 Type of Business: The Debtors are leading on-line sellers of wireless services and devices. The Debtors sell wireless services and devices through private labeled websites that they create and manage for on-line businesses, affinity organizations and national retailers, as well as through their own branded websites. See http://corp.inphonic.com/ Chapter 11 Petition Date: November 8, 2007 Court: District of Delaware (Delaware) Judge: Kevin Gross Debtors' Counsel: Mary E. Augustine, Esq. Neil B. Glassman, Esq. The Bayard Firm 222 Delaware Avenue, Suite 900 P.O. Box 25130 Wilmington, DE 19899-5130 Tel: (302) 655-5000 Fax: (302) 658-6395 Debtors' Claims & Noticing Agent: The BMC Group, Inc. 875 Third Avenue, 5th Floor New York, NY 10022 Tel: (212) 310-5900 Fax: (888) 316-2354 http://www.bmccorp.net/ Debtors' consolidated financial condition as of Nov. 8, 2007: Total Assets: $120,916,991 Total Debts: $179,402,834 Debtors' consolidated list of their 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ MSN - Microsoft Corp. Trade Debt $8,177,356 1401 Elm Street, 5th Floor Lockbox #847543 Dallas, TX 75202 and Attn: Nat Hampson 1125 Sanctuary Parkway Suite 300 Alpharetta, GA 30004 Tel: (678) 629-5728 Yahoo!, Inc. Trade Debt $3,718,960 Yahoo! Accounts Receivable P.O. Box 3003 Carol Stream, IL 60132-3003 and Attn: Kevin Hein 111 West 40th Street 9th Floor New York, NY 10018 Tel: (212) 381-6922 Google, Inc. Trade Debt $3,501,674 P.O. Box 3900 Department No. 33654 San Francisco, CA 94139-3181 and Attn: Nick Pifani 76 Ninth Avenue, 4th Floor New York, NY 10011 Tel: (212) 565-8811 Brightpoint - Nextel Trade Debt $2,465,618 Department 1615 135 South LaSalle Street Chicago, IL 60674 and Attn: Greg Malakoff Sprint Nextel Corp. 2000 Edmund Halley Drive Reston, VA 20191 Tel: (703) 433-8776 Patton Boggs LLP Trade Debt $2,198,090 2550 M. Street, Northwest Washington, DC 20037 and Attn: Douglas C. Boggs 8484 Westpark Drive, 9th Floor McLean, Virginia 22102 Tel: (703) 744-8010 American Online, Inc. Trade Debt $2,112,021 P.O. Box 5696 New York, NY 10087-5695 and Attn: David Dziabis 22265 Pacific Boulevard Dulles, VA 20166 Tel: (703) 265-5451 Spanco Telesystems & Solutions Trade Debt $1,969,702 B/22 Kirshna Bhavan B.S. Deoshi Marg Deonar, Mumbai-400 088, India and Attn: Anil Wadhwa Respondez, Global Enclave Plot N TTC Indust. Mahape, Navi Mumt 400710 Tel: 91-22-67220000 Verizon Wireless Trade Debt $1,250,248 P.O. Box 64498 Baltimore, MD 21264-4498 and Attn: Kevin Kostes One Verizon Way Basking Ridge, NJ 07920 Tel: (908) 559-8257 Randall Van Dyke Trade Debt $1,174,628 c/o JDS Professional Group 5670 Greenwood Plaza Boulevard Greenwood Village, CO 80111 Tel: (858) 716-1241 ACN Communications Trade Debt $1,028,710 Services, Inc. 354 Lincoln Avenue Mingo Junction, OH 43938 and Attn: Tracy Nolan 13620 Reese Boulevard Building II Huntersville, NC 28078 Tel: (704) 996-8197 Alltel Communications Products Trade Debt $932,005 P.O. Box 102063 Atlanta, GA 30368 and Attn: Ron Herring Alltel Communications, Inc. One Allied Drive Little Rock, AR 72202 Tel: (501) 905-8080 Next Jump, Inc. Trade Debt $832,250 261 Fifth Avenue, 8th Floor New York, NY 10016 and Attn: Meghan Messenger 261 5th Avenue, 8th Floor New York, NY 10016 Tel: (212) 685-7101 Chadbourne and Parke LLP Trade Debt $831,109 Attn: Sydney Shabazz 12000 New Hampshire Avenue Washington, DC 20036 Tel: (202) 974-5600 Yahoo! Search Trade Debt $771,986 Marketing/Overture P.O. Box 89-4147 Los Angeles, CA 90189-4147 and Yahoo!, Inc. Attn: Brian H. Murphy 1065 Avenue of the Americas New York, NY 10018 Tel: (212) 381-6833 JBR Media Ventures, LLC Trade Debt $718,204 2 Wisconsin Circle, Suite 700 Chevy Chase, MD 20815 and Attn: Brent Shaw 2 Wisconsin Circle, Suite 700 Chevy Chase, MD 20815 Tel: (202) 247-7757 Yellow Page Authority Trade Debt $623,592 8940 West 192nd Street, Suite D Mokena, IL 60448 Attn: Patrick M. Fagen Tel: (708) 326-4844 Ask.com Trade Debt $579,890 File 30755 P.O. Box 60000 San Francisco, CA 94160 and Attn: Lino Senio 555 12th Street, Suite 500 Oakland, CA 94607 Tel: (510) 985-7639 CosmoCom, Inc. Trade Debt $522,181 Attn: Paul Strohmenger Tel: (631) 940-4232 121 Broad Hollow Road Melville, NY 11747 Microsoft Licensing, GP Trade Debt $487,119 1401 Elm Street 5th Floor, Department 842467 Dallas, TX 75202 and Attn: Brent Johnson Microsoft Corporation One Microsoft Way Redmond, WA 98052-6399 Tel: (425) 722-4930 Skadden Arps Slate Trade Debt $483,795 Meagher & Flom LLP P.O. Box 1764 White Plains, NY 10602 and Attn: Ivan A. Schlager 1440 New York Avenue, Northwest Washington, DC 20005 Tel: (202) 371-7810 ISCHUS MEZZANINE: Moody's Junks Ratings on $37.5 Million Notes -------------------------------------------------------------- Moody's Investors Service placed these notes issued by Ischus Mezzanine CDO IV, Ltd. on review for possible downgrade: Class Description: $150,000,000 Super Senior Swap -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $100,000,000 Class A-1 Second Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $80,000,000 Class A-2 Third Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: Class Description: $50,000,000 Class A-3 Fourth Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: A3, on review for possible downgrade Class Description: $54,000,000 Class B Fifth Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Baa3, on review for possible downgrade Class Description: $16,000,000 Class C Sixth Priority Senior Secured Deferrable Floating Rate Notes Due 2047 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $21,500,000 Class D Mezzanine Secured Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Baa2, 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. IXION PLC: Moody's Junks 5 Note Ratings Over Poor Credit Quality ---------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade these notes issued by Ixion PLC Matrix 2007-1 Series 20: Class Description: Tranche A $20,000,000 Floating Rate Portfolio Credit Linked Secured Notes due 2037 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: Tranche B $25,000,000 Floating Rate Portfolio Credit Linked Secured Notes due 2037 -- Prior Rating: Aa3 -- Current Rating: Ba2, on review for possible downgrade Class Description: Tranche C $30,000,000 Floating Rate Portfolio Credit Linked Secured Notes due 2037 -- Prior Rating: A2 -- Current Rating: Caa1, on review for possible downgrade Class Description: Tranche D EUR 16,000,000 Floating Rate Portfolio Credit Linked Secured Notes due 2037 -- Prior Rating: A2 -- Current Rating: Caa1, on review for possible downgrade Class Description: Tranche E JPY 1,000,000,000 Floating Rate Portfolio Credit Linked Secured Notes due 2037 -- Prior Rating: A3 -- Current Rating: Caa2, on review for possible downgrade Class Description: Tranche F EUR 7,500,000 Floating Rate Portfolio Credit Linked Secured Notes due 2037 -- Prior Rating: A3 -- Current Rating: Caa2, on review for possible downgrade Class Description: Tranche G EUR 3,000,000 Floating Rate Portfolio Credit Linked Secured Notes due 2037 -- Prior Rating: Baa2 -- Current Rating: Caa3, on review for possible downgrade Class Description: Tranche H EUR 20,000,000 Floating Rate Portfolio Credit Linked Secured Notes due 2037 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: Tranche I EUR 30,000,000 Floating Rate Portfolio Credit Linked Secured Notes due 2037 -- Prior Rating: Aa2 -- 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. JUPITER HIGH: Moody's Junks Ratings on Three Classes of Notes ------------------------------------------------------------- Moody's Investors Service downgraded five classes of notes issued by Jupiter High-Grade CDO V, Ltd., with three of these classes left on review for further possible downgrade. The notes affected by today's rating action are: (1) $1,290,000,000 Class A-1 Senior Secured Floating Rate Notes Due March 2052 -- Prior Rating: Aaa -- Current Rating: A1 on review for possible downgrade (2) $105,500,000 Class A-2 Senior Secured Floating Rate Notes Due March 2052 -- Prior Rating: Aaa -- Current Rating: B1 on review for possible downgrade (3) $60,000,000 Class B Senior Secured Floating Rate Notes Due March 2052 -- Prior Rating: Aa2 -- Current Rating: Caa1 on review for possible downgrade (4) $20,000,000 Class C Secured Floating Rate Deferrable Notes Due March 2052 -- Prior Rating: A2 -- Current Rating: Ca (5) $15,000,000 Class D Secured Floating Rate Deferrable Notes Due March 2052 -- Prior Rating: Baa2 -- Current Rating: C The rating actions reflect severe deterioration in the credit quality of the underlying portfolio, as well as the occurrence on November 2, 2007 of an event of default caused by a failure of the Class A Overcollateralization Ratio to be greater than or equal to 100% pursuant to Section 5.01(i) of the Indenture, dated March 28, 2007. Jupiter High-Grade CDO V, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities, CDO securities and synthetic securities in the form of credit default swaps. Reference obligations for the credit default swaps are RMBS and CDO securities. Recent ratings downgrades on the underlying portfolio magnified the impact of the ratings-based haircuts, causing the Class A Overcollateralization Ratio to fail to meet the required level. Upon an event of default in this transaction, a majority of the controlling class is entitled to exercise certain remedies under the indenture. Liquidation of the underlying portfolio is one possible remedy; however, it is not clear at this time whether the controlling class will choose to exercise this option. The rating downgrades taken today reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The expected losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by the controlling class. Because of this uncertainty, the ratings assigned to the Class A-1, Class A-2, and Class B Notes remain on review for possible downgrade pending the receipt of definitive information. LAWRENCE SALANDER: Files for Bankruptcy in New York --------------------------------------------------- Lawrence B. Salander and his wife, Julie D. Salander, filed for bankruptcy protection with the U.S. Bankruptcy Court for the Southern District of New York on Nov. 2, 2007. Mr. Salander owns Salander-O'Reilly Galleries LLC. On Nov. 1, 2007, three creditors filed an involuntary chapter 7 petition against Salander-O'Reilly with the New York Bankruptcy Court. A copy of the involuntary chapter 7 petition is included in today's Troubled Company Reporter. Bloomberg relates that in a September 2007 interview, Mr. Salander asserted that he won't be filing for bankruptcy since his assets exceeded his liabilities. However, as reported in the Troubled Company Reporter on Oct. 23, 2007, a New York State judge ordered the closure of Salander- O'Reilly which was prompted by lawsuits accusing Mr. Salander of non-payment to consignees of proceeds from sold paintings. According to Bloomberg, clients such as Earl Davis, son of artist Stuart Davis, tennis star John McEnroe as well as former New York Observer Publisher Arthur Carter have filed lawsuits against Mr. Salander. The lawsuits allege that Mr. Salander pocketed proceeds from art sold on consignment, gave promises of guaranteed investment profits but paid back little or nothing at all, and defaulted on loans and bills, Bloomberg adds. Bloomberg reports, citing Dean Nicyper, Esq., counsel for the younger Davis, that the filing wasn't a surprise since the couple and the gallery had lots of debts. LAWRENCE SALANDER: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------------- Debtors: Lawrence B. Salander Julie D. Salander 482 Deep Hallow Road Millbrook, NY 12545 Bankruptcy Case No.: 07-36735 Type of Business: Mr. Salander owns Salander-O'Reilly Galleries LLC. On Nov. 1, 2007, three creditors filed an involuntary chapter 7 petition against the gallery. A copy of the involuntary chapter 7 petition against Salander-O'Reilly is included in today's Troubled Company Reporter. Chapter 11 Petition Date: November 2, 2007 Court: Southern District of New York (Poughkeepsie) Judge: Cecelia G. Morris Debtors' Counsel: Douglas E. Spelfogel, Esq. Baker & Hostetler LLP 45 Rockefeller Plaza, 10th Floor New York, NY 10111 Tel: (212) 589-4280 Fax: (212) 589-4201 Estimated Assets: $50 Million to $100 Million Estimated Debts: $50 Million to $100 Million Debtors' list of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Curtis Galleries, Inc. Business Related $7,672,001 c/o Gergory Joseph, Esq. Gregory P. Joseph Law Offices 485 Lexington Avenue New York, NY 10017 Tel: (212) 407-1200 Sandra Lane Business Related $4,000,000 c/o Joseph F. Shea, Esq. Nutter McClennen & Fish LLP World Trade Center West 155 Seaport Boulevard Boston, MA 02210-2604 Tel: (617) 439-2000 Carol F. Cohen Business Related $3,597,500 c/o Amos Alter, Esq. Troutman Sanders LLP The Chrysler Building 405 Lexington Avenue New York, NY 10174 Tel: (212) 704-6000 Frelinghuysen Morris Foundation Business Related $3,145,000 T. Kinney Frelinghuysen c/o Debra A. Mayer, Esq. Shatzkin & Mayer, P.C. 1776 Broadway, 21st Floor New York, NY 10019 Tel: (212) 684-3000 Earl Davis Business Related $2,900,000 c/o Dean Nicyper, Esq. Flemming Zulack Williamson Zauderer LLP One Liberty Plaza New York, NY 10006 Tel: (212) 412-9500 Deborah Pearlman Business Related $1,200,000 Ellyn Shander Beth Smith c/o Debra A. Mayer, Esq. Shtazkin & Mayer, P.C. 1776 Broadway, 21st Floor New York, NY 10019 Tel: (212) 684-3000 Nella Longari SRL Business Related $1,100,000 c/o Francesco Di Pietro Wuersch & Gering LLP 100 Wall Street, 21st Floor New York, NY 10005 Tel: (212) 509-5050 Stanley Moss & Company Inc. Business Related $1,000,000 5247 Independence Avenue Riverdale, NY 10471 Joseph Sirulnick Business Related $750,000 c/o Vincent Syracuse, Esq. Tannenbaum Helpern Syracuse and Hirschtritt LLP 900 Third Avenue New York, NY 10022 Tel: (212) 508-6700 Sotheby's Business Related $640,000 1334 York Avenue New York, NY 10019 Elite Plus Credit Account Unsecured Loan $500,000 c/o Mickee Hennessy, Esq. Westerman Ball Ederer Miller and Sharfstein, LLP 170 Old Country Road Minneola, NY 11501 Tel: (516) 622-9200 Trince Electric, Inc. Services $40,000 Ellyn Shander Business Related $35,000 Tannenbaum Helpern Syracuse and Services $16,268 Hirschtritt LLP Dougall Arts Ltd. Business Related Unknown Roy Lennox Business Related Unknown Renaissance Art Investors LLC Business Related Unknown Triple S Management, LLC Business Related Unknown Old Master Properties, LLC Business Related Unknown LB UBS: Moody's Lifts Rating on $3 Million Class T Certs. to Caa2 ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of 11 classes and affirmed the ratings of 11 classes of LB-UBS Commercial Mortgage Trust 2002-C2, Commercial Mortgage Pass-Through Certificates, Series 2002-C2 as: --Class A-2, $66,530,447, affirmed at Aaa --Class A-3, $144,100,000, affirmed at Aaa --Class A-4, $533,879,000, affirmed at Aaa --Class X-CL, Notional, affirmed at Aaa --Class X-CP, Notional, affirmed at Aaa --Class X-D, Notional, affirmed at Aaa --Class B, $16,644,000, affirmed at Aaa --Class C, $27,235,000, affirmed at Aaa --Class D, $18,157,000, affirmed at Aaa --Class E, $18,157,000, upgraded to Aaa from Aa1 --Class F, $24,209,000, upgraded to Aa3 from A1 --Class G, $12,104,000, upgraded to A1 from A2 --Class H, $15,131,000, upgraded to A2 from A3 --Class J, $18,157,000, upgraded to Baa1 from Baa2 --Class K, $15,131,000, affirmed at Baa3 --Class L, $15,130,000, affirmed at Ba1 --Class M, $12,105,000, upgraded to Ba2 from Ba3 --Class N, $6,052,000, upgraded to Ba3 from B2 --Class P, $4,539,000, upgraded to B1 from B3 --Class Q, $7,566,000, upgraded to B2 from Caa1 --Class S, $3,026,000, upgraded to B3 from Caa2 --Class T, $3,026,000, upgraded to Caa2 from Caa3 As of the Oct. 17, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 19.6% to $972.8 million from $1.21 billion at securitization. The Certificates are collateralized by 87 loans, ranging in size from less than 1.0% to 16.7% of the pool, with the top 10 loans representing 56.0% of the pool. The pool includes five investment grade shadow rated loans, representing 39.2% of the pool. About 24 conduit loans, representing 16.6% of the pool, have defeased and are collateralized by U.S. Government securities. Five loans have been liquidated from the pool, resulting in an aggregate realized loss of approximately $205,000. There was one loan, representing less than 1.0% of the pool, is in special servicing. Moody's is not currently projecting a loss from this specially serviced loan. Around 20 loans, representing 6.1% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2006 operating results for 95.8% of the pool. Moody's weighted average loan to value ratio ("LTV") for the conduit component is 83.0%, compared to 86.7% at Moody's last full review in April 2007 and compared to 90.0% at securitization. Moody's is upgrading Classes E, F, G, H, J, M, N, P, Q, S and T due to improved overall pool performance and defeasance. At last review, Moody's had anticipated a significant loss from the Wisconsin Multifamily Pool Loan, which was in special servicing. The loan was liquidated with no loss. The largest shadow rated loan is the Dadeland Mall Loan ($162.7 million -- 16.7%), which is secured by the borrower's interest in a 1.4 million square foot super regional mall located in Miami, Florida. The property is the dominant mall in the region and is anchored by Macy's, Macy's Home Gallery & Kids, J.C. Penney, Nordstrom and Saks Fifth Avenue. The in-line space was 91.7% occupied as of February 2007. The loan's performance has improved since securitization due to increased revenues, stable expenses and loan amortization. Moody's current shadow rating is Aaa, compared to Aa1 at last review. The second largest shadow rated loan is the Square One Mall Loan ($89.0 million -- 9.1%), which is secured by the borrower's interest in a 865,400 square foot regional mall located approximately 8 miles northeast of Boston in Saugus, Massachusetts. The property is anchored by Sears, Filene's, T.J.Maxx and Filene's Basement. The in-line space was 88.8% occupied as of December 2006. Moody's current shadow rating is Baa1, the same as last review. The third largest shadow rated loan is the 250 Park Avenue Loan ($71.5 million -- 7.3%), which is secured by a 448,000 square foot Class A office building located in New York City. The property was 95.5% occupied as of December 2006. The loan's performance has improved since securitization due to increased rental income, stable expenses and amortization. The loan has amortized by approximately 9.3% since securitization. Moody's current shadow rating is Aaa, compared to Aa1 at last review. The fourth largest shadow rated loan is the 21 Chelsea Loan ($32.9 million - 3.4%), which is secured by a 209-unit multifamily complex located in New York City. The property was 100.0% leased as of December 2006. Moody's current shadow rating is A1, the same as at last review. The fifth largest shadow rated loan is The Loop Loan ($25.5 million - 2.6%), which is secured by a 339,000 square foot retail center located approximately 30 miles north of Boston in Methuen, Massachusetts. The property was 100.0% leased as of February 2007, the same as at last review and at securitization. Moody's current shadow rating is A1, the same as at last review. The top three conduit loans represent 11.5% of the pool. The largest conduit loan is the 1750 Pennsylvania Avenue Loan ($47.3 million - 4.9%), which is secured by a 259,000 square foot Class A office building located in Washington, D.C. The property was 98.3% occupied as of December 2006. Moody's LTV is 80.6%, essentially the same as last review. The second largest conduit loan is the Center Building Loan ($32.6 million - 3.4%), which is secured by a 437,000 square foot office building located in Long Island City, New York. The property was 72.1% leased as of June 2007, the same as last review. The decline in occupancy is due to the lease expiration of a major tenant in June 2006. Performance has improved since last review due to increased rental revenues. Moody's LTV is 96.8%, compared to in excess of 100.0% at last review. The third largest conduit loan is the Bank of America Tower Loan ($32.3 million - 3.3%), which is secured by a 299,700 square foot office building located in St. Petersburg, Florida. The property was 82.1% leased as of August 2007, compared to 96.7% at securitization. Property performance has been impacted by a decline in occupancy. Moody's LTV is 96.3%, compared to 78.4% at last review. LEVITT & SONS: Files Chapter 11 Petition in Florida --------------------------------------------------- Levitt and Sons, LLC today and 37 of its subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code. The Chapter 11 filings were made in the U.S. Bankruptcy Court for the Southern District of Florida in Fort Lauderdale. As reported in the Troubled Company Reporter on Nov. 8, 2007, citing the Wall Street Journal, some Levitt Corp. shareholders believe the company's homebuilding unit, Levitt & Sons LLC, will soon file for bankruptcy protection after defaulting on several loan agreements with Wachovia Bank N.A. and KeyBank National Association. Levitt and Sons is the homebuilding subsidiary of Levitt Corporation. Levitt Corporation and its other principal subsidiary, Core Communities, are financially strong and conducting normal business operations. Levitt and Sons has taken this action in response to unprecedented conditions in the homebuilding industry, which have severely impacted the company. This downturn has been particularly sudden and steep in Florida and in the Southeastern United States -- the markets in which Levitt and Sons operates. For the past several months, Levitt and Sons has been involved in intense negotiations with its bank lenders in an effort to restructure its debt and obtain appropriate funding to complete unfinished homes and other projects that were suspended due to the company's financial condition. These negotiations have not been successful to date but remain ongoing. Levitt and Sons also disclosed that Lawrence E. Young of AP Services, LLC and a Managing Director at AlixPartners LLP, was named Chief Restructuring Officer, a new position, effective October 22. In this capacity he will oversee Levitt and Sons' Chapter 11 cases and related matters. Mr. Young said, "We deeply regret the impact the Chapter 11 filing of Levitt and Sons will have on homeowners, vendors and employees. We remain mindful of Levitt and Sons' customers whose homes have not yet been completed. Through the Chapter 11 process, we seek a mechanism that will facilitate the completion of some unfinished homes. Likewise, we seek a resolution that will allow closings to take place promptly for previously completed homes. In the meantime, we will continue to make Levitt and Sons representatives available to answer customer questions and do what they can to provide assistance." "Our principal objective during the Chapter 11 process will be to identify the best means of maximizing recoveries for all creditor constituencies including our customers and employees," Mr. Young continued. "As part of this process, we will explore the potential sale of all or some of Levitt and Sons' assets." In documents filed with the U.S. Bankruptcy Court, Levitt and Sons noted that its business operations are concentrated in the homebuilding industry which is going through an unprecedented slowdown after years of strong growth driven in part by speculative activity by investors. Excess supply, particularly in previously strong markets like Florida, has led to downward pricing pressure for residential homes and improved and unimproved land. In response to the deteriorating homebuilding environment, in 2006 and 2007 Levitt and Sons implemented a number of initiatives with a view to maintaining sufficient liquidity during a downturn. These actions included downsizing operations in Tennessee and exiting the Memphis and Nashville markets, attempting to align inventory investment with absorption rates, reducing staffing levels across the organization, and working with subcontractors to lower the costs of home construction. The company's financial difficulties became particularly acute in August 2007, when disruption in the credit markets further paralyzed buyers and increased cancellation rates. In September and October, Levitt and Sons engaged in negotiations with its secured lenders regarding the status of development and its near- term cash needs. Levitt and Sons requested that the lenders provide advances to pay outstanding liabilities to contractors, suppliers and other third parties at the projects that serve as collateral for each lender. These negotiations are continuing. Levitt and Sons commenced its Chapter 11 proceedings in order to facilitate an orderly negotiation process with its creditors and facilitate an orderly wind-down or sale of the enterprise or its assets. Mr. Young, the new Chief Restructuring Officer at Levitt and Sons, has more than 15 years of experience in crisis management and business reorganizations. He has advised other large homebuilders and has served as Chief Financial Officer and CRO for several public and private companies including AT&T Latin America and Sunterra Corporation. Levitt and Sons' legal counsel with regard to its Chapter 11 cases is Berger Singerman, P.A. About Levitt and Sons Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, Homebuilding and Land. The Homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The Land division engages in the development of master-planned communities in Florida and South Carolina. It engages in the acquisition of large tracts of raw land; planning, entitlement, and infrastructure development; the sale of entitled land and/or developed lots to homebuilders and commercial, industrial, and institutional end-users; and the development and leasing of commercial space to commercial, industrial, and institutional end-users. LEVITZ FURNITURE: Files for Chapter 11 Protection in New York ------------------------------------------------------------- Levitz Furniture has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York. The filing became necessary as a result of insufficient liquidity to support the company's current operations. The filing is part of the company's strategic effort to evaluate its options, including a sale or identifying new financial investment. The company has obtained the consent of its lenders to use funds to continue to operate its business. The company has filed a variety of "first day motions" for approval from the Court to support its employees, vendors, customers and other stakeholders. The filings request, among other things, approval to continue fulfilling existing customer orders, honoring customer deposits, and maintaining payroll and employee benefits. The company has also sought approval to pay for goods and services "post-petition." "We are hopeful this filing will enable the business to emerge stronger and better positioned for long-term success," said Larry Zigerelli, chairman and CEO of Levitz Furniture. "We have an exceptional group of people at Levitz who have made great strides to improve our business during a challenging period for our entire industry." About Levitz Furniture Headquartered in New York City, Levitz Furniture fka Levitz Home Furnishings is a specialty retailer of furniture, bedding and home furnishings in the United States with 76 locations in major metropolitan areas, principally in the Northeast and on the West Coast of the United States. Levitz Home Furnishings filed for Chapter 11 bankruptcy in 2005, and sold its assets in December of that year to investment firm Prentice Capital Management and Pride Capital, the parent of liquidator Great American Group. The new owners closed about 30 Levitz stores. The creation of Levitz Home Furnishings in 2001 allowed Levitz Furniture Incorporated to emerge from a trip through Chapter 11 bankruptcy (originally filed in 1997). LEVITZ FURNITURE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: PLVTZ, Inc. aka Levitz Furniture aka PLVTZ, LLC 233 Broadway, 23rd Floor New York, NY 10279 Bankruptcy Case No.: 07-13532 Type of Business: The Debtor is one of the largest furniture retailers in the U.S. The Debtor's affiliates, under Levitz Home Furnishing, Inc., filed for Chapter 11 protection on Oct. 11, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-45189). The Debtors sold their assets in that year to investment firms Prentice Capital Management and Pride Capital, and closed about 30 stores. See http://www.levitz.com/ Chapter 11 Petition Date: November 8, 2007 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtor's Counsel: Paul D. Leake, Esq. Brad B. Erens, Esq. Jones Day 222 East 41st Street New York, NY 10017 Tel: (212) 326-3939 Fax: (212) 755-7306 Debtor's Claims & Noticing Agent: Kurtzman Carson Consultants LLC New York Office 1180 Avenue of the Americas Suite 1400 New York, NY 10036 Tel: (866) 381-9100 Fax: (310) 823-9133 http://www.kccllc.com/ Debtor's Conflicts Counsel: Young Conaway Stargatt & Taylor, LLP New York Office 845 Third Avenue Suites 606 & 608 New York, NY 10022 Tel: (646) 290-5018 Fax: (646) 290-5019 http://www.youngconaway.com/ Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million Debtor's list of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Legacy Classic Furniture $3,374,850 6530 Judge Adams Road Whitsett, NC 27377 Tel: (225) 449-4600 Fax: (516) 449-4687 Collezione Europa USA, Inc. $2,947,726 145 Cedar Lane Englewood, NJ 07631 Tel: (201) 541-8600 Fax: (516) 426-9654 Klaussner Furniture Ind. $2,724,517 P.O. Box 220 Asheboro, NC 27204 Tel: (336) 625-6175 Fax: (336) 626-0905 Prime Resources/Harbor Homes $2,487,001 100 Shepard Avenue Wheeling, IL 60090 Tel: (847) 279-4200 ext. 12 Fax: (847) 279-0500 Haining Mengnu Group, Co., Ltd. $2,311,666 c/o Li & Fung (Trading) Ltd. LiFung Tower 888 Cheung Sha Wan Road Kowloon, Hong Kong Attn: Mr. Phillip Keetch Tel: (852) 2300 2300 Fax: (852) 2300 2000 Tongxiang Shouwang Leather $2,300,165 c/o Li & Fung (Trading) Ltd. LiFung Tower 888 Cheung Sha Wan Road Kowloon, Hong Kong Attn: Mr. Phillip Keetch Tel: (852) 2300 2300 Fax: (852) 2300 2000 Samuel Lawrence Furniture Co. $1,860,654 443 Greenwich St. New York, NY 10013 Tel: (336) 889-3639 Fax: (212) 941-9265 Sealy Mattress Co. $1,457,241 One Office Parkway at Sealy Drive Trinity, NC 27370 Tel: (336) 861-3814 Fax: (336) 861-3705 Pro Line Printing, Inc. $1,050,678 P.O. Box 730595 Dallas, TX 75373-0595 Tel: (817) 640-9180 Fax: (817) 385-5324 Decoro $970,000 24 5th Avenue Suite 1412A New York, NY 10011 Tel: (212) 228-0125 Fax: (336) 885-1648 Riversedge Furniture Co. $882,752 P.O. Box 1510 Lynchburg, VA 24501 Tel: (434) 847-4155 ext. 3265 Fax: (434) 455-2380 Magnussen Home Furnishing Inc. $776,516 200 Lexington Avenue New York, NY 10016 Tel: (336) 841-4424 Fax: (516) 903-3373 Home Delivery Link Inc. $763,014 32236 Paseo Adelato, Suite C San Juan Capistrano, CA 92675 Tel: (949) 248-7501 ext. 101 Fax: (949) 248-7359 Yue Sen $731,158 c/o Li & Fung (Trading) Ltd. LiFung Tower 888 Cheung Sha Wan Road Kowloon, Hong Kong Attn: Mr. Phillip Keetch Tel: (852) 2300 2300 Fax: (852) 2300 2000 Haining Nice Harvest Furniture $719,082 c/o Li & Fung (Trading) Ltd. LiFung Tower 888 Cheung Sha Wan Road Kowloon, Hong Kong Attn: Mr. Phillip Keetch Tel: (852) 2300 2300 Fax: (852) 2300 2000 Serta Mattress $717,270 5401 Trillium Boulevard, Suite 250 Hoffman Estates, IL 60192 Tel: (847) 747-0463 Fax: (847) 747-0563 Steve Silver $669,207 1000 FM 548 North Forney, TX 75126 Tel: (336) 882-4368 Fax: (888) 774-5837 Chaki Co. Ltd. $456,854 c/o Li & Fung (Trading) Ltd. LiFung Tower 888 Cheung Sha Wan Road Kowloon, Hong Kong Attn: Mr. Phillip Keetch Tel: (852) 2300 2300 Fax: (852) 2300 2000 KDG Construction Inc. $454,127 1520 West Cameron Avenue Suite 135 West Covina, CA 91790 Tel: (626) 480-1701 Fax: (626) 480-1476 Breakaway Staffing, Inc. $434,926 893 South Broad Street Trenton, NJ 08611 Tel: (609) 393-3900 Fax: (609) 393-3138 LIBERTAS PREFERRED: Moody's Puts Ba3-Rated Notes Under Neg. Watch ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Libertas Preferred Funding V, Ltd. on review for possible downgrade: Class Description: $360,000,000 Class A-1 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: Class Description: $30,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $66,000,000 Class A-3 Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $40,500,000 Class B Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa2 -- Current Rating: A2, on review for possible downgrade Class Description: $31,500,000 Class C Mezzanine Secured Deferrable Floating Rate Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $23,000,000 Class D Mezzanine Secured Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: Ba1, on review for possible downgrade Class Description: $22,000,000 Class E Mezzanine Secured Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Baa3 -- 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. LONGPORT FUNDING: Moody's Junks Ratings on $38,250,000 Notes ------------------------------------------------------------ Moody's Investors Service placed these notes issued by Longport Funding III, Ltd. on review for possible downgrade: Class Description: $450,000,000 Class A1-VF Senior Secured Floating Rate Notes Due 2051 -- 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: Class Description: $63,750,000 Class A2A Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $45,000,000 Class A2B Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $97,500,000 Class B Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Aa2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $26,250,000 Class C Mezzanine Secured Deferrable Interest Floating Rate Notes Due -- Prior Rating: A2 -- Current Rating: B3, on review for possible downgrade Class Description: $26,250,000 Class D Mezzanine Secured Deferrable Interest Floating Rate Notes Due -- Prior Rating: Baa2 -- Current Rating: Caa2, on review for possible downgrade Class Description: $12,000,000 Class E Mezzanine Secured Deferrable Interest Floating Rate Notes Due -- 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. LOUISIANA LOCAL: Moody's Puts Ba3 Rating on $250 Million Bonds -------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to the $250 million Louisiana Local Government Environmental Facilities and Community Development Authority Revenue Bonds (Westlake Chemical Corporation Projects) Series 2007. Moody's also affirmed Westlake's Ba2 corporate family rating, the Ba3 rating on its existing unsecured notes and its positive outlook. Proceeds from this tax-exempt bond will be used by Westlake to expand and improve its existing facilities (Geismar and Lake Charles) in Louisiana which are located in the Gulf Opportunity Zone as provided in the Gulf Opportunity Zone Act of 2005. Moody's also raised the LGD assessment on the existing notes to LGD4, 67% from LGD5, 75% consistent with its Loss Given Default methodology. Ratings assigned: Louisiana Local Government Environmental Facilities and Community Development Authority -- Senior unsecured tax-exempt revenue bonds, $250 million due 2032 -> Ba3, LGD4, 67% Ratings affirmed: Westlake Chemical Corporation -- Corporate Family Rating at Ba2 -- Probability of Default Rating at Ba2 -- Guaranteed senior unsecured notes, $250 million due 2016 -> Ba3 Ratings raised: -- Guaranteed senior unsecured notes, $250 million due 2016 to LGD4, 67% from LGD5, 74% The Ba3 rating on the Go Zone bonds reflects their unsecured status as they are backed by an unsecured loan agreement with Westlake. Westlake has agreed to make timely payments of interest and principle on the loan, which will be used to pay bondholders. The Ba3 ratings on the Go Zone bonds, and the existing unsecured notes due 2016, are one notch below Westlake's CFR and are subordinated to the company's $300 million secured revolving credit facility. There was roughly $75 million outstanding under this facility at Sept. 30, 2007. The company will likely repay borrowings under the facility after the issuance of the bonds. The affirmation of the Ba2 CFR reflects Moody's prior expectation that the company would significantly increase debt to fund future capital investments. Westlake had previously announced the potential for a low-cost ethylene cracker in Trinidad and expansion of its Calvert City, KY vinyl manufacturing complex. The issuance of the GO Zone bonds indicates that the company will undertake a significant expansion of its Geismar facility as well. Westlake's Ba2 CFR continues to reflect the modest level of debt for the size of the company. The ratings are tempered by the substantial cyclicality in its two main commodity markets, limited product diversity, its size relative to other commodity plastics producers (PE and PVC), the regional nature of its operations, and the company's limited feedstock flexibility. Moody's expects the company to remain adequately placed in the Ba2 rating category due to its relatively conservative financial policies, strong financial metrics for a Ba2 company, and its discipline in pursuing growth through acquisitions and capital investments. Additionally, Moody's expects that the company's earnings and cash flow will decline over the next two years as margins in both of their operating segments decline due to weak downstream demand in PVC, and to a lesser degree in polyethylene. The positive outlook reflects Moody's belief that Westlake's investment in a low-cost cracker in Trinidad would improve its credit profile by raise earnings in the trough of the cycle and reducing the downside potential in earnings and cash flow from its two commodity chemical segments. Westlake had announced in 2006 that it was in discussions with the Republic of Trinidad and Tobago to study the feasibility of a low-cost ethylene cracker. Currently, Westlake is pursuing authorization from Trinidad's Environmental Management Authority (EMA) to construct the facility. While the potential investment would be large, it would likely represent almost 30% of the company's future ethylene capacity and improve the stability of the company's earnings over the cycle. The potential for a higher rating is largely dependant on the approval for this new facility, and expectations of economics of the facility and its impact on the company's credit profile over the next several years. On the other hand, the outlook could be returned to stable if Westlake is unable to obtain authorization from EMA, if Moody's determines that the potential plant in Trinidad will not improve the company's long term credit profile, or if margins decline precipitously in 2008 or 2009 (EBITDA well below $200 million) due to, for example, pressures from imports or greater feedstock volatility. Westlake Chemical Corporation (Westlake), headquartered in Houston, TX, is a producer of commodity petrochemicals (ethylene and styrene), plastics (polyvinyl chloride and polyethylene), and fabricated products. Revenues were $2.9 billion for the LTM ended Sept. 30, 2007. MARCAL PAPER: Wants Proposed Asset Sale Procedure Approved ---------------------------------------------------------- Marcal Paper Mills Inc. asks the United States Bankruptcy Court for the District of New Jersey to approve its proposed procedure for the sale of its business to NexBanc SSB, subject to higher and better offers, Bill Rochelle of Bloomberg News reports. NexBanc, Bloomberg says, offered $121.6 million for the assets, which includes a credit bid of $35 million and a $6 million cash. Competing bids must be filed by Dec. 12, 2007, in order to participate in the auction set for Dec. 14. The Debtor proposes a Dec. 17 hearing for the approval of the results of the sale. As reported in the Troubled Company Reporter on Oct. 4, 2007, the Debtor informed the Court of its intent to proceed with an amended plan of reorganization and sale process. "After expending a considerable amount of time and effort exploring various restructuring alternatives, we have concluded that a sale of the company as part of a plan of reorganization - while we continue to operate in the ordinary course of business - is the best way for us to provide continuing employment to our loyal people, ensure our ongoing relationships with our many valued customers and vendors, and maximize value for the benefit of our creditors," Nicholas Marcalus, company chairman and CEO, said. Pending the submission of the anticipated amended plan, the company and its investment banker, NatCity Investments Inc., will proceed with an orderly and efficient sale process with the object to close a transaction by year end. "Importantly, our company's operations will continue in the ordinary course of business with funding from our DIP lenders," Mr. Marcalus added. "This will ensure the continued employment of our dedicated employees, payment of all of our post-petition obligations and high-quality service to our customers. Unfortunately, the tightening of the credit markets and inability to meet certain closing conditions under the existing plan of reorganization requires the company to pursue an alternative strategy for the best interests of all stakeholders." About Marcal Paper Mills Based in Elmwood Park, New Jersey, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- is a privately-held, fourth generation family business. Founded in 1932, it employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The company produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from- home use in hotels, restaurants, hospitals, offices and factories. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard P.A. represent the Debtor. Kenneth Rosen, Esq., and Mary E. Seymour, Esq., at Lowenstein Sandler PC represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MARS CDO: Poor Loan Quality Prompts Moody's to Junk Note Ratings ---------------------------------------------------------------- Moody's Investors Service placed these notes issued by Mars CDO I, Ltd. on review for possible downgrade: Class Description: $180,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2052 -- 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: Class Description: $240,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2052 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $78,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes Due 2052 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $39,000,000 Class B Fourth Priority Senior Secured Floating Rate Notes Due 2052 -- Prior Rating: Aa2 -- Current Rating: Ba2, on review for possible downgrade Class Description: $10,000,000 Class C Fifth Priority Senior Secured Floating Rate Notes Due 2052 -- Prior Rating: Aa3 -- Current Rating: Ba3, on review for possible downgrade Class Description: $15,000,000 Class D Sixth Priority Senior Secured Floating Rate Notes Due 2052 -- Prior Rating: A1 -- Current Rating: B1, on review for possible downgrade Class Description: $18,500,000 Class E Seventh Priority Senior Secured Floating Rate Notes Due 2052 -- Prior Rating: A3 -- Current Rating: B3, on review for possible downgrade Class Description: $13,000,000 Class F Eighth Priority Secured Floating Rate Notes Due 2052 -- Prior Rating: Baa2 -- 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. MARSICO PARENT: S&P Assigns 'B' Credit Rating with Stable Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' long-term counterparty credit rating to Marsico Parent Co. LLC and Marsico Parent Holdco LLC. The outlook is stable. At the same time, S&P assigned issue-level and recovery ratings to Marsico Parent Co.'s planned $1.225 billion senior secured credit facilities, consisting of a $1.2 billion seven-year term loan and a $25 million revolving credit facility. The loan rating is 'B+' and the recovery rating is '2', indicating that lenders can expect substantial (70% to 90%) recovery in the event of a payment default. In addition, S&P assigned its 'CCC+' debt rating to Marsico Parent Co.'s $600 million eight-year subordinated notes and Marsico Parent Holdco's $400 million 8.5 year pay-in-kind notes. These ratings are two notches below the counterparty credit ratings of the respective parent companies. These borrowings are part of a $2.7 billion financing package Marsico is putting in place to finance the $2.6 billion management buyout from Bank of America Corp. Marsico Parent Co.'s senior secured credit facilities will be secured by all assets and stock of the borrower. The senior secured credit facilities will be guaranteed by the company's domestic subsidiaries, including the principal operating entity, Marsico Capital Management LLC. Marsico Parent Co.'s subordinated notes are guaranteed and unsecured, while Marsico Parent Holdco's PIK notes are not guaranteed and unsecured. "Ratings factor both the business and financial risks at this midsize, fast growing asset manager," said Standard & Poor's credit analyst Charles D. Rauch. In only 10 years since its founding, assets under management have grown to $103.5 billion at Sept. 30, 2007. Since 2001, AUM have grown at a 46% compound annual rate and net asset inflows have been 11x greater than inflows for the mutual fund industry. There is a high degree of business risk at Marsico. The company is focused exclusively on growth equities, and portfolio managers tend to invest some portfolio assets in large individual stock positions. There is key-man risk because Tom Marsico, founder and CEO, is also the chief investment officer and portfolio manager for the large-cap growth investment strategy, which accounts for 70% of AUM. The firm has an excellent long-term investment performance track record in both bull markets and bear markets. This performance track record, along with a strong compliance record, underlies Marsico's valuable brand name and good reputation in the market. In addition, the firm's distribution capabilities are adequately diversified among proprietary mutual funds, subadvisory funds, wrap accounts, and institutional accounts. In terms of financial risk, Marsico will soon carry a very heavy debt load. Tom Marsico and a company controlled by him are buying Marsico Capital Management, the operating entity, from BoA for $2.6 billion cash. To finance the buyout, the company and its affiliates will issue $2.55 billion of debt and hybrid capital instruments and $150 million of common equity. Marsico's ability to service its debt obligations will depend on its ability to maintain its investment performance track record and grow, or at least maintain, AUM. Given the company's undiversified business model, there is little room for error. S&P forecast the company, at least in the initial years, will generate net losses, owing to sizable intangible amortization and interest expense. Cash flow from operations, however, should be positive, but weak. S&P project initial EBITDA/interest coverage will be only 1.3x. Since a portion of the company's obligations are PIK instruments, meaning they do not pay interest or dividends in cash, S&P estimate EBITDA/cash interest coverage will be less severe at 2.2x. The management buyout transaction will generate a very large amount of goodwill and intangible assets. As a result, tangible capital will be very negative. The stable outlook incorporates S&P's expectation that Marsico's investment performance will continue to rank ahead of peers and the company will continue to exhibit healthy organic growth in AUM. If investment performance were to falter, leading to net asset outflows, ratings could be lowered. Alternatively, if the company quickly pays down debt, ratings could be raised. MEDIACOM COMMS: S&P Places 'BB-' Rating Under Negative Watch ------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on Mediacom Communications Corp., including the 'BB-' corporate credit rating, on CreditWatch with negative implications. About $3.2 billion of debt is outstanding. "The action follows the cable company's reduced estimates for revenue and EBITDA growth in 2007 to 6.5%-7% from 7%-8%, and to 4%-5% from 6%-7%, respectively," said Standard & Poor's credit analyst Naveen Sarma. The Middletown, New York-based company had previously lowered its guidance from 8%-9% revenue growth and 7%- 8% EBITDA growth when it reported second-quarter results in August. In addition, it is unlikely Mediacom will achieve a meaningful reduction in debt, given its recent operating performance and opportunistic stock repurchases under a new $50 million share repurchase program. Basic subscriber losses have continued and demand for advanced services has been weaker than expected at Mediacom. The cable industry is showing signs of maturation, with slowing subscriber growth for advanced services and competition from the local telephone companies deploying their facilities- based video product in some markets. Thus, S&P believe a lower debt balance would better position Mediacom to compete against The DIRECTV Group and EchoStar Communications Corp. and, longer term, the local telephone companies. In resolving the CreditWatch action, S&P will seek further information from management about the company's operating plans, including plans to limit basic subscriber losses and continue to increase its quotient of bundled customers -- steps that would not only improve cash flow but better position the company to meet challenges from satellite TV and telephone companies. S&P will also assess Mediacom's prospects for generating material discretionary cash flow in the medium term. MEZZANINE PORTFOLIO: Moody's Junks Rating on $7.5 Million Notes --------------------------------------------------------------- Moody's Investors Service downgraded and placed these notes issued by Mezzanine Portfolio Credit Default Swap (Sub-Swap I) on review for possible downgrade: Class Description: $7,500,000 Initial Tranche Notional Amount Credit Default Swap -- Prior Rating: Baa2 -- 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 ABS securities. MOVIE GALLERY: Committee Opposes Debtors' Pact w/ Sopris Advisors ----------------------------------------------------------------- The Official Committee of Unsecured Creditors objects to Movie Gallery, Inc., and its debtor-affiliates' request to commit to pay, during the initial days of their bankruptcy cases, expenses and a "break-up fee" to its largest unsecured creditor, Sopris Advisors, LLC. The Debtors sought authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to perform under the Lock Up, Voting and Consent Agreement it entered into on Oct. 14, 2007, with with Sopris Capital Advisors LLC, and with the lenders holding a majority of the debt under the Second Lien Credit and Guaranty Agreement. Sopris holds of majority of the Debtors' 11% senior unsecured notes due 2012. Under the agreements, the Holders committed to support the Debtors' restructuring plans, including an agreement to vote to accept a plan of reorganization consistent with the Plan Term Sheet. Sopris agreed, among others, to: (i) convert roughly $72,000,000, plus accrued interest, in second lien debt into equity in the reorganized company; and (ii) backstop a $50,000,000 rights offering to be made available pro rata to the holders of the 11% Senior Notes. In exchange, the Debtors will pay (i) a commitment fee equal to 2.3% of the $50,000,000 Rights to be paid in the form of New MG Common Stock, with the number of shares calculated according to the Plan Term Sheet, (ii) a termination fee of $2,000,000 in cash, plus reimbursement of expenses in the event the Debtors close a merger or consolidation with another entity, and (iii) expense reimbursements, provided that the reimbursement will not include any amounts incurred after termination of the Lock Up Agreement or the Backstop Rights Purchase Agreement. Initially, the Committee finds that the contemplated plan dilutes the recovery on unsecured claims by transferring value in a proposed restructuring to the Debtors' equity holders and management. To clarify the observation, the Committee asks the Court to continue the hearing on the the Debtors' request for approximately two weeks, allowing the newly-formed Committee a reasonable opportunity: -- to investigate and analyze the contemplated Plan, and -- to reach a meaningful negotiation with Sopris, notwithstanding the restraints imposed by the Lock-Up Agreement. The Committee contends that as a serious investor, Sopris is expected to bear, rather than decline, modest delay on the hearing as to the allowance of reimbursement of their expenses. In the alternative, the request should be denied as it is of no legal basis and is not in the best interest of the Debtors' estates, Brian F. Kenney, Esq., at Pachulski Stang Ziehl & Jones, in Los Angeles, California, asserts. The Debtors' request is not in the best interests of the estates, because it is premature to expend a considerable amount in conjunction with a contemplated Plan that has not been finalized, and the Plan's confirmation risk appears to be material, Mr. Kenney says. Mr. Kenney maintains that the contemplated Plan, seeking to provide for the transfer of equity from unsecured creditors to Debtors' management and equity holders through the Lock-Up Agreement, will directly injure the unsecured creditors. Moreover, the Debtors' proposal to reimburse and indemnify the largest creditor in the Chapter 11 cases, as its incentive to pursue a contemplated Plan, did not gain the support of other unsecured creditors, and has not been reduced to a complete Plan, Mr. Kenney notes. The Committee also argues that Sopris' reimbursement, and the Lock-Up Agreement are not intended to induce bidding, irrespective of context of Section 363 of the Bankruptcy Code, which generally holds that break-up fees are appropriate only otherwise. 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. James I. Stang, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors appointed in these bankruptcy cases. 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. 7; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) MOVIE GALLERY: 8 Landlords Object to Lease Rejection Procedures --------------------------------------------------------------- Several landlords filed objections to Movie Gallery Inc. and its debtor-affiliates' proposed lease rejection procedures. The landlords include: (1) Publix Super Markets, Inc.; (2) Ronald Pearson; (3) Brandon Mall General Partnership; (4) Carnegie Management and Development Corporation; (5) River Commons Company, Ltd.; (6) East Erie Company, Ltd.; (7) Lynnwood Tower LLC; and (8) Madison Lake Forest LLC The landlords argue that the procedures are unnecessary and the Debtors have not demonstrated compelling reasons why they should be excused from the requirements of a motion pursuant to Section 365 of the Bankruptcy Code, and a notice and a hearing before rejection of an executory contract or unexpired lease. The landlords point out that the Debtors have sought to set lease rejection procedures that include lease rejection dates that predate the decision of the Court to permit the requested rejection. According to the landlords, the proposed procedures by their terms put the landlords in a position in which they cannot safely and legally relet the premises, while at the same time they are not being paid for those premises. The landlords contend that the proposed procedures conflict with both the wording and the policy of Section 365 of the Bankruptcy Code, which has been repeatedly modified to ensure that landlords keep getting paid until they get their properties back. 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. James I. Stang, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors appointed in these bankruptcy cases. 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. 7; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) MOVIE GALLERY: Landlords & Committee Object to $150MM DIP Loan -------------------------------------------------------------- A substantial number of landlords and the Official Committee of Unsecured Creditors appointed in Movie Gallery Inc. and its debtor-affiliates' bankruptcy cases objected to some provisions provided by the Debtors' $150 million debtor-in-possession financing agreement. As reported in the Troubled Company Reporter on Oct. 22, 2007, the Honorable Douglas O. Tice, Jr. of the U.S. Bankruptcy Court for the Eastern District of Virginia gave interim authority to the Debtors to borrow up to $140,000,000 of their lenders' DIP Credit Facility. The Debtors entered into a $150,000,000 Secured Super-Priority Debtor-in-Possession Credit and Guaranty Agreement, dated as of Oct. 16, 2007, with Goldman Sachs Credit Partners L.P. as lead arranger, syndication agent, and documentation agent; The Bank of New York as administrative agent and collateral agent; and a consortium of lenders. According to William C. Kosturos, managing director at Alvarez & Marsal North America LLC, and chief restructuring officer of Movie Gallery, Inc., the Debtors have an urgent need to obtain the DIP Financing for, among other things, continuing the operation of their business in an orderly manner, maintaining business relationships with vendors, suppliers and customers, paying employees and satisfying other working capital and operational needs. A full-text copy of the DIP Credit Agreement is available at no charge at http://researcharchives.com/t/s?245d/ Objections (1) Landlords Fifty-three landlords oppose the postpetition financing provisions proposed by Movie Gallery, Inc.'s and its debtor affiliates. The Landlords include: -- SEMLAK, LLC; Imperial 1999, LP, Century Associates; Auburndale, LLC and Cedav Associates; Widewaters Connellsville Company, LLC; Widewaters Garner Company, LLC; Widewaters Uniontown Company, LLC; Princeton (East River) WMS, LLC; Pocomoke (East Town) WMG, LLC; Bluefield (Ridgeview) WMS, LLC; Lexington (East Towne) WMB, LLC; -- McLaren Investments, LLC, as assignee from Ferrari Investments, LLC; -- 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.; -- The Macerich Company, RREEF Management Company, West Valley Properties; Westwood Financial Corporation; Watt Management Company, Sywest Development; Primestor Los Jardines, LLC; J.H. Snyder Company; Sol Hoff Company, LLC; and Beverly Wilcox Properties, LLC; -- DG Development Properties, Inc., Robbins Center, LLC and Mocksville Op, LLC; -- Bowling Green Plaza, LLC; Courthouse Ventures, LLC; Madison Plaza, LLC, Kilmarnock Partners Limited Partnership; the Estate of Rowland C. Cobb; PKS Development, Inc.; and Clinton Parkway Center, LLC; -- M&L Investment Properties, LLC; -- 255 Mall LLC; Hampton Village Associates LLC; and BLDG-ICS Olney Inc.; and -- Aronov Realty Management; Centro Properties Group; Developers Diversified Realty Corporation; Federal Realty Investment Trust; General Growth Management, Inc.; Levin Management Corporation; The Morris Companies Affiliates; and Regency Centers L.P.; -- GE Commercial Finance Business Property Corporation; -- F.I. Mentor Commons, Ltd.; and -- Weingarten Realty Investors; RMC Property Group; BC Wood Properties LLC; Basser Kaufman, LTD.; KIMCO Realty Corporation and Gibraltar Management, and 53 other landlords. The Landlords maintain that while the Court authorizes the Debtors to pledge or otherwise grant a security interest or a lien on, sell, assign or otherwise transfer the Debtors' interests in the leases to the DIP lenders, the lenders did not have prepetition rights to the leases and may not obtain the same rights through the Debtors' cases. According to the Landlords, it is not unusual for DIP lenders to require liens on a Debtor's real property leases, but the liens are normally limited to only the proceeds of the Debtor's leasehold interests and do not extend to the leasehold interests themselves. The proposed direct lien on the Debtors' leasehold interests in the leases, if allowed, will circumvent critical protections granted to shopping center landlords granted accordingly by Section 365 of the Bankruptcy Code. Moreover, the Landlords point out that Section 365(b)(3) of the Bankruptcy Code requires that the lease assumption or assignment should be subject to all provisions of the lease. The negotiated terms binding the Debtors' lease transactions with the landlords do not permit the Debtors to grant their DIP lenders with security interest in the leases. Thus, the Landlords find that Debtors' attempt to secure liens against, and designate assumptions on nonresidential real property leases as to the DIP lenders, is invalid and improperly compromises contractual protections afforded to landlords. In addition, the landlords point out that the Debtors' DIP financing, which was given interim approval, provides that the lenders, upon loan default by the Debtors, are awarded the automatic relief from stay. The objecting parties protest that the relief is not afforded in the same manner to the landlords. The Landlords also express disagreement to the Court's allowance of the lenders to enter and occupy the leases in the event of a default (i) without the lenders bearing full financial responsibility for all charges upon possession of the leased premises, and (ii) without reasonable notice allowing any party- in-interest to raise objections. Further, the Court allows the lenders "to file and pursue . . . any motion or other appropriate pleading . . . seeking the assumption, assignment or rejection of such of the leases with respect to the leasehold property as DIP Lenders". The Landlords hold that the provision is irrespective of Section 365, which provides that the Debtors, or a trustee if appointed, are the only parties that may move to assume or reject the leases. Accordingly, the objecting Landlords ask the Court to reject in finality the Debtors' request. In the alternative, the Landlords call for modified DIP financing provisions with due consideration to the issues raised. A complete list of the 53 landlords is available at no charge at: http://researcharchives.com/t/s?2521/ (2) Unsecured Creditors Committee The Committee finds that the Court's interim approval of the Debtor's DIP financing is not in the best interest of the general creditor body. The Committee points out that it was afforded neither the relevant information nor the necessary amount of time to obtain information, to fully review and comprehend the impacts of the DIP proposal. Proposed co-counsel for the Committee, Brian F. Kenney, Esq., at Miles & Stockbridge, P.C., in McLean, Virginia, maintains that affording avoidance actions rights to DIP and existing lenders, is invalid, because the existing lenders (i) need a going-on concern as much as the unsecured creditors; and (ii) have already used a considerable part of the DIP loan to refinance their existing debt into an administrative claim. As such, he says, the Committee suggests that there should be a carve-out for avoidance claims and their proceeds, including preserved liens, from the liens and super-priority claims of the DIP and existing lenders. Moreover, the Committee finds that entitling the lenders to all Chapter 11 process benefits while escaping the analogous costs, is simply inappropriate. Mr. Kenney notes that the Debtors provide for the liens of existing secured indebtedness to be validated as non-avoidable in all respects and oversecured. As this is inappropriate, he says, the Court must: -- make it clear that all prepetition, secured claims are subject to characterizations as unsecured, depending on a later value determination, and regardless of the validation provision; -- modify the provision on validity to give the Committee standing to bring any claims it uncovers; and -- modify the challenge period to from 75 days to 120 days, affording the Committee ample time to review the extensive documentation. Moreover, while the automatic stay is deemed lifted upon a default to permit the enforcement by DIP lenders, the provisions do not include the procedures to challenge the lenders' assertion of a default, Mr. Kenney asserts. The lenders are also afforded adequate protection "for, and solely to the extent of, any diminution in value of existing lenders' interest in the existing collateral resulting from the (i) priming of their liens . . .", which the Committee finds inappropriate to the extent priming loans repay priming indebtedness, without resulting in a diminution of the existing lenders interests. Mr. Kenney further tells the Court that the Debtors' request exceeds the limits of the available relief with respect to the provisions that: * afford the DIP lenders rights to file motions and conduct sales as if they were a Debtor or a Trustee; * grant the DIP lenders leasehold mortgages even as to leases that would have no value to them, creating an incurable default precluding assumption and assignment; * allow the DIP lenders to continue occupancy of the Debtors' premises while paying only limited expenses incurred; * forbid the Debtors from rejecting leases, owing to the requirement that the Debtors may not "sell, transfer, lease, encumber, or otherwise dispose of any portion of the collateral," which constitutes a default; and * include a waiver of the Debtors' and its estates' ability to surcharge the existing, and DIP lenders' collateral, under Section 506(c) of the Bankruptcy Code, but without a justification from the lenders. The Committee holds that the non-workable professional fee carve- out of $7,000,000 plus approved, pre-triggered notice incurred fees and expenses (i) has no apparent funding source, and (ii) risks a premature depletion, which can be prevented by a provision making the sending of a carve-out trigger notice simultaneous with a final termination of the Debtors' DIP financing, and the lenders' exercise of remedies. Mr. Kenney further stresses the need to modify to certain financing procedures and conditions, including: (a) no reconsiderations or appeals as to the final Court order can be pending, even if it is not stayed; (b) procedures for obtaining the consent to the lenders should be made workable; (c) the DIP Agreement default arising from the entry of, or the Debtors' failure to oppose, any "adverse" Order must be eliminated; and (d) the default entry for a judgment on the Debtors postpetition debt of over $2,500,000 must be conditioned upon there being a material adverse effect arising from it. Even in the Court's final judgment, no final closing may occur and a default arises if the Debtors fail to obtain a credit rating for the DIP, which, the Committee finds, is a complete uncertainty. In sum, the Committee submits that the Debtors' DIP financing request is overreaching and should not be approved in its present form. Landlords Withdraw Objections These Landlords have withdrawn their objections to the Debtors' DIP Financing Request: * SEMLAK, LLC * Imperial 1999, LP * Century Associates Auburndale, LLC * Cedav Associates * Widewaters Connellsville Company,LLC * Widewaters Garner Company, LLC * Widewaters Uniontown Company, LLC * Princeton(East River) WMS, LLC * Pocomoke (East Town) WMG, LLC * Bluefield (Ridgeview) WMS, LLC * Lexington (East Towne) WMB, LLC Judge Tice has adjourned the final hearing the Debtors' request to Nov. 14, 2007. 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. James I. Stang, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors appointed in these bankruptcy cases. 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. 7; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) MORGAN STANLEY: Moody's Holds Low-B Ratings on Five Cert. Classes ----------------------------------------------------------------- Moody's Investors Service affirms the ratings of all classes of Morgan Stanley Dean Witter Capital I Trust 2001-IQ, Commercial Mortgage Pass-Through Certificates, Series 2001-IQ as: --Class A-3, $151,257,538, affirmed at Aaa --Class X-1, Notional, affirmed at Aaa --Class X-2, Notional, affirmed at Aaa --Class C, $18,717,000, affirmed at Aaa --Class D, $5,348,000, affirmed at Aaa --Class E, $5,348,000, affirmed at Aa1 --Class F, $8,913,000, affirmed at A1 --Class G, $5,347,000, affirmed at A2 --Class H, $5,348,000, affirmed at Baa2 --Class J, $10,695,000, affirmed at Ba2 --Class K, $3,565,000, affirmed at Ba3 --Class L, $1,783,000, affirmed at B1 --Class M, $5,348,000, affirmed at B2 --Class N, $1,782,000, affirmed at B3 As of the Oct. 18, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 65.2% to $247.9 million from $713.0 million at securitization. The Certificates are collateralized by 36 loans ranging in size from less than 1.0% to 19.4% of the pool, with the top 10 loans representing 63.1% of the pool. The pool has become more concentrated since securitization and now has a Herfindahl index score of 15, compared to 48 at securitization. Two loans have been liquidated from the trust, resulting in an aggregate realized loss of approximately $3.1 million. There are no loans in special servicing currently. About eight loans, representing 13.4% of the pool, are on the master servicer's watchlist. No loans have defeased. Moody's was provided with year-end 2006 operating results for 96.7% of the performing loans. Moody's loan to value ratio ("LTV") is 64.1%, compared to 63.7% at Moody's last full review in August 2006 and compared to 68.7% at securitization. The top three exposures represent 35.0% of the outstanding pool balance. The largest loan exposure is the Town Center Plaza Loan ($48.0 million -- 19.4%), which is secured by a portion (413,000 square feet) of a 632,000 square foot anchored community shopping center located approximately 13 miles south of Kansas City in Leawood, Kansas. The property is positioned as a "lifestyle" center and includes a mix of upscale fashion oriented stores. The largest tenants include Macy's, Barnes & Noble, Bath and Body and Pottery Barn. Moody's LTV is 59.3%, compared to 62.0% at last review and compared to 75.1% at securitization. The second largest exposure consists of the 1410, 1420 and 1430 State Highway 206 Loan ($14.3 million - 5.8%) and the Metro Office Center III Loan ($5.9 million - 2.4%), two cross collateralized loans secured by four office properties located in New Jersey. The 1410, 1420 and 1430 State Highway 206 Loan is secured by three buildings totaling 88,000 square feet located in Bedminster, New Jersey. The Metro Office Center III Loan is secured by a 45,000 square foot office building located approximately three miles southeast of Princeton in West Windsor, New Jersey. Moody's LTV is 78.4%, compared to 80.0% at last review and compared to 89.3% at securitization. The third largest exposure consists of the Covina Town Square Loan ($18.3 million -- 7.4%), which is secured by the borrower's interest in a 269,400 square foot office retail center located in Covina, California. The center is anchored by Home Depot, Staples, Petsmart, Michaels and a 30-screen AMC, which is not part of the collateral. Moody's LTV is 58.4%, compared to 61.7% at last review and compared to 73.5% at securitization. NABI BIOPHARMA: Stockholders OK Sale of Assets for $185 Million --------------------------------------------------------------- Nabi Biopharmaceuticals's stockholders voted to approve the sale of assets for $185 million, in a special meeting of stockholders. The transaction involved Biotest Pharmaceuticals Corporation and Biotest AG. On Sept. 11, 2007, Nabi Biopharmaceuticals entered into a definitive agreement with Biotest AG, Dreieich, Germany to sell the Nabi Biologics strategic business unit to Biotest Pharmaceuticals Corporation. Biotest has agreed to acquire the Biologics SBU's products, including Nabi-HB(R) [Hepatitis B Immune Globulin (Human)], and other plasma business assets, including Nabi's state-of-the-art plasma protein production plant, and nine FDA-certified plasma collection centers across the U.S. The acquisition also will include certain of Nabi's Corporate Shared Services group assets and the company's Boca Raton, Florida headquarters and other facilities, well as the assumption of certain liabilities. More than 60% of the outstanding shares of the company's common stock were represented at the meeting and 98% of those shares were voted in favor of the sale of assets transaction. "We are pleased and gratified by the strong support we have received from our stockholders and thank them for their continued commitment to Nabi Biopharmaceuticals," Leslie Hudson, Ph.D., the company's interim president and chief executive officer, said. About Biotest Pharmaceuticals Corporation Biotest Pharmaceuticals Corporation researches and manufactures pharmaceutical, biotherapeutic and diagnostic products and has more than 1,200 employees worldwide. About Nabi Biopharmaceuticals Headquartered in Boca Raton, Florida, Nabi Biopharmaceuticals - http://www.nabi.com/-- leverages its experience and knowledge in powering the immune system to develop and market products that fight serious medical conditions. * * * Standard & Poor's Ratings Services placed the long term foreign and local issuer credit ratings of Nabi Biopharmaceuticals' at 'B- ' in April 2006. The ratings still hold to date with a negative outlook. NEO CDO: Moody's Junks Ratings on Three Certificate Classes ----------------------------------------------------------- Moody's Investors Service downgraded and placed these notes issued by Neo CDO 2007-1, Ltd. on review for possible downgrade: Class Description: $90,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes due 2053 -- Prior Rating: Aaa -- Current Rating: Baa1, on review for possible downgrade Class Description: $90,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2053 -- Prior Rating: Aaa -- Current Rating: Baa2, on review for possible downgrade Class Description: $15,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes due 2053 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $52,500,000 Class B Fourth Priority Senior Secured Floating Rate Notes due 2053 -- Prior Rating: Aa2 -- Current Rating: B2, on review for possible downgrade Class Description: $6,000,000 Class C Fifth Priority Senior Secured Floating Rate Notes due 2053 -- Prior Rating: Aa3 -- Current Rating: B3, on review for possible downgrade Class Description: $12,000,000 Class D Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2053 -- Prior Rating: A2 -- Current Rating: Caa2, on review for possible downgrade Class Description: $6,000,000 Class E Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes due 2053 -- Prior Rating: A3 -- Current Rating: Caa3, on review for possible downgrade In addition Moody's also downgraded these notes: Class Description: $16,500,000 Class F Eighth Priority Mezzanine Secured Deferrable Floating Rate Notes due 2053 -- Prior Rating: Baa2 -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. NEW ENGLAND CENTER: Moody's Keeps Ba2 Rating on Long-Term Bonds --------------------------------------------------------------- Moody's Investors Service affirmed New England Center for Children's Ba2 long-term rating. The outlook for the rating has been revised to positive, reflecting the organization's consistent operating performance that has allowed for improvement in balance sheet and liquidity indicators. The rating applies to $14.5 million of outstanding Series 1998 bonds. Legal Security: The Series 1998 bonds are secured by a gross revenue pledge. Additionally, the Hospital's obligations are secured by a mortgage. Interest Rate Derivatives: None Strengths * Established history and strong reputation in providing state and federally mandated services for autistic children. Strong demand as illustrated by waiting lists for all service lines * Consistent operating performance has enabled the organization to materially improve liquidity measures and deleverage the balance sheet. Limited additional capital needs will allow the organization to continue to build balance sheet resources * Expansion of operations internationally in the United Arab Emirates will enhance the size and scope of the organization, diversify operations, and is expected to improve profitability Challenges * Relatively high dependence on governmental payers, with 66% of revenues derived from Massachusetts operations * Profitability, historically in the 2-4% operating margin, has declined to 0-2% operating margins in FY 2006 and FY 2007 * Thin balance sheet metrics with limited opportunity to build the balance sheet form Commonwealth contracts. * Small revenue base relative to other human service providers. Recent Developments/Results NECC is a human service provider that serves autistic children. Over 83% of revenues are derived from services mandated by Chapter 766, which illustrates the essentiality of NECC's services and anchors financial performance. NECC has enjoyed steady enrollment trends in its key service lines, including residential, staff intensive, day school, adult transition and outreach programs, driven by strong demand fundamentals as illustrated by waiting lists for key services. Total census at the headquarter facility has remained stable at 227 students. NECC continues to generate consistent financial performance, with operating income of $0.6 million (1.4% operating margin) in FY 2007 (unaudited), up from $0.3 million (0.7% operating margin) in FY 2006, although we note that despite the improvement in FY 2007, operating margins have been in the 0-2% range in the last five years compared to the 2-4% range more historically. Operating cash flow increased to $3.0 million (7.5% operating cash flow margin), up from $2.7 (7.2% operating cash flow margin) in FY 2006. Debt-to-cashflow improved to 5.1 times in FY 2007 from 7.5 times in FY 2006, and MADS coverage improved to 2.2 in FY 2007 times from 1.7 times in FY 2006. NECC enjoyed 7% revenue growth in FY 2007 due to robust rate increases from the Commonwealth. Management does not plan for any major capital expansion at the headquarter facility and future growth will derive from expansion of consulting and outreach services. In addition, NECC reports a recent signing of an exclusive contract with the government of Abu Dhabi to provide services locally, which we believe will allow NECC to further diversify revenues, increase the scope and reach of the organization, and improve profitability. As a result of this strategic direction, NECC does not have any major debt plans on the horizon, which will allow the organization to continue to improve key balance sheet measures. Unrestricted cash and investments declined to $3.2 (30 days) million at FYE 2007 from $3.5 million (35 days) at FYE 2006, while cash to debt eased to 18% at FYE 2007 from 19% at FYE 2006. Outlook The revision in the outlook to positive from stable is attributable to improvement in balance sheet indicators, consistent financial performance, and the essentiality and demand for NECC's services. What could change the rating--UP Successful opening of Abu Dhabi operations, improved profitability, and improved balance sheet measures What could change the rating--DOWN Further declines in liquidity, a significant departure in operating performance, or material increase in debt without commensurate increases in cash flow or cash Key Indicators Assumptions & Adjustments: -- Based on financial statements for The New England Center for Children, Inc. -- First number reflects audit year ended June 30, 2006 -- Second number reflects unaudited year ended June 30, 2007 -- Investment returns normalized at 6% unless otherwise noted * Total operating revenues: $37.6 million; $40.0 million * Moody's-adjusted net revenue available for debt service: $3.6 million; $5.8 million * Total debt outstanding: $18.0 million; $17.0 million * Maximum annual debt service (MADS): $2.0 million; $2.0 million * MADS Coverage with reported investment income: 1.7 times; 2.2 times * Moody's-adjusted MADS Coverage with normalized investment income: 1.7 times; 2.2 times * Debt-to-cash flow: 7.4 times; 5.1 times * Days cash on hand: 35 days; 30 days * Cash-to-debt: 19%; 18% * Operating margin: 0.7%; 1.4% * Operating cash flow margin: 7,2%; 7.5% Rated Debt (debt outstanding as of June 30, 2007) -- Series 1998 ($14.5 million outstanding) rated Ba2 NORDIC VALLEY: May Further Downgrade Low-B Ratings on Three Notes ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Nordic Valley 2007-1 CDO, Ltd. on review for possible downgrade: Class Description: $31,500,000 Class A-X Senior Secured Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade In addition Moody's announced that it has downgraded and placed these notes on review for possible downgrade: Class Description: Class A-1 Senior Secured Funded Notes due 2047 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $600,000,000 Class A-1 Unfunded Notes due 2047 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $100,000,000 Class A-2a Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: A1, on review for possible downgrade Class Description: $93,000,000 Class A-2b Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $50,000,000 Class B Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa2 -- Current Rating: Baa1, on review for possible downgrade Class Description: $66,000,000 Class C Secured Floating Rate Deferrable Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Ba1, on review for possible downgrade Class Description: $30,000,000 Class D Secured Floating Rate Deferrable Notes Due 2047 -- Prior Rating: Baa1 -- Current Rating: Ba3, on review for possible downgrade Class Description: $18,000,000 Class E Secured Floating Rate Deferrable Notes Due 2047 -- 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. OCTONION I: Moody's Junks Ratings on Four Floating Rate Notes ------------------------------------------------------------- Moody's Investors Service placed these notes issued by Octonion I CDO, Ltd. on review for possible downgrade: Class Description: $22,250,000 Class S Floating Rate Notes Due 2014 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $600,000,000 Class A1 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: Class Description: $150,000,000 Class A2 Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $88,000,000 Class A3 Floating Rate Notes Due 2047 -- Prior Rating: Aa2 -- Current Rating: Ba2, on review for possible downgrade Class Description: $70,000,000 Class B Deferrable Floating Rate Notes Due 2047 -- Prior Rating: A2 -- Current Rating: Caa1, on review for possible downgrade Class Description: $40,000,000 Class C Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: Caa2, on review for possible downgrade Class Description: $10,000,000 Class D Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Baa3 -- Current Rating: Caa3, on review for possible downgrade Moody's also downgraded these notes: Class Description: $10,000,000 Class E Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Ba1 -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. ORION 2006-2: S&P Retains Nine Ratings Under Negative Watch ----------------------------------------------------------- Standard & Poor's Ratings Services placed its 'AAA' rating on the class A-1B notes issued by Orion 2006-2 Ltd. on CreditWatch with negative implications. The class A-2, B-1, B-2, C-1, C-2, D-1, D- 2, E, and X notes remain on CreditWatch with negative implications, where they were placed on Oct. 22, 2007. Standard & Poor's notes that Orion 2006-2 Ltd. triggered an event of default on Nov. 6, 2007, under section 5.1(h) of the indenture, dated Dec. 7, 2006, with a ratio calculated by dividing the aggregate par value of collateral debt securities, the excess notional amount liquidity, the principal proceeds held as cash, and eligible investments purchased with principal proceeds, by the sum of the aggregate outstanding amount of the class A notes and the remaining unfunded class A-1A commitment amount less than 100%. When Standard & Poor's receives EOD notices, S&P place all affected note ratings on CreditWatch with negative implications. Rating Placed on Creditwatch Negative Orion 2006-2 Ltd. Rating ------ Class To From ----- -- ---- A-1B AAA/Watch Neg AAA Ratings Remaining on Creditwatch Negative Orion 2006-2 Ltd. Class Rating ----- ------ A-2 AA+/Watch Neg B-1 AA/Watch Neg B-2 AA-/Watch Neg C-1 A-/Watch Neg C-2 BBB/Watch Neg D-1 BB/Watch Neg D-2 BB-/Watch Neg E B-/Watch Neg X BB/Watch Neg Other Outstanding Ratings Orion 2006-2 Ltd. Class Rating ----- ------ A-1A AAA S AAA OXFORD INDUSTRIES: Board Approves $60 Million Stock Repurchase -------------------------------------------------------------- Oxford Industries Inc.'s board of directors has authorized the repurchase by the company of up to $60 million of its outstanding common stock, replacing the company's stock repurchase authorization. The company expects to enter into an accelerated share repurchase agreement with Bank of America N.A. for the full amount of the $60 million authorization. The $60 million represents approximately 14% of the company's current market capitalization. "We believe in the strength of our company and that the repurchase of shares at this time is an excellent opportunity to deliver value to our shareholders," J. Hicks Lanier, chairman and chief executive officer of Oxford Industries Inc., commented. "At the same time, we remain committed to building a portfolio of lifestyle brands and this share repurchase will not prevent us from pursuing future transactions aligned with this strategy." The specific number of shares to be repurchased under the agreement with Bank of America generally will be based on the volume weighted average share price of the company's common shares during a specified calculation period. During the share repurchase program, a price cap provision will establish the maximum price payable by the company for the shares to be repurchased under the agreement. The program is expected to take up to seven months to complete. The company will fund the share repurchase through borrowings under its U.S. revolving credit facility. About Oxford Industries Inc. Headquartered in Largo, Florida, Oxford Industries Inc. ( NYSE: OXM) - http://www.oxfordinc.com/-- is a producer and marketer of branded and private label apparel for men, women and children. Oxford provides retailers and consumers with a wide variety of apparel products and services to suit their individual needs. The company filed for Chapter 11 protection on May 4, 2007, (Bankr. M.D. FL. Case No.: 07-03683). Don M. Stichter, Esq. of Stichter, Riedel, Blain & Prosser represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its estimated assets were $1 million to $100 million and estimated debts were $100,000 to $1 million. PAC-WEST TELECOMM: Plan Confirmation Hearing Deferred to Nov. 19 ---------------------------------------------------------------- The Honorable Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware continued to Nov. 19, 2007, at 2:30 p.m., the hearing to consider confirmation of Pac-West Telecomm Inc. and its debtor-affiliates' Second Amended Joint Chapter 11 Plan of Reorganization. In a Court filing dated Nov. 11, 2007, Qwest Corporation and Qwest Communications Corporation asked the Court to defer the Debtors' amended Plan confirmation hearing until Nov. 20, 2007, because they need sufficient time to determine whether the Debtors have the financial resources to pay the multi-million dollar refund claims under the Washington and Arizona interconnection agreements. Kurt F. Gwynne, Esq., at Reed Smith LLP, said that the requested continuance will also enable the Qwest entities to amend their discovery requests to reflect the legal and factual issues of the Debtors' "eleventh-hour about-face" in regrad to these interconnection agreements. Treatment of Claims The Debtors' Plan, as reported in the Troubled Company Reporter on Oct. 31, 2007, proposes to pay Class 1 Priority Claims in full, in cash. The Class 2 Prepetition Claim of Pac-West Funding Company LLC will be paid, on the effective date of the Plan, in full, in cash from the proceeds of the New Senior Secured Note to be issued by the Reorganized Debtors in the amount of $18,000,000. The Debtor, will, among others, elect to distribute to the holders of Class 3 Other Secured Claims the property securing their claims, in which event the holder will be entitled within 30 days to file a proof of claim for any deficiency claim entitled to treatment in Class 4. Merrill Lynch's secured claims will be entitle to receive $500,000 on account of its claim on the effective date. Holders of Class 4 General Unsecured Claims will receive pro rata beneficial interest in and to the Class 4 Liquidating Trust and the Class 4 Liquidating Trust Assets. Holders of Class 5 Equity Interests in Pac-West will neither retain nor receive property under the Plan, while holders of Class 6 Equity Interests in the Debtors other than Pac-West will retain 100% of their interest. About Pac-West Based in Stockton, California, Pac-West Telecomm Inc. (OTC: PACW.PK) -- http://www.pacwest.com/-- provides switched local and long distance telecommunications services to, among others, internet service providers and paging companies. The company and its affiliates filed for Chapter 11 protection on April 30, 2007 (Bankr. D. Del. Case Nos. 07-10562 through 07-10567). Jeremy W. Ryan, Esq. and Norman L. Pernick, Esq. of Saul, Ewing, Remick & Saul LLP represent the Debtors in their restructuring efforts. Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $53,883,888 and total debts of $66,358,711. PAETEC HOLDING: Good Liquidity Cues Moody's to Assign SGL-2 Rating ------------------------------------------------------------------ Moody's assigned an SGL-2 speculative grade liquidity rating to PAETEC Holding Corp. The SGL-2 rating reflects PAETEC's good liquidity over the coming 12 months as Moody's expects the company to meet its obligations primarily by relying on cash-on-hand, cash flow from operations and access to the company's revolving credit. The likely cash needs will include the tender for the $104 million McLeodUSA Inc. senior secured notes. Moody's also recognizes that PAETEC may access the capital markets to enhance its liquidity, at which time, the SGL rating may be revisited. Absent new capital raising, Moody's anticipates the Company will borrow under the revolver to complete the pending acquisition of McLeod. Assuming the acquisition of McLeod closes at year-end 2007 and a $25 million drawdown under the revolver, Moody's expects PAETEC's cash balances to decline from $106 million at 3Q 2007, to about $20 million at closing of McLeod's acquisition. Moody's expects PAETEC to generate $184 million in cash flow from operations over the next four quarters; however, increased debt service and capital investments of nearly $140 million (roughly 12% to 14% of its pro forma revenues) to grow its business and integrate McLeod will erode much of the Company's free cash flow generating capacity. Nevertheless, Moody's estimates PAETEC will have good liquidity over the next four quarters, consisting of nearly $45 million in free cash flow over the next four quarters, in addition to the cash balances. PAETEC's credit facilities contain a total leverage covenant at 5.0x trailing twelve months' consolidated cash flow, which the Company is expected to comply with. With the acquisition of McLeod, PAETEC will add a cluster of discrete assets, including colocations, fiber and switches, which can be sold to raise cash without disrupting its core operations, as McLeod has large network assets that remain underutilized. PAETEC, headquartered in Fairport, NY, and McLeod, headquartered in Hiawatha, IA are competitive local exchange carriers. Pro forma for the merger, the combined company will generate revenue of over $1.6 billion. * * * As reported in the Troubled Company Reporter on Sept. 19, 2007, Standard & Poor's Ratings Services affirmed the ratings on PAETEC Holding Corp., including the 'B' corporate credit rating. The outlook is positive. The rating action followed PAETEC's announcement of a definitive agreement to acquire McLeodUSA Inc. (B-/Negative/--) for $557 million, including the assumption of $65 million in net debt, in a stock- based transaction. The McLeodUSA debt will be repaid at close of the transaction and S&P will withdraw its ratings on McLeodUSA at that time. McLeodUSA is a competitive local exchange carrier based in Hiawatha, Iowa. PAUL HOWARD: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Paul Anthony Howard 6465 South Yale Suite 614 Tulsa, OK 74136 Bankruptcy Case No.: 07-12174 Type of Business: The Debtor operates a health care business. Chapter 11 Petition Date: November 7, 2007 Court: Northern District of Oklahoma (Tulsa) Judge: Terrence L. Michael Debtor's Counsel: Patrick J. Malloy, III, Esq. Malloy Law Firm, P.C. 111 West 5th Street, Suite 700 Tulsa, OK 74103-4261 Tel: (918) 747-3491 Fax: (918) 743-6103 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's list of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Individual $109,783 Special Procedures Staff Liablity for Payroll 55 North Robinson Stop 5024 Tax Debt Oklahoma City, OK 73102-9229 Income Tax $93,463 Oklahoma Tax Commission Income Tax $21,471 General Counsel's Office 440 South Houston Suite Morrelsaffacraighicks Barnhart Business-Accounting $21,471 & Brunton Inc 3501 South Yale Avenue Tulsa, OK 74135-8014 Yellow Book USA-West Business-Advertising $20,246 The E. Maynard Cole Revocable Residential Lease $18,821 Trust and The Kay Cole Revocable Trust Allergan Business $3,845 The User-Friendly Phone Book Business-Advertising $2,930 PSS Business-Medical $1,297 Supplies Coapt Systems Inc Business-Medical $552 Supplies Saint Francis Health System Medical $512 Ingenix Business-Medical Books $501 Patterson Office Business $500 East central Electric Utility-Main House $449 Care Communications LLC Business-Phone and $407 Answering Service AT&T Wireless Business-Cellular $304 Services Yale Cleaners Business-Services $225 AT&T Services-Residential $198 Phone Service DirectTV Other $174 Pikepass Services $160 PHH MORTGAGE: Fitch Rates $200,000 Class B-5 Certificates at B -------------------------------------------------------------- Fitch Ratings has assigned these ratings to PHH Mortgage Capital LLC mortgage pass-through certificates, series 2007-6: -- $112 million classes A-1, A-2, R-I, and R-II 'AAA'; -- $5.4 million privately offered class B-1 'AA'; -- $0.7 million privately offered class B-2 'A'; -- $0.4 million privately offered class B-3 'BBB'; -- $0.3 million privately offered class B-4 'BB'; -- $0.2 million privately offered class B-5 'B'. The 'AAA' rating on the senior certificates reflects the 6.0% subordination provided by the 4.5% privately offered class B-1, 0.6% privately offered class B-2, 0.3% privately offered class B- 3, 0.25% privately offered class B-4, 0.15% privately offered class B-5, and 0.2% privately offered and not rated class B-6. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the servicing capabilities of PHH Mortgage Corporation, which is rated 'RPS1-' by Fitch. The certificates represent ownership in a trust fund, which consists primarily of 174 one- to four-family conventional, fixed- rate mortgage loans secured by first liens on residential mortgage properties. As of the cut-off date (Nov. 1, 2007), the mortgage pool has an aggregate principal balance of approximately $119,184,087.07, a weighted average original loan-to-value ratio of 72.67%, a weighted average coupon of 6.797%, a weighted average remaining term of 356 months, and an average balance of $684,966.02. The loans are primarily located in California (18.56%), Washington (7.94%) and Maryland (7.80%). All of the mortgage loans were either originated by PHH Mortgage or acquired by Bishop's Gate Residential Mortgage Trust, and sold to PHH Mortgage Capital LLC, an affiliate of PHH Mortgage Corporation. PHH Mortgage Capital LLC deposited the loans in the trust which issued the certificates. William J. Mayer Securities, LLC acted as Agent for PHH Mortgage, structuring and underwriting this deal. Citibank N.A. (AA/F1+) will serve as Trustee. For federal income tax purposes, an election will be made to treat the trust fund as two real estate mortgage investment conduits (REMIC's). PINE MOUNTAIN: Moody's Places Low-B Ratings Under Negative Watch ---------------------------------------------------------------- Moody's Investors Service placed these notes issued by Pine Mountain CDO III Ltd. on review for possible downgrade: Class Description: $20,000,000 Class A-2 Floating Rate Notes Due July 7, 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $90,000,000 Class A-3 Floating Rate Notes Due July 7, 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $41,250,000 Class A-4 Floating Rate Notes Due July 7, 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: Class Description: $45,000,000 Class B Floating Rate Notes Due July 7, 2047 -- Prior Rating: Aa2 -- Current Rating: A3, on review for possible downgrade Class Description: $22,500,000 Class C Deferrable Interest Floating Rate Notes Due July 7, 2047 -- Prior Rating: A2 -- Current Rating: Baa3, on review for possible downgrade Class Description: $25,000,000 Class D Deferrable Interest Floating Rate Notes Due July 7, 2047 -- Prior Rating: Baa2 -- Current Rating: Ba3, on review for possible downgrade Class Description: $3,750,000 Class E Deferrable Interest Floating Rate Notes Due July 7, 2047 -- Prior Rating: Ba1 -- 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. PLETTENBERG BAY: Moody's Junks Ratings on $19.5 Million Notes ------------------------------------------------------------- Moody's Investors Service placed these notes issued by Plettenberg Bay CDO Limited on review for possible downgrade: Class Description: $300,000,000 Class S Floating Rate Senior Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $96,000,000 Class A-1 Floating Rate Senior Secured Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $40,000,000 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: Class Description: $24,000,000 Class B Floating Rate Subordinate Secured Deferrable Notes Due 2047 -- Prior Rating: A3 -- Current Rating: Baa3, on review for possible downgrade Class Description: $13,000,000 Class C Floating Rate Junior Subordinate Secured Deferrable Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: Ba3, on review for possible downgrade Class Description: $10,250,000 Class D Floating Rate Junior Subordinate Secured Deferrable Notes Due 2047 -- Prior Rating: Baa3 -- Current Rating: B1, on review for possible downgrade Class Description: $19,500,000 Income Notes Due 2047 -- Prior Rating: Ba2 -- 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. POTTSVILLE HOSPITAL: Weak Balance Sheet Cues S&P to Cut Rating -------------------------------------------------------------- Standard & Poor's Rating Services lowered its rating on Pottsville Hospital Authority, Pennsylvania's series 1998 hospital revenue bonds, issued for Pottsville Hospital and Warne Clinic, two notches to 'BB-' from 'BB+'. The rating action reflects a very weak balance sheet with limited financial flexibility, characterized by persistent low liquidity and high relative debt levels that have not remained in line with the 'BB+' rating level. The outlook is stable. "The stable outlook reflects our expectation that Pottsville will take advantage of its business position and continue management's cost control and physician recruiting efforts to maintain stable operations and adequate debt service coverage," said Standard & Poor's credit analyst Jessica Goldman. More specifically, the rating reflects a constrained balance sheet, with days' cash on hand of just 32 days' and a cash to long-term debt ratio of 22%; limited demographic market, though Pottsville maintains a good business position supported by niche service areas in obstetrics and psychiatry; and adequate operating and net income performance that despite some volatility has resulted in maximum annual debt service coverage of over 2.0x in recent years. In September 2007, the hospital signed a letter of intent to consolidate operations under a common local parent with its most significant competitor, Good Samaritan Regional Medical Center (currently part of Ascension Health 'AA'). Standard & Poor's has not fully incorporated the potential merger's effect on Pottsville into its current rating as it is too early in the process; however, this merger would result in Pottsville being the only acute care hospital in the service area. The lowered rating affects $31.63 million in rated debt. PROGRESSIVE BAPTIST: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Progressive Baptist Church, Inc. 5406 Brinkley Road Camp Springs, MD 20748 Tel: (301) 449-0237 Bankruptcy Case No.: 07-21183 Chapter 11 Petition Date: November 7, 2007 Court: District of Maryland (Greenbelt) Judge: Thomas J. Catliota Debtor's Counsel: George Z. Petros, Esq. 5849 Allentown Road Camp Springs, MD 20746 Tel: (301) 423-1000 Fax: (301) 423-3862 Total Assets: $6,944,825 Total Debts: $5,828,447 Debtor's list of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ TJ Distributors, Inc Materials $56,975 2220 Commerce Road Forest Hill, MD 21050 PNC Bank Line of Credit $49,500 Customer Services P.O. Box 609 Pittsburgh, PA 15230-8738 Warthan Associates Inc. Materials $44,000 P.O. Box 1378 Hopewell, VA 23860 Axis Capital, Inc. Materials $16,891 Puget Sound Leasing Co Copier Lease $16,623 Jin C. Chang Lease $16,121 Leaf Financial Corp. Lease $15,934 American Express Credit Card Charges $13,480 Bells United Methodist Church Lease $11,700 BB&T Bankcard Corp. Credit Card Charges $10,615 Harcourt Assessment Supplier of Books $9,391 Hyatt Regency Reston Cancellation $6,678 PEPCO Services $4,240 United Health Care Insurance $4,115 Heaven 1580 AM WPGC Services $4,100 Briggs Ice Cream $3,113 Staples Business Advantage Supplies $3,000 Waste Management of Waste Management $1,429 Greater Washington Services Verizon Phone Services $1,405 QUAKER FABRIC: Wants To Reject Unexpired Leases Under Gordon Pact ----------------------------------------------------------------- Quaker Fabric Corp. and Quaker Fabric Corporation of Fall River ask authority from the U.S. Bankruptcy Court for the District of Delaware to reject certain unexpired equipment and real property leases, nunc pro tunc to each leases' respective date of rejection. A list of these real property leases and unexpired equipment can be obtained at http://researcharchives.com/t/s?251f By way of an auction, the Debtors sold substantially all of their assets to Gordon Brothers Group, LLC including the right to designate the buyer for certain percels of real property and leases for approximately $27 million. Pursuant to the rights, Gordon Brothers has the exclusive right to market and direct the disposition of leases and to designate the ultimate assignee of all the Debtors' right, title and interest in and to such leases. In addition, Gordon Brothers has the right to discontinue its efforts to market and attempt to sell any such leases and to remove itself from liability with respect to the leases. On Oct. 15, 2007, Gordon Brothers delivered to the Debtors a notice that Gordon had exercised its rights with respect to the leases to the Debtors' Los Angeles, California warehouse, and the Debtors' Highpoint warehouse in Thomasville, North Carolina. The Debtors tell the Court that rejection of the leases is in the best interests of their creditors and estates, since the Debtors have ceased their operations prior to their bankruptcy filing. About Quaker Fabric Based in Fall River, Mass., Quaker Fabric Corp. (NASDAQ: QFAB) -- http://www.quakerfabric.com/-- designs, manufactures, and markets woven upholstery fabrics primarily for residential furniture manufacturers and jobbers. It also develops and manufactures specialty yarns, including chenille, taslan, and spun products for use in the production of its fabrics, as well as for sale to distributors of craft yarns, and manufacturers of homefurnishings and other products. The company is one of the largest producers of Jacquard upholstery fabrics. Quaker Fabric sells its products through sales representatives andindependent commissioned sales agents in the United States, Canada, Mexico, and internationally. The company and its affiliate, Quaker Fabric Corporation of Fall River, filed for chapter 11 protection on Aug. 16, 2007 (Bankr. D. Del. Case No. 07-11146). John D. Sigel, Esq. at Wilmer Cutler Pickering Hale and Dorr LLP and Joel A. Waite, Esq. at Young Conaway Stargatt & Taylor LLP are co-counsels to the Debtors. Epiq Bankruptcy Solutions is the Debtors' claims agent. The Official Committee of Unsecured Creditors has selected Shumaker, Loop & Kendrick, LLP, as its bankruptcy counsel and Benesch, Friedlander, Coplan & Aronoff, LLP, as co-counsel. The Debtors' schedules reflect total assets of $41,375,191 and total liabilities of $54,435,354. QUEBECOR WORLD: Paying Preferred Shares Dividends on December 1 --------------------------------------------------------------- The board of directors of Quebecor World Inc. declared a dividend of CDN$0.3845 per share on Series 3 Preferred Shares and CDN$0.43125 on Series 5 Preferred Shares. The dividends are payable on Dec. 1, 2007 to shareholders of record at the close of business on Nov. 19, 2007. Headquartered in Montreal, Quebec, Canada, Quebecor World Inc. (TSX: IQW) (NYSE: IQW) -- http://www.quebecorworld.com/-- provides marketing and advertising solutions to leading retailers, catalogers, branded-goods companies and other businesses with marketing and advertising activities, as well as complete, full- service print solutions for publishers. The company's major product categories include advertising inserts and circulars, catalogs, direct mail products, magazines, books, directories, digital premedia, logistics, mail list technologies and other value-added services. Quebecor World has approximately 27,500 employees working in more than 120 printing and related facilities in the United States, Canada, Argentina, Austria, Belgium, Brazil, Chile, Colombia, Finland, France, India, Mexico, Peru, Spain, Sweden, Switzerland and the United Kingdom. * * * As reported in the Troubled Company Reporter on Aug. 30, 2007, Standard & Poor's Ratings Services lowered its long-term corporate credit rating to 'B' from 'B+' ratings on Quebecor World Inc. Moody's Investors Service downgraded Quebecor World Inc.'s corporate family rating to B3 from B2 and the senior unsecured ratings for subsidiary companies, Quebecor World Capital Corporation and Quebecor World Capital ULC, also to B3 from B2. QUEBECOR WORLD: Posts $315 Mil. Net Loss in 2006 Third Quarter -------------------------------------------------------------- Quebecor World Inc. reported a net loss of $315 million from continuing operations compared to net income of $19 million in the third quarter of 2006. Third quarter 2007 results incorporated an impairment of assets, restructuring and other charges and a goodwill impairment charge, net of income taxes, of $272 million, compared with $10 million in 2006 which resulted in a non-cash impact mainly due to the European transaction. Considering the transaction and evaluation of the company's European operations, Quebecor World incurred a non-cash goodwill impairment charge of $166 million, $159 million net of taxes. In addition, because of the European transaction with RSDB and because of the retooling plan and the relocation of existing assets in North America, impairment tests were triggered that resulted in an impairment of assets restructuring and other charges of $133 million, $113 million net of taxes of which $128 million was a non-cash impairment of long-lived assets. For the first nine months of 2007, Quebecor World reported a net loss from continuing operations of $374 million compared to net income from continuing operations of $19 million for the same period in 2006. The results for the first nine months of 2007 included impairment of assets, restructuring, and other charges and goodwill impairment of $321 million compared to $54 million in 2006 which resulted in a non-cash impact mainly due to the European transaction. Adjusted operating income in the first nine months of 2007 was $88 million compared to $167 million in 2006. This decrease reflects lower revenues from plant closures, and restructuring programs well as the effect of the poor European market conditions, which offset the increased profits in divisions where the retooling has already been completed, such as the U.S. Book and Magazines Divisions. "Our overall third quarter financial results are disappointing, but we are achieving three key milestones in the third quarter to turn around our business and to grow earnings and cash flow: (1) sale/merger of the company's European business; (2) refinancing the company's balance sheet; and (3) completion of the 3-year retooling of the company's plants. "We firmly believe that the sale/merger of our European platform combined with other initiatives will strengthen our balance sheet, give us additional financial flexibility and allow us to focus on our core business in the America's," Wes Lucas, president and CEO, Quebecor World, said. "Now that our three-year retooling program is completed, we will concentrate on maximizing our cash flow, optimize the value of our asset base, reduce costs and further develop value-added initiatives to ensure we succeed in the marketplace by providing our customers with the best solutions." Quebecor World disclosed a full repurchase of its 8.42%, 8.52%, 8.54% and 8.69% Private Notes. Other initiatives are planned to further strengthen the balance sheet. At Sept. 30, 2007, the company's balance sheet showed total assets of $ 5.6 billion, total liabilities of $4.2 billion and total shareholders' equity of $1.4 billion. About Quebecor World Headquartered in Montreal, Quebec, Canada, Quebecor World Inc. (TSX: IQW) (NYSE: IQW) -- http://www.quebecorworld.com/-- provides marketing and advertising solutions to leading retailers, catalogers, branded-goods companies and other businesses with marketing and advertising activities, as well as complete, full- service print solutions for publishers. The company's major product categories include advertising inserts and circulars, catalogs, direct mail products, magazines, books, directories, digital premedia, logistics, mail list technologies and other value-added services. Quebecor World has approximately 27,500 employees working in more than 120 printing and related facilities in the United States, Canada, Argentina, Austria, Belgium, Brazil, Chile, Colombia, Finland, France, India, Mexico, Peru, Spain, Sweden, Switzerland and the United Kingdom. * * * As reported in the Troubled Company Reporter on Aug. 30, 2007, Standard & Poor's Ratings Services lowered its long-term corporate credit rating to 'B' from 'B+' ratings on Quebecor World Inc. Moody's Investors Service downgraded Quebecor World Inc.'s corporate family rating to B3 from B2 and the senior unsecured ratings for subsidiary companies, Quebecor World Capital Corporation and Quebecor World Capital ULC, also to B3 from B2. RASC SERIES: Moody's Puts Ratings On Neg. Watch Over Expected Loss ------------------------------------------------------------------ Moody's Investors Service placed 21 certificates on review for possible downgrade. The certificates were issued in 2004 by various Residential Asset Securities Corporation Trusts. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. The available levels of enhancement for these certificates may be inadequate compared to the current and projected pipeline losses. Complete rating actions are: Issuer: RASC Series 2004-KS1 Trust -- Class M-II-2, current rating A2, on review for possible downgrade; -- Class M-II-3, current rating Baa2, on review for possible downgrade; Issuer: RASC Series 2004-KS2 Trust -- Class M-I-3, current rating Baa2, on review for possible downgrade; -- Class M-II-3, current rating Baa2, on review for possible downgrade; Issuer: RASC Series 2004-KS3 Trust -- Class M-II-3, current rating Baa2, on review for possible downgrade; Issuer: RASC Series 2004-KS5 Trust -- Class M-II-3, current rating Baa2, on review for possible downgrade; Issuer: RASC Series 2004-KS6 Trust -- Class M-II-3, current rating Baa2, on review for possible downgrade; Issuer: RASC Series 2004-KS8 Trust -- Class M-II-3, current rating Baa2, on review for possible downgrade; Issuer: RASC Series 2004-KS10 Trust -- Class M-3, current rating A3, on review for possible downgrade; -- Class M-4, current rating Baa1, on review for possible downgrade; -- Class M-5, current rating Baa2, on review for possible downgrade; -- Class M-6, current rating Baa3, on review for possible downgrade; -- Class B, current rating Ba1, on review for possible downgrade; Issuer: RASC Series 2004-KS11 Trust -- Class M-3, current rating A3, on review for possible downgrade; -- Class M-4, current rating Baa1, on review for possible downgrade; -- Class M-5, current rating Baa2, on review for possible downgrade; -- Class M-6, current rating Baa3, on review for possible downgrade; -- Class B, current rating Ba1, on review for possible downgrade; Issuer: RASC Series 2004-KS12 Trust -- Class M-5, current rating Baa2, on review for possible downgrade; -- Class M-6, current rating Baa3, on review for possible downgrade; -- Class B, current rating Ba1, on review for possible downgrade. RESMAE MORTGAGE: Moody's Puts Low-B Ratings on Two Cert. Classes ---------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by ResMAE Mortgage Loan Trust 2007-1 and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by ResMAE Mortgage Corporation originated adjustable-rate (75.01%) and fixed-rate (24.99%) subprime first lien mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread, and an interest rate swap agreement. Moody's expects collateral losses to range from 7.75% to 8.25%. Aurora Loan Services, LLC (Aurora) will service the mortgage loans. Aurora will also act as a Master Servicer. The complete rating actions are: ResMAE Mortgage Loan Trust 2007-1 Mortgage Pass-Through Certificates, Series 2007-1 -- Cl. 1-A1, Assigned Aaa -- Cl. 2-A1, Assigned Aaa -- Cl. 2-A2, Assigned Aaa -- Cl. 2-A3, Assigned Aaa -- Cl. M1, Assigned Aa1 -- Cl. M2, Assigned Aa2 -- Cl. M3, Assigned Aa3 -- Cl. M4, Assigned A1 -- Cl. M5, Assigned A2 -- Cl. M6, Assigned A3 -- Cl. M7, Assigned Baa1 -- Cl. M8, Assigned Baa2 -- Cl. M9, Assigned Baa3 -- Cl. M10, Assigned Ba1 -- Cl. M11, Assigned Ba2 RCN CORPORATION: Moody's Assigns B1 Rating on $200 Mil. Term Loan ----------------------------------------------------------------- Moody's Investors Service has assigned B1 rating to RCN Corp.'s proposed $200 million senior secured term loan which is being raised in connection with the acquisition of Neon Communications. The acquisition is expected to close by mid-November 2007 provided Neon achieves revenue and profit milestones set by RCN. The company plans to fund the $255 million to $260 million in net purchase price for Neon with proceeds from the $200 million term loan, $25 million of borrowing under the existing revolving credit facility, and the remainder with cash on hand. As part of the rating action, Moody's affirmed RCN's B1 corporate family rating and the B1 rating of the Company's existing senior secured credit facilities. The outlook remains stable. Moody's has taken these ratings action: Issuer -- RCN Corp. -- Corporate Family Rating -- Affirmed B1 -- Probability of Default Rating -- Affirmed B2 -- $75 million revolving credit facility due 2013 -- Affirmed B1, LGD3 -- 33% -- $520 million senior secured Term Loan B due 2014 -- Affirmed B1, LGD3 -- 33% -- $200 million new senior secured Term Loan -- Assigned B1, LGD3 -- 33% -- Outlook is Stable -- Speculative Grade Liquidity is affirmed SGL-2 RCN's B1 corporate family rating reflects the Company's high leverage following the special dividend to shareholders in June 2007 and the proposed debt-financed acquisition of Neon. The rating also incorporates RCN's lower margins relative to both incumbent cable operators and other overbuilders, and execution risk as management continues to pursue new investment opportunities in the residential and commercial space. Moreover, RCN's dividend reflects management's willingness to increase its debt burden despite significant capital investment as well as intense competition, including from better capitalized operators. However, its high penetration of multiple services, good growth trajectory, and valuable network support the ratings. Moody's expects RCN will have good liquidity in the next 12 months. Pro forma for the Neon acquisition, RCN had about $72 million of liquidity at 3Q 2007 consisting of $63 million of cash and short-term investments, and $9 million of availability under its $75 million revolving credit facility. RCN is a facilities-based competitive provider of bundled cable, high-speed internet and phone services to residential customers in the high-density northeast and Chicago markets. RCN also serves commercial customers through RCN Business Services, a provider of bulk video, broadband internet access and voice services to small and medium business customers, and RCN Business Solutions, a fiber facilities-based provider of high-availability telecommunication services to both retail and wholesale business customers. Neon is a high-capacity bandwidth provider to carrier and enterprise customers in the New England and mid-Atlantic regions. Pro forma for the acquisition of Neon, RCN generated about $680 million in LTM annual revenue. RIDGEWAY COURT: Moody's Cuts Ratings on Two Cert. Classes to Low-B ------------------------------------------------------------------ Moody's Investors Service placed these notes issued by Ridgeway Court Funding II, Ltd. on review for possible downgrade: Class Description: Up to $840,000,000 Class A1A Floating Rate Notes Due June 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $660,000,000 Class A1B Floating Rate Notes Due June 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $450,000,000 Class A1C Floating Rate Notes Due June 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $300,000,000 Class A1X Floating Rate Notes Due June 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $225,000,000 Class A2 Floating Rate Notes Due June 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $225,000,000 Class A3 Floating Rate Notes Due June 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: Class Description: $126,000,000 Class A4 Floating Rate Notes Due June 2047 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $80,000,000 Class A5 Floating Rate Notes Due June 2047 -- Prior Rating: Aa2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $35,000,000 Class B Deferrable Floating Rate Notes Due June 2047 -- Prior Rating: A1 -- Current Rating: B1, on review for possible downgrade Class Description: $33,000,000 Class C Deferrable Floating Rate Notes Due June 2047 -- Prior Rating: A3 -- 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. ROCKBOUND CDO: Moody's Junks Ratings on $65MM Floating Rate Notes ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Rockbound CDO I, Ltd. on review for possible downgrade: Class Description: $205,000,000 Class A1S Variable Funding 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: Class Description: $115,000,000 Class A1J Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $103,000,000 Class A2 Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa3 -- Current Rating: Ba2, on review for possible downgrade Class Description: $42,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: A3 -- Current Rating: Caa3, on review for possible downgrade Moody's also downgraded these notes: Class Description: $23,000,000 Class B Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2047 -- Prior Rating: Baa1 -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. SALANDER-O'REILLY: Involuntary Chapter 7 Case Summary ----------------------------------------------------- Alleged Debtor: Salander-O'Reilly Galleries LLC 22 East 71st Street New York, NY 10021 Case Number: 07-13476 Type of Business: Established in 1976, the Debtor and exhibits and manages fine art from renaissance to contemporary. See http://www.salander.com/ Gallery owner Lawrence B. Salander and wife Julie, filed for chapter 11 protection on Nov. 2, 2007. A copy of their voluntary chapter 11 petition is included in today's Troubled Company Reporter. Involuntary Petition Date: November 1, 2007 Court: Southern District of New York (Manhattan) Judge: Burton R. Lifland Petitioners' Counsel: Amos Alter, Esq. Troutman Sanders LLP The Chrysler Building, 405 Lexington Avenue New York, NY 10174 Tel: (212) 704-6000 Fax: (212) 704-6137 -- and -- John Koegel, Esq. The Koegel Group LLP 161 Avenue of the Americas New York, NY 10013 Tel: (212) 255-7744 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Carol F. Cohen Conversion $4,607,900 Two Swans Farm 13900 53rd Road South Wellington, FL 33449 Giorgio Cavallon Family Conversion $960,000 Limited Partnership c/o John Koegel, Esq. The Koegel Group LLP 161 Avenue of the Americas New York, NY 10013 Richard Ellenberg Contract $50,400 1714 Upper Canyon Road Santa Fe, NM 87501 SEQUA CORP: Wants to Redeem 2008 Unsecured Notes by December 21 --------------------------------------------------------------- Early last month, Sequa Corporation notified The Bank of New York, as successor Trustee under the Indenture dated July 29, 1999 between the Company and Harris Trust Company of New York, that the company had elected to exercise its option to conditionally redeem all of its outstanding 8-7/8% Senior Unsecured Notes due 2008 and 9% Senior Unsecured Notes due 2009. The redemption price of the securities will be the greater of (a) 100% of the outstanding principal amount thereof and (b) the sum of the present values of the remaining scheduled payments of interest and principal discounted to the date of the Redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate in effect on the second business day prior to the redemption date plus 50 basis points. Holders of redeemed Securities will also receive accrued and unpaid interest thereon up to but not including the Redemption Date. The anticipated redemption date is Nov. 21, 2007, and in no event will the redemption date be later than Dec. 21, 2007. The redemption is conditional on the consummation of the merger of Blue Jay Merger Corporation with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Blue Jay Acquisition Corporation in accordance with the terms of the Merger Agreement dated as of July 8, 2007, among the company, Merger Co and Parent. To date and prior to any redemption, $199,140,000 in aggregate principal amount of the 2008 Notes were outstanding, and $498,000,000 in aggregate principal amount of the 2009 Notes were outstanding. About Sequa Corporation Sequa Corporation (NYSE: SQA.A, SQA.B), -- http://www.sequa.com/- - incorporated in 1929, is a diversified industrial company that produces a range of products through operating units in six business segments: Aerospace, Automotive, Metal Coating, Specialty Chemicals, Industrial Machinery and Other Products. The Aerospace segment consists solely of the operations of Chromalloy Gas Turbine Corporation, the Company's largest operating unit. ARC Automotive Inc. and Casco Products Corporation make up the Automotive segment. The Metal Coating segment consists solely of Precoat Metals. The Specialty Chemicals segment is composed solely of Warwick International Group Limited. The Industrial Machinery segment consists solely of MEGTEC Systems, Inc. The Other Products segment is composed of two entities, After Six, Inc. and Centor Company. In January 2007, Precoat Metals acquired certain assets and liabilities of Chicago Finished Metals' coil coating business. SEQUA CORPORATION: Earns $18,113,000 in Third Qtr. Ended Sept. 30 ----------------------------------------------------------------- Sequa Corporation generated sales of $572,086,000 for the three months ended Sept. 30, 2007, as compared with sales of $554,377,000 for the same quarter a year ago. The company had a net income of $18,113,000 during the third quarter of 2007 and a net income of $14,695,000 during the third quarter of 2006. For the nine months ended Sept. 30, 2007, the company generated sale of $1,660,046,000, as compared with sales of $1,636,473,000 for the nine months ended Sept. 30, 2006. Net income for the nine months ended Sept. 30, 2007, was $44,258,000, as compared with net income of $42,149,000 for the nine months ended Sept. 30, 2006. As of Sept. 30, 2007, the company's balance sheet showed total assets of $2,145,610,000, total liabilities of $786,043,390, resulting in total stockholders' equity of $788,189,000. Sequa's consolidated balance sheet includes accruals relating to current and prior restructuring programs of $557,000 at Sept. 30, 2007 and $2,207,000 at Dec. 31, 2006. The consolidated financial statements of Sequa Corporation include the accounts of all majority-owned subsidiaries except for a 52.6% owned component manufacturing operation. The 52.6% ownership interest in BELAC does not equate to a controlling interest primarily due to a super majority vote requirement (at least 75% approval) on certain key operational decisions. In addition, BELAC has been determined not to be a Variable Interest Entity and therefore its financial statements are not required to be consolidated. Debts and Obligations On Oct. 18, 2007, Sequa notified The Bank of New York, as successor trustee under the Indenture dated July 29, 1999, that Sequa had elected to exercise its option to conditionally redeem all of its outstanding 8 7/8% Senior Unsecured Notes due 2008 and 9% Senior Unsecured Notes due 2009. The redemption price will be the greater of (a) 100% of the outstanding principal amount thereof and (b) the sum of the present values of the remaining scheduled payments of interest and principal discounted to the date of the redemption on a semi-annual basis at the treasury rate in effect on the second business day prior to the redemption date plus 50 basis points. Holders of the redeemed Notes will also receive accrued and unpaid interest thereon up to but not including the redemption date. The anticipated redemption date is Nov. 21, 2007, and in no event will the redemption date be later than Dec. 21, 2007. The redemption is conditional on the consummation of the merger. The senior unsecured notes at 8-7/8% mature in April 2008 and, accordingly, the aggregate principal amount of $199,140,000 is classified on the balance sheet at Sept. 30, 2007, in current maturities of long-term debt. On Aug. 27, 2007, Sequa entered into a Loan Agreement with Bank of America, N.A under which Bank of America agreed to provide a $25,000,000 revolving line of credit to Sequa to be used for general working capital purposes. Interest on the line of credit is payable at an annual rate of LIBOR plus 75 basis points and will adjust periodically. The line of credit will terminate upon the earlier of Aug. 26, 2008 or a Change of Control. As of Sept. 30, 2007, no amounts were outstanding under the line of credit facility. At Sept. 30, 2007, Sequa was contingently liable for $35,032,000 of outstanding letters of credit and $1,121,000 of surety bonds not reflected in the accompanying Consolidated Financial Statements. In addition, Sequa has guaranteed a bank line of credit for its MJB International Limited joint venture in an amount up to $9,688,000. Sequa has also guaranteed 50% of the capitalized lease payments and 50% of the overdraft facility for its Turbine Surface Technology Limited joint venture in an amount not to exceed 10,250,000 British pounds. At Sept. 30, 2007, $2,205,000 was outstanding under MJB's bank line of credit and 5,759,000 British pounds were outstanding related to the TSTL guarantees. Sequa is not aware of any existing conditions that would cause risk of loss relative to outstanding letters of credit, surety bonds or bank guarantees. Merger with Blue Jay Sequa had entered an agreement and plan of merger, dated as of July 8, 2007, with Blue Jay Acquisition Corporation, a Delaware corporation, and Blue Jay Merger Corporation, a Delaware corporation and a wholly owned subsidiary of parent company Blue Jay Acquisition. Parent and Merger Co are entities directly and indirectly owned by Carlyle Partners V, L.P. and its affiliates. The merger agreement contemplates that Merger Co will be merged with and into Sequa, with Sequa continuing as the surviving corporation and a wholly owned subsidiary of Parent. The merger agreement further contemplates that at the effective time of the Merger, each outstanding share of Class A Common Stock and of Class B Common Stock of Sequa, other than shares owned directly or indirectly by Sequa, Parent and Merger Co and by any stockholders who properly exercise appraisal rights under Delaware law, will be cancelled and converted into the right to receive $175.00 in cash, without interest. On Sept. 17, 2007, Sequa's shareholders approved the Merger. Sequa and parent each have certain termination rights under the Merger Agreement. Under certain circumstances, Sequa will be obligated to pay Parent either: (1) a termination fee in the amount of $60,570,000 Breakup (2) a termination fee in the amount of $30,285,000 plus the lesser of (x) $10,000,000 and (y) Parent's expenses or (3) Parent's expenses. Under certain other circumstances, Parent will be obligated to pay Sequa a termination fee in the amount of $60,570,000. About Sequa Corporation Sequa Corporation (NYSE: SQA.A, SQA.B), -- http://www.sequa.com/ -- incorporated in 1929, is a diversified industrial company that produces a range of products through operating units in six business segments: Aerospace, Automotive, Metal Coating, Specialty Chemicals, Industrial Machinery and Other Products. The Aerospace segment consists solely of the operations of Chromalloy Gas Turbine Corporation, the Company's largest operating unit. ARC Automotive Inc. and Casco Products Corporation make up the Automotive segment. The Metal Coating segment consists solely of Precoat Metals. The Specialty Chemicals segment is composed solely of Warwick International Group Limited. The Industrial Machinery segment consists solely of MEGTEC Systems, Inc. The Other Products segment is composed of two entities, After Six, Inc. and Centor Company. In January 2007, Precoat Metals acquired certain assets and liabilities of Chicago Finished Metals' coil coating business. SEQUA CORPORATION: Moody's Rates Proposed Sr. Debt Facility at B1 ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Blue Jay Merger Corporation's proposed senior secured credit facilities, consisting of a revolving credit facility due 2013 and a term loan facility due 2014, and a Caa2 rating to the company's proposed senior unsecured notes due 2015. Blue Jay Merger Corporation will be merged into Sequa Corporation on the close of the proposed acquisition. The Corporate Family Rating was assigned at B3 with a stable outlook. Approximately $2 billion of debt securities are rated. The purpose of the proposed debt offerings is to partially finance the $2.8 billion acquisition of Sequa by private equity sponsor, Carlyle Group. Upon the consummation of the merger Sequa will be the surviving corporation and will assume all of Blue Jay Merger's obligations. Sequa's existing 8-7/8% and 9% notes are subject to redemption requirements under their current indentures, and it is anticipated that they will be redeemed in their entirety upon close of the acquisition financing transactions. Moody's intends to withdraw all of Sequa's pre LBO ratings, including its B1 Corporate Family Rating and B2 senior notes ratings when the acquisition financing is completed. Sequa's B3 Corporate Family Rating reflects high leverage and weak interest coverage pro forma the Carlyle LBO. Near term negative free cash flow resulting from continued investment across business lines is also a constraint on the rating. Despite improving fundamentals, particularly in the company's aerospace segment, high debt levels resulting from the transaction are expected to keep credit metrics weak over the near term. Sequa's Corporate Family Rating benefits from a diverse revenue base across industries and geography, which provides stability through individual industry cycles. However, the credit profiles of a number of key customers in Sequa's two largest segments, commercial aerospace (legacy airlines in particular) and automotive (especially Delphi which is seeking to emerge from bankruptcy protection) remain of concern. While the airline industry is experiencing a modest recovery, the auto business continues to experience on-going economic difficulties. The stable ratings outlook reflects Moody's expectations that the company will continue to grow its revenue base while maintaining or modestly improving margins from current levels. The company is also expected to begin to generate modest amounts of positive free cash flow as its investment phase winds down over the near term, which should be applied to modest debt reduction. Ratings or their outlook may be adjusted upward if operating results continue to improve such that these metrics are achieved: Leverage: Debt/EBITDA of less than 6.0 times; Interest Coverage: EBIT/Interest of greater than 1.5 times; Cash Flow: RCF/Debt greater than 8% with sustained positive free cash flow. Downward ratings pressure may also occur if free cash flow were to continue to remain negative such that the company's liquidity profile would be impaired, if the company were to increase debt materially for any reason, or if operating results were to deteriorate resulting in these metrics: Leverage: Debt/EBITDA of greater than 8.0 times; Interest Coverage: EBIT/Interest remaining less than 1.0 time; Cash Flow: RCF/Debt less than 5% with continued negative free cash flow. Assignments: Issuer: Blue Jay Merger Corporation -- Probability of Default Rating, Assigned B3 -- Corporate Family Rating, Assigned B3 -- Senior Secured Revolving Credit Facility due 2013, Assigned B1 (LGD3-30) -- Senior Secured Bank Term Loan due 2014, Assigned B1 (LGD3- 30) -- Senior Unsecured Notes due 2015, Assigned Caa2 (LGD5-83) -- Senior Unsecured Discount Notes due 2015, Assigned Caa2 (LGD5-83) Sequa Corporation, headquartered in New York, NY, is a diversified industrial company. Its operations manufacture and repair jet engine components, perform metal coating, produce automotive airbag inflators, cigarette lighters, power outlets and sensors, and manufacture chemical detergent additives, auxiliary printing press equipment, emissions control systems and men's formalwear. Sequa had LTM 9/30/2007 revenues of approximately $2.2 billion. SEQUA CORP: S&P Rates Proposed $1.35BB Secured Financing at BB- --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating and '1' recovery rating, indicating expectations of very high (90%-100%) recovery in the event of a payment default, to aerospace supplier Sequa Corp.'s (BB-/Watch Neg/--) proposed $1.35 billion secured financing, consisting of a $150 million revolving credit facility and a $1.2 billion term loan B. In addition, S&P assigned 'CCC+' ratings to the company's proposed $450 million senior unsecured notes due 2015 and $250 million senior unsecured discount notes due 2015, both offered under Rule 144A without registration rights. These ratings are not on CreditWatch. Proceeds of the term loan and debt offerings, combined with $968 million of cash equity contribution from private equity firm Carlyle Group, will be used to fund the $2.8 billion (including $700 million of debt, fees, and expenses) acquisition of Sequa. Standard & Poor's other ratings on Sequa remain on CreditWatch, where they were placed with negative implications on July 10, 2007. "We expect to lower the corporate credit ratings on Sequa to 'B' from 'BB-' and assign a stable outlook upon completion of the acquisition of Sequa by Carlyle," said Standard & Poor's credit analyst Roman Szuper. "The downgrade would be based on a much heavier debt burden than currently, resulting in very weak credit protection measures." Pro forma for the transaction, expected to close in the fourth quarter of 2007, debt (including operating leases) to EBITDA (adjusted for reduced expenses for Sequa as a private company, merger costs, and some benefits from expected costs savings) will be about 7.5x. If Sequa's outstanding senior unsecured notes ($498 million 9% due 2009 and $199 million 8 7/8% due 2008) are redeemed, S&P will withdraw its ratings on the notes; the redemption notice was filed on Oct. 18, 2007. The anticipated corporate credit rating on New York, New York- based Sequa reflects a highly leveraged financial profile, very weak credit protection measures, modest profitability, and risks associated with the cyclical and competitive airline industry, the company's primary customer base. Those factors outweigh the firm's major positions in niche markets and currently generally favorable conditions in the airline and commercial aerospace sectors. SHEFFIELD CDO: Moody's Pares Rating on $21.4 Million Notes to Ba3 ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Sheffield CDO II, Ltd. on review for possible downgrade: Class Description: $19,500,000 Class C Deferrable Interest Secured Floating Rate Notes due 2051 -- Prior Rating: A2 -- Current Rating: A2, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: Class Description: $21,400,000 Class D Deferrable Interest Secured Floating Rate Notes due 2051 -- 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. SOLAR TRUST: Moody's Affirms Low-B Ratings on Four Cert. Classes ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of eight classes of Solar Trust, Commercial Mortgage Pass-Through Certificates, Series 2001-1 as follows: -- Class A-1, $4,888,623, affirmed at Aaa -- Class A-2, $100,188,936, affirmed at Aaa -- Class IO, Notional, affirmed at Aaa -- Class B, $6,632,766, affirmed at Aaa -- Class C, $7,838,723, upgraded to Aaa from Aa3 -- Class D, $9,044,681, upgraded to A2 from Baa1 -- Class E, $2,411,915, upgraded to Baa1 from Baa3 -- Class F, $6,029,787, affirmed at Ba2 -- Class G, $1,205,957, affirmed at Ba3 -- Class H, $3,014,894, affirmed at B2 -- Class J, $1,205,957, affirmed at B3 As of the Oct. 15, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 39.4% to $146.1 million from $241.2 million at securitization. The Certificates are collateralized by 33 loans, ranging in size from less than 1.0% to 20.4% of the pool, with the top 10 loans representing 78.6% of the pool. The pool has not experienced any losses to date and no loans have defeased. One loan, representing 3.2% of the pool, is in special servicing. Moody's is not anticipating a loss from this specially serviced loan currently. Six loans, representing 9.1% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2006 operating results for 89.1% of the pool. Moody's weighted average loan to value ratio is 63.2%, compared to 68.8% at Moody's last full review in March 2006 and compared to 74.4% at securitization. Moody's is upgrading Classes C, D and E due to increased credit support and improved overall pool performance. The top three loans represent 40.7% of the pool. The largest loan is the Bayview Glen Retail Centre (Phase 2, 3, and 4) Loans ($29.8 million - 20.4%), which consists of three cross collateralized loans secured by a 300,000 square foot retail shopping center located in the Richmond Hill suburb of Toronto, Ontario. The loans amortize on a 25-year schedule. Moody's LTV is 61.7%, compared to 64.0% at last review and compared to 71.5% at securitization. The second largest loan is the Windsor Outlet Mall Loan ($16.1 million -- 11.0%), which is secured by a 150,000 square foot retail outlet center located in Windsor, Ontario. As of July 2007 the center was 83.0% occupied, compared to 100.0% at last review and 99.0% at securitization. Net cash flow has declined due to higher expenses and decreased rental revenue. The loan amortizes on a 25-year schedule. Moody's LTV is 72.7%, compared to 68.3% at last review and compared to 71.2% at securitization. The third largest loan is the Royal Host Portfolio Loan ($13.5 million -- 9.3%), which is secured by nine limited service hotels containing a total of 725 rooms and located in Alberta (4), Ontario (3), British Columbia (1) and Saskatchewan (1). The hotels are flagged by Super 8 (6) and Travelodge (3). The loan amortizes on an 18-year schedule and has amortized by approximately 19.8% since securitization. Moody's LTV is 51.9%, compared to 55.9% at last review and compared to 64.7% at securitization. SOLUTIA INC: Judge Beatty Approves $25 Million Backstop Deal ------------------------------------------------------------ The Honorable Prudence Beatty of the U.S. Bankruptcy Court for the Southern District of New York has approved Solutia Inc. and its debtor-affiliates' agreement with a handful of unsecured creditors who will provide $250 million into the company in exchange for backstop rights and the chance to directly purchase discounted new stock. Solutia signed the agreement last month with UBS Securities LLC, Merrill Lynch & Co. Inc., a General Motors Corp. pension fund, and hedge funds Highland Capital Management, Longacre Fund Management and Southpaw Asset Management. Under the arrangement, the backstop investors will pay approximately $175,000,000 to be put toward retiree pensions and $75,000,000 that will cover other legacy liabilities. The investors will buy any stock that other unsecured creditors, noteholders and existing stockholders do not buy in the new offering, in which the stock will sell for $13.33 per share, discounted from the $20 expected value. Solutia said it will get the $250 million even if the offering is under-subscribed. In a four-page order, Judge Beatty authorized Solutia to take any and all actions necessary or appropriate in connection with the contemplated transactions, including the payment of the backstop fee, the transaction expenses and the litigation expenses to the Investors, without further filing with or Court order. Judge Beatty determined that the Backstop Fee, the Transaction Expenses and the Litigation Expenses, if and when payable, are accorded the status of administrative expense claims pursuant to Section 503(b)(1) of the Bankruptcy Code. With the approval of the Backstop Commitment Agreement, Solutia said that it is on its way towards Chapter 11 exit. Judge Beatty has set a confirmation hearing for Nov. 29, 2007, to approve Solutia's Amended Plan of Reorganization. The company expects to emerge from bankruptcy by the end of the year. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. A hearing to consider confirmation of the Debtors' Reorganization Plan is scheduled for Nov. 29, 2007. SOTHEBY'S: Experts Link Low Art Sale Proceeds on Credit Crisis -------------------------------------------------------------- Results of Sotheby's art sale last week fell 25% below the auction company's $355 million estimate as works by several major artists were left unsold, The Wall Street Journal reports. According to WSJ, experts linked the poor sale on the current housing market crisis which could cause slowdown in the art market. Headquartered in New York City, Sotheby's is one of the two largest auction houses in the world. Total revenues for the fiscal year ended Dec. 31, 2006 were nearly $665 million. * * * As reported in the Troubled Company Reporter on Aug. 16, 2007, Moody's Investors Service upgraded Sotheby's corporate family rating to Ba2 from Ba3; probability of default rating to Ba2 from Ba3; and senior unsecured notes rating to Ba3 (LGD5-84%) from B2 (LGD6- 90%). The outlook is stable. SPECTRUM BRANDS: Posts $333 Million Net Loss in Fourth Quarter -------------------------------------------------------------- Spectrum Brands Inc. disclosed Thursday results of its fourth quarter ended Sept. 30, 2007. The company reported a fourth quarter net loss of $333 million on net sales of $548.2 million for the quarter ended Sept. 30, 2007. This compares with a net loss of $439.4 million on net sales of $486.3 million in the same period in 2006. Included in the net loss for the fourth quarter included certain items which management believes are not indicative of the company's on-going normalized operations. These items include: -- a loss from discontinued operations, net of tax, of $178.8 million related to the company's Home & Garden business, which is being held for sale, including a $168.5 million non-cash charge related to the fair value of this asset; -- net tax adjustments of $126.7 million which include a non- cash charge of $211.3 million (of which $54.2 million is included in the loss from discontinued operations) reflecting an increase in the valuation allowance against certain net deferred tax assets; and other tax benefit adjustments of $30.4 million which principally relate to the revaluation of certain foreign deferred tax credits resulting from statutory tax rate changes; -- pretax restructuring and related charges of $36.6 million, associated with company-wide cost reduction initiatives; -- a non-cash impairment charge of $24.4 million primarily related to the company's Varta brand. -- other items netting to a pretax benefit of $1.9 million. Spectrum Brands' sales for the quarter were $548.2 million, an increase of 13%, largely attributable to sales volume increases and the impact of favorable foreign exchange rates. Segment profit increased 54% to $76.4 million for the quarter due primarily to increased sales and the impact of the company's cost restructuring initiatives. On a constant currency basis, sales increased 8% and segment profit increased 48%. Adjusted EBITDA, including EBITDA from Home & Garden, was $92 million as compared with $58 million in the prior year. Chief executive officer Kent Hussey stated, "We are pleased with the overall improvement in sales, EBITDA and segment profitability during the quarter. We are particularly pleased that the improvement represented both sales and profitability growth in each of our business segments, including our Home & Garden business. Our fourth quarter performance improvement was driven by a combination of sales volume growth and the benefits from the restructuring actions we took over the last two years to better control our costs. We believe this positive momentum demonstrates that we are taking the appropriate steps to deliver sustainable operating profitability improvement and create long-term shareholder value. We believe these positive trends will continue in fiscal year 2008." Gross profit and gross margin for the quarter were $198.6 million and 36.2%, respectively, versus $168.0 million and 34.5% for the same period last year. Restructuring and related charges of $14.6 million were included in the current quarter's cost of goods sold; cost of goods sold in the comparable period last year included $18.0 million in similar charges. Excluding these restructuring and related charges, gross margin improved as the positive impact of volume increases and manufacturing cost efficiencies offset increased raw material costs. Spectrum generated fourth quarter operating income of $7.2 million versus an operating loss of $415.3 million last year. The current quarter included $22.0 million in restructuring and related charges within operating expenses; last year's operating expenses included $3.1 million. Fiscal year 2006 results also included a $433.0 million non-cash charge related to the value of certain trade names and goodwill. Absent these amounts, operating income increased largely due to increased sales and lower costs as a result of the restructuring initiatives implemented across the organization. About Spectrum Brands Headquartered in Atlanta, Georgia, Spectrum Brands Inc. (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a consumer products company and a supplier of batteries, portable lighting, lawn and garden products, household insect control, shaving and grooming products, personal care products and specialty pet supplies. Spectrum Brands' products are available in more than one million stores in 120 countries around the world. * * * As reported in the Troubled Company Reporter on Oct. 3, 2007, Fitch Ratings has assigned a 'B/RR1' rating to Spectrum Brand's new four-year, $225 million senior secured asset-backed loan facility priced at LIBOR +225 basis points. Fitch also affirmed these ratings: 'CCC' Issuer Default Rating, 'B/RR1' rating on the company's $1 billion term loan B, 'B/RR1' rating on the company's EUR350 million term loan, 'CCC-/RR5' rating on the company's $700 million 7.4% senior subordinated notes, 'CCC-/RR5' rating of the company's $2.9 million 8.5% senior subordinated notes, and 'CCC-/RR5' rating on the company's $347 million 11.25% variable rate toggle senior subordinated notes. The Rating Outlook is Negative. STATION CASINOS: Completed Deal Prompts S&P to Lower Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Las Vegas-based Station Casinos Inc.; the corporate credit rating was lowered to 'B+' from 'BB-'. The ratings were removed from CreditWatch, where they were placed with negative implications on Nov. 2, 2006. The rating outlook is negative. The issue-level and recovery ratings on the company's secured financing, consisting of a $650 million revolving credit facility and a $250 million term loan, remain unchanged. Standard & Poor's rates the secured loan 'BB' with a recovery rating of '1', indicating the expectation for very high (90% to 100%) recovery in the event of a payment default. The rating downgrade follows the company's announcement that the acquisition of Station was completed pursuant to the Agreement and Plan of Merger dated as of Feb. 23, 2007, and amended as of May 4, 2007, among Station, Feritta Colony Partners LLC, and FCP Acquisition Sub. S&P had previously stated that the rating would be lowered to this new level once all barriers to completing the transaction were eliminated. "The downgrade reflects substantially weaker credit metrics as a result of the LBO," noted Standard & Poor's credit analyst Ben Bubeck. In S&P's analysis of the LBO transaction, it considered the financing structure, which relies on the creation of an unrestricted special purpose subsidiary that will raise up to $2.475 billion of CMBS loans. The CMBS borrower is expected to be secured by mortgages on Red Rock, Palace Station, Boulder Station, and Sunset Station. The CMBS borrower will then lease these properties back to Station, which will, in turn, sublease them to the operating subsidiaries that have historically operated them. While the CMBS borrower is expected to be a special purpose entity that benefits from various structural protections in the event of a Station Casinos bankruptcy, S&P factored in the CMBS debt when S&P considered the probability of Station defaulting. This debt is ultimately repaid through lease payments from Station and its operating subsidiaries, and the properties are core assets with strategic importance to the company. S&P's analysis also considered the high debt leverage stemming from the LBO, tempered by Station's leadership position in the Las Vegas locals market, which is supported by relatively high barriers to entry, management's strong operating and development track record, and the favorable growth characteristics of Las Vegas. In addition, S&P considered the past success that Station has had in managing Native American gaming properties (in part due to how well its model transfers into these markets) and the number of new Native American gaming opportunities in its pipeline. S&P also incorporated a more current financial plan presented in conjunction with some minor adjustments to the original terms of the proposed capital structure. The current 'B+' rating reflects Station's limited market diversity, aggressive financial policy, and high debt leverage. These factors are tempered by the company's leadership position in the Las Vegas locals market, management's good operating and development track record, and favorable long-term growth prospects for the market. STEVE PINKSTAFF: Case Summary & 17 Largest Unsecured Creditors -------------------------------------------------------------- Debtors: Steve Robert Pinkstaff Michelle Jessica Pinkstaff dba OC Pool Technicians dba Steve's Pool Repair 23969 Skyline Drive Mission Viejo, CA 92692 Bankruptcy Case No.: 07-13701 Chapter 11 Petition Date: November 6, 2007 Court: Central District Of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: Michael Jay Berger, Esq. Law Offices of Michael Jay Berger 9454 Wilshire Boulevard 6th Floor Beverly Hills, CA 90212-2929 Tel: (310) 271-6223 Fax: (310) 271-9805 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtors' list of its 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Indi Mac $82,000 P.O. Box 4045 ($611,582 Kalamazoo, MI 49003 secured) (599,932.50 senior lien) Wachovia Dealer Services 2007 Toyota Camry $46,440 P.O. Bix 25341 ($24,200 Santa Ana, CA 92799 secured) Ford Motor Credit Ford F150 Long Bed $32,000 P.O. Box 239801 ($21,975 Las Vegas, NV 89105 secured) Bank of America SBA Loan $25,000 Michelle Trask $20,000 Treasurer Orange County $12,787 Bank of America $11,570 Alaska Airlines Bank of America $6,254 Wells Fargo Credit Card $6,315 Washington Mutual $4,948 J.C. Penny's $4,774 Capital One $4,521 Wells Fargo Financial $3,526 StoneRidge at Mission Viejo $1,700 Sprint Nextel $783 Irvine Physical Medicaine $780 and Rehab West Coast Directories $730 STOCKTON CDO: Moody's May Further Cut Low-B Ratings on Four Notes ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Stockton CDO I Ltd. on review for possible downgrade: Class Description: $495,000,000 Class A-1 Variable Funding Senior Secured Floating Rate Notes due July 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $90,000,000 Class A-2 Senior Secured Floating Rate Notes due July 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $54,000,000 Class A-3 Senior Secured Floating Rate Notes due July 2052 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $81,000,000 Class B Senior Secured Floating Rate Notes due July 2052 -- 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: Class Description: $67,500,000 Class C Mezzanine Secured Deferrable Interest Floating Rate Notes due July 2052 -- Prior Rating: A2 -- Current Rating: Baa3, on review for possible downgrade Class Description: $18,000,000 Class D-1 Mezzanine Secured Deferrable Interest Floating Rate Notes due July 2052 -- Prior Rating: Baa1 -- Current Rating: Ba1, on review for possible downgrade Class Description: $15,000,000 Class D-2 Mezzanine Secured Deferrable Interest Floating Rate Notes due July 2052 -- Prior Rating: Baa2 -- Current Rating: Ba2, on review for possible downgrade Class Description: $25,500,000 Class D-3 Mezzanine Secured Deferrable Interest Floating Rate Notes due July 2052 -- Prior Rating: Baa3 -- Current Rating: Ba3, on review for possible downgrade Class Description: $9,000,000 Class E Mezzanine Secured Deferrable Interest Floating Rate Notes due July 2052 -- 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. STRUCTURED ASSET: Losses Cue Moody's to Take Neg. Rating Actions ---------------------------------------------------------------- Moody's has downgraded two tranches and placed under review for possible downgrade five tranches from three closed-end second lien residential mortgage securitizations issued by Structured Asset Securities Corp. in 2004. Additionally, one tranche was downgraded and placed on review for further possible downgrade. The downgrades are driven by back ended losses that have eroded credit support to a point where the subordinate tranches no longer have sufficient enhancement levels to maintain their current ratings in light of the anticipated losses. The complete rating action is as follows: Issuer: Structured Asset Securities Corp Trust 2004-S2 -- Class M5; currently Baa1, under review for possible downgrade; -- Class M6; currently Baa2, under review for possible downgrade; -- Class M7; downgraded to B3, under review for possible further downgrade, previously Baa3; Issuer: Structured Asset Securities Corp Trust 2004-S3 -- Class M6; currently A3, under review for possible downgrade; -- Class M7; currently Baa2, under review for possible downgrade; Issuer: Structured Asset Securities Corp Trust 2004-S4 -- Class M7; currently Baa3, under review for possible downgrade; -- Class B1; downgraded to Caa3, previously Ba1; -- Class B2; downgraded to Ca, previously Ba2. TASMAN CDO: Bad Loan Quality Cues Moody's to Junk Note Rating ------------------------------------------------------------- Moody's Investors Service placed these notes issued by Tasman CDO, Ltd. on review for possible downgrade: Class Description: $164,000,000 Class A1S Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $30,000,000 Class A1J Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $58,000,000 Class A2 Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa2 -- Current Rating: Aa2, on review for possible downgrade Class Description: $20,000,000 Class A3 Secured Deferrable Floating Rate Notes Due 2047 -- Prior Rating: A2 -- Current Rating: A2, on review for possible downgrade In addition Moody's also downgraded and left on review for possible downgrade these notes: Class Description: $12,000,000 Class B Mezzanine Secured Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Baa2 -- Current Rating: Ba2, on review for possible downgrade Class Description: $4,000,000 Class C Mezzanine Secured Deferrable Floating Rate Notes Due 2047 -- 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. TAZLINA FUNDING: Moody's Junks Rating on $6 Million Class E Notes ----------------------------------------------------------------- Moody's Investors Service placed these notes issued by Tazlina Funding CDO II, Ltd. on review for possible downgrade: Class Description: $450,000,000 Class A-2 Second Priority Senior Floating Rate Notes Due 2054 -- Prior Rating: Aaa -- Current Rating: Aaa, on review for possible downgrade Class Description: $105,000,000 Class A-3 Third Priority Senior Floating Rate Notes Due 2054 -- 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: Class Description: $17,500,000 Class B Fourth Priority Senior Floating Rate Notes Due 2054 -- Prior Rating: Aa2 -- Current Rating: A2, on review for possible downgrade Class Description: $2,500,000 Class C Fifth Priority Senior Floating Rate Notes Due 2054 -- Prior Rating: Aa3 -- Current Rating: A3, on review for possible downgrade Class Description: $16,000,000 Class D Sixth Priority Mezzanine Deferrable Floating Rate Notes Due 2054 -- Prior Rating: A2 -- Current Rating: Ba3, on review for possible downgrade Class Description: $6,000,000 Class E Seventh Priority Mezzanine Deferrable Floating Rate Notes Due 2054 -- Prior Rating: Baa2 -- 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. TEREX CORP: Moody's Holds Low-B Ratings on $1.1 Billion Notes ------------------------------------------------------------- Moody's Investors Service affirmed the corporate family rating of Terex Corporation and updated Terex's debt ratings to reflect the issuance of $800 million of 8% senior subordinated notes due 2017, versus the expected $500 million of senior subordinated notes that were to be issued in a combination of eight and ten year maturities. The outlook is stable. Moody's had anticipated that a larger issuance was possible and the $300 million additional amount of notes issued does not materially impact Terex's positioning at the Ba2 corporate family rating level. The larger amount of notes issued, when applied to Moody's Loss Given Default methodology, results in some LGD assessment rate changes as: -- $900 million senior secured credit facility to Baa3, LGD2 16% from Baa3, LGD2 18% -- $300 million 7.375% senior subordinated notes due 2014 to Ba2, LGD3 42% from Ba2, LGD4 50% -- $800 million 8% senior subordinated notes due 2017 to Ba3, LGD5 79% from Ba3, LGD5 83% Approximately $2.0 billion of debt are affected. The ratings on the senior subordinated note issuance of 8 year maturity (2015) has been withdrawn. Terex Corporation, headquartered in Westport, Connecticut, is a diversified global manufacturer of construction, infrastructure, and surface mining equipment. Last twelve months September 30, 2007 revenues were approximately $8.5 billion. THEATER XTREME: Closes Pennsylvania and Delaware Retail Stores -------------------------------------------------------------- Theater Xtreme Entertainment Group Inc. closed two underperforming corporate-owned retail stores located in Leesport, Pennsylvania and Newark, Delaware. Along with the store closings, the company has eliminated certain staff positions. This is part of the company's steps to reduce costs and improve its operations. "In addition to these store closings and staff reductions, we are reviewing every aspect of our operations in order to take all the necessary actions to operate in a more efficient and cost- effective structure," Scott Oglum, CEO of Theater Xtreme, says. Headquartered in Newark, Delaware, Theater Xtreme Entertainment Group Inc. (TXEG.OB) -- http://www.theaterxtreme.com/-- operates as a retail store and franchise marketing company. The company engages in retail sales and distribution through the operation of its home cinema design centers, the sale of franchise stores, and wholesale product distribution to franchisees. Its design centers focus on the sale and installation of screen front projection in- home cinema rooms, which include video and audio home theater components. The company also sells theater seating, interior decor items, accessories, and its proprietary digital theater management system called OneView. As of Aug. 27, 2007, Theater Xtreme Entertainment Group operated 5 company owned stores and 10 franchises in 11 states. Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 19, 2007, Morison Cogen LLP, in Bala Cynwyd, Pennsylvania, raised substantial doubt about Theater Xtreme Entertainment Group, Inc.'s ability to continue as a going concern after it audited the company's financial statements for the fiscal year ended June 30, 2007. The auditing firm reported that the company incurred significant losses from operations, has negative working capital and an accumulated deficit. The company reported a net loss of $3,446,254 on $6,110,464 of total revenues for the year ended June 30, 2007, as compared with a net loss of $2,132,730 on $4,619,142 of total revenues in the prior year. At June 30, 2007, the company's balance sheet showed $3,043,920 in total assets, $4,890,221 in total liabilities, resulting in $1,846,301 stockholders' deficit. THOMAS BAYLY: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------- Debtors: Thomas Wayne Bayly, Jr. Theresa Elizabeth Bayly 4378 Solomons Island Road Harwood, MD 20776 Bankruptcy Case No.: 07-21181 Chapter 11 Petition Date: November 7, 2007 Court: District of Maryland (Baltimore) Judge: Nancy V. Alquist Debtor's Counsel: James Greenan, Esq. McNamee, Hosea, Jernigan, Kim, Greenan & Walker P.A. 6411 Ivy Lane Suite 200 Greenbelt, MD 20770 Tel: (301) 441-2420 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtors' list of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Paccar Financial Corp Business debt- $75,000 P.O. Box 642945 Peterbilt Septic Truck Pittsburgh, PA 15264-2945 Noreast Capital Corp Isuzu $47,099 428 Fourth Street, Suite 1 Annapolis, MD 21403 Sterns Bank Bobcat $34,000 500 13th Street P.O. Box 750 Albany, MN 56307 State Farm Bank 2002 Damon RV (to be $70,000 surrendered) ($40,000 secured) Adams Contracting, Inc. Lawsuit $28,382 Home Depot Credit Credit Card Purchase $18,000 Rocky Mountain Holdings $17,490 GMAC Paymnet Proc. Ctr. Deficiency from $16,000 Repossession- 2003 Chevy Trailblazer Discover Credit Card Purchase $15,508 Rex S. Caldwell $11,899 CNH Capital $11,373 Verison Information Services Advertising-Idearc $7,861 Media Corp John Hopkins Hospital Medical Expense $6,676 Best Buy $4,596 Retail Services $4,303 Griffith $3,341 Bank of America Credit Card Purchases $3,104 Sears Credit Card Purchases $2,817 Anco Engineering $2,650 TRENTON CONVALESCENT: Organizational Meeting Set for November 14 ---------------------------------------------------------------- The U.S. Trustee for Region 3 will hold an organizational meeting to appoint an official committee of unsecured creditors in Trenton Convalescent Center Urban Renewal Associates, LP, dba The Millhouse, and its debtor-affiliate, Trenton Convalescent Center Operating Company, LP's chapter 11 cases at 11:00 a.m., on Nov. 23,2007, at the United States Trustee's Hearing Room, Bridge View, 800-840 Cooper Street, Suite 102 in Camden, New Jersey. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtor will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. 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 that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Based in cherry Hill, New Jersey, Trenton Convalescent Center Urban Renewal Associates, L.P., dba The Millhouse, operates a long term care facility. The company and its affiliate, Trenton Convalescent Center Operating Co., L.P., filed for chapter 11 protection on Oct. 30, 2007 (Bankr. D. N.J. Case Nos. 07-25874 & 07-25876). Jerrold N. Poslusny, Jr., Esq., at Cozen O'Connor, represents the Debtors. When they filed for protection from their creditors, Trenton Convalescent disclosed total assets of $2,874,490 and total debts of $8,471,744 while Tenton Operating disclosed total assets of $1,206,222 and total debts of $9,774,710. TRICADIA CDO: Moody's Junks Ratings on Three Certificate Classes ---------------------------------------------------------------- Moody's Investors Service downgraded and placed these notes issued by Tricadia CDO 2006-7, Ltd. on review for possible downgrade: Class Description: $328,500,000 Class A-I Notes due 2051 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $8,000,000 Class A-X Secured Notes due 2051, -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $65,000,000 Class A-2 Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aaa -- Current Rating: Baa1, on review for possible downgrade Class Description: $43,000,000 Class B Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aa2 -- Current Rating: Ba1, on review for possible downgrade Class Description: $25,000,000 Class C Secured Floating Rate Deferrable Notes due 2051 -- Prior Rating: A2 -- Current Rating: B2, on review for possible downgrade Class Description: $19,000,000 Class D Secured Floating Rate Deferrable Notes due 2051 -- Prior Rating: Baa2 -- Current Rating: Caa2, on review for possible downgrade Class Description: $7,200,000 Class E Secured Floating Rate Deferrable Notes due 2051 -- Prior Rating: Baa3 -- Current Rating: Caa3, on review for possible downgrade In addition Moody's also downgraded these notes: Class Description: $7,000,000 Class F Secured Floating Rate Deferrable Notes due 2051 -- Prior Rating: Ba2 -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. UAL CORP: Issues 600,000+ Shares to Eligible Claimholders --------------------------------------------------------- UAL Corporation, the holding company whose primary subsidiary is United Airlines, commenced distribution of an additional 608,000 shares of UAUA common stock to holders of allowed general unsecured claims against the company and certain of its subsidiaries pursuant to the terms of the Plan of Reorganization under which the company and its subsidiaries emerged from Chapter 11 protection on February 1, 2006. This marks the 5th broad-based distribution of equity by the company. Upon the completion of the current distribution, the company will have distributed a total of 112.2 million shares to holders of allowed and deemed general unsecured claims, out of a total expected distribution of 115 million shares under the Plan to holders of the claims. With this, the company will have 116,916,281 shares outstanding as of November 8, 2007. As part of the current distribution, United employees will be issued, either directly or have monetized on their behalf, approximately 197,000 shares of new UAUA common stock. Since February 2, 2006, and including the current distribution, employees will have been issued, directly and indirectly, a total of 35.7 million shares of new UAUA common stock. In connection with the reorganization, employees also received $726 million in notes proceeds which were distributed in August 2006. Including both the notes and the stock distribution, and based on the closing price of UAUA common stock on November 7, 2007, securities worth more than $2.0 billion have been distributed to employees pursuant to the company's Plan of Reorganization. As of today, holders of approximately 45,000 allowed general unsecured claims aggregating to approximately $29.2 billion in claim value have received common shares of the company to partially satisfy those claims. The company currently estimates its total unsecured claim exposure, including those that have been partially satisfied, to be between $29.3 billion and $29.6 billion. The company currently holds approximately 2.8 million shares of UAUA common stock in reserve to satisfy the remaining disputed unsecured claims. Distributions of this stock will take place on a periodic basis as remaining claims disputes are resolved. To the extent that any disputed claims become disallowed claims, the shares of the UAUA common stock reserved for issuance to the holders of the disputed claims will be distributed pro rata to holders of allowed general unsecured claims. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. At Dec. 31, 2006, the company's balance sheet showed total assets of US$25,369,000,000 and total liabilities of US$23,221,000,000. * * * As reported in the Troubled Company Reporter on May 3, 2007, Fitch Ratings has affirmed the Issuer Default Ratings of UAL Corp. and its principal operating subsidiary United Airlines Inc. at B-. WACHOVIA BANK: Moody's Holds Ba1 Ratings on Three Cert. Classes --------------------------------------------------------------- Moody's Investors Service downgraded the rating of one class, upgraded the rating of one class, affirmed the ratings of 12 classes and placed three classes on review for possible downgrade of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2006-WHALE 7 as: -- Class X-1A, Notional, affirmed at Aaa -- Class X-1B, Notional, affirmed at Aaa -- Class A-1, $1,252,410,049, Floating, affirmed at Aaa -- Class A-2, $573,484,000, Floating, affirmed at Aaa -- Class B, $98,625,000, Floating, upgraded to Aaa from Aa1 -- Class C, $94,972,000, Floating, affirmed at Aa2 -- Class KH-1, $68,922,037, Floating, affirmed at Baa3 -- Class KH-2, $54,054,700, Floating, affirmed at Ba1 -- Class WA, $3,300,000, Floating, downgraded to Ba3 from Ba1 -- Class BP-1, $2,021,238, Floating, currently rated Baa2; placed on review for possible downgrade -- Class BP-2, $2,189,674, Floating, currently rated Baa3; placed on review for possible downgrade -- Class MB-1, $2,300,000, Floating, affirm at Baa1 -- Class MB-2, $2,600,000, Floating, affirm at Baa2 -- Class MB-3, $2,600,000, Floating, affirm at Baa3 -- Class MB-4, $2,500,000, Floating, affirm at Ba1 -- Class CM, $1,200,000, Floating, currently rated Baa3; placed on review for possible downgrade -- Class UV, $1,890,000, Floating, affirmed at Ba1 The transaction's aggregate pool balance has declined by approximately 14.9% to $2.8 billion from $3.2 billion at securitization due to the payoff of 5 loans initially in the pool. Currently the Certificates are collateralized by 14 loans ranging in size from less than 1.0% to 39.8% of the pool balance. The trust has not realized any losses since securitization and no loans are currently in special servicing. Moody's is upgrading Class B due to increased credit support from loan payoffs. Non-pooled Classes BP-1 and BP-2 are secured by junior components of the Broadreach Pool Loan. Non-pooled Class CM is secured by Colonial Mall Myrtle Beach Loan. Moody's is placing Classes BP-1, BP-2 and CM on review for possible downgrade due to declines in property occupancy and net cash flow. Moody's is downgrading non-pooled Class WA due to the poor performance of the Westin Aruba Resort & Spa Loan. Class WA, which is secured solely by the loan, was placed on review for possible downgrade on April 30, 2007 due to the nonpayment of the April senior debt service, which was subsequently paid by the mezzanine lender. The loan was transferred to special servicing although it has since been transferred back to the master servicer. Two loans related to the resort are in the trust, the $96.7 million pooled portion (3.8%) and the $3.3 million junior portion which supports non-pooled Class WA. There is also a $130.0 million non-trust junior secured component and a $19.45 million non-trust mezzanine component. The Westin Aruba Resort & Spa was formerly operated as a Wyndham. The initial borrower, who has now been replaced by the mezzanine lender, Petra Capital Management, initiated an upgrade of the hotel flag to Starwood's Westin brand along with property improvement plan ("PIP") spending anticipated to cost $15.0 million. When the revenue improvements expected in the winter 2007 season did not materialize and the $15.0 million debt service reserve was depleted, the borrower failed to support the loan or initiate the additional PIP spending necessary to improve RevPAR performance. Additional improvements of approximately $5.0 to $7.0 million are necessary. Moody's estimates that the property could reach expected performance by mid-2009. In the meantime, Petra Capital Management is funding debt service and the additional improvements out-of-pocket. Moody's current shadow rating on the pooled portion of the loan is Ba2, compared to Baa3 at securitization. The Kyo-ya Hotel Pool Loan ($1.0 billion -- 39.8%) is secured by eight hotels containing a total of 6,127 rooms. The hotels are located in Hawaii, San Francisco and Orlando. There is a $123.0MM trust junior component which supports non-pooled Classes KH-1 and KH-2, a $50.0 million non-trust junior component and a $700.0 million non-trust mezzanine component. The sponsor, Cerberus Capital Management LLC, plans to spend approximately $190.0 million ($120.0 million was reserved; current balance of approximately $92.5 million) over the next two years on property upgrades and the possible re-branding of some of the hotels. For the trailing 12-month period ending 6/30/2007 RevPAR was $177.00, compared to $167.00 for the trailing 12-month period ending 6/30/2006. Moody's anticipated RevPAR is $176.80. Moody's current shadow rating is Baa2, the same as at securitization. The Boca Resorts Hotel Pool Loan ($652.0 million -- 25.5%) is secured by five luxury, full-service hotels containing a total of 2,318 rooms and a golf club. The properties are located in Boca Raton, Naples, and Ft. Lauderdale, Florida. There is a $148.0 million trust junior component which secures non-pooled Classes BH-1, BH-2, BH-3 and BH-4 (not rated by Moody's). Additionally there is a $100.0 million non-trust junior component and a $175.0 million non-trust mezzanine component. The sponsor, The Blackstone Group, intends to spend $90.0 million on project improvements. As of August 2007 approximately $62.6 million had been funded with the remainder to be expended by March 2008. For the trailing 12-month period ending 8/31/2007 RevPAR was $152.00, compared $153.00 for the trailing 12-month period ending 6/30/2006. Moody's anticipated RevPAR is $174.85. Moody's current shadow rating is Baa3, the same as at securitization. The 1515 Broadway Loan ($212.5 million -- 8.3%) is secured by a 1.7 million square foot Class A office located in the Times Square/Theater District submarket of New York City. There is a $212.5 million non-trust pari-passu component and a $200.0 million non-trust mezzanine component. The major tenant is Viacom which occupies approximately 82.0% of the building under multiple leases. The majority of the leases expire in May 2010. Viacom's space is leased at rents below Moody's market rents. As of December 2006, occupancy was 99.6%, similar to securitization. SL Green Realty Corp. and SITQ are the loan sponsors. Moody's current shadow rating is Baa2, the same as at securitization. WCI COMMUNITIES: Financial Woes Prompt Moody's to Junk Ratings -------------------------------------------------------------- Moody's lowered the ratings of WCI Communities Inc., including its corporate family rating to Caa2 from B3 and the ratings on its senior subordinated notes to Caa3 from Caa2. The ratings outlook is negative. Approximately $650 million of debt securities are affected. The downgrades and negative outlook reflect the substantially weaker than expected cash flow generation, continued difficulties in complying with bank covenants, accelerating losses, and increasing debt leverage. Having entered 2007 with expectations of generating close to $1 billion of cash flow from operations, WCI will now be challenged to generate even 20% of that amount, as accelerating cancellations exacerbate the company's delays in finishing buildings and delivering units to buyers. Covenant compliance, a constant problem since last year, has gotten worse, with the possibility existing that the banks will no longer grant relief on the latest violations, thus potentially accelerating all of the company's outstanding debt. With cost containment efforts lagging the decline in unit deliveries and in revenue generation, losses continue to mount. Debt leverage, unaided by any significant debt repayment, keeps edging up from the steady write-offs of tangible net worth due to impairments and other charges. Going forward, the ratings could be reduced again if the company is unable to obtain additional, and more than stopgap, covenant relief. The ratings outlook could stabilize if the company were to obtain substantial and long-term covenant relief and were to reverse the current weakness in cash flow generation. These ratings were affected: -- Corporate family rating changed to Caa2 from B3; -- Probability of default rating changed to Caa2 from B3; -- Senior sub debt ratings changed to Caa3 (LGD-5, 81%) from Caa2 (LGD-5, 83%). Headquartered in Bonita Springs, Florida, WCI Communities Inc. is a fully integrated homebuilding and real estate services company with 60 years of experience in the design, construction, and operation of leisure-oriented, amenity-rich master planned communities targeting affluent homebuyers. Revenues and consolidated earnings for the nine months ended September 30, 2007 were $746 million and $(119) million, respectively. WESTLAKE CHEMICAL: Moody's Rates $250 Mil. Revenue Bonds at Ba3 --------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to the $250 million Louisiana Local Government Environmental Facilities and Community Development Authority Revenue Bonds (Westlake Chemical Corporation Projects) Series 2007. Moody's also affirmed Westlake's Ba2 corporate family rating (CFR), the Ba3 rating on its existing unsecured notes and its positive outlook. Proceeds from this tax-exempt bond will be used by Westlake to expand and improve its existing facilities (Geismar and Lake Charles) in Louisiana which are located in the Gulf Opportunity Zone as provided in the Gulf Opportunity Zone Act of 2005. Moody's also raised the LGD assessment on the existing notes to LGD4, 67% from LGD5, 75% consistent with its Loss Given Default methodology. Ratings assigned: Louisiana Local Government Environmental Facilities and Community Development Authority -- Senior unsecured tax-exempt revenue bonds, $250 million due 2032 -> Ba3, LGD4, 67% Ratings affirmed: Westlake Chemical Corporation -- Corporate Family Rating at Ba2 -- Probability of Default Rating at Ba2 -- Guaranteed senior unsecured notes, $250 million due 2016 -> Ba3 Ratings raised: -- Guaranteed senior unsecured notes, $250 million due 2016 to LGD4, 67% from LGD5, 74% The Ba3 rating on the Go Zone bonds reflects their unsecured status as they are backed by an unsecured loan agreement with Westlake. Westlake has agreed to make timely payments of interest and principle on the loan, which will be used to pay bondholders. The Ba3 ratings on the Go Zone bonds, and the existing unsecured notes due 2016, are one notch below Westlake's CFR and are subordinated to the company's $300 million secured revolving credit facility. There was roughly $75 million outstanding under this facility at September 30, 2007. The company will likely repay borrowings under the facility after the issuance of the bonds. The affirmation of the Ba2 CFR reflects Moody's prior expectation that the company would significantly increase debt to fund future capital investments. Westlake had previously announced the potential for a low-cost ethylene cracker in Trinidad and expansion of its Calvert City, KY vinyl manufacturing complex. The issuance of the GO Zone bonds indicates that the company will undertake a significant expansion of its Geismar facility as well. Westlake's Ba2 CFR continues to reflect the modest level of debt for the size of the company. The ratings are tempered by the substantial cyclicality in its two main commodity markets, limited product diversity, its size relative to other commodity plastics producers (PE and PVC), the regional nature of its operations, and the company's limited feedstock flexibility. Moody's expects the company to remain adequately placed in the Ba2 rating category due to its relatively conservative financial policies, strong financial metrics for a Ba2 company, and its discipline in pursuing growth through acquisitions and capital investments. Additionally, Moody's expects that the company's earnings and cash flow will decline over the next two years as margins in both of their operating segments decline due to weak downstream demand in PVC, and to a lesser degree in polyethylene. The positive outlook reflects Moody's belief that Westlake's investment in a low-cost cracker in Trinidad would improve its credit profile by raise earnings in the trough of the cycle and reducing the downside potential in earnings and cash flow from its two commodity chemical segments. Westlake had announced in 2006 that it was in discussions with the Republic of Trinidad and Tobago to study the feasibility of a low-cost ethylene cracker. Currently, Westlake is pursuing authorization from Trinidad's Environmental Management Authority (EMA) to construct the facility. While the potential investment would be large, it would likely represent almost 30% of the company's future ethylene capacity and improve the stability of the company's earnings over the cycle. The potential for a higher rating is largely dependant on the approval for this new facility, and expectations of economics of the facility and its impact on the company's credit profile over the next several years. On the other hand, the outlook could be returned to stable if Westlake is unable to obtain authorization from EMA, if Moody's determines that the potential plant in Trinidad will not improve the company's long term credit profile, or if margins decline precipitously in 2008 or 2009 (EBITDA well below $200 million) due to, for example, pressures from imports or greater feedstock volatility. Westlake Chemical Corporation (Westlake), headquartered in Houston, TX, is a producer of commodity petrochemicals (ethylene and styrene), plastics (polyvinyl chloride and polyethylene), and fabricated products. Revenues were $2.9 billion for the LTM ended September 30, 2007. ZAIS INVESTMENT: Moody's Cuts Rating on $50 Million Notes to Ba1 ---------------------------------------------------------------- Moody's Investors Service placed these notes issued by ZAIS Investment Grade Limited X on review for possible downgrade: Class Description: $32,500,000 Class C Senior Subordinate Secured Floating Rate Notes Due 2057 -- Prior Rating: Baa2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $5,000,000 Class D Subordinate Secured Floating Rate Notes Due 2057 -- Prior Rating: Ba1 -- 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. * Fitch Completes Review of U.S. Subprime RMBS Transactions ----------------------------------------------------------- Earlier this week, Fitch Ratings completed its review of its rated universe of U.S. Subprime RMBS transactions originated in the first-quarter of 2007. These transactions were placed 'Under Analysis' on Sept. 28, 2007. Fitch initiated this review following the completion of a review of all 2006 subprime RMBS ratings in September 2007. Both reviews were undertaken due to the substantial decline in home prices and the resulting impact on high-risk mortgage products. Fitch's rated universe of first-quarter 2007 vintage subprime is 29 transactions comprised of 435 rated classes with an outstanding balance of $20.3 billion. Fitch's most severe rating actions affected those RMBS transactions that exhibited poor early performance and high projected losses relative to available and projected credit enhancement. Overall Fitch has affirmed 181 classes with an outstanding balance of $11.7 billion, downgraded 226 classes with an outstanding balance of $5.5 billion and, in addition to the classes downgraded, placed 28 classes on Rating Watch Negative with an outstanding balance of $3.1 billion. Fitch believes that those classes that have been downgraded to below-investment grade have substantial risk of principal loss. However those bonds remaining investment grade still exhibit the ability to withstand the higher projected collateral default and loss expectations without principal loss. Those classes affirmed at 'AAA' are able to withstand a substantial multiple of expected collateral performance without experiencing loss. Fitch will continue to actively monitor the performance of the 2007 subprime RMBS as part of its normal monthly review cycle. First-Quarter 2007 Vintage Summary: -- Transaction Reviews Completed: 29 -- Affirmations: 181 classes (outstanding balance: $11.7 billion); -- Placed on Rating Watch Negative: 28 classes (outstanding balance: $3.1 billion); -- Downgraded: 159 classes (outstanding balance: $2.6 billion); -- Downgraded & Placed on Rating Watch Negative: 67 classes (outstanding balance: $2.8 billion). Rating actions that Fitch took on 152 classes originally rated 'AAA' resulted in these: -- Affirmed: 109 classes ($10.8 billion); -- Placed on Rating Watch Negative: 28 classes ($3.1 billion); -- Downgraded: Four classes ($500 million); -- Downgraded & placed on Rating Watch Negative: 11 classes ($1.7 billion). Ratings Distribution After Actions: -- 'AAA' classes: 137 (balance: $13.9 billion); -- All investment grade classes (including 'AAA'): 329 (balance: $19.2 billion); -- Below investment grade classes: 106 (balance: $1.1 billion). Rating: 'AAA' # of classes: 137 $Balance (Millions): $13,896 Rating: 'AA+' # of classes: 12 $Balance (Millions): $298 Rating: 'AA' # of classes: 17 $Balance (Millions): $864 Rating: 'AA-' # of classes: 24 $Balance (Millions): 903 Rating: 'A+' # of classes: 24 $Balance (Millions): $893 Rating: 'A' # of classes: 16 $Balance (Millions): $232 Rating: 'A-' # of classes: 26 $Balance (Millions): $1,125 Rating: 'BBB+' # of classes: 23 $Balance (Millions): $274 Rating: 'BBB' # of classes: 24 $Balance (Millions): $340 Rating: 'BBB-' # of classes: 26 $Balance (Millions): $326 Rating: 'BB+' # of classes: 2 $Balance (Millions): $27 Rating: 'BB' # of classes: 36 $Balance (Millions): $406 Rating: 'B' # of classes: 47 $Balance (Millions): $466 Rating: 'CCC' # of classes: 21 $Balance (Millions): $215 Recent Criteria -- 'U.S. Subprime RMBS/HEL Upgrade/Downgrade Criteria' (June 12 ,2007); -- 'Downgrade Criteria for Recent Vintage U.S. Subprime RMBS' (Aug. 8, 2007). * Stephen Jones Joins Mesirow as Executive Vice President --------------------------------------------------------- Stephen C. Jones has joined Mesirow Financial Consulting LLC as executive vice president and senior managing director. Mr. Jones will head the firms Valuation Services practice and play a key role on MFCs executive leadership team. Jones addition marks a major milestone in the execution of MFCs long-term strategic plan and continues its track record as a destination employer for the top talent in the industry. Mr. Jones has vast experience consulting with Fortune 500 companies across a broad array of assignments including business enterprise valuation, financial statement valuation, intellectual property valuation, and transactional valuation, as well as various commercial damages and corporate restructuring related engagements. Mr. Jones has also served as a financial and economic expert on numerous occasions, providing expert witness testimony on many high-profile engagements in the US and the ICC in Europe. Prior to joining Mesirow Financial, Mr. Jones was a managing director and operating committee member in the Corporate Finance practice at Navigant Consulting Inc., serving as practice area leader for the Global Valuation Services group. In addition, he served on the International Development Committee. Mr. Jones is a member of the American Society of Appraisers, Licensing Executives Society. He is a committee member of the Appraisal Foundations subcommittee Best Practices in Financial Reporting. The TAF is a non-profit funded by the US Congress to evaluate valuation issues in the United States primarily for public companies who are SEC registrants. He is also is a member of the Appraisal Issues Task Force. A full-service financial advisory consulting provider, Mesirow Financial Consulting provides corporate recovery, litigation and investigative services, valuation services, interim management, operations and performance improvement and other consulting services. Visit Mesirow Financial online at http://www.mesirowfinancial.com/ to learn more about the firm's Financial Advisory services. * BOND PRICING: For the Week of Nov. 5 - Nov. 9, 2007 ----------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 01/15/04 0 ABC Rail Product 10.500% 12/31/04 0 Acme Metals Inc 12.500% 08/01/02 0 Alesco Financial 7.625% 05/15/27 68 Allegiance Tel 11.750% 02/15/08 52 Alltel Corp 6.800% 05/01/29 72 Ambac Inc 6.150% 02/15/37 67 Amer & Forgn Pwr 5.000% 03/01/30 64 Amer Color Graph 10.000% 06/15/10 66 Amer Pad & Paper 13.000% 11/15/05 0 Americredit Corp 0.750% 09/15/11 72 Americredit Corp 0.750% 09/15/11 69 Americredit Corp 2.125% 09/15/13 67 Americredit Corp 2.125% 09/15/13 66 Ames True Temper 10.000% 07/15/12 72 Antigenics 5.250% 02/01/25 62 Archibald Candy 10.000% 11/01/07 0 Ashton Woods USA 9.500% 10/01/15 75 At Home Corp 4.750% 12/15/06 0 Ata Holdings 12.125% 06/15/10 0 Atherogenics Inc 1.500% 02/01/12 30 Atherogenics Inc 4.500% 03/01/11 36 Bank New England 8.750% 04/01/99 9 Bank New England 9.500% 02/15/96 14 Bank New England 9.875% 09/15/99 9 BankUnited Cap 3.125% 03/01/34 66 BBN Corp 6.000% 04/01/12 0 Bearingpoint Inc 2.500% 12/15/24 74 Bearingpoint Inc 2.750% 12/15/24 71 Beazer Homes USA 4.625% 06/15/24 74 Beazer Homes USA 6.875% 07/15/15 75 Beyond.com 7.250% 12/01/03 0 Big City Radio 11.250% 03/15/05 0 Borden Inc 7.875% 02/15/23 73 Buffets Inc 12.500% 11/01/14 51 Burlington North 3.200% 01/01/45 54 Calpine Gener Co 11.500% 04/01/11 38 Charter Comm Inc 6.500% 10/01/27 62 CIH 9.920% 04/01/14 71 CIT Group Inc 6.100% 03/15/67 74 Clark Material 10.750% 11/15/06 0 Claire's Stores 6.500% 06/01/17 73 Collins & Aikman 10.750% 12/31/11 2 Columbia/HCA 7.500% 11/15/95 75 Complete Mgmt 8.000% 08/15/03 0 Complete Mgmt 8.000% 12/15/03 0 Compucredit 3.625% 05/30/25 56 CompuCredit 5.875% 11/30/35 49 Constar Intl 11.000% 12/01/12 66 Countrywide Finl 6.250% 05/15/16 74 Curagen Corp 4.000% 02/15/11 69 Dana Corp 9.000% 08/15/11 70 Decode Genetics 3.500% 04/15/11 68 Decode Genetics 3.500% 04/15/11 68 Delta Air Lines 8.000% 12/01/15 71 Delta Mills Inc 9.625% 09/01/07 15 Delphi Corp 6.197% 11/15/33 57 Delphi Corp 8.250% 10/15/33 52 Dura Operating 8.625% 04/15/12 36 Dura Operating 9.000% 05/01/09 1 Eagle Food Centr 11.000% 04/15/05 0 Empire Gas Corp 9.000% 12/31/07 0 Encysive Pharma 2.500% 03/15/12 63 Epix Medical Inc 3.000% 06/15/24 72 Exodus Comm Inc 11.625% 07/15/10 0 Fedders North Am 9.875% 03/01/14 16 Finova Group 7.500% 11/15/09 18 Ford Motor Co 6.375% 02/01/29 71 Ford Motor Co 6.625% 02/15/28 70 Ford Motor Co 6.625% 10/01/28 73 Ford Motor Co 7.125% 11/15/25 71 Ford Motor Co 7.400% 11/01/46 71 Ford Motor Co 7.500% 08/01/26 74 Ford Motor Co 7.700% 05/15/97 73 Ford Motor Co 7.750% 06/15/43 74 Ford Motor Cred 6.050% 02/20/15 74 General Motors 6.750% 05/01/28 71 General Motors 7.375% 05/23/48 74 Gulf States STL 13.500% 04/15/03 0 GMAC 5.250% 01/15/14 75 GMAC 5.900% 01/15/19 71 GMAC 5.900% 02/15/19 69 GMAC 5.900% 10/15/19 71 GMAC 6.000% 02/15/19 75 GMAC 6.000% 02/15/19 74 GMAC 6.000% 02/15/19 73 GMAC 6.000% 03/15/19 71 GMAC 6.000% 03/15/19 68 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 66 GMAC 6.000% 03/15/19 69 GMAC 6.000% 04/15/19 71 GMAC 6.000% 09/15/19 70 GMAC 6.000% 09/15/19 72 GMAC 6.050% 08/15/19 71 GMAC 6.050% 08/15/19 72 GMAC 6.050% 10/15/19 70 GMAC 6.125% 10/15/19 71 GMAC 6.150% 10/15/19 71 GMAC 6.250% 01/15/19 72 GMAC 6.250% 04/15/19 72 GMAC 6.250% 05/15/19 75 GMAC 6.250% 07/15/19 74 GMAC 6.300% 08/15/19 74 GMAC 6.300% 08/15/19 72 GMAC 6.350% 07/15/19 72 GMAC 6.400% 12/15/18 72 GMAC 6.400% 11/15/19 73 GMAC 6.500% 06/15/18 75 GMAC 6.500% 11/15/18 75 GMAC 6.500% 02/15/20 75 GMAC 6.700% 06/15/19 75 GMAC 6.750% 05/15/19 74 GMAC 6.750% 06/15/19 74 GMAC 6.750% 06/15/19 72 GMAC 6.750% 03/15/19 75 GMAC 6.800% 10/15/18 75 GMAC 7.000% 08/15/18 75 GMAC 7.000% 11/15/23 71 GMAC 7.000% 11/15/24 74 GMAC 7.000% 11/15/24 71 GMAC 7.150% 03/15/25 69 GMAC 7.250% 02/15/25 75 Harrahs Oper Co 5.750% 10/01/17 72 Hilton Hotels 7.500% 12/15/17 75 Hines Nurseries 10.250% 10/01/11 75 HNG Internorth 9.625% 03/15/06 19 Ion Media 11.000% 07/31/13 69 Iridium LLC/CAP 10.875% 07/15/05 3 Iridium LLC/CAP 11.250% 07/15/05 3 Iridium LLC/CAP 13.000% 07/15/05 2 Iridium LLC/CAP 14.000% 07/15/05 3 K Hovnanian Entr 6.000% 01/15/10 74 K Hovnanian Entr 6.250% 01/15/16 75 K Hovnanian Entr 7.750% 05/15/13 69 K Hovnanian Entr 8.875% 04/01/12 72 Kmart Corp 9.350% 01/02/20 5 Kmart Corp 9.780% 01/05/20 0 KMart Funding 8.800% 07/01/10 10 KMart Funding 9.440% 07/01/18 60 Kaiser Aluminum 9.875% 02/15/02 5 Kaiser Aluminum 12.750% 02/01/03 8 Kimball Hill Inc 10.500% 12/15/12 61 Lehman Bros Holding 11.000% 10/25/17 70 Liberty Media 3.750% 02/15/30 58 Liberty Media 4.000% 11/15/29 64 Lifecare Holding 9.250% 08/15/13 65 LTV Corp 8.200% 09/15/07 0 McSaver Financl 7.400% 02/15/02 5 McSaver Financl 7.600% 08/01/07 5 McSaver Financl 7.875% 08/01/03 5 MediaNews Group 6.375% 04/01/14 73 MHS Holdings Co 16.875% 09/22/04 0 Mosler Inc 11.000% 04/15/03 0 Movie Gallery 11.000% 05/01/12 27 Muzak LLC 9.875% 03/15/09 53 National Steel Corp 8.375% 08/01/06 0 Neff Corp 10.000% 06/01/15 67 New Orl Grt N RR 5.000% 07/01/32 63 Northern Pacific RY 3.000% 01/01/47 52 Northern Pacific RY 3.000% 01/01/47 52 Northpoint Comm 12.875% 02/15/10 0 Northwest Steel & Wire 9.500% 06/15/01 0 NTK Holdings Inc 10.750% 03/01/14 63 Nutritional Src 10.125% 08/01/09 5 Oakwood Homes 7.875% 03/01/04 13 Oakwood Homes 8.125% 03/01/09 3 Oscient Pharma 3.500% 04/15/11 55 Oscient Pharma 3.500% 04/15/11 58 Outboard Marine 9.125% 04/15/17 5 Pac-West Telecom 13.500% 02/01/09 4 Pac-West Telecom 13.500% 02/01/09 2 PCA LLC/PCA FIN 11.875% 08/01/09 6 Pegasus Satellite 13.500% 03/01/07 0 Piedmont Aviat 10.250% 01/15/49 0 Pixelworks Inc 1.750% 05/15/24 74 Polaroid Corp 11.500% 02/15/06 0 Pope & Talbot 8.375% 06/01/13 33 Pope & Talbot 8.375% 06/01/13 36 Primus Telecom 3.750% 09/15/10 66 Primus Telecom 8.000% 01/15/14 59 Propex Fabrics 10.000% 12/01/12 45 Pulte Homes Inc 6.000% 02/15/35 75 Radian Group 5.375% 06/15/15 75 Radian Group 5.625% 02/15/13 72 Radnor Holdings 11.000% 03/15/10 0 Rait Financial 6.875% 04/15/27 69 Rayovac Corp 8.500% 10/01/13 67 Read-Rite Corp 6.500% 09/01/04 0 Realogy Corp 12.375% 04/15/15 68 Residential Cap 6.000% 02/22/11 65 Residential Cap 6.375% 06/30/10 65 Residential Cap 6.500% 06/01/12 68 Residential Cap 6.500% 04/17/13 64 Residential Cap 6.875% 06/30/15 66 Rite Aid Corp 6.875% 12/15/28 69 Rite Aid Corp 7.700% 02/15/27 74 RJ Tower Corp. 12.000% 06/01/13 1 Saint Acquisition 12.500% 05/15/17 63 ServiceMaster Co 7.100% 03/01/18 73 ServiceMaster Co 7.250% 03/01/38 70 ServiceMaster Co 7.450% 08/15/27 67 Six Flags Inc 4.500% 05/15/15 72 SLM Corp 5.000% 06/15/28 74 SLM Corp 5.050% 03/15/23 73 SLM Corp 5.250% 03/15/28 73 SLM Corp 5.250% 12/15/28 71 SLM Corp 5.350% 06/15/28 73 SLM Corp 5.400% 06/15/30 71 SLM Corp 5.500% 06/15/29 68 SLM Corp 5.500% 06/15/29 71 SLM Corp 5.500% 06/15/29 72 SLM Corp 5.500% 03/15/30 71 SLM Corp 5.500% 06/15/30 71 SLM Corp 5.500% 12/15/30 71 SLM Corp 5.500% 12/15/30 70 SLM Corp 5.550% 03/15/29 72 SLM Corp 5.600% 03/15/29 73 SLM Corp 5.600% 06/15/29 75 SLM Corp 5.600% 12/15/29 72 SLM Corp 5.600% 12/15/29 71 SLM Corp 5.650% 03/15/29 73 SLM Corp 5.650% 12/15/29 72 SLM Corp 5.650% 12/15/29 72 SLM Corp 5.650% 09/15/30 74 SLM Corp 5.700% 03/15/29 74 SLM Corp 5.700% 03/15/29 71 SLM Corp 5.700% 12/15/29 75 SLM Corp 5.700% 03/15/30 70 SLM Corp 5.750% 03/15/29 73 SLM Corp 5.750% 03/15/29 72 SLM Corp 5.750% 09/15/29 74 SLM Corp 5.750% 09/15/29 75 SLM Corp 5.750% 12/15/29 72 SLM Corp 5.750% 12/15/29 72 SLM Corp 5.750% 12/15/29 72 SLM Corp 5.750% 12/15/29 73 SLM Corp 5.750% 03/15/30 73 SLM Corp 5.800% 12/15/29 71 SLM Corp 5.850% 09/15/29 75 SLM Corp 5.850% 12/15/31 73 SLM Corp 5.900% 09/15/29 74 SLM Corp 6.000% 12/15/26 75 SLM Corp 6.000% 09/15/29 73 SLM Corp 6.000% 12/15/31 72 Spacehab Inc 5.500% 10/15/10 54 Spansion Llc 2.250% 06/15/16 67 Special Devices 11.375% 12/15/08 66 Spectrum Brands 7.375% 02/01/15 73 Standard Pac corp 6.000% 10/01/12 61 Standard Pac Corp 6.250% 04/01/14 69 Standard Pacific 6.500% 08/15/10 74 Standard Pac Corp 6.875% 05/15/11 74 Standard Pac corp 7.000% 08/15/15 68 Standard Pacific 7.750% 03/15/13 73 Standard Pacific 9.250% 04/15/12 51 Stanley-Martin 9.750% 08/15/15 69 Tekni-Plex Inc 12.750% 06/15/10 63 Tenet Healthcare 6.875% 11/15/31 72 Times Mirror Co 6.610% 09/15/27 57 Times Mirror Co 7.250% 11/15/96 58 Times Mirror-New 7.500% 07/01/23 65 Tom's Foods Inc 10.500% 11/01/04 1 Tousa Inc 7.500% 03/15/11 17 Tousa Inc 7.500% 01/15/15 8 Tousa Inc 9.000% 07/01/10 46 Tousa Inc 10.375% 07/01/12 9 Trans Mfg Oper 11.250% 05/01/09 60 TransTexas Gas 15.000% 03/15/05 0 Tribune Co 5.250% 08/15/15 67 True Temper 8.375% 09/15/11 58 TXU Corp 6.500% 11/15/24 72 TXU Corp 6.550% 11/15/34 72 United Air Lines 9.200% 03/22/08 49 United Air Lines 9.350% 04/07/16 30 United Air Lines 9.560% 10/19/18 54 United Air Lines 10.020% 03/22/14 49 United Air Lines 10.850% 02/19/15 30 Universal Stand 8.250% 02/01/06 0 US Air Inc. 10.700% 01/01/49 0 Venture Holdings 12.000% 06/01/09 0 Vertis Inc 13.500% 12/07/09 6 Vesta Insur Grp 8.750% 07/15/25 2 Vicorp Restaurant 10.500% 04/15/11 60 Viropharma Inc 2.000% 03/15/17 72 Wachovia Corp 9.250% 04/10/08 59 Wachovia Corp 12.500% 03/05/08 74 Wachovia Corp 15.500% 12/05/07 63 WCI Communities 6.625% 03/15/15 66 WCI Communities 7.875% 10/01/13 66 WCI Communities 9.125% 05/01/12 70 Werner Holdings 10.000% 11/15/07 0 William Lyon 7.500% 02/15/14 61 William Lyon 7.625% 12/15/12 61 William Lyon 10.750% 04/01/13 64 Wimar Opco/Fin 9.625% 12/15/14 74 Winstar Comm Inc 10.000% 03/15/08 0 Winstar Comm Inc 12.750% 04/15/10 0 Wornick Co 10.875% 07/15/11 69 Ziff Davis Media 12.000% 08/12/09 56 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Jason A. Nieva, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, John Paul C. Canonigo, 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 ***