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/raid1/www/Hosts/bankrupt/TCR_Public/071113.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, November 13, 2007, Vol. 11, No. 269 Headlines ACE AVIATION: Earns CDN$224 Million in 3rd Quarter Ended Sept. 30 AKCEM CORP: Case Summary & Largest Unsecured Creditor ALLIANCE LAUNDRY: S&P Lifts Corp. Credit Rating to B- from CCC+ AMERISOURCEBERGEN CORP: Board Lifts Share Purchase by $500 Million AMERICAN HOME: Amends Terms of AHM Sale Deal on DBSP's Stay Motion AMERICAN HOME: Reaches Pact with Bear Stearns and EMC Mortgage AMERICAN TONERSERV: Sept. 30 Balance Sheet Upside-Down by $152,087 AMORTIZING RESIDENTIAL: Moody's Cuts Ratings on Four Cert. Classes ARCADIA RESOURCES: Posts $9.2 Million Net Loss in Second Quarter ARINC INC: Moody's Rates Proposed Credit Facilities at B2 AURIGA LABS: Posts $8.1 Million Net Loss in Quarter Ended Sept. 30 AXON FIN'L: Poor Portfolio Market Value Cues S&P to Junk Ratings BALLY TECHNOLOGIES: Fitch Lifts Credit Facility Rating to B BLACKHAWK AUTOMOTIVE: Withdraws Request to Sell Equipment BROTMAN MEDICAL: Taps Imperial Capital as Investment Banker CALPINE CORP: Resolves Claims with Calgen & 1st Lien Noteholders CALPINE CORP: Rosetta Resources Files Adversary Counterclaims CERIDIAN CORP: Closes $5.3 Bil. Buyout Deal with Fidelity Nat'l CHAMPION ENTERPRISES: Prices Tender Offering of 7-5/8% Notes CHARMING SHOPPES: Board OKs New $200 Mil. Share Repurchase Program CHRYSLER LLC: Closing Sterling Heights Vehicle Testing Center CITADEL BROADCASTING: Posts $447.8 Million Net Loss in 3rd Quarter CITY OF GILMER: Moody's Holds Ba1 Rating on $7.3 Mil. Tax Debt CITICORP MORTGAGE: Fitch Takes Rating Actions on 18 Deals CLAYTON WILLIAMS: Completes $21 Million Sale of Texas Assets COUNTRYWIDE FIN'L: Credit Rating Cut Cues Funding Modification CRICKET COMMS: Moody's Holds B2 Corporate Family Rating DANA CORP: Gets Banks' Proposals for $2 Billion Exit Financing DELPHI CORP: Wants DIP Financing Maturity Date Extended DELPHI CORP: Wants to Enter into $6.8 Billion Exit Financing DELPHI CORP: Committee Says Disclosure Statement is Inadequate DELPHI CORP: Senior Noteholders Balk at Disclosure Statement DHL EXPRESS: Gets Default Notice from ABX Air for Withholding Fees DIRECTED ELECTRONICS: Weak Performance Cues S&P to Cut Ratings DOLLARAMA GROUP: S&P Holds Ratings and Revises Outlook to Stable E*TRADE FIN'L: 4th Qtr. Write Down in ABS to Exceed Expectations FINANCIAL ASSET: Fitch Junks Rating on Class B-5 Certificates FORD MOTOR: Defers Volvo Sale; Intends to Improve Financials FORD MOTOR: Anticipates Jaguar & Land Rover Sale Talks in 2008 FORD MOTOR: Primary Stakeholder in Auto Fuel Cell Cooperation FORD MOTOR: Unit Earns $334 Million in Third Quarter of 2007 FORD MOTOR: New Labor Pact Gets Massive UAW Votes of Approval FORD MOTOR: Narrow Third Quarter Loss Cues S&P to Retain Watch GAP INC: October Net Sales Down 1% at $1.23 Billion H&E EQUIPMENT: Board Authorizes $100 Mil. of Stock Repurchase HARRAH'S ENT: Unit Lowers Conversion Price of $375MM Senior Notes HAYES LEMMERZ: Selling Automotive Brake to Brembo NA for $58 Mil. JAZZ PHARMA: Posts $19.4 Million Net Loss in Qtr. Ended Sept. 30 KNOLOGY INC: Neutral Leverage Cues S&P to Hold 'B' Loan Rating LEAP WIRELESS: To Restate FY 2004 Through 2nd Qtr 2007 Financials LEAP WIRELESS: Potential Credit Default Prompts S&P's Neg. Watch LEVITT AND SONS: Case Summary & 400 Largest Unsecured Creditors LSO LTD: Case Summary & 19 Largest Unsecured Creditors M FABRIKANT: Judge Bernstein Approves Joint Disclosure Statement M FABRIKANT: Plan Confirmation Hearing Slated for December 19 M FABRIKANT: Last Day of Filing Administrative Claims is Dec. 7 MORGAN STANLEY: S&P Places 'B' Rating Under Negative CreditWatch MATTRESS GALLERY: Wants to Hire Greenberg Traurig as Counsel MATTRESS GALLERY: Court Approves Kurtzman Carson as Claims Agent MCCLATCHY CO: Declining Revenue Cues Moody's to Review Ratings MCMORAN EXPLORATION: Prices $300 Million of 11.875% Notes Offering MEGA BRANDS: S&P Puts 'B+' Corp. Credit Rating Under Neg. Watch MORGAN STANLEY: Fitch Holds Junk Rating on Class B-5 Certificates MORGAN STANLEY: Moody's Cuts and Reviews Ratings on 11 Deals MORTGAGE ASSET: Fitch Holds Low-B Ratings on Five Cert. Classes MTI TECHNOLOGY: Selects Manatt Phelps as Special SEC Counsel NASDAQ STOCK: Hellman & Friedman Sells 23.5 Million Stake NASH FINCH: Board Declares $0.18 Per Share Quarterly Dividend NATIONAL CENTURY: L. Poulsen Arrested for Obstruction of Justice NATIONAL COAL: Weak Profile Cues Moody's to Junk Ratings NEOMEDIA TECH: Sept. 30 Balance Sheet Upside-Down by $76.7 Million OGLEBAY NORTON: Shareholders Approve Merger Deal with Carmeuse NA OPEN TEXT: Moody's Affirms B1 Corporate Family Rating OTTIMO FUNDING: Debt Enhancement Breach Cues S&P's Default Ratings PENN NATIONAL: Sets Special Shareholders Meeting on December 12 PERKINELMER INC: Completes Cash Tender Offer for ViaCell Inc. PLANET TECH: Completes $10 Million Acquisition of Antigen Labs POLYMER GROUP: Weak Business Prompts S&P to Hold 'BB-' Rating PREGO DELLA: Michael Carlevale Mulls Declaring Bankruptcy PROVIDENCE SERVICE: S&P Assigns 'B+' Corporate Credit Rating PSEG ENERGY: S&P Holds 'BB-' Corp. Rating and Revises Outlook RALI SERIES: Moody's Downgrades and Reviews Ratings on 12 Deals SAINT GERMAIN: Moody's Junks Ratings on $50 Mil. Capital Notes SATCON TECH: Retires Conv. Loan Using Note Purchase Pact Proceeds SCOTTISH RE: S&P Revises Outlook to Negative from Developing SEMCO ENERGY: Closed Cap Rock Deal Cues S&P to Withdraw Ratings SEQUOIA MORTGAGE: Fitch Holds Low-B Ratings on 10 Cert. Classes SIX FLAGS: Moody's Junks Corporate Family Rating SIX FLAGS: Declining Profitability Cues S&P to Lower Ratings SMART SERIES: Moody's Assigns (P)B2 Rating on Class E Notes SOLUTIA INC: Judge Beatty Approves $250 Million Backstop Deal STRUCTURED ASSET: Fitch Assigns Low-B Ratings on $21.3MM Certs. TERADYNE INC: Boards Approves New $400 Million Stock Repurchase TLC VISION: Posts $22.6 Million Net Loss in Quarter Ended Sept. 30 VALLEY HEALTH: Voters Trash Measure G; Cutler To Woe Public Again VESCOR DEV'T.: Section 341(a) Meeting Slated for December 12 VESCOR DEV'T.: Committee Taps Pachulski Stang as Co-Counsel WILLIAMS COS: S&P Lifts Corporate Credit Rating to BBB- from BB+ WORLDGATE COMMS: Posts $2.7 Million Net Loss in Third Quarter YUKOS OIL: Owners Get Nothing from $35.6 Billion Sale Proceeds * Entergy's Nuclear Spinco Spin-off Will Have Moderate Risk * S&P Places Ratings on 484 Classes of RMBS Under Negative Watch * Large Companies with Insolvent Balance Sheet ********* ACE AVIATION: Earns CDN$224 Million in 3rd Quarter Ended Sept. 30 ----------------------------------------------------------------- ACE Aviation Holdings Inc. reported Friday net income of CDN$224 million on net operating revenues of CDN$3.022 billion for the third quarter ended Sept. 30, 2007, compared with net income of CDN$103 million on net operating revenues of CDN$2.845 billion in the same quarter last year. Results for the 2007 quarter included non-controlling interest of CDN$69 million, foreign exchange gains of CDN$104 million and provision for income taxes of CDN$124 million. ACE ceased to consolidate the results and financial position of Aeroplan and Jazz with effect from March 14, 2007, and May 24, 2007, respectively, and is accounting for its investments under the equity method. As a result, ACE's results for the third quarter of 2007 are not directly comparable to the results for the 2006 quarter. The company reported EBITDAR of CDN$553 million and operating income of CDN$340 million for the third quarter of 2007. Air Canada reported EBITDAR of CDN$561 million and operating income of CDN$351 million, increases of CDN$124 million and CDN$119 million respectively over the third quarter of 2006 (excluding special charge). Passenger revenues increased by CDN$108 million or 4% over the 2006 quarter. This increase was partly offset by a decline of CDN$25 million in cargo revenues, driven by freighter capacity reduction. Operating costs decreased by CDN$26 million or 1% over the 2006 quarter. Unit cost, as measured by operating expense per ASM, decreased 4.4% over the third quarter of 2006. The special charge refers to a charge recorded in 2006 related to Air Canada's obligations for the redemption of pre-2002 Aeroplan miles. EBITDAR is a non-GAAP financial measure commonly used in the airline industry to assess earnings before interest, taxes, depreciation, and aircraft rent. Air Canada Technical Services reported EBITDA of CDN$15 million for the quarter, an improvement of CDN$3 million on the 2006 quarter. "The results for the quarter demonstrate very good performances by all of ACE's businesses," said Robert Milton, chairman, president and chief executive officer, ACE Aviation Holdings Inc. "I am particularly pleased with the results for Air Canada for the quarter. Air Canada has delivered the improved operating results signalled at the time of the release of the second quarter results. The benefits of its fleet replacement and refurbishment programs are beginning to translate into improving financial performance for the business. Management expects that this program will continue to yield improved operating results for the remainder of 2007 and beyond. "ACTS continued to build on the progress made in recent quarters and the business has recorded a 20% increase in year-to-date revenues. The business continues to announce new contracts. On Oct. 16, we completed the sale of a majority interest in ACTS to a consortium consisting of Sageview Capital and KKR. As a result, this is the final quarter that we will consolidate the results of ACTS. ACE received net cash of CDN$723 million on closing, together with a residual equity stake of 23%. "Aeroplan and Jazz both delivered strong results in the quarter and we reduced our interests in both entities to 20.1% on October 22 through secondary offerings that generated net cash proceeds to ACE of CDN$726 million. "ACE has cash of CDN$1.85 billion and other assets, primarily its interests in Air Canada, Aeroplan and Jazz, with a market value of CDN$2.4 billion. At Sept. 30, 2007, the company's consolidated balance sheet showed CDN$12.240 billion in total assets, $9.558 billion in total liabilities, and $1.938 billion in total shareholders' equity. About ACE Aviation Headquartered in Montreal, Canada, ACE Aviation Holdings Inc. (Toronto: ACE-A.TO) -- http://www.aceaviation.com/-- is the parent holding company of Air Canada, Aeroplan, Jazz, Air Canada Technical Services, Air Canada Vacations, Air Canada Cargo, and Air Canada Ground Handling Services. * * * ACE Aviation Holdings still carries Dominion Bond Rating Service's "B+" long-term local and foreign issuer credit ratings, which were placed on April 20, 2006 with a negative outlook. AKCEM CORP: Case Summary & Largest Unsecured Creditor ----------------------------------------------------- Debtor: Akcem Corporation 217B East Louisiana McKinney, TX 75069 Bankruptcy Case No.: 07-42642 Chapter 11 Petition Date: November 9, 2007 Court: Eastern District of Texas (Sherman) Debtor's Counsel: Reedy Macque Spigner, Esq. Spigner & Gallerson 555 Republic Drive, Suite 101 Plano, TX 75074 Tel: (972) 881-0581 Fax: (972) 424-1309 Total Assets: $1,498,842 Total Debts: $391,175 Debtor's list of its Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Collin Central Property Taxes $8,842 Appraisal District 250 West Eldorado Parkway McKinney, TX 75069 ALLIANCE LAUNDRY: S&P Lifts Corp. Credit Rating to B- from CCC+ --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Alliance Laundry Systems LLC to 'B-' from 'CCC+', and removed all ratings from CreditWatch, where they were placed with developing implications on Sept. 7, 2007. In addition, S&P raised its rating on the company's senior secured first-lien debt to 'B+' from 'B' with a '1' recovery rating, indicating the expectation of very high recovery (90%-100%) in the event of a payment default. The first-lien debt consists of a $260 million ($220 million outstanding at June 30, 2007) term loan B and $55 million revolving credit facility. S&P also raised the rating on the company's $150 million senior subordinated notes one notch to 'CCC' from 'CCC-'. The outlook is developing. About $425 million of rated debt is affected. S&P initially placed its ratings on Alliance Laundry on CreditWatch with negative implications on Aug. 15, 2007, after the company announced that it had identified errors in its reconciliation of unvouched payables, which resulted in the understatement of its liabilities and prevented the timely filing of its June 2007 Form 10-Q. S&P subsequently lowered the ratings and placed them on CreditWatch with developing implications on Sept. 7, 2007, after the company announced that its understatement of liabilities was somewhat higher than originally estimated, leading to a potential violation of its financial covenants and loss of access to its revolving credit facility. As a result of these developments, the company sought and obtained a bank amendment and waivers, which included an increase to its consolidated leverage ratio covenant as of June 30, 2007; extended until Nov. 13, 2007, the time to file its June 2007 quarterly financial statements; and waived defaults arising from any potential restatement of its financial statements for the year ended Dec. 31, 2006, and quarterly financial statements through March 31, 2007. "The ratings upgrade reflects the company's ability to timely file its restated financial statements and its Form 10Q for the period ended June 30, 2007, prior to Nov. 13, 2007," said Standard & Poor's credit analyst Christopher Johnson. Alliance Laundry filed prior to Nov. 13, 2007, its restated Forms 10K and 10Q for the fiscal year ended Dec. 31, 2007, and quarter ending March 31, 2007, respectively, and filed its Form 10Q for the period ended June 30, 2007. "The upgrade also reflects the company's improved liquidity position after it regained access to its revolving credit facility [with about $22 million in availability] following the amendment and waivers, and our expectation that the company will generate meaningful cash flows in the second half of its fiscal year. Still, we remain concerned about future covenant cushion under the company's bank financial covenants," the analyst added. The ratings on Ripon, Wisconsin-based Alliance Laundry reflect its narrow product portfolio, high debt leverage, and thin credit protection measures. The developing outlook takes into account our concerns over Alliance Laundry's tight covenant cushion, as well as S&P's expectations that its cash flow will continue to improve. S&P could lower ratings if Alliance Laundry fails to maintain compliance with its financial covenants or if the cushion on them tightens. Alternatively, S&P could raise ratings if Alliance Laundry maintains compliance and improves the cushion on its financial covenants to adequate levels. AMERISOURCEBERGEN CORP: Board Lifts Share Purchase by $500 Million ------------------------------------------------------------------ The Board of Directors of AmerisourceBergen Corporation increased the company's quarterly dividend rate 50% to $0.075 per common share from $0.05 per common share. The Board of Directors also authorized a $500 million increase in its existing $850 million share repurchase program, which allows the company to repurchase its outstanding shares of common stock subject to market conditions. "Increasing our dividend and share repurchase program demonstrates continued confidence in our performance and our disciplined use of cash to deliver long-term value to our shareholders," R. David Yost, AmerisourceBergen President & Chief Executive Officer, said. As of Nov. 7, 2007, the company had approximately $89 million remaining under the original $850 million share repurchase program, which was authorized on May 24, 2007. With the $500 million increase, the company now has approximately $589 million remaining under its existing share repurchase program. AmerisourceBergen currently has 167 million common shares outstanding. The company may repurchase the shares from time to time for cash in open market transactions or by other means in accordance with applicable federal securities laws, and will hold any repurchased shares as treasury shares, which will be available for general corporate purposes. The quarterly dividend of $0.075 per common share will be payable Dec. 3, 2007, to stockholders of record at the close of business on Nov. 19, 2007. About AmerisourceBergen Headquartered in Valley Forge, Pennsylvania, AmerisourceBergen Corporation (NYSE:ABC) -- http://www.amerisourcebergen.com/-- is one of the pharmaceutical services companies serving the United States, Canada and selected global markets. AmerisourceBergen's service solutions range from pharmacy automation and pharmaceutical packaging to pharmacy services for skilled nursing and assisted living facilities, reimbursement and pharmaceutical consulting services, and physician education. AmerisourceBergen employs more than 14,000 people. * * * AmerisourceBergen continues to carry Moody's Investor Services' Ba1 long term corporate family and Ba1 probability of default ratings. The outlook is positive. AMERICAN HOME: Amends Terms of AHM Sale Deal on DBSP's Stay Motion ------------------------------------------------------------------ American Home Mortgage Investment Corp. and its debtor-affiliates amended the terms of their court-approved purchase agreement with Wilbur Ross' AH Mortgage Acquisition Co. Inc. The amendment follows DB Structured Products Inc.'s intention to appeal before the U.S. District Court for the District of Delaware the order of the U.S. Bankruptcy Court for the District of Delaware approving the sale of the Debtors' loan servicing business to AHM Acquisition, free and clear of liens, claims and interests. The Debtors are expected to sell their loan servicing business to AHM Acquisition Co. Inc. for approximately $500,000,000, under a two-stage closing process. Included in the approved sale are certain of the Debtors' rights and obligations arising out of a master mortgage loan purchase and servicing agreement between the Debtors and DBSP. DB Structured Products asked the Bankruptcy Court to issue a limited stay of the sale order solely insofar as it would authorize the assignment of, and otherwise impair DBSP's rights under, the MLPSA, pending an expedited appeal that it intends to take to the District Court. Accordingly, the Debtors asked the Court to deny DBSP's motion given that they have recently agreed to a modification of the purchase agreement as it relates to the sale and transfer of DBSP servicing rights. Under the amended purchase agreement, DBSP's servicing rights are placed on a separate schedule, "Disputed Servicing Agreements." Pending a decision on DBSP's appeal, the mortgage loans under the MLPSA will continue to be serviced by the Debtors through the later of the final closing and Sept. 30, 2008, and the portion of the total purchase price under the purchase agreement relating to the unpaid principal balance of the loans serviced under the MLPSA will be escrowed, subject to the final resolution of the appeal. On Nov. 6, 2007, DBSP filed with the Court a notice stating that it is withdrawing the stay motion. Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 14, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Reaches Pact with Bear Stearns and EMC Mortgage -------------------------------------------------------------- American Home Mortgage Investment Corp. and its debtor-affiliates obtained the U.S. Bankruptcy Court for the District of Delaware's approval of a settlement agreement that resolves the adversary proceeding filed by Bear Stearns Mortgage Corp. and EMC Mortgage Corp. BSMCC and the debtor-defendants in the adversary proceeding, namely, AHM Corp., AHM Investment, AHM Acceptance and AHM Servicing, were parties to a certain Whole Loan Master Repurchase Agreement, dated June 23,2004, pursuant to which BSMCC purchased certain mortgage loans from the Defendants and the Defendants were to repurchase the Purchased Mortgage Loans from BSMCC on demand, or at a later, agreed upon date. With respect to any purchase of Purchased Mortgage Loans by BSMCC, the Repurchase Agreement provided that the Defendants maintain a certain margin amount calculated at a previously agreed upon percentage of the price at which the Defendants agreed to repurchase the Purchased Mortgage Loans from BSMCC. Pursuant to the Repurchase Agreement, if the Defendants failed to maintain the requisite margin amount, the Defendants were obligated, upon notice, to transfer cash in the amount of the deficiency. Failure to meet a Margin Call was an Event of Default thus rendering all amounts immediately due and payable by the Defendants and requiring that the Defendants transfer to BSMCC all documents and subsequently received funds related to the Purchased Mortgage Loans. On August 10,2007, BSMCC sold the Purchased Mortgage Loans to EMC on a servicing related basis as the result of the Defendants' alleged prepetition failure to meet a certain Margin Call and requested that the Defendants turn over all documents and subsequently received funds related to the Purchased Mortgage Loans. On August 24, 2007, BSMCC and EMC initiated the Adversary Proceeding, seeking a declaratory judgment that, among other things, (i) the Defendants were obligated to provide access to and deliver certain documents related to the Purchased Mortgage Loans to EMC, (ii) the Defendants were obligated to transfer certain documents related to the Purchased Mortgage Loans to EMC, (iii) the Defendants were obligated to prevent commingling of funds or payments related to the Purchased Mortgage Loans, (iv) the Defendants breached the Repurchase Agreement, and (v) the Defendants exercised and assumed an unauthorized right of ownership of the Purchased Mortgage Loans by failing to turn same over to EMC upon request. The Debtors have filed an answer to the complaint. As a result of extensive negotiations, the Parties have reached an agreement the terms of which are embodied in the executed Settlement Agreement. Pursuant to the Settlement Agreement, the Defendants agreed to convey to EMC, no later than November 2, 2007, all Servicing Rights, related to the Purchased Mortgage Loans under the Repurchase Agreement. EMC and BSMCC will transfer $100,000 to AHM Servicing. In addition, they will cause to be transferred the "Non-MSR Related Collateral", consisting of: a. the security known as AHM 2004-lIIA with Original Face Amount of $3,015,925 with CUSIP No. 02660TAJ2; b. all Principal and Interest received by BSMCC on account of above security; c. cash collateral balances unrelated to the P&I payments believed to be $28,051, as of October 10, 2007 based on the collateral statement received from BSMCC; and d. interest on cash balances held by BSMCC using an industry rate of Fed Funds effective for cash collateral balances held by a swap or repo counterparty. EMC and BSMCC will pay the Settlement Amount and release the Non- MSR Related Collateral to the Defendants no later than two business days after the completion of the Defendants' transfer obligations under the Settlement, provided however, that in the event that the Plaintiffs do not timely pay the Settlement Amount, the Settlement Amount will accrue liquidated damages of $1,000 per day calculated from and after the Transfer Date, plus cost of collection, including reasonable attorneys' fees. Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 14, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN TONERSERV: Sept. 30 Balance Sheet Upside-Down by $152,087 ------------------------------------------------------------------ American TonerServ Corp.'s consolidated balance sheet at Sept. 30, 2007, showed $4,375,923 in total assets and $4,528,010 in total liabilities, resulting in a $152,087 total stockholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $1,374,567 in total current assets available to pay $4,047,915 in total current liabilities. The company reported a net loss of $1,234,037 on revenues of $1,086,602 for the third quarter ended Sept. 30, 2007, compared with a net loss of $732,724 on revenues of $172,952 in the same period in 2006. 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?2529 Going Concern Doubt As reported in the Troubled Company Reporter on April 1, 2007, Perry-Smith LLP expressed substantial doubt about American TonerServ Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2006. Perry-Smith pointed to the company's recurring losses from operations, and shareholders' deficit as of Dec. 31, 2006. About American TonerServ American TonerServ Corp., formerly Q Matrix Inc., (OTC BB: ASVP.OB) -- http://www.americantonerserv.com/ -- is a consolidator in the highly fragmented printer supplies and services industry. ATS acquires, integrates and manages independent businesses that deliver printer supplies, services and equipment to small/mid-sized businesses. AMORTIZING RESIDENTIAL: Moody's Cuts Ratings on Four Cert. Classes ------------------------------------------------------------------ Moody's Investors Service downgraded ratings of four tranches issued by Amortizing Residential Collateral Trust Mortgage Pass- Through Certificates Series 2004-1. The collateral consists primarily of first-lien, subprime fixed and adjustable rate mortgage loans. The actions are based on the analysis of the current credit enhancement levels provided by excess spread, overcollateralization, and subordinate classes relative to current projected and stressed losses. Complete rating actions are: Issuer: Amortizing Residential Collateral Trust Mortgage Pass- Through Certificates Series 2004-1 -- Cl. M5, currently A3; downgraded to Baa2; -- Cl. M6, currently Baa1; downgraded to Baa3. -- Cl. M7, currently Baa2; downgraded to Ba1; -- Cl. M8, currently Baa3; downgraded to B1. ARCADIA RESOURCES: Posts $9.2 Million Net Loss in Second Quarter ---------------------------------------------------------------- Arcadia Resources Inc. reported Friday its financial results for the second quarter and six months ended Sept. 30, 2007. The company reported a net loss of $9.2 million for the second quarter ended Sept. 30, 2007, compared with a net loss of $735,619 in the same period last year. Net loss from continuing operations for the fiscal second quarter of 2008 was $4.5 million. Net loss from continuing operations for the year-ago second quarter was $1.6 million. Net revenues for fiscal second quarter 2008 were $38.7 million versus $38.3 million for the same quarter last year. The revenue increase primarily reflected organic growth of approximately $435,000 in the In-Home Health Services segment, which comprises approximately 81% of total net revenues. Revenues in the Retailer and Employer Services segment and the Durable Medical Equipment segment were essentially unchanged from the year-ago quarter. EBITDA loss from continuing operations for the fiscal second quarter of 2008 was $2.0 million, compared with positive EBITDA from continuing operations of $452,000 a year ago. For the first half of fiscal 2008, Arcadia reported a nearly 5% rise in net revenues, to $77.9 million. Net loss was $16.6 million, compared with a net loss of $893,552 in the first half of fiscal 2007. Net loss from continuing operations was $8.4 million, versus a net loss from continuing operations of $1.9 million for the first half of fiscal 2007. During the second quarter, the company disposed of the clinics and certain DME business operations. The financial results of those operations are reported in discontinued operations for the second quarter and six months ended Sept. 30, 2007. The prior period results have also been recast for consistency purposes. Discontinued operations accounted for an additional loss of $4.6 million and $8.2 million, for the second quarter and six months ended Sept. 30, 2007, respectively. Clinics accounted for $6.4 million of the loss from discontinued operations for the first half of fiscal 2008. "While we are never satisfied to report a loss, we are proud of the first half of fiscal 2008 in terms of our turnaround efforts and the building of a 'new' Arcadia HealthCare," commented Marvin R. Richardson, president and chief executive officer. "As a result of our operational and financial progress, we strengthened the balance sheet by reducing long-term debt of approximately $10 million since March 31, 2007. And, based on recent monthly results, we are pleased to reiterate our expectation that the company will be cash flow and EBITDA positive by the third quarter of fiscal 2008." Commenting on several of Arcadia's strategic actions during the second quarter of fiscal 2008, Mr. Richardson noted, "We took concrete steps to deliver on our business goals, including the divesting of our Clinic operations which produced significant losses, divesting the Florida and Colorado Durable Medical Equipment business units, financing Durable Medical Equipment accounts receivable and improving Florida Medicare collections. In the process, we generated $5.8 million of cash without diluting investors." "We also announced a major DailyMed(TM) initiative with the State of Indiana estimated to contribute approximately $40 million to fiscal 2009 revenues. Our collaboration with Indiana demonstrates the great potential of our DailyMed(TM) compliance pharmacy packaging system, which has been endorsed by multiple public agencies in Indiana and will be promoted with a state-sponsored direct-to-consumer campaign to 1.7 million Hoosier seniors. This will provide a solid foundation for additional payor contracts leading to a national launch of DailyMed planned for fiscal 2009." "To streamline our corporate operations, we closed four Arcadia offices, moving our executive team to our new headquarters in Indianapolis. We continue to focus on improving earnings and cash flow while seeking additional SG&A cost reductions and improvement in our overall accounts receivable collections. I feel that we have delivered tangible results to our shareholders and look forward to building upon this progress," Mr. Richardson concluded. At Sept. 30, 2007, the company's consolidated balance sheet showed $105.2 million in total assets, $49.5 million in total liabilities, and $55.7 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?2530 Going Concern Doubt As reported in the Troubled Company Reporter on July 4, 2007, BDO Seidman LLP, in Troy, Michigan, expressed substantial doubt about Arcadia Resources Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended March 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses from operations. About Arcadia Resources Headquartered in Indianapolis, Arcadia Resources Inc. (AMEX: KAD) -- http://www.arcadiaresourcesinc.com/ -- is a national provider of alternate site healthcare services and products, including respiratory and durable medical equipment; non-medical and medical staffing, including travel nursing; comprehensive central fill and licensed pharmacy services including its proprietary DailyMed(TM) Pharmacy program and a catalog of healthcare-oriented products. ARINC INC: Moody's Rates Proposed Credit Facilities at B2 --------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Arinc Incorporated's proposed first lien credit facilities, consisting of a revolving credit facility due 2013, a synthetic letter of credit facility due 2014, and a term loan facility due 2014, as well as a Caa2 rating to the company's proposed second lien term loan due 2015. The Corporate Family Rating was assigned at B3 with a stable outlook. The proceeds from the debt offerings were used to partially finance the acquisition of Arinc by private equity sponsor, Carlyle Group. Arinc's previous senior secured credit facilities were repaid and terminated in their entirety upon close of the acquisition financing transactions. As such, Moody's will withdraw all of Arinc's pre LBO ratings, including its Ba3 Corporate Family Rating and senior secured credit facilities' ratings. Arinc's B3 Corporate Family Rating post the LBO reflects high leverage and weak interest coverage pro forma the new capital structure. As a result of its high debt burden, Arinc's credit metrics are expected to remain in the single B-range for the foreseeable future. The company's operating margins, while stable, are low relative to other aerospace and defense service providers. Moody's expects margins to improve as the company begins to leverage its leading market shares in core commercial segments and attempts to reduce the amount of government contract work passed-through to subcontractors, but recognizes that these efforts pose significant challenges in their implementation. Arinc's annual revenues of nearly $1 billion benefit from the stability provided by a diversified customer base, long-term contracts with government agencies and commercial airlines, and dominant market shares in air-to-ground commercial aviation communications. The essentiality of the company's services to the transportation system also suggests some degree of revenue stability over time. However, a significant portion of recent revenue growth is attributable to increased pass-through revenue and expansion in airport information systems, which has yet to yield favorable margins due to the high cost of gaining market share. The company is expected to generate modest free cash flow over the near term, which should be used to repay a small portion of debt, but the majority of this depends on the company's ability to realize cost savings from proposed work force reductions and benefits from restructuring initiatives. The stable outlook reflects Moody's expectation that Arinc will reduce leverage at a modest pace over the near to medium term through a combination of operating margin improvement and modest debt repayment from free cash flows. Significant debt repayment or substantial margin improvement resulting in metrics at these levels would be supportive of upward movement in the ratings or outlook: Leverage: debt/EBITDA below 6 times; Interest coverage: EBIT/interest in excess of 1.5 times; Cash flow: RCF/debt exceeding 7% with sustained positive FCF. Failure to improve operating margins resulting in metrics at these levels, or deterioration of liquidity due to prolonged negative free cash flow and heavy reliance on revolver drawings could put downward pressure on Arinc's ratings or outlook: Operating margins: remaining less than 5%; Leverage: debt/EBITDA remaining above 7 times; Interest coverage: EBIT/interest remaining below 1 time; Cash flow: RCF/debt less than 5%, or prolonged negative free cash flow. Assignments: Issuer: Arinc Incorporated (New) -- Probability of Default Rating, Assigned B3 -- Corporate Family Rating, Assigned B3 -- Senior Secured Revolving Credit Facility, Assigned B2 (LGD3-37) -- Senior Secured Synthetic Letter of Credit Facility, Assigned B2 (LGD3-37) -- Senior Secured Term Loan Facility, Assigned B2 (LGD3-37) -- Senior Secured Second Lien Term Loan Facility, Assigned Caa2 (LGD5-87) Arinc Inc., headquartered in Annapolis, Maryland, is a provider of communications information technology products and services and engineering services to the commercial aviation industry as well as government agencies. AURIGA LABS: Posts $8.1 Million Net Loss in Quarter Ended Sept. 30 ------------------------------------------------------------------ Auriga Laboratories Inc. reported Thursday its financial results for the third quarter ended Sept. 30, 2007. The net loss for the 2007 third quarter was $8.1 million, compared to a net loss of $3.5 million in the same period in 2006. The 2007 net loss includes $1.5 million of non-cash share-based compensation costs under SFAS 123(R) and $300,000 of depreciation and amortization expenses. The third quarter of fiscal 2006 results included $2.4 million of non-cash share-based compensation costs under SFAS 123(R) and $65,000 of depreciation and amortization costs. The company generated third quarter net revenue of $333,719, compared to $1.8 million in the same period a year earlier, a decrease of $1.5 million. The decrease was primarily due to a charge to the product returns reserve of $4.9 million, in-part due to a $1.3 million one-time charge relating to certain products affected by the FDA's recent federal register notices regarding timed-release guaifenesin and hydrocodone, and also the difference between gross prescription demand and gross revenues less sales discounts. For the nine months ended Sept. 30, 2007, net revenues increased by 126% to $12.0 million from $5.3 million for the nine months ended Sept. 30, 2006. Auriga had a net loss for the nine months ended Sept. 30, 2007, of $10.3 million, compared to a loss of $10.3 million in the first nine months of 2006. As of Sept. 30, 2007, the company had $1.5 million in cash and no term debt, representing an increase of $1.2 million in cash and a $2.2 million reduction in term debt as compared to the end of fiscal 2006. At Sept. 30, 2007, the company's consolidated balance sheet showed $14.6 million in total assets, $10.2 million in total liabilities, and $4.4 million in total shareholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $6.8 million in total current assets available to pay $10.2 million in total current liabilities. 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?2534 Going Concern Doubt As reported in the Troubled Company Reporter on April 3, 2007, Williams & Webster P.S., in Spokane, Wash., raised substantial doubt about Auriga Laboratories 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 auditor pointed to the company's substantial operating losses since inception, negative working capital, and limited cash resources. About Auriga Laboratories Based in Norcross, Georgia, Auriga Laboratories Inc. (OTC BB: ARGA) -- http://www.aurigalabs.com/ -- is a specialty pharmaceutical company building an industry changing commission- based sales model targeting over 2000 filled territories by 2009. The company's high-growth business model combines driving revenues through a variable cost commission-based sales structure, acquisition and development of FDA approved products, all of which are designed to enhance its growing direct relationships with physicians nationwide. Auriga's current product portfolio includes 27 marketed products and 6 products in development covering various therapeutic categories. AXON FIN'L: Poor Portfolio Market Value Cues S&P to Junk Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its issuer credit ratings on Axon Financial Funding LLC and Axon Financial Funding Ltd., co-issuers of the structured investment vehicle. Standard & Poor's also lowered its ratings on Axon's commercial paper, medium-term note, and subordinated mezzanine note programs. The ratings remain on CreditWatch with negative implications, where they were originally placed Sept. 14, 2007. The downgrades reflect significant deterioration of the market value of Axon's portfolio over the past week and Axon's decrease in net asset value to below 20% of total paid-in capital. If Axon's NAV of total paid-in capital falls to 0%, the vehicle will be accelerated and all senior liabilities will become due and payable. If an acceleration occurs, interest and principal payments will be suspended and all senior liabilities will be paid pari passu upon completion of the collateral liquidation. The downgrades follow Standard & Poor's analysis of the vehicle's ability to pay the senior liabilities based on the market value of Axon's portfolio. Further deterioration of the assets' market value, as provided by an independent third-party source, shows that the senior liabilities are vulnerable to nonpayment according to the terms of the respective liabilities. The downgrade of Axon's subordinated mezzanine debt reflects the declining market values and the vehicle's realized losses resulting from ongoing asset liquidations. Axon's subordinated mezzanine notes are currently highly vulnerable to nonpayment. The outstanding amount of Axon's senior debt is approximately $8.477 billion, and the outstanding amount of the subordinated mezzanine notes is approximately $890 million. Axon is a SIV structure managed by Axon Asset Management Inc., which purchases assets, manages the portfolio, and oversees the issuance of CP and MTNs. The portfolio is predominantly invested in structured finance assets, a considerable portion of which is U.S. RMBS, CMBS, and CDO securities. Ratings Lowered and Remaining on Creditwatch Negative Axon Financial Funding LLC and Axon Financial Funding Ltd. Up to $20 billion European and U.S. CP and MTN programs and up to $1.25 billion subordinated mezzanine note program Rating ------ To From -- ---- Issuer credit CCC/Watch Neg/C BBB/Watch Neg/A-2+ CP C/Watch Neg A-2/Watch Neg MTN CCC/Watch Neg BBB/Watch Neg Sub. mezzanine notes CCC-/Watch Neg CCC+/Watch Neg BALLY TECHNOLOGIES: Fitch Lifts Credit Facility Rating to B ----------------------------------------------------------- Fitch Ratings upgraded Bally Technologies' secured bank debt rating and affirmed Bally's Issuer Default Rating as: -- Secured bank credit facility upgraded to 'B/RR3' from 'B- /RR4'; -- IDR affirmed at 'B-'. The secured credit facility comprises a term loan with $308 million outstanding and a $75 million revolver, which was undrawn as of June 30, 2007. Fitch has revised the Rating Outlook on Bally Technologies to Stable from Negative. The Rating Outlook revision reflects Bally's significant progress in terms of its operating performance and its financial restatements. If those trends were to continue over the next couple quarters, Fitch anticipates that additional positive rating actions could occur. The rating actions are based on Bally's significantly improved product pipeline and solid acceptance of the Alpha platform over the past two years, which is generating meaningful improvement in its financial performance. On Nov. 1, Bally announced its fiscal 4Q'07 and FY07 (period ending June 30) results and reiterated its expectations for FY08, which were initially given on Aug. 21, 2007. Driven by the improved product platform, Bally generated 26% revenue growth to $682 million in FY07 and expects 21-22% growth in FY08 to more than $830 million. Reported adjusted EBITDA increased to $138.5 million in FY07 from $49.6 million in FY06. Bally's leverage ratio according to its credit facility as of June 30, 2007 was 2.17x versus a maximum allowable of 3.75x, which declines to 3.50x as of Sept. 30, 2007. Bally's credit profile has improved dramatically fueled by the improving operating profile. As of June 30, 2007, Bally had roughly $37 million in debt maturities through FY09, unrestricted cash balances of $40.8 million (up from $12.4 million as of Dec. 31, 2007), an untapped $75 million credit revolver, and a somewhat flexible capex budget. Tempering the financial improvement is the fact that Bally has been under investigation by the SEC since 2005 and has been untimely with its SEC filings. In its most recent audited financial statements Bally continues to note material weaknesses in internal controls over financial reporting, with revenue recognition and inventory valuation among the most significant items. While these items continue to be concerns that weigh on Bally's credit ratings, Fitch notes that Bally has made significant strides over the past 12 months with its restatements and becoming current on its filings. Bally has been restating its financial results and filed its fiscal 4Q07 10Q and fiscal 2007 10K on Nov. 2, 2007 (temporarily becoming current) and has now filed three 10Ks and six 10Qs within the last 12 months. However, Bally expects to miss the Nov. 9, 2007 deadline to file its fiscal 1Q08 10Q. An additional concern centers around how Bally will fare when the industry enters a new technology-driven upturn in the next 12-24 months with the onset of server-based gaming, which could benefit Bally as well as the other major players including IGT, WMS, and Aristocrat. While competition has increased since the peak of the last cycle, IGT is likely to remain the dominant player, in Fitch's view, because it has the most financial resources, the broadest product pipeline, and the largest sales/marketing team. Fitch believes Bally's improved financial position and operational turnaround should help it to compete in the next cycle, but maintenance of Bally's recent market share gains could become more challenging. The Recovery Ratings and notching reflect Fitch's recovery expectations under a distressed scenario. Bally's Recovery Ratings reflect Fitch's expectation that the enterprise value of the company, and hence recovery rates for its creditors, will be maximized in a restructuring scenario (going concern), rather than a liquidation given Bally's limited tangible asset base. An 'RR3' recovery rating reflects Fitch's belief that 51-70% recovery, including the assumption of a fully drawn revolver, is possible under a distress scenario. BLACKHAWK AUTOMOTIVE: Withdraws Request to Sell Equipment --------------------------------------------------------- Blackhawk Automotive Plastics Inc. together with its parent holding company, Tier e Automotive Group Inc., withdrew their motion to sell their equipment, free and clear of liens. Reasons for the withdrawal were not disclosed in documents filed with the court. On Nov. 8, 2007, the Debtors sought authority from the U.S. Bankruptcy Court for the Northern District of Ohio to sell certain items of manufacturing equipment to Stopol Inc. On Oct. 23, the Debtors obtained two interim orders authorizing them to obtain up to $3.7 million if debtor-in-possession financing. As a condition of the financing, the Debtors are required to prosecute a sale of their business assets to be consummated within approximately 120 days of the Debtors' bankruptcy filing. Stopol has committed to purchase two units of equipment for an aggregate price of $220,900 on or before Nov. 30. Stopol also had an option to purchase two additional units of equipment for an aggregate price of $265,000 on or before Dec. 31. Stopol is in the business of brokering equipment for ultimate buyers requiring delivery on short notice. Headquartered in Salem, Ohio, Blackhawk Automotive Plastics Inc. manufactures injection molded plastic products and motor vehicle parts and accessories. The company filed for chapter 11 protection on October 22, 2007 (Bankr. N.D. Ohio, Case No. 07- 42671). An affiliate, Tier e Automotive Group Inc., filed a separate chapter 11 petition on the same day (Bankr. N.D. Ohio, Case No. 07-42673) David M. Neumann, Esq. and William I. Kohn, Esq. at Benesch, Friedlander, Coplan & Aronoff, L.L.P. represent the Debtors. When the Debtors filed for bankruptcy, they listed assets and debts between $1 million to $100 million. BROTMAN MEDICAL: Taps Imperial Capital as Investment Banker ----------------------------------------------------------- Brotman Medical Center Inc. asks the United States Bankruptcy Court for the Central District of California for authority to employ Imperial Capital LLC as its investment banker. Imperia Capital is expected to: a. advise the Debtor on a proposed purchase price and the form of consideration; b. assist the Debtor in developing, evaluating, structuring and negotiating the terms and conditions of a potential transaction; c. assist the Debtor in the preparation of solicitation materials with respect to the transaction and the Debtor; d. identification of and contacting selected qualified buyers for the transaction offering materials; e. assist the Debtor in arranging for potential buyers to conduct due diligence investigations; f. advise the Debtor with respect to a potential reorganization in lieu of outright sale, and assist the Debtor in assessing the relative merits of potential sale or reorganization transaction; g. assist the Debtor in obtaining court approval for the transaction, if applicable; h. assist in the consummation of the transaction; and i. provide other financial advisory services with respect to the Debtor as may from time to time be agreed upon between the Debtor and the firm. The Debtor tells the Court that the firm will receive an initiation fee of $100,000 if the Debtor's employment request is approved. The firm will also receive in cash, 5% of the transaction consideration received by the Debtor. To the best of the Debtor's knowledge, the firm does not hold any interest adverse to the estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Culver City, California, Brotman Medical Center Inc. -- http://www.brotmanmedicalcenter.com/-- provides range of inpatient and outpatient services, as well as rehabilitation, psychiatric care and chemical dependency. The company filed for Chapter 11 protection on Oct. 25, 2007 (Bankr. C.D. Calif. Case No. 07-19705). The Debtor selected Kurtzman Carson Consultants LLC as its claims and noticing agent. The United States Trustee for Region 16 has not appointed creditors who will serve on an Official Committee of Unsecured Creditors in this case. When the Debtor filed for bankruptcy, it listed assets and debts between $1 million and $100 million. CALPINE CORP: Resolves Claims with Calgen & 1st Lien Noteholders ---------------------------------------------------------------- Calpine Corporation and its affiliated debtors in possession have reached a claims settlement with Law Debenture Trust Company of New York, as successor indenture trustee for the 9.625% First Priority Senior Secured Notes due 2014. Additionally, Calpine reached a claims settlement with the holders of the First Priority Secured Floating Rate Notes due 2009 issued by Calpine Generating Company LLC and CalGen Finance Corporation and First Priority Secured Institutional Term Loans due 2009 issued by CalGen and the indenture trustee and administrative agent for such notes. Both of these settlements are subject to approval by the U.S. Bankruptcy Court. "In reaching these settlements, we have successfully addressed one of our last major hurdles before emerging from Chapter 11 as a financially stable, stand-alone company with an improved competitive position in the energy industry," Robert P. May, Calpine's Chief Executive Officer, said. "We are very pleased to have reached this agreement, and we continue to be proud of what we have accomplished thus far in this process. We remain on track with our current timetable and expect to emerge from Chapter 11 prior to Jan. 31, 2008." Under the agreement with the Calpine First Lien Debtholders, the claims for make whole premium and damages claims asserted by the First Lien Trustee and disputed by the Debtors and the Official Committee of Unsecured Creditors have been settled and will be allowed as claims against Calpine in the aggregate amount of approximately $84 million plus interest, representing an allowed secured claim of approximately $50.4 million, plus interest at the contract non-default rate and an allowed unsecured claim of approximately $33.6 million, plus interest at the contract non- default rate. In addition, the Debtors have agreed to pay up to $3.5 million of the reasonable professional fees incurred by the First Lien Trustee. Under the agreement with the CalGen First Priority Noteholders, the claims for contract damages and default interest asserted by the First Priority Debt Representatives and disputed by the Debtors have been settled and will be allowed as unsecured claims against CalGen in the aggregate amount of approximately $50 million plus interest at the federal judgment rate, representing approximately $20.1 million on account of make whole premium and damages claims and approximately $29.1 million on account of default interest claims. In addition, the Debtors have agreed to pay up to $3 million of the reasonable professional fees incurred by the First Priority Debt Representatives and up to $684,000 of the reasonable professional fees incurred by Whitebox Advisors LLC. The Debtors will seek approval of these agreements from the United States Bankruptcy Court for the Southern District of New York on Nov. 27, 2007. About Calpine Corporation Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2007, the Debtors disclosed total assets of $18,467,000,000, total liabilities not subject to compromise of $11,207,000,000, total liabilities subject to compromise of $15,354,000,000 and stockholders' deficit of $8,102,000,000. On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC, and Silverado Geothermal Resources, Inc., filed voluntary chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198). On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another affiliate, also filed a voluntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 07-12967). On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. Calpine filed a Second Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a Third Amended Plan. On Sept. 25, 2007, the Court approved the adequacy of the Debtors' Disclosure Statement and entered a written order on September 26. The hearing to consider confirmation of the Plan is scheduled on Dec. 18, 2007. (Calpine Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). CALPINE CORP: Rosetta Resources Files Adversary Counterclaims ------------------------------------------------------------- Rosetta Resources Inc. has filed an answer and counterclaims to Calpine Corp.'s complaint in the U.S. Bankruptcy Court for the Southern District of New York adversary proceeding. Rosetta's answer details the inaccuracies contained in Calpine's complaint, and rejects Calpine's characterization of the transaction by which Calpine sold the shares of Rosetta to individual investors for more than $1 billion in cash plus other valuable consideration. As reported in the Troubled Company Reporter on Oct. 26, 2007, the Court denied the request of Rosetta to dismiss Calpine's fraudulent conveyance complaint, on the ground that it is uncertain at this time as to whether Calpine's creditors will receive a full recovery on their claims. "In an effort to manufacture a claim against our company, Calpine has grossly mischaracterized the underlying facts of the Rosetta transaction," Michael Rosinski, Rosetta Resources Executive Vice President and CFO, said. "We intend to continue to vigorously defend against Calpine's baseless claims, and prosecute our counterclaims against Calpine to recover for any and all damages Rosetta has suffered and may suffer as a consequence of Calpine's actions." Rosetta's counterclaims against Calpine allege that, if Calpine's allegation in the complaint that it was insolvent at the time of the Rosetta transaction is correct, its filings with the SEC and its warranties to Rosetta and its new investors that it was solvent at the time of the transaction would have been false and misleading, and that Calpine's board of directors and its sophisticated professionals knew or should have known of Calpine's financial condition at the time those statements were made. Rosetta further claims that Calpine breached the agreements pursuant to which Rosetta purchased the oil and gas business by failing to complete the transaction in material respects and by failing to pay over to Rosetta proceeds from operation of certain properties that Calpine sold to Rosetta. Rosetta also asserts that if Calpine obtains any recovery from Rosetta in the adversary proceeding, any such recovery would be subject to setoff against the damages Rosetta is seeking against Calpine. In the answer, Rosetta also identifies the factual inaccuracies in the allegations contained in Calpine's complaint. Calpine's complaint mischaracterizes its spin-off of Rosetta, which was Calpine's indirect subsidiary, to sophisticated institutional investors as an "insider transaction," wrongly implying that Calpine's executives and board were denied access to key information about the value of the assets being sold. Calpine further mischaracterizes the sale as being $400 million short of its oil and gas business' true value, when, in reality, Calpine extracted the highest possible value at the terms it dictated and a process it controlled. The answer alleges that the Rosetta transaction involved the private placement by two Calpine subsidiaries of the stock of Rosetta to sophisticated investors. Rosetta's answer alleges that Calpine "spent millions of dollars," working with "some of the most knowledgeable and well-respected experts in the industry," including investment bankers, petroleum engineers, accountants and lawyers, "to value the oil and gas business that was sold." The entity formed for the purpose of the transaction, which became Rosetta, was not permitted to retain its own advisors. Rosetta's answer further alleges that Calpine dictated the price at which it was willing to sell, flatly rejecting a lower proposal when initial efforts yielded insufficient offers to meet Calpine's price. The entire transaction was reviewed and approved by Calpine's sophisticated board -- all of whom Calpine, as part of its plan of reorganization, has proposed be released from any liability for their actions. In Calpine's own legal filings, Calpine has alleged that its own board members (two of whom (George Stathakis and Susan Wang) are still active members of Calpine's board and one of whom (Kenneth Derr former Chairman and CEO of Chevron) has an oil and gas background), were engaged in waste of Calpine's corporate assets, breached their fiduciary duties owed to Calpine's shareholders, and, at a minimum, committed negligence, notwithstanding the myriad of professional advisors who participated on the Rosetta transaction and provided advice to these same board members. Characterizing Calpine's allegations as "a transparent attempt to manufacture leverage with which to extort additional funds from Rosetta and its shareholders," Rosetta alleges that the transaction and its price were "the product of a comprehensive, fully-vetted and arms-length valuation process," culminating in the representations by Deutsche Bank to the Calpine board that the price constituted fair market value. Rosetta points out that the sale was the final part of Calpine's longstanding strategic decision to sell its "non-core" oil and gas assets, resulting in a price "at or above the highest range of valuations (of) any investment banker retained by Calpine," which was "uniformly applauded" by analysts after its terms were announced. About Rosetta Based in Houston, Texas, Rosetta is an independent oil and gas company engaged in the acquisition, exploration, development and production of oil and gas properties in North America. Its operations are concentrated in the Sacramento Basin of California, South Texas, the Gulf of Mexico and the Rocky Mountains. About Calpine Corporation Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2007, the Debtors disclosed total assets of $18,467,000,000, total liabilities not subject to compromise of $11,207,000,000, total liabilities subject to compromise of $15,354,000,000 and stockholders' deficit of $8,102,000,000. On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC, and Silverado Geothermal Resources, Inc., filed voluntary chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198). On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another affiliate, also filed a voluntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 07-12967). On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. Calpine filed a Second Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a Third Amended Plan. On Sept. 25, 2007, the Court approved the adequacy of the Debtors' Disclosure Statement and entered a written order on September 26. (Calpine Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). CERIDIAN CORP: Closes $5.3 Bil. Buyout Deal with Fidelity Nat'l --------------------------------------------------------------- Fidelity National Financial Inc. has completed the acquisition of Ceridian Corporation for approximately $5.3 billion. FNF contributed approximately $525 million of the total $1.6 billion equity funding for the acquisition, resulting in a 33% ownership stake for FNF in Ceridian. The majority of FNF's equity contribution was funded through a borrowing under its existing bank credit facility. "We are very excited about the acquisition of Ceridian," said FNF chairman and chief executive officer William P. Foley, II. "Ceridian provides FNF with a company that has leading market positions in large, growing markets, long- term customer relationships, recurring revenue, strong cash flow and a significant margin expansion opportunity. We look forward to the opportunity it provides for us to continue to create significant long-term value for FNF shareholders." About Fidelity National Headquartered in Jacksonville, Florida, Fidelity National Financial Inc. (NYSE:FNF) -- http://www.fntg.com/-- fka Fidelity National Title Group Inc., through its subsidiaries, is a provider of title insurance, specialty insurance and claims management services. The company also provides flood insurance, personal lines insurance and home warranty insurance through its specialty insurance subsidiaries. In addition, FNF is a provider of outsourced claims management services to corporate and public sector entities through its minority-owned subsidiary, Sedgwick CMS Holdings, Inc. About Ceridian Corporation Headquartered in Minneapolis, Minnesota, Ceridian Corporation (NYSE:CEN) -- http://www.ceridian.com/-- is an information services company principally in the human resource, transportation and retail markets. The company's human resource solutions business enables customers to outsource a range of employment processes, such as payroll, tax filing, human resource information systems, employee self-service, time and labor management, benefits administration, employee assistance and work-life programs, recruitment and applicant screening, and post-employment health insurance portability compliance. It has HRS operations in the United States, Canada and the United Kingdom. Ceridian Corporation's Comdata subsidiary provides transaction processing, financial services and regulatory compliance services to the transportation and retail industries. Comdata's products and services include payment processing and the issuance of credit, debit and stored value cards. * * * As reported in the Troubled Company Reporter on Oct. 25, 2007, Moody's Investors Service assigned a B3 Corporate Family Rating to Ceridian Corporation related to its $5.2 billion acquisition by Thomas H. Lee Partners L.P. and Fidelity National Financial, Inc. In addition, Moody's assigned a B1 rating to its $2.55 billion senior secured credit facilities ($2.25 billion term loan and $300 million revolving credit facility), a Caa2 rating to its $1 billion of senior unsecured notes (anticipated $600 million cash pay and $400 million PIK toggle), and a Caa2 rating to its $300 million of senior subordinated notes. CHAMPION ENTERPRISES: Prices Tender Offering of 7-5/8% Notes ------------------------------------------------------------ Champion Enterprises Inc. has priced its tender offer and consent solicitation for the company's outstanding 7-5/8% Senior Notes due 2009 (CUSIP No. 158496AB5). The total consideration for the notes was calculated as of 10:00 a.m., New York City time, on Nov. 9, 2007, by reference to a fixed spread of 50 basis points over the yield on the 3.875 percent U.S. Treasury note due May 15, 2009. The reference yield to maturity on the Reference Treasury Security, as of 10:00 a.m., New York City time, on Nov. 9, 2007 was 3.477%. The company will pay the total consideration to holders of the notes who validly tendered their notes and delivered their consents prior to 5:00 p.m., New York City time, on Nov. 9, 2007, and whose notes are accepted for purchase by the company, on Nov. 13, 2007. The total consideration per $1,000 principal amount of the notes that were validly tendered prior to the Consent Payment Deadline will be $1,052.80, which includes a consent payment of $30. Holders of such notes validly tendered and accepted for payment will also receive accrued and unpaid interest on such notes from the last interest payment date to, but not including, the Initial Payment Date. At the final payment date, which is expected to be on or about Nov. 28, 2007, holders tendering their notes after the Consent Payment Deadline, but prior to 12:00 midnight, New York City time, on Nov. 27, 2007, unless extended, whose notes are accepted for purchase by the company, will receive the tender offer consideration of $1,022.80, but will not receive the Consent Payment. Holders of such notes tendered after the Consent Payment Deadline will also receive accrued and unpaid interest on such notes from the last interest payment date to the Final Payment Date. The company also disclosed that a majority of holders in principal amount of the notes have provided the requisite consents to amend the indenture governing the notes. As of the Consent Payment Deadline, the company had received tenders and consents for $74,843,000 in aggregate principal amount of the notes, representing approximately 90.94% of the outstanding notes. Holders may no longer withdraw the notes previously or hereafter tendered, except as described in the Offer to Purchase and Consent Solicitation Statement, dated Oct. 29, 2007. The Offer is subject to the satisfaction of certain conditions, including the financing condition, the minimum tender condition, the supplemental condition and other general conditions, as described in the Offer to Purchase and Consent Solicitation Statement, dated Oct. 29, 2007. Questions about the tender offer and consent solicitation may be directed to Credit Suisse at (212) 325- 4951 (collect). Holders can request documents from D.F. King & Co., Inc., the information agent and tender agent, at (888) 644-5854 (U.S. toll free) or (212) 269-5550 (collect). About Champion Enterprises Inc. Auburn Hills, Michigan-based Champion Enterprises Inc., (NYSE: CHB) -- http://www.championhomes.com/-- operates 32 manufacturing facilities in North America and the United Kingdom and works with over 3,000 independent retailers, builders and developers. The Champion family of builders produces manufactured and modular homes, as well as modular buildings for government and commercial applications. * * * Moody's Investor Service placed Champion Enterprises Inc.'s senior unsecured debt and probability of default ratings at 'B1' in September 2006. The ratings still hold to date with a negative outlook. CHARMING SHOPPES: Board OKs New $200 Mil. Share Repurchase Program ------------------------------------------------------------------ Charming Shoppes Inc.'s board of directors has authorized a new $200 million share repurchase program. The share repurchases will be made from time to time in the open market or through privately negotiated transactions, and are expected to be funded from operating cash flow. The timing and number of shares purchased will depend on market conditions, and shares acquired will be held as treasury stock. The company expects to complete the program over the next several years. "Our new share repurchase program reflects our strong balance sheet and cash flows from operations, confidence in our long- term growth and our commitment to returning value to shareholders," Dorrit J. Bern, chairman, chief executive officer and president of Charming Shoppes Inc. stated. Under existing share repurchase programs, year to date, the company has repurchased approximately 22 million shares. There are approximately 3.3 million shares remaining under the company's existing 5 million share authorization. The company expects to complete the current five million share authorization by the end of the current fiscal year. In a separate press statement, the company disclosed the relocation of its Catherines Plus Sizes Memphis, Tennessee operations to its Bensalem, Pennsylvania offices. About Charming Shoppes Inc. Headquartered in Bensalem, Pennsylvania, Charming Shoppes Inc. (NASDAQ:CHRS) - http://www.charmingshoppes.com/-- is a multi- brand, multi-channel specialty apparel retailer focused on women's plus-size specialty apparel. The company operates in two segments: Retail Stores segment and Direct-to-Consumer segment. Charming Shoppes operates 2,425 retail stores in 48 states under the names LANE BRYANT(R), FASHION BUG(R), FASHION BUG PLUS(R), CATHERINES PLUS SIZES(R), PETITE SOPHISTICATE(R), LANE BRYANT OUTLET(TM), and PETITE SOPHISTICATE OUTLET(TM). * * * As reported in the Troubled Company Reporter on Oct. 24, 2007, Moody's Investors Service placed the 'Ba3' corporate family and 'Ba3' probability of default ratings of Charming Shoppes Inc. on review for possible downgrade. CHRYSLER LLC: Closing Sterling Heights Vehicle Testing Center ------------------------------------------------------------- United Auto Workers union employees at a Chrysler LLC testing facility on Metropolitan Parkway in Michigan will be reassigned following the closure of the site, under the recently ratified labor contract between the carmaker and the union, Terry Oparka of C&G News reports. Mr. Oparka wrote that according to Chrysler spokesman Dave Elshoff, the Sterling Heights Vehicle Test Center, which employs twenty employees and is listed as an industrial warehouse, is for sale for $7 million. Mr. Elshoff added that other Michigan facilities designated to be shuttered are located in Windsor, in Detroit on Mound and and Van Dyke, and in Plymouth. As reported in the Troubled Company Reporter on Nov. 5, 2007, Chrysler disclosed that it would make volume-related reductions at several of its North American assembly and powertrain plants, and eliminate four products from its line-up. Shifts will be eliminated at five North American assembly plants which, combined with other volume-related manufacturing actions, will lead to a reduction of 8,500-10,000 additional hourly jobs through 2008. Additional actions include reductions of salaried employment by 1,000 and supplemental (contract) employment by 37%. The Company also plans to eliminate hourly and salaried overtime and reduce purchased services due to reduction in volume. The volume-related actions are in addition to 13,000 jobs eliminated by the three-year Recovery and Transformation Plan announced in February. The objectives of the RTP remain the same. "We have to move now to adjust the way our company looks and acts to reflect a smaller market," Tom LaSorda, vice chairman and president of the Chrysler Group, said. "That means a cost base that is right-sized and an appropriate level of plant utilization." About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, 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. CITADEL BROADCASTING: Posts $447.8 Million Net Loss in 3rd Quarter ------------------------------------------------------------------ Citadel Broadcasting Corporation reported Friday its results for the third quarter of 2007. Net loss for the quarter ended Sept. 30, 2007, was $447.8 million, as compared to net income of $18.4 million for the same period in 2006. Included in net loss for the quarter ended Sept. 30, 2007, was approximately $463.2 million of asset impairment and disposal charges, net of tax, and $4.6 million of stock-based compensation expense, net of tax. Included in net income for the quarter ended Sept. 30, 2006, was $3.1 million of stock-based compensation expense, net of tax. Net revenues for the third quarter of 2007 were $240.2 million as compared to $112.5 million for the third quarter of 2006. The increase in revenues was a result of the acquisition of ABC Radio on June 12, 2007. On a pro forma basis, which includes the results of ABC Radio for the quarter ended Sept. 30, 2006, net revenues were $249.2 million compared to $240.2 million for the quarter ended Sept. 30, 2007. Farid Suleman, chairman and chief executive officer of Citadel Broadcasting Corporation, commented: "The company is pleased with the progress of integrating the ABC Radio and Network business with our existing operations, and we are focusing our efforts on the potential sale of certain radio stations, which is expected to reduce the company's outstanding indebtedness." Operating loss for the third quarter of 2007 was $427.4 million as compared to operating income of $40.3 million in the corresponding 2006 period, a decrease of $467.7 million. The decrease in operating income for the three months ended Sept. 30, 2007, is the result of a $495.8 million asset impairment and disposal charge. The asset impairment and disposal charge is related to an overall deterioration in the radio market place and to a decline in the company's stock price during the three months ended Sept. 30, 2007, as compared to the company's stock price that was used under GAAP in the United States of America to record the ABC Radio merger, coupled with a decline in the estimated fair value of certain markets that are more likely than not to be disposed. Net interest expense increased to $39.0 million for the quarter ended Sept. 30, 2007, from $8.2 million for the quarter ended Sept. 30, 2006, an increase of $30.8 million. The increase in net interest expense was primarily the result of the interest incurred on the increased borrowings under the company's new senior credit and term loan facility as a result of the merger with ABC Radio. Income tax benefit for the quarter ended Sept. 30, 2007, was $20.0 million, compared to income tax expense of $13.4 million for the quarter ended Sept. 30, 2006. The income tax benefit for the quarter ended Sept. 30, 2007, is related to the $495.8 million asset impairment and disposal charges, which resulted in an income tax benefit of approximately $32.6 million, partially offset by the tax expense on pre-tax income excluding impairment loss. Free cash flow was $41.6 million for the three months ended Sept. 30, 2007, compared to $35.8 million for the three months ended Sept. 30, 2006, an increase of $5.8 million. The increase in free cash flow is a result of the acquired ABC Radio business, offset in part by an increase in interest costs and corporate general and administrative expenses. At Sept. 30, 2007, the company's consolidated balance sheet showed $4.92 billion in total assets, $3.44 billion in total liabilities, and $1.48 billion 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?2528 About Citadel Broadcasting Headquartered in Las Vegas, Nevada, Citadel Broadcasting Corp. (NYSE: CDL) -- http://www.citadelbroadcasting.com/-- is a radio broadcaster focused primarily on acquiring, developing and operating radio stations throughout the United States. Citadel is comprised of 169 FM and 61 AM radio stations, in addition to the ABC Radio Network business. * * * Citadel Broadcasting Corp. still carries Moody's Investors Service 'Ba3' corporate family and 'Ba3' bank loan debt ratings. The rating outlook is stable. CITY OF GILMER: Moody's Holds Ba1 Rating on $7.3 Mil. Tax Debt -------------------------------------------------------------- Moody's Investor Services affirmed the Ba1 underlying rating on the City of Gilmer's $7,255,000 outstanding general obligation limited tax debt. The rating action reflects the City's continued negative fund balance; unfavorable budgeting practices; an unwillingness to utilize the City's available taxing capacity; and unresolved audit findings. Continued Financial Strain Without a Clear Recovery Plan In September of 2005, Moody's downgraded the City of Gilmer from a Baa3 to a Ba1. In part, the downgrade was reflective of a negative fund balance. The negative fund balance has improved but remains negative. The FY 2006 fund balance was a negative $924K a $257K improvement over FY 2005. The budget continues to be structurally imbalanced with budgeted operating expenditures exceeding budgeted general fund operating revenues in FY 2006, FY 2007 and FY 2008. In each of these years, the overage has been corrected with a transfer from the sanitation and water and sewer funds. Absent a clearly defined transfer policy, as is the case with Gilmer, the reliance of the general fund on the transfer creates a spiraling dependency. In FY 2008, the City increased the water and sewer fee by 3% to support the $430K transfer to the general fund. In addition to the proprietary fund transfer to support operating expenditures, the City had utilized a line of credit to meet its daily operating needs. At the beginning of FY 2006, the balance owed on the line of credit was $577K, representing 20% of the City's overall operating revenues for the same fiscal year. The City paid $100K toward the principle amount during the fiscal year. The remaining balance along with the City's repeated reliance on the water, sewer and sanitation transfer indicates a weak cash position for the city. Additionally, the City has not demonstrated a sound and forward-looking approach to re-establish a positive fund balance. These factors and budgetary practices are not consistent with an investment grade rating category. Deferred Utilization of Ad Valorem Revenue Stream The City has experienced an upward trend in property values but has not harnessed the revenue potential this trend could afford. The City reduced the property tax rate in FY 2006, 2007 and 2008. The FY 2008 tax rate of $6.50 per $1,000 assessed valuation is well below the state constitutional limit of $25 per $1,000 assessed valuation. According to city management, the City has avoided raising tax rates and is adverse to keeping rates steady when there is growth in the base. Taking into consideration Gilmer's negative cash position, the unwillingness to utilize this revenue stream is especially troubling and contributes to the affirmation of the below investment grade rating. Audit Findings Also of concern to Moody's are "reportable condition" audit findings that have not been addressed by the City. In FY 2005, the city's audit noted the absence of several internal control measures related to journal entry accounting. The exact findings related to journal entry accounting were repeated in the city's FY 2006 audit. Of particular concern to Moody's is city management's lack of a well-formulated or articulated plan to correct these findings. Key Statistics Estimated 2004 Population: 5,071 Per Capita Income: $16,823 (86% of state median) 2007 Full Value: $210 million 2007 Full Value per Capita: $45,204 Direct Debt Burden: 3.9% Overall Debt Burden: 7.5% Payout in Ten Years: 52.1% FY 2006 General Fund Balance: Negative $924,474 General Obligation Debt Outstanding: $7.25 million CITICORP MORTGAGE: Fitch Takes Rating Actions on 18 Deals --------------------------------------------------------- Fitch Ratings upgraded four classes and affirmed 83 classes for these Citicorp mortgage-pass through certificates: Series 2002-11 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AA'; -- Class B-4 affirmed at 'A'; -- Class B-5 affirmed at 'BBB'. Series 2002-12 -- Class A affirmed at 'AAA'. Series 2003-2 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA+'; -- Class B-3 upgraded to 'AA' from 'AA-'. -- Class B-4 upgraded to 'A' from 'A-'. -- Class B-5 affirmed at 'BB+'. Series 2003-3 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AA'; -- Class B-4 affirmed at 'A'; -- Class B-5 affirmed at 'BB+'. Series 2003-4 -- Class A affirmed at 'AAA' Series 2003-5 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class B-3 affirmed at 'A'; -- Class B-4 upgraded to 'BBB' from 'BBB-'; -- Class B-5 upgraded to 'BB' from 'BB-'. Series 2003-8 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2003-10 -- Class A affirmed at 'AAA'. Series 2003-11 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-2 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-3 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-4 -- Class A affirmed at 'AAA'. Series 2004-5 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'. Series 2004-6 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-7 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-8 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-9 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. The affirmations affect about $4.744 billion in outstanding certificates and reflect adequate relationships of credit enhancement to future loss expectations. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect about $3.8 million in outstanding certificates. The mortgage loans consist primarily of fixed-rate 15-30-year mortgages extended to prime borrowers and are secured by first liens, primarily on one- to four-family residential properties. As of the October 2007 distribution date, the transactions are seasoned from a range of 34 to 59 months and the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from 0.09% (2002-11) to 0.72% (2004-4). All of the loans are serviced by CitiMortgage Inc. which is rated 'RPS1' by Fitch. CLAYTON WILLIAMS: Completes $21 Million Sale of Texas Assets ------------------------------------------------------------ Clayton Williams Energy Inc. has closed the sale of all of its producing and nonproducing acreage in Pecos County, Texas to an undisclosed buyer for $21 million, subject to typical post-close adjustments. The company expects to record a gain of approximately $13 million in the fourth quarter of 2007 in connection with this sale. Proceeds from the sale were used to repay indebtedness on the company's revolving credit facility. Clayton Williams Energy Inc. (NasdaqGM: CWEI) -- http://www.claytonwilliams.com/-- is an independent energy company located in Midland, Texas. It holds interests primarily in the Permian Basin, Louisiana; and the Austin Chalk and Cotton Valley Reef of Texas. * * * Moody's Investor Services placed Clayton Williams Energy Inc.'s long term corporate family ratings at 'B2' in July 2005. The ratings still hold to date with a stable outlook. COUNTRYWIDE FIN'L: Credit Rating Cut Cues Funding Modification -------------------------------------------------------------- Countrywide Financial Corporation has modified its funding structure by reducing its reliance on the public debt and non- agency secondary mortgage markets after credit rating agencies downgraded the company's debt ratings due to current market conditions and constrained liquidity, the company's Nov. 9, 2007 regulatory filing with the Securities and Exchange Commission disclosed. Specifically, Countrywide: * accelerated the integration of its mortgage banking activities into its bank subsidiary which has more stable funding and more access to highly reliable sources of funds which are less dependent on the capital markets during periods of market stress; * significantly changed its underwriting standards, focusing the bulk of its current loan production on loans that are available for direct sale to or securitization into programs sponsored by the government-sponsored agencies (Fannie Mae, Freddie Mac and Ginnie Mae); * procured other sources of financing, including: -- drawing the full $11.5 billion amount of its committed revolving credit facilities established to provide liquidity in the event of a disruption in the commercial paper market; -- making a private issuance of $2.0 billion of 7.25% convertible cumulative preferred stock; -- negotiating $7.5 billion of committed repurchase facilities, which included renewals of $2.5 billion of existing uncommitted repurchase facilities; -- negotiating an increase of $5.5 billion of an uncommitted but highly reliable repurchase facilities with a government-sponsored enterprise; and -- implementing an aggressive campaign to attract and retain bank deposits, including significant expansion of its network of financial centers. David Sambol, Countrywide's president and chief operating officer and director, relates that to retain access to the public debt markets, it is critical for the company to maintain investment- grade credit ratings. Among other things, Mr. Sambol says, maintenance of the company's current investment-grade ratings requires that the company has high levels of liquidity, including access to alternative sources of funding such as deposits and committed lines of credit provided by highly rated banks. The company must also maintain adequate capital that exceeds current rating agency requirements. Mr. Sambol notes that while Countrywide retains its investment grade ratings, all three rating agencies have placed the company's ratings on some form of "negative outlook." He warns that should the company's credit ratings drop below "investment grade," its access to the public corporate debt markets could be severely limited. "The cutoff for investment grade is generally considered a long- term rating of BBB- (or Baa3 Moody's Investors Service), which is equal to our lowest current rating. Furthermore, we expect that renegotiation or replacement of our existing financing arrangements beyond their current maturity dates will involve more restrictive terms and higher relative rates than those presently in place," Mr. Sambol explains. According to Mr. Sambol, any reduction of Countrywide's credit ratings below investment grade could, among others: a) subject the company's roughly $5.5 billion custodial deposits to placement with another bank; b) negatively affect the company's ability to retain its commercial deposits; and c) cause difficulty to the company's broker-dealer in conducting trading operations. Mr. Sambol points out that the company has responded to the risks by procuring additional sources of liquidity, including $9.2 billion of cash and cash equivalents as of Sept. 30, 2007. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services residential and commercial loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. Bankruptcy Speculation Kenneth Bruce, a Merrill Lynch & Co. analyst in San Francisco, raised the possibility that Countrywide might need to seek protection from creditors under chapter 11 in a research report entitled "Liquidity is the Achilles heel" distributed to Merrill Lynch clients. "If liquidations occur in a weak market, then it is possible for CFC to go bankrupt," Mr. Bruce wrote. With $209 billion in assets and $194 billion in liabilities, Countrywide would be the largest chapter 11 filing in U.S. history by those measures. The company however gave banking customers reassurance that their money was safe. That company cited that it has assets of more than $100 billion; has investment-grade ratings from three major credit rating agencies; and credit woes currently hurting its lending business won't affect federally insured deposits. Countrywide also disclosed that it received a $2 billion strategic equity investment from Bank of America which was completed and funded Aug. 22, 2007. In September 2007, Countrywide completed more than 17,000 loan modifications and is on target to complete nearly 25,000 in 2007, in its ongoing effort to curb foreclosures. CRICKET COMMS: Moody's Holds B2 Corporate Family Rating ------------------------------------------------------- Moody's Investors Service lowered Cricket Communications Inc.'s speculative grade liquidity rating to SGL-4 from SGL-1 and affirmed the company's long term ratings, including its B2 corporate family rating. The lowering of Cricket's liquidity rating reflects the potential that the company may become in technical default under the terms of its bank agreement following the announcement made by Cricket's parent company, Leap Wireless International Inc. that Leap will restate its financial results for the period of Jan 1 2004 to June 30, 2007 to correct for certain errors in previously reported service revenues, equipment revenues and operating expenses. While Moody's expects that the company will successfully receive a waiver over any potential default that may occur as a result of the restatements, the liquidity rating incorporates no such expectation. Downgrades: Issuer: Cricket Communications, Inc. -- Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-1 The restatements are expected to result in a net aggregate reduction of both service revenues and operating income by $20 million compared to previously reported aggregate service revenues and operating income of about $3.1 billion and $125 million respectively. This may result in a default under Cricket's senior secured credit agreement arising from a potential breach of representations regarding the presentation of Leaps prior financial statements and require the immediate repayment of Cricket's $890 million in senior secured term debt and $1.1 billion in senior unsecured notes which Cricket does not otherwise have the committed resources to satisfy. Moody's changed Cricket's outlook to developing in September 2007 to reflect the potential that the company's parent (Leap Wireless International Inc.) may reach an agreement to merge with MetroPCS Communications Inc. While PCS has withdrawn its offer for Leap, Moody's believes the potential for a merger continues to exist evidenced in part by Leap's request for its lenders to amend the timing of when a change of control provision is triggered. As such, Cricket's outlook continues to be developing. Leap Wireless International Inc. wholly-owns Cricket Communications Inc., which is a wireless service provider. Both companies are headquartered in San Diego, California. DANA CORP: Gets Banks' Proposals for $2 Billion Exit Financing -------------------------------------------------------------- Dana Corp. and its debtor-affiliates have received proposals from 10 financial institutions in connection with the exit financing contemplated in their joint plan of reorganization and the bankruptcy court-approved Disclosure Statement. The Debtors are seeking a $2 billion loan to exit Chapter 11 by the end of 2007. Dana has sought permission from the U.S. Bankruptcy Court for the Southern District of New York to enter into and perform under a commitment letter and a fee letter, which allows the payment of commitment fees and reimbursement of out-of-pocket expenses. Dana, however, has yet to identify the lenders or financial institutions who will syndicate or provide the loan. Corinne Ball, Esq., at Jones Day, in New York, told the Court that the Debtors, with the assistance of Miller Buckfire & Co., LLC, and AlixPartners, LLP, their financial advisors, are still in the process of selecting and negotiating the optimal financing package from proposals submitted by more than 10 financial institutions. "The Debtors need to proceed expeditiously to stay on target to emerge from chapter 11 by the end of 2007 and anticipate that they will be in a position to file the Commitment Letter with the Court on or about November 16, 2007," Ms. Ball says. The Debtors have asked the Court to hold a hearing on Nov. 28, 2007, to consider approval of the Commitment Letter. Objections are due Nov. 21, 2007, at 4:00 p.m. The Debtors said that in any event, they will file the Commitment Letter with the Court at least three business days prior to the scheduled hearing. According to Ms. Ball, the Commitment Documents will contain customary terms and conditions found in similar types of financing, and will generally provide for an Exit Facility consisting of: (a) Up to $2 billion senior credit facility, which will consist of: -- $650 million asset-based revolving credit facility with a sublimit for letters of credit to be determined; and -- $1.35 billion term loan. (b) Maturity is expected to be between five to seven years. (c) The collateral securing the exit facility is substantially all of the Debtors' assets, including a pledge of 65% of the stock of each of the Debtors' foreign subsidiaries. (d) The interest rate and fees are still to be negotiated but will be consistent with market rates used in similar financing type. (e) The Exit Facility will contain affirmative and negative covenants, representations and warranties and events of default customary for similar types of financings. (f) The Revolver will be undrawn at closing. The proceeds of the Term Loan will be used at closing to repay existing claims against the Debtors pursuant to the Plan, including repaying in full the DIP Credit Agreement, and any excess proceeds will remain on the balance sheet of the Reorganized Debtors. About Dana Corporation Headquartered in Toledo, Ohio, Dana Corporation -- http://www.dana.com/--designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off- highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Aug. 31, 2007 the Debtors listed $6,878,000,000 in total assets and $7,551,000,000 in total debts resulting in a total shareholders' deficit of $673,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non- Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. The Court has set Dec. 10, 2007, to consider confirmation of the Plan. (Dana Corporation Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELPHI CORP: Wants DIP Financing Maturity Date Extended ------------------------------------------------------- Delphi Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend its $4,500,000,000 bankruptcy loan for five months to June 28, 2008, with an option to further extend to Sept. 30, 2008, to give it more time to exit Chapter 11 protection after changing the terms of its reorganization plan. The Debtors had previously obtained Judge Drain's approval to enter into a postpetition financing facility with JPMorgan Chase Bank, N.A., the administrative agent for certain lenders. The DIP Facility, among other things, refinanced both the $2,000,000,000 first amended DIP credit facility arranged by J.P. Morgan Securities Inc., Citigroup Global Markets, Inc., and Deutsche Bank Securities Inc. in Nov. 21, 2005, and the approximate $2,500,000,000 outstanding on the $2,825,000,000 credit facility obtained by the Debtors prior to filing for bankruptcy. The DIP facility consists of: Tranche Commitment ------- ---------- A $1,750,000,000 first priority revolving credit facility B $250,000,000 first priority term loan C $2,500,000,000 second priority term loan The DIP Facility, on its current terms, matures on the date of the earlier of (i) December 31, 2007 or (ii) the date of the substantial consummation of a reorganization plan that is confirmed pursuant to an order of the Court. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, tells the Court that the maturity date of the existing credit facility must be extended in light of the Debtors' timetable of emerging from bankruptcy by the end of the first quarter of 2008. Delphi had earlier planned to emerge from Chapter 11 by the end of 2007. The Debtors and the DIP Lenders have negotiated and entered into an amendment to DIP Credit Agreement. The key modifications achieved as a result of the amendments are: Current DIP Amended And Restated Credit Agreement DIP Credit Agreement ---------------- -------------------- Maturity Date Earlier of Earlier of (i) Dec. 31, 2007 and (i) June 30, 2008, with (ii) substantial option to further extend consummation of plan to further extend to September 30, 2008 if Delphi pays an amount equal to 25 basis points of the Tranche A commitment, the Tranche B loan, and the Tranche C loan and (ii) substantial consummation of plan Add'l Interest Tranche A Prior to July 1, 2008 on JP Morgan's Borrowings: 1.50% Tranche A Alternate Tranche B Borrowings: 1.75% Rate Borrowings: 1.25% Tranche B Tranche C Borrowings: 1.75% Borrowings: 1.75% Tranche C Borrowings: 2.25% From & after July 1, 2008 Tranche A Borrowings: 2.00% Tranche B Borrowings: 2.00% Tranche C Borrowings: 2.50% Add'l Interest Tranche A Prior to July 1, 2008 on LIBOR Borrowings: 2.50% Tranche A Tranche B Borrowings: 2.75% Borrowings: 2.25% Tranche B Tranche C Borrowings: 2.75% Borrowings: 2.75% Tranche C Borrowings: 3.25% From & after July 1, 2008 Tranche A Borrowings: 3.00% Tranche B Borrowings: 3.00% Tranche C Borrowings: 3.50% Global EBITDAR For each rolling 12 For each rolling 12 Covenants fiscal month period fiscal month period ending on the last ending on the last day of day of the months the months Dec. 31, 2007 March 31, 2007 through Aug. 31, 2008 through Nov. 30, 2007 with a global EBITDAR with a global EBITDAR ranging from $475,000,000 ranging from to $500,000,000 $130,000,000 to $375,000,000 PBGC -- None-- DIP Lenders consent to Replacement consummation of Liens transactions authorized under DASHI Intercompany Transfer Order The proposed Amended and Restated DIP Credit Agreement contains fee provisions, including, among other things, certain commitment fees and letter of credit fees. Other fee provisions are contained in a separate fee letter, which the parties have agreed would be kept confidential. The fee letter will be provided, upon request, to counsel to the Statutory Committees and the U.S. Trustee and will be made available to the Court for review. The Debtors also propose that they be authorized, but not directed, to perform, and take all actions necessary to make, execute, and deliver the Amendment together with all other documentation executed in connection therewith and to pay the related fees. A copy of the form of Amendment to the DIP Facility is available for free at: DIP Lenders Consent to Intercompany Transfer As previously reported, the Debtors obtained the Court's approval (i) for Delphi Automotive Systems (Holding), Inc., to effectuate the transfer funds accumulated from certain of its global affiliates to Delphi Automotive Systems LLC; and (ii) use the proceeds of the transfer, subject to the requisite consent of the DIP Lenders. In connection with the intercompany transfer, the Debtors proposed to grant the U.S. Pension Benefit Guaranty Corp., on account of unpaid contributions to certain Delphi pension plans, adequate protection of its asserted interests in the form of replacement liens in the amount of $255,000,000 upon certain DASHI assets already encumbered by the Current DIP Facility. As memorialized in the Amended and Restated DIP Credit Agreement, the DIP Lenders have consented to the Intercompany Transaction, including the use of proceeds and the granting of the replacement liens to the PBGC. In addition, -- In the event the Debtors accumulate any further funds from their global affiliates, the Debtors also negotiated a provision that should obviate the need for further consent by the DIP Lenders. Specifically, they agreed that the replacement liens, and any additional liens, granted to the PBGC will be permitted but subject to and subordinate to the liens granted to the Agent for the benefit of the DIP Lenders and the liens granted to any "Setoff Claimant" set forth in the DIP Order. -- In connection with their consent to the PBGC Liens, the DIP Lenders required clarification that the PBGC will be treated like all other subordinated secured creditors under the DIP Order. The Debtors also ask the Court to waive the 10-day stay period under Rule 6004(g) of the Federal Rules of Bankruptcy Procedure for the use, sale, or lease of property. By waiving the 10-day period, the Debtors will be able to consummate the Intercompany Transaction, thereby allowing them to immediately take advantage of the $650,000,000 intercompany transfer. By using these funds, the Debtors will be able, among other things, to reduce their interest expense on the Current DIP Facility. Mr. Butler asserts that approval of the Amendment will allow the Debtors to consummate the Intercompany Transaction, which, among other things, will provide a definitive source of liquidity on favorable terms to the Debtors and enable the Debtors to maximize efficiencies. 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). DELPHI CORP: Wants to Enter into $6.8 Billion Exit Financing ------------------------------------------------------------ Delphi Corp. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's permission to enter into engagement and fee letters in connection with exit financing arrangements to be organized by JPMorgan Securities Inc., JPMorgan Chase Bank, N.A., and Citigroup Global Markets Inc. Exit financing is a necessary and integral component of the Debtors' strategy for emergence from Chapter 11, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates. The Debtors, Mr. Butler says, need to enter into exit financing arrangements to: (a) satisfy certain claims arising in connection with the existing DIP financing; (b) make other payments required under the proposed Joint Plan of Reorganization; and (c) fund the Debtors' post-reorganization operations. To ensure that exit financing arrangements are in place upon their emergence from Chapter 11, the Debtors have obtained an engagement letter from JPMorgan and Citigroup. JPMorgan and Citigroup have agreed to assemble a syndicate of lenders to provide the Debtors with exit financing arrangements, Mr. Butler tells the Court. The Exit Financing Arrangements consists primarily of these facilities: (a) a $1,600,000,000 senior secured first lien asset-based revolving credit facility; (b) a $3,700,000,000 senior secured first-lien term facility; and (c) a $1,500,000,000 senior secured second-lien term facility, of which up to $750,000,000 will be in the form of a note issued to General Motors Corp. in connection with the distributions contemplated under the Plan. The Debtors, Mr. Butler relates, will negotiate and enter into definitive credit documents with respect to the Exit Financing Arrangements as soon as practicable. The Exit Lenders' obligation to fund the Exit Financing Arrangements under the definitive documents will be contingent upon, among other things, confirmation of the Plan, he clarifies. As consideration for their commitments and agreements, the Debtors propose to pay JPMorgan and Citigroup certain nonrefundable fees and reimburse certain expenses pursuant to a fee letter. The Debtors have also agreed to indemnify JPMorgan and Citigroup in certain circumstances and subject to certain conditions. Mr. Butler notes that the payment of certain fees or expenses may be required prior to the Debtors' emergence from Chapter 11. No amount, however, will be payable upon entry of the proposed order granting the Debtors' request, he assures the Court. Moreover, no fees will be payable prior to JPMorgan and Citigroup having completed syndication and the Debtors having agreed to the terms of definitive documents. In the event the transactions contemplated in the Engagement Letter are not completed, the Debtors will not be obligated to reimburse the JPMorgan and Citigroup for expenses in excess of $500,000, Mr. Butler adds. The Debtors' entry into the Exit Financing Arrangements, Mr. Butler points out, is a condition to the effectiveness of the Plan. The Debtors, he avers, have conducted an expansive and thorough investigation of available exit financing alternatives and have eventually determined that the offer presented by JPMorgan and Citigroup is the best one. Redacted Engagement Letter The Debtors subsequently obtained the Court's permission to file the Engagement Letter in redacted form and the Fee Letter under seal. A redacted version of the Engagement Letter among the Debtors, JPMorgan and Citigroup is available for free at: http://ResearchArchives.com/t/s?2533 Judge Drain directs the Debtors to serve unredacted copies of the Engagement Letter and Fee Letter solely on (i) the U.S. Trustee; (ii) counsel to the Statutory Committees; and (iii) other parties as deemed appropriate by the Court. The Engagement and Fee Letters contain highly sensitive and confidential terms in connection with the relationship among the Debtors, JPMorgan, and Citigroup, including terms related to pricing, fees, and prepayment premia, if any, Mr. Butler explains. He points out that because the Engagement Letter provides for a "best efforts" standard for JPMorgan and Citigroup rather than a firm commitment to provide the Exit Financing Arrangements on particular terms, full public disclosure of the Engagement Letter could prejudice the Debtors' ability to negotiate its terms with potential members of the Syndicate Lenders that JPMorgan and Citigroup will endeavor to assemble. 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). DELPHI CORP: Committee Says Disclosure Statement is Inadequate -------------------------------------------------------------- The Official Committee of Unsecured Creditors asks the U.S. Bankruptcy Court for the Southern District of New York to deny approval of the Disclosure Statement explaining Delphi Corporation and its debtor-affiliates' Joint Chapter 11 Plan of Reorganization. As reported in yesterday's Troubled Company Reporter, the Court agreed to continue until Nov. 29 the hearing to consider the adequacy of the Disclosure Statement at the request of the Debtors and the Official Committee of Equity Security Holders. The Committee argues that the Disclosure Statement fails to provide adequate information concerning matters that are important to the Debtors' creditors in their evaluation of whether to vote for or against the Plan. The Plan, as currently drafted, ceases the accrual of postpetition interest to General Unsecured Claims other than TOPrS Claims on Dec. 31, 2007, even though it will not have been confirmed by that date, Robert J. Rosenberg, Esq., at Latham & Watkins LLP, in New York, points out. The EPCA Amendment, Mr. Rosenberg notes, requires the Debtors to issue additional Direct Subscription Shares to the Appaloosa Plan Investors without the Investors' payment of any additional consideration. The issuance of the additional shares will materially reduce the conversion price of the preferred shares and dilute the value of the common stock to be distributed to holders of General Unsecured Claims, he contends. The Creditors Committee and the Debtors are continuing to discuss potential resolutions, Mr. Rosenberg relates. He informs the Court that absent acceptable resolution, the Creditors Committee will not support the Plan. 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). DELPHI CORP: Senior Noteholders Balk at Disclosure Statement ------------------------------------------------------------ Eight holders of Senior Notes in Delphi Corp. asks the United States Bankruptcy Court for the Southern District of New York to disapprove the Disclosure Statement explaining the Debtors' Joint Chapter 11 Plan of Reorganization. The eight Senior Noteholders are: * Caspian Capital Advisors, LLC, * Castlerigg Master Investments Ltd., * Davidson Kempner Capital Management LLC, * Elliott Associates, L.P., * Gradient Partners, L.P., * Sailfish Capital Partners, LLC, * Whitebox Advisors, LLC, and * Wilmington Trust Company, as indenture trustee. As reported in yesterday's Troubled Company Reporter, the Court agreed to continue until Nov. 29 the hearing to consider the adequacy of the Disclosure Statement at the request of the Debtors and the Official Committee of Equity Security Holders. the Senior Noteholders contend that the Court should not approve the Disclosure Statement and allow the Debtors to solicit acceptances of the Plan because the Plan contains a patently nonconfirmable classification scheme The Senior Noteholders, among other things, complain that the Plan: -- groups dissimilar claims in the same class in violation of Section 1122(a) of the Bankruptcy Code; and -- provides different treatment to claims classified together within a single class in violation of Section 1123(a)(4) of the Bankruptcy Code. Class 1C of the Plan contains the claims of the Senior Noteholders and holders of the subordinated TOPrS Claims, Allan S. Brilliant, Esq., at Goodwin Procter LLP, in New York, notes, on behalf of Caspian, et al. Mr. Brilliant points out that TOPrS claimholders, although classified in the same class with the Senior Noteholders and other General Unsecured Creditors, do not receive the same distribution as the other Claims in Class 1C. The Plan is also unconfirmable because it does not enforce the subordination agreement between the Senior Notes and TOPrS Claims thereby violating Section 510(a) of the Bankruptcy Code, Mr. Brilliant asserts. The Disclosure Statement, Mr. Brilliant contends, does not contain adequate information on many critical issues as required by Section 1125(a) of the Bankruptcy Code regarding a number of topics, including: (a) the value of the distributions that will be made to creditors; (b) the valuation of the New Common Stock; (c) the likelihood of the Debtors obtaining exit financing and the consequences if the Debtors do not obtain exit financing before the hearing to consider confirmation of the Plan or the Effective Date of the Plan; (d) the factors required for the Debtors' substantive consolidation and the effect it has on various creditor groups; (e) the costs, benefits and effects of the settlement of the GM Claim; (f) the releases provided to non-Debtor parties under the Plan; and (g) the impact, on the recoveries paid to General Unsecured Creditors, of the Debtors' attempts to provide a recovery to otherwise subordinated creditors under the MDL Settlements. The Senior Noteholders therefore ask the Court to disapprove the Disclosure Statement. Wilmington Trust also asks the Court to direct the Debtors to reclassify the Senior Notes and the TOPrS Claims in different classes. The Disclosure Statement must clearly and concisely inform the holders of the Senior Debt of the actual value of their recovery under the Plan, Edward M. Fox, Esq., at Kirkpatrick & Lockhart Preston Gates Ellis LLP, in New York, maintains, on Wilmington Trust's behalf. "Valuation euphemisms such as 'negotiated plan value' or 'deemed value' are not acceptable. Rather, the Debtors must indicate the value of recoveries on a fully diluted basis based on the range of value estimated by the Debtors investment banker and financial advisor, Rothschild [Inc.], with particular emphasis on its mid-point valuation," Mr. Fox asserts. The Debtors should also explain why substantive consolidation of their assets and liabilities is necessary and appropriate while consolidation of the 42 Debtors is not, he adds. 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). DHL EXPRESS: Gets Default Notice from ABX Air for Withholding Fees ------------------------------------------------------------------ ABX Air Inc. last week notified its principal customer, DHL Express (USA) Inc., that it considers DHL in default under terms of two principal commercial agreements between the companies. ABX Air is reviewing its options while continuing to maintain full service to DHL and its customers. ABX Air said in a Form 8-K filing with the Securities and Exchange Commission on Nov. 9, 2007, that DHL has withheld payments to ABX Air otherwise due for reimbursement of legitimate expenses under the ACMI Service Agreement and the Hub and Line-Haul Services Agreement, which govern the business relationship between the companies. The dispute centers on a claim by DHL that certain ABX Air expenses are no longer eligible for reimbursement in full by DHL under the agreements, because ABX Air's revenues from other customers have exceeded a 10% threshold of ABX Air's total revenues. ABX Air's position is that DHL has improperly excluded from its calculation certain ABX Air revenues that stem from reimbursements for fuel expenses that ABX Air incurred on behalf of DHL. When the fuel-related revenues are properly included in the calculation, ABX Air's revenues from other customers have not exceeded the 10% threshold in the agreement. In addition, DHL is claiming that ABX Air's costs in maintaining its public company status and certain professional fees incurred by ABX with respect to an unsolicited indication of interest from ASTAR Air Cargo are not recoverable under the agreements. Joe Hete, president and chief executive officer of ABX Air, said, "As the events described in our 8-K filing indicate, our decision to declare DHL in default of our ACMI and Hub Services commercial agreements was taken only after intensive efforts on our part to resolve this issue directly with DHL, or to continue normal operations under explicit language in the agreements for working together while disputed matters are resolved through arbitration. Unfortunately, DHL has chosen a course that leaves us with no alternative, as a public company, other than to inform our shareholders of the steps we are obliged to take to defend their interests. "At the same time, I want to reaffirm that ABX Air is today, and intends to remain, DHL's principal U.S. business partner. As we pursue a solution to this matter under terms of the agreements, we intend to continue to provide DHL and its customers with dedicated, efficient, and high-quality air and ground logistics services, subject to the terms of our commercial agreements. "We are aware of the disclosures yesterday by the management of DHL's parent company, Deutsche Post World Net, that growth in DHL's U.S. network has slowed considerably in recent months, and that DHL's U.S. operations are "the critical issue" for that company. While we are eager to support DHL in its efforts to build market share, growth, and profitability in the U.S., that process cannot be furthered at the expense of the shareholders of ABX Air." ABX Air also stated that the refusal of DHL to pay the amounts due to ABX Air under the agreements may cause it to be in default under certain of its credit facilities. Should this be the case, ABX Air will consider whether to seek reimbursement from DHL for any damages or liabilities ABX Air may incur as a result of any such default. ABX Air said its alternatives include, but are not limited to, pursuing the dispute resolution process set forth in the agreements, negotiating with DHL to resolve the disputed issues, or any other option available to ABX Air at law or in equity. On Sept. 19, 2007, DHL sent a letter to ABX claiming that ABX's third party revenues exceeded 10% of its overall revenues giving rise to a provision under the ACMI Services Agreement and the Hub and Line-Haul Services Agreement which calls for the parties to negotiate in good faith an allocation of the overhead costs attributable to ABX's provision of such third party services and for the amounts to be excluded from the compensation due ABX under the Agreements. DHL took the position that in determining whether or not the 10% threshold had been crossed, fuel revenues should be excluded from total revenues. In addition, DHL claimed that under the Agreements the costs of maintaining public company status and certain professional fees incurred by ABX with respect to an unsolicited indication of interest from ASTAR Air Cargo were not recoverable under the Agreements. On Sept. 26, 2007, ABX sent a letter to DHL disputing DHL's claims. ABX asserted its strongly held view that in calculating the revenues for the purposes of determining whether the 10% threshold had been exceeded, expenses reimbursable by DHL, including but not limited to the fuel costs should be included, as has been the practice for so long as the Agreements have been in place. Accordingly, ABX believes it is yet to cross the 10% threshold. In addition, ABX disputed DHL's claims with respect to costs incurred by ABX as a result of ABX being a public company, which DHL has previously paid without objection, and as a result of the ASTAR Offer. On Oct. 31, 2007 the parties met to discuss the disputed issues, but were not able to reach any resolution. ABX believed that the companies would continue to follow the contractually prescribed process toward resolution. However, on Nov. 5, 2007, DHL notified ABX that it was reducing the weekly ACMI Agreement and Hub Agreement pre-funding amounts under these Agreements by $8.8 million comprised of DHL's estimated $4 million of overhead allocation for each of the second and third quarters of 2007, and $800,000 for costs related to the ASTAR Offer. According to this letter, DHL would deposit the amounts in a separate interest bearing bank account until the issues could be resolved through further discussion or arbitration. The letter did not contain a calculation supporting how the $8.8 million was derived. About ABX Air ABX Air Inc. (www.abxair.com) -- http://www.abxair.com/-- is an air cargo services provider operating out of Wilmington, Ohio, and 15 hubs throughout the United States. In addition to providing airlift capacity and sort facility staffing to DHL, ABX Air is a Part 121 operator and holds a Part 145 FAA Repair certificate. It provides charter, maintenance and package handling services to a diverse group of customers. ABX Air is the largest employer in a several-county area in southwestern Ohio. About DHL Express DHL Express -- http://www.dhl-usa.com/-- provides door-to-door delivery services to more than 220 countries and territories worldwide through some 4,400 facilities. It maintains a fleet of about 420 aircraft and 76,000 vehicles. DHL Express offers international same-day deliveries and allows customers to track shipments online. Other services include after-hours pickup and delivery, customs-clearance assistance, dangerous-goods handling, insurance, and packaging. DHL Express is one of the main businesses of express delivery and logistics giant DHL, which itself is a unit of Deutsche Post. DHL Express (USA), Inc. is the largest customer of ABX. ABX manages a network of 17 hubs for DHL, operating two segments: DHL and Non-DHL ACMI/Charters. DIRECTED ELECTRONICS: Weak Performance Cues S&P to Cut Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Vista, California-based Directed Electronics Inc., including its corporate credit rating, to 'B' from 'B+'. S&P also placed all of the DEI ratings on CreditWatch with negative implications. Total debt outstanding at Sept. 30, 2007, was about $309 million. "The downgrade and CreditWatch listing reflect DEI's continued weak operating performance and high leverage, as well as our concerns about the company's liquidity given its recently announced potential for violating financial covenants in the upcoming fourth quarter," said Standard & Poor's credit analyst Kenneth Shea. S&P could lower the ratings further if the company is unable to restore some covenant cushion and/or meet its covenant test in the fourth quarter. Before resolving the CreditWatch listing, S&P will review the company's operating and financial plans with management, as well as monitor the company's liquidity status and its ability to comply with or amend its bank financial covenants. DOLLARAMA GROUP: S&P Holds Ratings and Revises Outlook to Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on Montreal-based Dollarama Group LP to stable from negative. At the same time, S&P affirmed the 'B+' long-term corporate credit rating, the 'BB-' senior secured debt credit rating, with a recovery rating of '2', and the 'B-' subordinated debt rating on the company. The revised outlook reflects Dollarama's improved credit metrics and consistent operating performance. On a last 12 month basis, the adjusted debt to EBITDA improved to 6.1x at Aug. 5, 2007, from 6.7x at Feb. 4, 2007. This improvement resulted from some debt reduction as well as higher EBITDA generation from the store expansion and the resilient operating profitability. "The ratings reflect the company's high debt and interest burden, weak credit protection measures, and the uncertain financial policy over the medium term, as well as dependence on the Rossy family to continue expanding the company," said Standard & Poor's credit analyst Maude Tremblay. These features are only partially mitigated by Dollarama's leading market share in the Canadian dollar store segment, and a very successful corporate store business model with strong sourcing capabilities and attractive real estate locations for its stores. Dollarama is Canada's largest chain of dollar stores, with about 500 stores in 10 Canadian provinces, all corporate-operated and leased under the Dollarama banner. The stores have an average of 9,400 square feet and stock approximately 5,000 stock keeping units of both consumable and semi-durable goods, with a variety of seasonal and impulse items, each sold at a fixed price of CDN$1.00. In 2004, Bain Capital purchased an 80% equity interest in Dollarama from the Rossy family for CDN$1 billion. The equity is held at Dollarama Capital Corp., while the debt was issued at Dollarama Group LP and Dollarama Group Holdings LP. All assets reside at the wholly owned operating subsidiaries of Dollarama Group LP. Since its acquisition by Bain, Dollarama has adopted a more aggressive expansion strategy, adding about 60 stores annually to its network. The company has deepened its penetration of the Quebec and Ontario markets and is also expanding its network into western Canada. Dollarama's exclusive reliance on corporate- operated stores has proven to be an integral part of the company's long-term success. The stable outlook reflects Standard & Poor's expectation that Dollarama will continue to achieve profitable growth through store expansion and consistent execution while maintaining leverage around 6x, on a lease-adjusted basis. S&P could revise the outlook to positive once the company sustains material debt reduction, assuming Dollarama maintains its operational consistency. In addition, S&P would need to feel greater comfort about the company's financial policy. Alternatively, S&P could revise the outlook to negative if an increase in the debt level or a deterioration in operating performance leads to weaker credit measures. E*TRADE FIN'L: 4th Qtr. Write Down in ABS to Exceed Expectations ---------------------------------------------------------------- E*TRADE Financial Corporation filed Friday its quarterly report on Form 10Q for the period ended Sept. 30, 2007. The company disclosed that consistent with a series of industry- wide rating agency downgrades of securities after the end of the third quarter, it has observed continued declines in the fair value of its $3.0 billion asset-backed securities portfolio, predominantly within ABS CDO and second-lien securities. The total exposure to ABS CDO and second-lien securities at Sept. 30, 2007, was approximately $450 million in amortized cost, including approximately $50 million of "AAA" rated asset-backed CDOs that were downgraded to below investment grade. The company stated that it expected the declines in fair value to result in further securities write downs in the fourth quarter. The company expects to remain well capitalized based on regulatory standards. Management believes the additional deterioration observed since September 30 will likely result in write downs that exceed the previous expectations included in the company's 2007 earnings outlook updated on Oct. 17, and investors should no longer expect these earnings levels to be achieved. Actual securities-related losses will depend on future market developments, including the potential for future downgrades by rating agencies, which are extremely difficult to predict in this environment. Accordingly, management believes it is no longer beneficial to provide earnings expectations for the remainder of the year. About E*TRADE Financial Headquartered in New York City, E*TRADE Financial Corp. (NasdaqGS: ETFC) -- http://us.etrade.com/-- provides financial services including trading, investing, banking and lending for retail and institutional customers. Securities products and services are offered by E*TRADE Securities LLC. Bank and lending products and services are offered by E*TRADE Bank, a Federal savings bank or its subsidiaries. * * * As reported in the Troubled Company Reporter on Oct. 11, 2007, Moody's Investors Service affirmed the ratings of E*TRADE Financial Corporation (Senior debt at Ba2) and its lead thrift subsidiary, E*TRADE Bank (LT deposits at Baa3). The rating outlook remains positive. FINANCIAL ASSET: Fitch Junks Rating on Class B-5 Certificates ------------------------------------------------------------- Fitch Ratings affirmed eight, downgraded one, and placed two classes on Rating Watch Negative from these two Financial Asset Securitization Inc. transactions: Series 1997-NAMC1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 rated 'AA-' and placed on Rating Watch Negative; -- Class B-5 downgraded to 'CCC' from 'BBB' and assigned Distressed Recovery rating of 'DR2'. Series 1997-NAMC2 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 rated 'A' and placed on Rating Watch Negative; -- Class B-4 affirmed at 'CCC/DR2'; -- Class B-5 remains at 'C' and DR rating is revised from 'DR5' to 'DR6'. The affirmations reflect satisfactory relationships between credit enhancement and future loss expectations and affect about $2.69 million of outstanding certificates. The negative rating actions reflect deterioration in the relationship between CE and future loss expectations and affect $45,906 of the outstanding certificates. The classes placed on Rating Watch Negative have a balance of $325,847. As of the November 2007 distribution date, series 1997-NAMC1 and 1997-NAMC2 are seasoned 126 and 125 months, respectively. The pool factors (current principal balance as a percentage of original balance) for the 1997-NAMC1 and 1997-NAMC2 are both less than 1% and the cumulative loan loss is 0.21% and 0.43%, respectively, of the original collateral balance. The underlying collateral for this transaction consists of conventional, fully amortizing 30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. FORD MOTOR: Defers Volvo Sale; Intends to Improve Financials ------------------------------------------------------------ Ford Motor Company has been conducting a strategic review of Swedish unit Volvo, a Premier Automotive Group brand, 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 Premier Automotive Group, which includes Volvo, Jaguar and Land Rover brands, 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. "Our third quarter performance is very encouraging," Ford President and Chief Executive Officer Alan Mulally said. "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." As reported in the Troubled Company Reporter on July 17, 2007, citing the Wall Street Journal, Ford was mulling over the sale of its Volvo unit in an effort to boost U.S. operations. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on 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. 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. FORD MOTOR: Anticipates Jaguar & Land Rover Sale Talks in 2008 -------------------------------------------------------------- Ford Motor Company continues to explore in greater detail the potential sale of its Premier Automotive Group brands, Jaguar and Land Rover, with interested parties and anticipates these discussions will culminate in an agreement no later than early next year. As reported in the Troubled Company Reporter on June 13, 2007, the company employed help from investment banks including Goldman Sachs, HSBC and Morgan Stanley to explore the sale of its Jaguar and Land Rover brands. The partnership of private equity firm Apollo Management LP and Indian automaker Mahindra & Mahindra Ltd. is considering the acquisition of Ford's Jaguar and Land Rover units, the Sunday Times said without naming sources. John Hutton, the U.K. secretary of state for business and enterprise will assess the bidders' offering pitch. The Financial Times previously reported that Terra Firma Capital Partners Limited joined the bid for Ford's Jaguar and Land Rover brands as Guy Hands, Terra's head, requested for Ford's sale documents and started to accomplish due diligence for the bid. Citing Reuters, the TCR further names the four suitors as Ripplewood Holdings LLC, Tata Motors Limited, TPG Capital L.P. also known as Texas Pacific Group, and One Equity Partners, but these firms are yet to complete the due diligence. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on 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. 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. FORD MOTOR: Primary Stakeholder in Auto Fuel Cell Cooperation ------------------------------------------------------------- Ford Motor Company and Daimler AG are forming a new, privately- held company that will focus on automotive fuel cell technology and allow the two automakers to further expand their global leading position in fuel cell technology. With a share of 50.1%, Daimler AG will be the majority stakeholder in the new company, Automotive Fuel Cell Cooperation. Ford Motor Company will hold a 30% stake and Ballard Power Systems the remaining stake of 19.9% in AFCC. "We have identified the future fields of activity and key technologies for zero-emission mobility and we are investing specifically in expanding our competencies in these fields," Dr. Thomas Weber, member of the Board of Management of Daimler AG with responsibility for Group Research as well as for Development within Mercedes-Benz Cars, said. "Our majority stake and partnership with Ford in Automotive Fuel Cell Cooperation is a logical step in this direction." "The fuel cell remains one of the most viable solutions to develop a sustainable, zero-emissions vehicle," Dr. Gerhard Schmidt, Ford vice president for Research and Advanced Engineering, said. "The creation of the Automotive Fuel Cell Cooperation is an investment in our future. Fuel cells are the technology of the future and we are happy to be working with a great partner like Daimler to advance this technology. Through this partnership, we will work even harder to make fuel cell technology even more reliable and affordable for the future." The creation of AFCC will allow Daimler and Ford to concentrate on automotive fuel cell technology while Ballard will emphasize their future efforts on the marketing of non-automotive fuel cell applications. "Automotive Fuel Cell Cooperation will orient its activities even more intensively to the specific requirements we make on fuel cell stacks," Prof. Dr. Herbert Kohler, Vice President with responsibility for Advanced Vehicle and Powertrain Engineering and Chief Environmental Officer of the Daimler Group, said. "With the newly founded company, we strengthen our leading position in the field of fuel cell technology and go full steam ahead in our preparations for the series production of fuel cell cars." Automotive Fuel Cell Cooperation will be managed by Daimler and Ford with their collective 80.1% stake in the new company, while Ballard will hold the remaining stake of 19.9%. In return, Daimler AG and Ford will retransfer their total stake in Ballard. The new company will employ approximately 150 people. Fuel Cells at Daimler AG A pioneer in fuel cell technology, Daimler introduced the world's first fuel cell vehicle in 1994. Today, the company has more than 100 fuel cell vehicles on the road accumulating more than 3.7 million kilometers (2.3 million miles) in everyday operation with customers to date. Fuel Cells Part of a Broader Effort at Ford Ford currently has a fleet of 30 hydrogen-powered Focus fuel cell vehicles on the road as part of a worldwide, seven-city program to conduct real world testing of fuel cell technology. The 30-car fleet has accumulated more than 965,000 kilometers (600,000 miles) since its inception in 2005. Ford also is conducting tests with the world's first plug-in hybrid electric vehicle, the Ford Edge with HySeries Drive. The Ford Edge with HySeries Drive uses a series electric drivetrain with an onboard hydrogen fuel cell generator to give the vehicle a range of 225 miles with zero emissions. Ford currently offers gasoline-electric hybrids including the Escape Hybrid and Mercury Mariner Hybrid. The company will begin production of hybrid versions of the Ford Fusion and Mercury Milan in 2008. About Daimler AG Stuttgart, Germany-based, Daimler AG -- http://www.daimler.com/-- supplies premium passenger cars as well as the world`s largest manufacturer of commercial vehicles. With its strong brands and its comprehensive portfolio of automobiles from compact cars to heavy-duty engine trucks, Daimler, with 271,486 employees, is active in nearly all countries in the world. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. FORD MOTOR: Unit Earns $334 Million in Third Quarter of 2007 ------------------------------------------------------------ Ford Motor Credit Company reported net income of $334 million in the third quarter of 2007, down $118 million from earnings of $452 million a year earlier. On a pre-tax basis from continuing operations, Ford Motor Credit earned $546 million in the third quarter compared with $730 million in the previous year. The decrease in earnings primarily reflected the non-recurrence of credit loss reserve reductions, higher depreciation expense for leased vehicles and higher borrowing costs. In the third quarters of 2007 and 2006, pre-tax earnings were $341 million and $521 million, excluding the net gains related to market valuation adjustments from derivatives, which were $205 million and $209 million, respectively. Ford Motor Credit expects to earn on a pre-tax basis $1.3 billion to $1.4 billion this year, excluding the impact of gains and losses related to market valuation adjustments from derivatives, consistent with the previous estimate. "Our sound risk management practices, high-quality portfolio, strong liquidity and ongoing restructuring continue to produce solid operating results," Mike Bannister, chairman and CEO, said. "As we effectively execute the fundamentals of the business, we remain on track to meet our earnings outlook." On Sept. 30, 2007, Ford Motor Credit's on-balance sheet net receivables totaled $141 billion, compared with $135 billion at year-end 2006. Managed receivables were $148 billion, largely unchanged compared with Dec. 31, 2006. On Sept. 30, 2007, managed leverage was 10.1 to 1. About Ford Motor Credit Ford Motor Credit Company LLC -- http://www.fordcredit.com/-- an indirect, wholly owned subsidiary of Ford Motor Company, is an automotive finance company and has supported the sale of Ford products since 1959. It provides automotive financing for Ford, Lincoln, Mercury, Jaguar, Land Rover, Mazda and Volvo dealers and customers. About Ford Motor Company Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. FORD MOTOR: New Labor Pact Gets Massive UAW Votes of Approval ------------------------------------------------------------- Initial results from United Auto Workers union locals in Illinois, and Michigan, who voted on Friday, and locals from Kentucky and Missouri who voted Sunday, revealed a vast support for a new four- year labor contract between Ford Motor Company and the UAW, various papers report naming local union presidents as sources. Papers say that 75% of 900 UAW members of Local 588, a Chicago stamping plant in Illinois, voted yes to the new labor agreement. Meanwhile, 82% of the 1,200 union members of Local 898, Ford's Rawsonville plant in Ypsilanti Township, in Michigan, voted for the new labor deal. UAW Local 862 President Rocky Comito told The Courier-Journal that 80% production workers and 75% of skilled trade workers of the Louisville Assembly Plant in Kentucky supported the new labor deal. Results at UAW Local 249, a plant in Claycomo, Missouri that manufactures the Escape, Mercury Mariner and Mazda Tribute SUVs, showed great support for the contract at a 69%-31% margin, the Kansas City Business Journal relates. Sarah A. Webster of the Detroit Free Press disclosed an overwhelming 91% reception for the new labor agreement from members of an axle plant in Sterling Heights, Michigan. Ms. Webster added that Emanuela Henderson, the recording secretary with UAW Local 900 in Wayne, Michigan, told the paper that "a minimum of 90%" of its workers voted in favor of the contract. The local represents more than 5,000 workers at Michigan Truck Plant and Wayne Stamping and Assembly. Voting results from Local 600 in Dearborn, Michigan, and Local 2000 in Ohio are not yet available. As reported in the Troubled Company Reporter on Nov. 6, 2007, Ford and the UAW reached a tentative agreement on a four-year national labor contract covering approximately 54,000 represented employees in the United States. The UAW Ford National Council -- made up of delegates from more than 55 Ford facilities across the nation -- voted to unanimously recommend ratification of the union's 2007 tentative agreement with Ford. According to AP, Ford's shares dropped 3.3% closing at $8.20 on Friday, the same day union leaders say workers in Michigan and Illinois approved a new contract. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. FORD MOTOR: Narrow Third Quarter Loss Cues S&P to Retain Watch -------------------------------------------------------------- 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 Ford's report of a narrower third-quarter loss compared to that of a year ago. S&P currently expect to resolve the CreditWatch around mid-November. The most likely outcome is an affirmation of the 'B' rating, with an outlook to be determined. The ratings were placed on CreditWatch Sept. 26, 2007, based on S&P's belief that Ford would achieve a deal similar to the tentative new labor contract General Motors Corp. (GM; B/Stable/B- 3) reached with its main labor union, the United Auto Workers, which addresses onerous retiree health care obligations that S&P view as debt-like in nature. As expected, Ford and the UAW subsequently reached their own four-year agreement, and the UAW membership will vote on that contract soon. S&P view the new contract as favorable to Ford compared with past agreements, and S&P believe the contract will support the company's turnaround plan in North America. Still, S&P remain concerned about the economic outlook for 2008, even as the company is making progress on its turnaround plan. Much of the labor contract's health care savings will not begin to accrue to Ford until 2010, and this is a key factor in S&P's review. Ford's third-quarter earnings demonstrated improvement over 2006 earnings, although Ford Motor Credit Co.'s profit declined. Ford's consolidated third-quarter loss from continuing operations, excluding special items, was $24 million, compared with a loss of $850 million in 2006. The pretax automotive loss in the third- quarter was $362 million, a sharp improvement from the pretax loss of $1.9 billion during the quarter in 2006, driven by higher net pricing, lower costs, and improved volume and mix. These factors more than offset higher interest expense and unfavorable foreign exchange rates. In the key North American operation, Ford reported a pretax loss of $1 billion compared with a loss of $2.1 billion in 2006. The same factors accounted for the decline in the loss. For now, Ford remains in a net cash position at the parent, with automotive cash (including cash, equivalents, loaned securities, and short-term VEBA assets) of $35.6 billion at Sept. 30, 2007, an increase of $1.7 billion from year-end 2006 due to asset sales that more than offset ongoing cash use from operations. GAP INC: October Net Sales Down 1% at $1.23 Billion --------------------------------------------------- Gap Inc. reported net sales of $1.23 billion for the four-week period ended Nov. 3, 2007, which represents a 1% decrease compared with net sales of $1.24 billion for the four-week period ended Oct. 28, 2006. Due to the 53rd week in fiscal year 2006, October 2007 comparable store sales are compared to the four-week period ended Nov. 4, 2006. On this basis, the company's comparable store sales for October 2007 decreased 8% compared with a 7% decrease in October 2006. Comparable store sales by division for October 2007 were: * Gap North America: negative 7% versus negative 4% last year; * Banana Republic North America: negative 2% versus positive 2% last year; * Old Navy North America: negative 11% versus negative 11% last year; and * International: negative 6% versus negative 8% last year. "While comparable store sales were down in October, merchandise margins were significantly above last year," Sabrina Simmons, executive vice president of Gap Inc. finance, said. "The results reflect our stated strategy of managing inventory tightly to support margin improvements." Third Quarter Sales and Earnings Guidance For the thirteen weeks ended Nov. 3, 2007, total company net sales were $3.85 billion, which is flat as compared to net sales of $3.85 billion for the thirteen weeks ended Oct. 28, 2006. Due to the 53rd week in fiscal year 2006, third quarter comparable store sales are compared to the thirteen weeks ended Nov. 4, 2006. On this basis, the company's third quarter comparable store sales decreased 5% compared with a decrease of 5% in the third quarter of the prior year. Comparable store sales by division for the third quarter were: * Gap North America: negative 6% versus negative 7% last year; * Banana Republic North America: positive 1% versus positive 3% last year; * Old Navy North America: negative 8% versus negative 7% last year; and * International: negative 4% versus negative 6% last year. For the third quarter of fiscal year 2007, Gap Inc. expects diluted earnings per share to be $0.28 to $0.30, as the company continues to make progress on its strategies of driving earnings with healthy margins and controlling expenses. Third quarter earnings are benefiting from the absence of last year's incremental marketing expense. The expected third quarter earnings per share also includes about $0.01 of benefit relating to a reduction of interest accruals resulting from tax audits and other tax resolutions completed during the quarter. The company reiterated that it expects the year-over-year percent change in inventory per square foot to be down in the mid-single digits at the end of the third quarter. November Sales The company will report November sales on Dec. 6, 2007. About Gap Inc. Gap Inc. (NYSE: GPS) -- http://www.gapinc.com/-- is an international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic, Old Navy, Forth & Towne and Piperlime brand names. Gap Inc. operates more than 3,100 stores in the United States, the United Kingdom, Canada, France, Ireland and Japan. In addition, Gap Inc. is expanding its international presence with franchise agreements for Gap and Banana Republic in Southeast Asia and the Middle East. * * * The company continues to carry Fitch's BB+ Issuer Default Rating. The company also carries Standard & Poor's Ratings Services' BB+ corporate credit rating. H&E EQUIPMENT: Board Authorizes $100 Mil. of Stock Repurchase ------------------------------------------------------------- H&E Equipment Services Inc.'s board of directors has authorized a stock repurchase program, under which the company may purchase, from time to time, in open market transactions at prevailing prices or through privately negotiated transactions as conditions permit, up to $100 million of the company's outstanding common stock. The repurchase program is expected to continue until Dec. 31, 2008, unless extended or shortened by the board. The company expects to fund the repurchases of the company's common stock with working capital and/or borrowings under the company's existing credit facility. Based in Baton Rouge, Louisiana, H&E Equipment Services Inc. (NASDAQ: HEES) -- http://www.he-equipment.com/-- is an integrated equipment service company in the United States focused on heavy construction and industrial equipment. The company rents, sells and provides parts and service support for four core categories of specialized equipment: hi-lift or aerial platform equipment, cranes, earthmoving equipment and industrial lift trucks. It is engaged in five principal business activities in these equipment categories: equipment rental, new equipment sales, used equipment sales, parts sales, and repair and maintenance services. H&E Equipment Services serves more than 27,700 customers in the United States, in the West Coast, Intermountain, Southwest, Gulf Coast, West Coast and Southeast regions. * * * Moody's Investor Services placed H&E Equipment Services Inc.'s senior secured debt and probability of default ratings at 'B1' in Sept. 2006. The ratings still hold to date. HARRAH'S ENT: Unit Lowers Conversion Price of $375MM Senior Notes ----------------------------------------------------------------- Harrah's Operating Company Inc., a subsidiary of Harrah's Entertainment Inc., has adjusted the conversion price under its outstanding $375 million Floating Rate Contingent Convertible Senior Notes due 2024, to $65.24 from $65.54, subject to further adjustment as provided for in the governing indenture. The adjustment has been made pursuant to the terms of the indenture as a result of the cash dividend of $0.40 per share of Harrah's Entertainment common stock that was declared on Oct. 29, 2007, and which will be payable Nov. 21, 2007, to Harrah's Entertainment stockholders of record as of the close of business on Nov 8, 2007. 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 "BB" long term foreign and local issuer credit ratings, which were placed in December 2006. HAYES LEMMERZ: Selling Automotive Brake to Brembo NA for $58 Mil. ----------------------------------------------------------------- Hayes Lemmerz International Inc. is selling Hayes Lemmerz' Automotive Brake Components division to Brembo North America Inc. for approximately $58 million, debt-free. Hayes Lemmerz' Automotive Brake Components division includes production facilities in Homer, Michigan and Apodaca, Mexico that manufacture brake rotors and drums for the North American passenger car and light truck markets. The division employs approximately 250 people, including 64 technical associates. The division's 2006 sales were approximately $120 million. Under the agreement, Brembo North America Inc., a subsidiary of Brembo S.p.A., has acquired all of the stock of two Hayes Lemmerz subsidiary companies that own the brake manufacturing operations in Homer and Apodaca and certain assets used in connection with the division's sales, marketing and engineering group located in Hayes Lemmerz' headquarters in Northville, Michigan. "We have built a strong business with a solid reputation for quality products, delivery and performance," Daniel Sandberg, president of Hayes Lemmerz' Automotive Components Group, said. "Combining this business with an international, technically dynamic brake company like Brembo will better position the combined company to grow and compete in the global market. Our brake teams in Homer, Apodaca and Northville look forward to leveraging our shared commitment to superior customer service, product innovation and technology." "I am very pleased with the acquisition of this well-managed and successful business," Brembo chairman, Alberto Bombassei, commented. "This is another important step for Brembo in the NAFTA region, where we already have a strong presence with 2006 sales of approximately $140 million," Mr. Bombassei said. "Our purchase of Hayes Lemmerz' rotor business will greatly improve Brembo's leadership position in the North American brake rotor market. We continue to believe that North America, as a mature and sophisticated market, is one of the most important in the world which fits well with Brembo's strategic position. This transaction will provide Brembo with a solid manufacturing base to supply all the North American operations of all of our customers." About Brembo S.p.A. Brembo North America Inc. is a subsidiary of Italy-based Brembo S.p.A. (Italian Stock Exchange: BRE) which is an innovator of disc braking system technology for vehicles. It supplies high performance braking systems to the manufacturers of cars, commercial vehicles and motorbikes around the world. Brembo is also into the racing sector. The company currently operates in 12 countries, with 23 production and business sites and a pool of over 4,700 associates, 9% of whom are engineers and product specialists working in R&D and technical areas. Brembo is the owner of the Brembo, AP Racing and Marchesini brands. The company operates in this region with a manufacturing plant in Puebla, Mexico, and business sites in Costa Mesa, CA and Charlotte, NC. About Hayes Lemmerz International Based in Northville, Michigan, Hayes Lemmerz International Inc. (Nasdaq: HAYZ) -- http://www.hayes-lemmerz.com/-- is a supplier of automotive and commercial highway wheels, brakes and powertrain components. The company has 30 facilities and approximately 8,500 employees worldwide. The company has operations in India, Brazil and Germany, among others. * * * As reported in the Troubled Company Reporter on Sept. 26, 2007, Fitch Ratings placed Hayes-Lemmerz International Inc.'s issuer default rating at 'B' with a negative rating watch. JAZZ PHARMA: Posts $19.4 Million Net Loss in Qtr. Ended Sept. 30 ---------------------------------------------------------------- Jazz Pharmaceuticals Inc. disclosed last week financial results for the quarter ended Sept. 30, 2007. Jazz Pharmaceuticals' net loss for the third quarter of 2007 was $19.4 million, compared to net income of $7.7 million for the third quarter of 2006. Net income in the quarter ended Sept. 30, 2006 included $31.6 million of gain on extinguishment of a development financing obligation in connection with a terminated development program. Total revenues for the quarter ended Sept. 30, 2007, were $21.5 million, compared to $11.5 million for the quarter ended Sept. 30, 2006. The increase in total revenue resulted primarily from $7.5 million of contract revenue related to achievement of a clinical enrollment milestone in the Phase III development program of JZP-6 for fibromyalgia syndrome. Xyrem(R) net sales were $9.6 million in the quarter ended Sept. 30, 2007, compared with $7.6 million for the same quarter of 2006. Research and development expenses for the quarter ended Sept. 30, 2007 were $17.0 million, compared to $14.7 million for the quarter ended Sept. 30, 2006. Selling, general and administrative expenses for the quarter ended Sept. 30, 2007, were $18.1 million, compared to $12.9 million for the quarter ended Sept. 30, 2006. The increase was primarily due to spending in preparation for the anticipated launch of Luvox(R) CR, increased headcount and higher expenses to support the sales force, offset in part by lower legal fees. For the nine months ended Sept. 30, 2007, total revenues increased to $49.8 million, compared to $32.4 million for the nine months ended Sept. 30, 2006. Net loss for the first nine months of 2007 was $78.8 million, compared to a net loss of $38.9 million for the first nine months of 2006. Jazz Pharmaceuticals' unrestricted cash, cash equivalents and marketable securities balance as of Sept. 30, 2007, was $130.9 million. During the quarter ended Sept. 30, 2007, net cash used in operating activities was $15.4 million. "As our commercial organization ramps up for the anticipated commercial launch of Luvox CR in early 2008, we have also made progress in all four of our most advanced clinical development programs during the past few months," said Samuel R. Saks, M.D., chief executive officer. "We continue to make important progress on our development programs for the treatment of fibromyalgia, recurrent acute repetitive seizures, restless legs syndrome and partial epilepsy." At Sept. 30, 2007, the company's consolidated balance sheet showed $258.8 million in total assets, $133.9 million in total liabilities, $13.2 million in common stock subject to repurchase, and $111.7 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?2535 Going Concern Doubt Ernst & Young LLP, in Palo Alto, Calif., expressed substantial doubt about Jazz Pharmaceuticals Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's significant losses from operations since its inception and cash used in operating activities. About Jazz Pharmaceuticals Headquartered in Palo Alto, Calif., Jazz Pharmaceuticals Inc. (NasdaqGM: JAZZ) -- http://www.jazzpharmaceuticals.com/ -- is a specialty pharmaceutical company focused on identifying, developing and commercializing innovative products to meet unmet medical needs in neurology and psychiatry. KNOLOGY INC: Neutral Leverage Cues S&P to Hold 'B' Loan Rating -------------------------------------------------------------- Standard & Poor's Rating Services affirmed its 'B' bank loan and '4' recovery rating on West Point, Georgia-based cable overbuilder Knology Inc.'s senior secured credit facility. The company is increasing its term loan B by $59 million (for a total of $609 million). The '4' recovery rating indicates expectations for average (30%-50%) recovery in the event of payment default. At the same time, S&P affirmed the 'B' corporate credit rating following Knology's announcement that it signed a definitive agreement to acquire Graceba Total Communications Inc. for $75 million in cash. The outlook is stable. Bank proceeds combined with $16 million of cash will be used to fund the acquisition, which is expected to close in the first quarter of 2008. "The rating affirmation reflects the fact that the transaction is leverage neutral," said Standard & Poor's credit analyst Allyn Arden. "Pro forma debt to EBITDA is approximately 4.8x, excluding potential operating synergies, which supports the current rating level, and the acquisition immediately adds to net free cash flow. The acquisition of Graceba will increase Knology's revenue generating units by only 4% but enables Knology to expand its southeast footprint to Alabama, providing some degree of market diversity." Knology offers video, telephony, and high speed data services over its two-way capable network and has about 228,000 basic video customers. The $611 million senior secured first-lien term loan, including the incremental $59 million term loan, and $25 million revolving credit facility are rated 'B', with a recovery rating of '4' indicating average (30%-50%) recovery of principal in the event of a payment default. "We could revise the outlook to negative if the competitive environment deteriorates to the extent that Knology experiences a significant decline in subscribers and related EBITDA or if there are execution missteps from the integration of recent acquisitions," Mr. Arden said. "Conversely, a positive outlook would hinge on Knology's ability to compete effectively against increasing competition, successfully integrate its recent acquisitions, generate material discretionary cash flow, and reduce debt." LEAP WIRELESS: To Restate FY 2004 Through 2nd Qtr 2007 Financials ----------------------------------------------------------------- Leap Wireless International Inc. disclosed Friday that it will restate its financial statements for fiscal years 2004, 2005 and 2006 and for the first and second quarters of 2007 to correct for errors in previously reported service revenues, equipment revenues, and operating expenses. Over these periods, the restatements are expected to result in a net cumulative reduction of approximately $20 million in service revenues and approximately $20 million in operating income. Changes in net income or loss will be determined following the company's completion of its tax expense calculations for these periods. As a result of the pending restatements, the company's previously issued financial statements for periods from fiscal year 2004 through the second quarter of 2007 should not be relied upon. The restatements are the result of an internal review of the company's service revenue activity and forecasting process that was initiated by management in September 2007 and are not attributable to any misconduct by company employees. The expected adjustments to historical financial results do not change unrestricted cash, cash equivalents and short term investments as of June 30, 2007. In addition, they do not materially change the overall trend in service revenues, nor do they materially change overall trends in ARPU, CPGA, CCU or capital expenditures. Finally, the expected adjustments do not impact previously reported results for net customer additions or churn. Description of Accounting Errors The most significant adjustment relates to the company's prior accounting for a group of customers who voluntarily disconnected service. These customers comprised a small percentage of the company's disconnected customers. For these customers, approximately one month of deferred revenue that was recorded when the customers' monthly bills were generated was mistakenly recognized as revenue after their service was disconnected. The company also identified other errors relating to the timing and recognition of certain service revenues and operating expenses. The effect of the timing errors varied across periods. The error with the largest variation across periods related to the reconciliation of billing system data for pay in arrears customers. This error resulted in an understatement of revenue in 2004 and 2005 and an overstatement of revenue in subsequent periods as the number of pay in arrears customers in the company's customer base declined. In connection with management's review, errors were also identified relating to the classification of certain components of equipment revenues and cost of equipment. Prior to June 2007, approximately $120 million of revenue from the sale of equipment was offset against related cost of equipment and reported on a net basis. The reclassification of these revenues and costs on a gross basis will not impact operating income. Preliminary Results for Third Quarter Based on preliminary data, Leap expects to report service revenues of between $348,000 to $352,000 for the third quarter ended Sept. 30, 2007, and operating income of between $8,000 to $12,000. The estimates for service revenues and operating income reflect the revisions in the company's accounting described in this release, costs associated with the company's major new initiatives, as well as approximately $4 million in aggregate costs incurred in connection with the unsolicited offer received from MetroPCS Communications Inc. in September 2007 and other strategic M&A activities. The pending restatements and preliminary third quarter results are subject to adjustment upon finalization of third quarter financial and operational results and completion of the audit and review of the company's restated financial statements by its independent registered public accounting firm. Senior Secured Credit Agreement and Indenture The restatements may result in a default under the senior secured credit agreement among Cricket Communications Inc., Leap Wireless International Inc., Bank of America N.A. and certain lenders, under which approximately $890 million in borrowings is currently outstanding. This potential default arises from the company's potential breach of representations regarding the presentation of its prior financial statements and not as a result of any non- compliance with its financial covenants. Notwithstanding any potential default, the company expects to continue to make scheduled payments of principal and interest under the credit agreement. The company is pursuing a waiver of any potential default from the credit agreement lenders. Unless waived by the required lenders, a default would permit the administrative agent to exercise its remedies under the credit agreement, including declaring all outstanding debt under the credit agreement to be immediately due and payable. An acceleration of the outstanding debt under the credit agreement would also trigger a default under Cricket's indenture governing its $1.1 billion of 9.375% senior notes due 2014. In conjunction with the waiver, the company is also asking lenders to approve other amendments to the credit agreement, including an amendment that would provide that entry into an agreement leading to a change of control will no longer constitute an event of default, unless and until the change of control occurs. About Leap Wireless Based in San Diego, California, Leap Wireless International Inc. (NASDAQ: LEAP) -- http://www.leapwireless.com/-- provides unlimited wireless services to a diverse customer base. The company and its joint ventures now operate in 23 states and hold licenses in 35 of the top 50 U.S. markets. * * * As reported in the Troubled Company Reporter on Sept. 10, 2007, Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on Leap Wireless International Inc. LEAP WIRELESS: Potential Credit Default Prompts S&P's Neg. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on San Diego, California-based Leap Wireless International Inc., including the 'B-' corporate credit rating, on CreditWatch with negative implications. "This reflects the possibility the company will trigger a potential default under its $1.1 billion senior secured credit facility because of its plan to restate certain audited financial statements," said Standard & Poor's credit analyst Allyn Arden. The restatements are to correct errors in previously reported service revenues, equipment revenues, and operating expenses for fiscal years 2004, 2005, and 2006 and the first and second quarters of 2007. The restatements could also potentially trigger a default under the company's $1.1 billion senior unsecured notes due 2014. Leap, a wireless carrier, indicated that the restatements were the result of errors related to its accounting for a group of customers who voluntarily disconnected services. About one month of deferred revenue that was recorded for these customers when their monthly bills were generated was mistakenly recognized as revenue after their service was disconnected. Leap also identified errors relating to the timing and recognition of certain service revenues and operating expenses. These errors resulted in an understatement of revenue in 2004 and 2005 and an overstatement of revenue in subsequent periods. However, based on the company's public statements, S&P do not expect the magnitude of these errors to be substantial. Leap will need to obtain waivers for the potential defaults and be current on its audited public financial statements to avoid a near-term downgrade. If this were to occur, S&P would expect to affirm the rating, albeit with a stable outlook. A reinstatement of the positive outlook would hinge on Leap's ability to fully address S&P's concerns to effectively limit further accounting issues. This would require a minimum of two quarters of timely and accurate financial reporting. LEVITT AND SONS: Case Summary & 400 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Levitt and Sons LLC 2200 West Cypress Creek Road Fort Lauderdale, FL 33309 Bankruptcy Case No.: 07-19845 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Levitt and Sons of Manatee County, LLC 07-19851 Levitt and Sons at World Golf Village, LLC 07-19852 BankAtlantic Venture Partners 5, LLC 07-19853 Levitt and Sons of Hernando County, LLC 07-19854 Regency Hills by Levitt and Sons, LLC 07-19855 Bellaggio by Levitt and Sons, LLC 07-19856 Levitt and Sons of Flagler County, LLC 07-19857 Levitt and Sons at Hunter's Creek, LLC 07-19858 Levitt G.P., LLC 07-19859 Levitt Construction Corp.-East 07-19861 Levitt and Sons of Seminole County, LLC 07-19863 Lev-Brn, LLC 07-19864 Levitt and Sons of Osceola County, LLC 07-19866 Summerport by Levitt and Sons, LLC 07-19870 Levitt Construction-East, LLC 07-19871 Levitt and Sons of Lee County, LLC 07-19872 Cascades by Levitt and Sons, LLC 07-19873 Levitt and Sons of Georgia, LLC 07-19874 Levitt Industries, LLC 07-19875 Levitt and Sons at Hawks Haven, LLC 07-19876 Levitt and Sons of Cherokee County, LLC 07-19877 Levitt Homes Bellaggio Partners, LLC 07-19878 Magnolia Lakes by Levitt and Sons, LLC 07-19879 Levitt and Sons of Hall County, LLC 07-19881 Levitt Homes, LLC 07-19882 Levitt and Sons at Tradition, LLC 07-19883 Avalon Park By Levitt and Sons, LLC 07-19884 Levitt and Sons of Paulding County, LLC 07-19885 Levitt and Sons of Tennessee, LLC 07-19886 Levitt Construction Georgia, LLC 07-19887 Levitt and Sons of Lake County, LLC 07-19888 Bowden Building Corporation 07-19889 Levitt and Sons of South Carolina, LLC 07-19891 Levitt and Sons of Nashville, LLC 07-19892 Levitt and Sons of Horry County, LLC 07-19893 Levitt and Sons of Shelby County, LLC 07-19894 Levitt Construction-South Carolina, LLC 07-19895 Type of Business: Levitt and Sons LLC and its affiliates are the subsidiaries of Levitt Corporation (NYSE:LEV). The group operates as a homebuilding and real estate development group in the southeastern U.S. 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. See http://www.levittcorporation.com/ Chapter 11 Petition Date: November 9, 2007 Court: Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Debtors' Counsel: Jordi Guso, Esq. Berger Singerman P.A. Paul Steven Singerman, Esq. 200 South Biscayne Boulevard Suite 1000 Miami, FL 33131 Tel: (305) 755-9500 http://www.bergersingerman.com/ Debtors' Chief Restructuring Officer: AP Services, LLC 2000 Town Center Suite 2400 Southfield, MI 48075 Tel: (248) 358-4420 Fax: (248) 358-1969 http://www.alixpartners.com/ Debtors' Claims & Noticing Agent: Kurtzman Carson Consultants, LLC 1180 Avenue of the Americas Suite 1400 New York, NY 10036 Tel: (866) 381-9100 Fax: (310) 823-9133 http://www.kccllc.com/ Debtors' latest consolidated financial condition as of Sept. 30, 2007: Total Assets: $900,392,000 Total Debts: $780,969,000 A. Levitt and Sons, LLC's Six Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Bank Loan $103,859,044 101 East Kennedy Boulevard Tampa, FL 33602 Wachovia Bank Bank Loan $103,669,834 One East Broward Boulevard 3rd Floor Fort Lauderdale, FL 33301 KeyBank Bank Loan $96,478,909 2385 Executive Center Drive Suite 350 Boca Raton, FL 33431 Regions Bank Bank Loan $24,734,018 6200 Poplar Avenue 3rd Floor Memphis, TN 38119 Wachovia Bank Bank Loan $4,385,036 One East Broward Boulevard 3rd Floor Fort Lauderdale, FL 33301 Ohio Savings Bank Bank Loan $1,091,849 1801 East 9th Street Suite 200 Cleveland, OH 44114 B. Levitt and Sons of Manatee County, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wachovia Bank Bank Loan $9,660,111 3rd Floor, One East Broward Boulevard Fort Lauderdale, FL 33301 McLeod land Services Inc. Trade Debt $119,411 P.O. Box 21057 Sarasota, FL 34277 Superior Pools & Spa Trade Debt $108,752 5580 North Pine Island Road Lauderhill, FL 33351 Sun State Landscaping Trade Debt $94,709 His Cabinetry Inc. Trade Debt $74,402 Coleman Floors Trade Debt $66,133 Holiday Pools of West Florida Trade Debt $60,669 Signature Contractors Inc. Trade Debt $53,368 Kater Truck and Paving Inc. Trade Debt $42,371 Sarasota Herald-Tribune Trade Debt $38,028 RT Moore Company Inc. Trade Debt $35,919 American Woodmark Corp. Trade Debt $32,224 Clear Channel Broadcast Trade Debt $26,721 Tomlinson Brothers Construction Trade Debt $26,430 Co. Inc. Nuccio Heating & Trade Debt $25,264 Airconditioning Inc. Melco Electric Trade Debt $21,498 Guajardo & Sons Inc. Trade Debt $20,225 Modular Space Corp. Trade Debt $19,747 Cox Lumber Co. dba HD Supply Trade Debt $18,336 LDM La Mystique Trade Debt $17,795 C. Levitt and Sons at World Golf Village, LLC's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wachovia Bank Bank Loan $8,806,673 One East Broward Boulevard 3rd Floor Fort Lauderdale, FL 33301 Progressive Trade Debt $521,762 Contractors, Inc. 3702 Olson Drive Daytona Beach, FL 32124 Construction Management Trade Debt $330,851 Plus Inc. 165 Wells Road, Suite 201 Orange Park, FL 32073 Builders FirstSource Trade Debt $163,419 Coleman Floors Company Trade Debt $122,084 American Door & Mill Co. Trade Debt $118,940 Allstar Building Trade Debt $110,175 Materials Ltd. Fogleman Builders Supply Trade Debt $106,272 Stockton Sports Construction Trade Debt $98,100 Ace Design Stucco Inc. Trade Debt $89,240 Millenium Electrical Trade Debt $87,649 First Coast Rainguard Trade Debt $83,011 Darleys Plumbing Trade Debt $79,836 Kirklyn Enterprises Inc. Trade Debt $48,690 CCI Site Development Trade Debt $75,397 Concepts in Greenery Inc. Trade Debt $71,659 American Woodmark Trade Debt $68,288 dba Timberlake Cabinet Paint Covers Inc. Trade Debt $65,031 Sun State Nursery 7 Landscape Trade Debt $63,900 D. BankAtlantic Venture Partners 5, LLC does not have any creditors who are not insiders. E. Levitt and Sons of Hernando County, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ KeyBank bank loan $96,478,908 2385 Executive Center Drive Suite 350 Boca Raton, FL 33431 c/o Edward M. Cochran 2385 Executive Center Drive, Suite 350 Boca Raton, FL 33431 Southern Hills Community trade debt $305,603 Development District 3434 Colwell Avenue, Suite 200 Tampa, FL 33614 Tel: (813) 933-5571 Morales-Keesee Design trade debt $52,879 Associates P.O. Box 160429 Altamonte Springs, FL 32716 Tel: (407)880-2333 Goodwin Brothers trade debt $49,974 Construction, Inc. M.&N. Construction-Central trade debt $49,005 Florida Quantum Underground trade debt $30,580 West Orange Nurseries trade debt $25,017 Kappes Electric Corp. trade debt $19,032 Sunset Drywall-Central trade debt $17,354 Florida Spraggins Builder Services trade debt $16,970 Central Florida A.B. Design Group, Inc. trade debt $13,157 Brad McDonald Roofing & trade debt $11,010 Construction, Inc. Senica Air Conditioning trade debt $10,844 Eugene Concklin's Shiloh trade debt $9,275 Construction Partridge Plastering, Inc. trade debt $9,225 Mastered Paint & Deco. trade debt $8,277 Dauson Supply Corp. trade debt $7,061 Modular Space Corp. trade debt $6,641 Coogan Window & Door trade debt $6,628 Progressive Communications trade debt $6,173 International F. Regency Hills by Levitt and Sons, LLC's Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ohio Savings Bank Bank Loan $1,091,849 1801 East Ninth Street Suite 200 Cleveland, OH 44114 Attn: Frank J. Bolognia Sunshine Kitchens Inc. Trade Debt $79,322 P.O. Box 54830 New Orleans, LA 70154 M & N Construction-Central Trade Debt $30,515 Florida Services Inc. 3300 Indian Trail Eustic, FL 32726 Advanced Pool Technologies Inc. Trade Debt $19,290 Classic Pavers of Central Trade Debt $11,428 Florida LLC Arcadis G&M Inc. Trade Debt $2,861 M Space Holdings LLC Trade Debt $1,098 Modular Space Corporation Trade Debt $953 Consumer Source Inc. Trade Debt $550 G. Bellaggio by Levitt and Sons, LLC's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wachovia Bank Bank Loan $9,660,112 One East Broward Boulevard 3rd Floor Fort Lauderdale, FL 33301 Shendell & Pollock PL Trade Debt $1,296 621 Norhtwest 53rd Street Suite 310 Boca Raton, FL 33487 Sunshine Kitchens Inc Trade Debt $611 P.O. Box 54830 New Orleans, LA 70154 H. Levitt and Sons of Flagler County, LLC's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Bank Loan $103,859,043 101 East Kennedy Boulevard Tampa, FL 33602 Arcade G&M Inc. Trade Debt $6,470 Department 547 (LNW) Denver, CO 80291 Environmental Resource Trade Debt $1,126 Solution Inc. 1597 The Green Way, Suite 200 Jacksonville, FL 32250 BL Land LLC Trade Debt $700 I. Levitt and Sons at Hunter's Creek, LLC's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Bank loan $103,859,044 101 East Kennedy Boulevard Tampa, FL 33602 Advanced Pool Trade debt $18,027 Technologies, Inc. 3280 Cord Avenue Saint Cloud, FL 34772 R & W Maintenance Inc. Trade debt $11,029 9815 Quiet Lane Winter Garden, FL 34787 American Building Supply Trade debt $5,694 ASP Framing Corporation Trade debt $4,775 Southern Skid Steer Inc. Trade debt $2,035 Coleman Floors Trade debt $560 Rizzo Roofing LLC Trade debt $500 Superior Pools & Spas Trade debt $500 Spraggins Builder Services Trade debt $470 Marotta Enterprises Inc. Trade debt $421 Varian Associates, P.A. Trade debt $400 American Woodmark Corp. Trade debt $152 Del-Air Electrical Trade debt $125 J. Levitt G.P., LLC does not have any creditors who are not insiders. K. Levitt Construction Corp.-East does not have any creditors who are not insiders. L. Levitt and Sons of Seminole County, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Bank Loan $103,859,044 101 East Kennedy Boulevard Tampa, FL 33602 Common Grounds Inc. Trade Debt $138,171 3150 Stone Street Oviedo, FL 32765 JR Davis Construction Trade Debt $95,700 Company Inc. 210 South Hoagland Boulevard Kissimmee, FL 34741 CCI Site Development Trade Debt $47,881 Straight Up Fence Trade Debt $45,514 Vergason Sojourner and Trade Debt $39,972 McWater Inc. All Terrain Tractor Trade Debt $37,775 Service Inc. Blue Ox Land Services Trade Debt $35,602 D & S Diversified Inc. Trade Debt $35,399 Prestige Lumber & Supplies Inc. Trade Debt $30,722 Rikmar Construction Trade Debt $25,793 American Door & Mill Co. Trade Debt $24,267 Spraggins Builder Services Trade Debt $21,292 American Kitchens Inc. Trade Debt $19,523 Seminole Masonry, Inc. Trade Debt $19,141 Impire Corporation Trade Debt $17,801 General Electric Co. Trade Debt $14,125 Superior Fence & Rail Trade Debt $10,691 Bruce Hage Irrigation Co. Trade Debt $10,176 R&W Maintenance Inc. Trade Debt $10,120 M. Lev-Brn, LLC does not have any creditors who are not insiders. N. Levitt and Sons of Osceola County, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Bank Loan $103,859,044 101 East Kennedy Boulevard Tampa, FL 33602 Attn: Ralph W. Lay JR Davis Construction Trade Debt $340,243 Company, Inc. 210 South Hoagland Boulevard Kissimmee, FL 34741 Coleman Floors Trade Debt $115,551 1930 North Thoreau Drive Suite 100 Schaumberg, IL 60173 R & W Maintenance Inc. Trade Debt $92,248 American Door & Mill Co. Trade Debt $78,689 American Woodmark Corp. Trade Debt $71,537 Common Grounds, Inc. Trade Debt $56,560 Concepts in Greenery Inc. Trade Debt $56,118 M&N Construction Trade Debt $53,325 Impire Corporation Trade Debt $44,605 Southern Style Construction Trade Debt $42,104 General Electric Co. Trade Debt $39,738 High and Low Electric Trade Debt $37,015 All Terrain Tractor Trade Debt $28,993 Service Inc. B Shea Inc. Trade Debt $27,950 A&B Stucco Inc. Trade Debt $25,396 Spraggins Builder Services Trade Debt $24,283 Advantage Glass Trade Debt $24,145 Trim-Pak Trade Debt $18,763 Hart and Reid Franklin Trade Debt $16,975 O. Summerport by Levitt and Sons, LLC's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sunshine Kitchens Inc. Trade Debt $53,456 P.O. Box 54830 New Orleans, LA 70154 Coleman Floor Trade Debt $2,145 1930 North Thoreau Drive Suite 100 Schaumberg, IL 60173 R & W Maintenance Inc. Trade Debt $1,950 9815 Quiet Lane Winter Garden, FL 34787 King Painting Contractors Trade Debt $1,475 Enegy Air Inc. Trade Debt $1,086 American Kitchens Inc. Trade Debt $1,057 Nancy Perez Trade Debt $1,000 Clermont Security & Sound Trade Debt $920 CCI Site Development Trade Debt $877 Arcadis G&M Inc. Trade Debt $809 Capri Engineering Trade Debt $562 L & Jim Painting Inc. Trade Debt $360 Sun-Tech Windows Inc. Trade Debt $302 Marotta Enterprises Inc. Trade Debt $75 Advantage Glass Trade Debt $75 Broad and Cassel Trade Debt $36 Zephyrhills Processing Center Trade Debt $15 P. Levitt Construction-East, LLC's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Bank Loan $103,859,044 101 East Kennedy Boulevard Tampa, FL 33602 Q. Levitt and Sons of Lee County, LLC's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Stearns Weaver Miller Trade Debt $8,489 Weisler Alhadeff PA 150 West Flagler Street Miami, FL 33130 Accessibility Services Trade Debt $8,048 Suite 206, 7421 114th Avenue Largo, FL JM Carrigan Corp. Trade Debt $7,690 P.O. Box 1691 Sanibel, FL 33957 American Woodmark Corp. Trade Debt $7,350 WCA Waste Corporation Trade Debt $7,300 Melco Electric Trade Debt $6,115 Smith Ruden McClosky Trade Debt $6,070 Wayne Wiles Floor Trade Debt $5,874 Kelly Services Inc. Trade Debt $5,376 CMR Contracting Inc. Trade Debt $4,535 Gatesystems Unlimited Trade Debt $4,169 R. Cascades by Levitt and Sons, LLC's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sunshine Kitchens Inc. Trade debt $117,922 P.O. Box 54830 New Orleans, LA 70154 Custom Storm Shutters Trade debt $6,884 215 South East 8th Avenue Boynton Beach, FL 33435 Residential Kitchen Trade debt $4,770 Designs, Inc. 2245 West 10th Avenue Hialeah, FL 33010 Juniper Landscaping Inc. Trade debt $4,024 CMR Contracting, Inc. Trade debt $3,100 Sunny Grove Landscaping Trade debt $2,235 Cascade@Estero Resident Trade debt $1,608 Naples Daily News Trade debt $1,415 Pro Frame Cont Inc. Trade debt $1,112 Coleman Floors Company Trade debt $960 ABC Screen Masters Inc. Trade debt $870 Heidt & Associates, Inc. Trade debt $375 Gustavo Rivero & Son Trade debt $175 Henderson, Franklin, Trade debt $160 Starnes & Holt, P.A. Prestige Cleaning of Trade debt $60 SW Florida Strategic Insulation Trade debt $50 Stock Building Supply Trade debt $25 S. Levitt and Sons of Georgia, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Rochester & Associates, Inc. Trade Debt $13,001 P.O. Box 2871 Gainesville, GA 30503 Tel: (770) 718-0600 Hyphen Solutions Ltd. Trade Debt $12,398 P.O. Box 849936 Dallas, TX 75284-9936 Tel: (972) 728-8114 ALS Design & Drafting Trade Debt $5,632 c/o Robert Satkovich Services Inc. 2721 Summer Street Kennesaw, GA 30144 Tel: (770) 590-1300 Market4site LLC Trade Debt $4,200 Excel Staffing Inc. Trade Debt $3,146 American Woodmark Corp. Trade Debt $2,904 Quill Corporation Trade Debt $2,634 Randstad Trade Debt $2,012 Aeroteck Inc. Trade Debt $1,430 Smith, Gambrell & Russel Trade Debt $1,066 Georgia MLS Trade Debt $1,001 CIT Technology Fin Serv Inc. Trade Debt $925 Pitney Bowes Global Financial Trade Debt $514 Services AAA Digital Imaging Trade Debt $428 Business Printing Solutions Trade Debt $374 Classic Party Rentals Trade Debt $367 Cherokee Association of Trade Debt $326 Realtors #104 Yellow Pages Co. Trade Debt $284 Perimeter Blueprint Trade Debt $279 Staples Credit Plan Trade Debt $24 T. Levitt Industries, LLC does not have any creditors who are not insiders. U. Levitt and Sons at Hawks Haven, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America Bank loan $103,859,044 101 East Kennedy Boulevard tampa, FL 33602 Pro Frame Cont. Inc. Trade debt $133,208 2985 Center Port Circle Suite 1 Pompano Beach, FL 33064 Coleman Floors Company Trade debt $115,638 1930 North Thoreau Drive Suite 100 Schaumberg, IL 60173 Juniper Landscaping Inc. Trade debt $74,312 Gulf Western Roofing Trade debt $64,563 JJR Construction Co. Trade debt $47,211 Cox Lumber Co. dba HD Trade debt $44,599 Supply LBM Melco Electric Inc. Trade debt $44,397 Precision Drywall Trade debt $43,894 Precast Wall Systems, Inc. Trade debt $36,760 Distinctive Kitchens and Trade debt $33,457 Baths, Inc. CMR Contracting, Inc. Trade debt $32,354 The Pool People West, Inc. Trade debt $30,414 JM Carrigan Corp. Trade debt $26,833 Southern Living Trade debt $24,105 Lawson Industries Inc. Trade debt $23,240 Sansone Corp. Trade debt $22,839 Royal Const. Group, Inc. Trade debt $20,506 Carter-Pritchett Trade debt $17,540 Advertising, Inc. Jade Home D�cor, Inc. Trade debt $17,444 V. Levitt and Sons of Cherokee County, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wachovia Bank Bank Loan $103,699,834 One East Broward Boulevard 3rd Floor Fort Lauderdale, FL 33301 JB Stevens Trade Debt $1,176,747 Construction Co. Inc. P.O. Box 908027 Gainesville, GA 30213 Strack, Inc. Trade Debt $583,426 125 Laser Ind. Court Fairburn, GA 30213 Piedmont Landscape Trade Debt $450,907 Contracts LLC Suite B P.O. Box 660248 Chamblee, GA 30341 Bartow Paving Company Inc. Trade Debt $336,628 P.O. Box 2045 Cartersville, GA 30120 C&C Ripoll Masonry of Trade Debt $277,198 Georgia LLC P.O. Box 29 Point Pleasant, NJ 08742 Georgia Floors, Inc. Trade Debt $272,864 1100 Cobb International Place Kennesaw, GA 30040 JNJ Foundation Specialists Inc. Trade Debt $177,215 Coleman Floor Company Trade Debt $176,673 Hogan Construction Inc. Trade Debt $175,374 Quality Construction Trade Debt $165,509 Klein Elite Millwork Inc. Trade Debt $162,783 Residential Drywall Inc. Trade Debt $160,263 AAA Painting Trade Debt $155,441 Hydrospec, Inc. Trade Debt $136,364 Laurel Canyon, LLC Trade Debt $123,500 Staton Heating & Air Trade Debt $122,666 Conditioning Inc. Houston Stafford Electric-DNU Trade Debt $116,101 LMI Electrical Contractors Inc. Trade Debt $112,205 American Woodmark Corp. Trade Debt $101,793 W. Levitt Homes Bellaggio Partners, LLC does not have any creditors who are not insiders. X. Magnolia Lakes by Levitt and Sons, LLC's Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sunshine Kitchens Inc. Trade Debt $9,336 P.O. Box 54830 New Orleans, LA 70154 Neopost Trade Debt $575 P.O. Box 45800 San Francisco, CA 94145 Y. Levitt and Sons of Hall County, LLC's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wachovia Bank Bank Loan $103,669,834 c/o Philip J. Lyew One East Broward Boulevard 3rd Floor Fort Lauderable, FL 33301 Coffman Grading Inc. Trade Debt $612,972 2450 Atlanta Highway, Suite Cumming, GA 30085 Tel: (678) 790-0360 Sunbelt Structures Inc. Trade Debt $321,137 P.O. Box 327 Tucker, GA 30085 Tel: (770) 934-1839 Georgia Floors Inc Trade Debt $309,511 1100 Cobb International Place Kennesaw, GA 30152 Tel: (678) 287-1718 Sunbelt Asphalt Surfaces Trade Debt $297,956 1383 Duncan Lane Auburn, GA 30011 Tel: (770) 867-5312 Quality Construction Trade Debt $285,138 675 Mansell Road Suite 250 Roswell, GA 30076 Tel: (770) 667-6500 Lanier Contracting Company Trade Debt $252,583 c/o Dwight Dorsey 3690 Lawrencewille-Suwanee Road Suwanee, GA 30024 Tel: (404) 435-0816 Piedmont Landscape Trade Debt $216,393 Contractors, LLC HD Supply Construction Supply Trade Debt $168,887 R&R Superior Plumbing Inc. Trade Debt $112,380 Hogan Construction Inc. Trade Debt $110,821 Staton Heaing & Air Trade Debt $109,857 Dilbeck Drywall Inc. Trade Debt $108,566 Wilkins Electric Co. Inc. Trade Debt $85,636 General Electric Co-Atlanta Trade Debt $83,498 Andersen Brothers Inc. Trade Debt $79,086 American Woodmark Corp. Trade Debt $73,655 Hydrospec Inc. Trade Debt $70,938 Steadfast Bridge Co. Trade Debt $64,776 Z. Levitt Homes, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Blattner Brunner Inc. Trade Debt $88,843 P.O. Box 1168 Hermitage, PA 16148 Real Foundations Trade Debt $76,087 Department 890330 P.O. Box 120330 Dallas, TX 75312 Stearns Weaver Miller Trade Debt $75,387 Weisler Alhadeff P.A. 150 West Flagler Street Miami, FL 33130 King Painting Contractors Trade Debt $67,199 Berta Management of Trade Debt $47,409 Florida Corp. Mactec Engineering Trade Debt $46,673 MDG Advertising Trade Debt $45,725 Richard A. Heaston Trade Debt $45,000 Showcase Events Inc. Trade Debt $37,778 Tri-County Drywall Trade Debt $28,128 Services Inc. Broad and Cassel Trade Debt $25,102 CCI Site Development Trade Debt $21,994 FacFind Inc. Trade Debt $18,732 Market4site, LLC Trade Debt $15,860 Hyphen Solutions Ltd. Trade Debt $14,690 Internet Broadcasting Systems Trade Debt $13,478 Fun Planners Inc. Trade Debt $12,468 Digiscribe Inc. Trade Debt $10,783 ASP Framing Corporation Trade Debt $8,945 Builder Homesite Inc. Trade Debt $7,525 AA. Levitt and Sons at Tradition, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ KeyBank Bank loan $96,478,909 2385 Executive Center Drive Suite 350 Boca Raton, FL 33431 H & J Contracting Inc. Trade debt $201,077 P.O. Box 210427 Royal Palm Beach, FL 33421 Hayslip Landscape Trade debt $166,362 6153 South US #1 Fort Pierce, FL 34982 East Coast Bobcat Inc. Trade debt $143,424 Tropic Floors Trade debt $135,958 Certified Building Contractors Trade debt $115,635 Royal Palm Aluminum, Inc. Trade debt $95,820 Tradition Development Trade debt $93,090 Precision Drywall Trade debt $90,582 Comet Electric Trade debt $82,968 Regal Kitchens Trade debt $72,420 Belvedere Contracting Trade debt $65,526 General Electric Co. Trade debt $51,989 Pool People East Inc, The Trade debt $50,990 Reliable Roofing Trade debt $46,946 Dacosta Services Inc. Trade debt $45,407 Tradition Community Assoc. Trade debt $45,360 Buckeye Plumbing Inc. Trade debt $33,924 Royal Const. Group, Inc. Trade debt $33,083 Roof Tile Specialist Inc. Trade debt $32,936 AB. Avalon Park By Levitt and Sons, LLC's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sunshine Kitchens Inc. Trade Debt $186,643 P.O. Box 54830 New Orleans, LA 70154 Cloud 9 Services Inc. Trade Debt $26,268 1201 W. Jackson Street Orlando, FL 32739 All Terrain Tractor Trade Debt $20,388 Service Inc. P.O. 390958 Deltona, FL 32739 Superior Trim & Door Trade Debt $11,305 Southern Skid Steer Inc. Trade Debt $10,100 Universal Engineering Sciences Trade Debt $6,459 Stearns Weaver Miller Trade Debt $5,065 US Storing & Equipment Co. Trade Debt $4,626 Foote Steel Corporation Trade Debt $4,275 Bobcat Excavating Inc. Trade Debt $2,960 Marotta Enterprises Inc. Trade Debt $2,281 Coleman Floors Trade Debt $1,735 Southern Marble & Design Trade Debt $1,729 M.A. Bruder & Sons, Inc. Trade Debt $1,660 M & N Construction Trade Debt $1,400 Seminole Cans Inc. Trade Debt $1,373 High and Low Electric Trade debt $1,038 Servicemaster of Southwest Trade Debt $741 Seminole AC. Levitt and Sons of Paulding County, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wachovia Bank Bank Loan $103,669,834 One East Broward Boulevard 3rd Floor Fort Lauderdale, FL 33301 Attn: Philip J. Lyew Strack, Inc. Trade Debt $1,398,589 125 Laser Ind. Court Fairburn, GA 30213 Aiken Grading, Inc. Trade Debt $519,044 P.O. Box 106 Dallas, GA 30132 Tippins Contracting Co., Inc. Trade Debt $88,606 Qore, Inc. Trade Debt $51,521 Bartow Paving Company, Inc. Trade Debt $45,678 Gaskins Surveying Co., Inc. Trade Debt $35,497 Quantum Underground Trade Debt $25,260 Piedmont Landscape Trade Debt $10,875 TA Millwork LLC Trade Debt $5,310 Hydrospec, Inc. Trade Debt $3,373 Consumer Source Inc. Trade Debt $3,071 Smith, Gambrell & Russell Trade Debt $3,046 Excel Staffing Inc. Trade Debt $2,904 Clear Channel Outdoor Melbourne Trade Debt $2,446 Clear Channel Outdoor Atlanta Trade Debt $2,446 Atlanta Erosion Consultants LLC Trade Debt $1,750 Flgraphix Inc. Trade Debt $1,337 American Woodmark Corp. Trade Debt $1,040 Angles Wood & Graphics Trade Debt $920 AD. Levitt and Sons of Tennessee, LLC does not have any creditors who are not insiders. AE. Levitt Construction Georgia, LLC does not have any creditors who are not insiders. AF. Levitt and Sons of Lake County, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ralph W. Lay Bank Loan $103,859,043 Bank of America 101 East Kennedy Boulevard Tampa, FL 33602 M & N Construction Trade Debt $237,947 Central Florida Services, Inc. 3300 Indian Trail Eustis FL, 32726 Cascades at Groveland CDD Trade Debt $206,616 7777 Glades Road Boca Raton, FL 33434 Concepts in Greenery Inc. Trade Debt $189,919 Energy Air Inc. Trade Debt $153,162 Dewitt Excavating Inc. Trade Debt $92,774 Garrard Carpentry Inc. Trade Debt $85,060 Palmer Electric Company Trade Debt $78,071 V&V Const Services Inc. Trade Debt $67,950 Superior Trim & Door Trade Debt $58,268 Collis Roofing Inc. Trade Debt $55,905 84 Lumber Company L.P. Trade Debt $55,543 Rikmar Construction Trade Debt $50,868 R & W Maintenance Inc. Trade Debt $48,112 Morales-Keesee Design Trade Debt $44,266 Rizzo Roofing LLC Trade Debt $40,729 Swell Construction Co. Trade Debt $40,635 Rens Plumbing Inc. Trade Debt $39,146 ASP Framing Corporation Trade Debt $34,788 Florida Landscape Trade Debt $33,547 AG. Bowden Building Corporation's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Regions Bank Bank Loan $24,734,018 6200 Poplar Avenue 3rd Floor Memphis, TN 38119 Financial Federal Bank Loan $217,615 6305 Humpreys Boulevard Suite 100 Memphis, TN 38120 Millington Floor Covers Inc. Trade Debt $202,232 9040 Highway 51 North Millington, TN 38053 Boral Bricks Inc. Trade Debt $131,841 Christenson Sash & Door Trade Debt $131,161 Jack M. Otto Electric Trade Debt $130,461 Thrifty Building Supply Trade Debt $124,701 Woodson & Bozeman Inc. Trade Debt $110,378 Mitchell Ivey Taylor Trade Debt $82,957 Dyke Industries Inc. Trade Debt $82,817 William T. Yarbrough Jr. Trade Debt $71,149 Acme Brick Company Trade Debt $66,623 Quality Insulation Inc. Trade Debt $63,004 Owen Lumber & Millwork Trade Debt $55,784 Marble Products Inc. Trade Debt $55,312 Cenwood Appl/Memphis Trade Debt $54,775 R W Wilkerson Heating Trade Debt $49,577 84 Lumber Company Trade Debt $49,089 Heritage Plumbing LLC Trade Debt $32,521 Allied Waste Trade Debt $32,000 AH. Levitt and Sons of South Carolina, LLC does not have any creditors who are not insiders. AI. Levitt and Sons of Nashville, LLC did not file a list of its 20 largest unsecured creditors. AJ. Levitt and Sons of Horry County, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wachovia Bank bank loan $103,669,834 One East Broward Boulevard 3rd Floor Fort Lauderdale, FL 33301 c/o Philip J. Lyew One East Broward Boulevard 3rd Floor Fort Lauderdale, FL 33301 Waccamaw Landscaping & trade debt $384,788 Construction Construction, Inc. P.O. Box 213 Pawleys Island, SC 29585 Tel: (843) 237-2224 Philips and Jordan, Inc.- trade debt $345,169 North Florida 1301 48th Avenue North, Suite A Myrtle Beach, SC 29577 Tel: (843) 692-27200 J.S. Elite Flooring Co. trade debt $306,669 541 Robert Grisom Parkway Myrtle Beach, SC 29577 Tel: (843) 444-0407 Cohen Drywall Co., Inc. trade debt $251,086 1415 Old Highway 52 Moncks Corner, SC 29461 Tel: (843) 761-6587 Renew Construction trade debt $233,637 Sky General Contracting trade debt $228,604 American Woodmark trade debt $224,397 dba Timberlake Cabinet Archer Exteriors, Inc. trade debt $202,587 84 Lumber Company trade debt $188,726 Elite Exteriors, LLC trade debt $148,387 Coastal Residential Services, trade debt $139,394 L.L.C. Omni Electrical Services trade debt $130,264 General Electric Co. trade debt $121,197 Dean Custom Air trade debt $105,271 Trebor Industries, Inc. trade debt $93,955 Countertop Store, The trade debt $93,171 Cribbs Well & Supply Co., Inc. trade debt $87,700 Tricity Insulation trade debt $83,177 Ferguson Enterprises, Inc. trade debt $63,398 AK. Levitt and Sons of Shelby County, LLC's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Regions Bank Bank Loan $24,734,018 c/o Maria Lapuente 6200 Poplar Avenue, 3rd Floor Memphis, TN, 38119 AL. Levitt Construction-South Carolina, LLC does not have any creditors who are not insiders. LSO LTD: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------ Debtor: LSO Ltd. dba Lifestyles Tours and Travel dba Lifestyles Resorts dba PlayCouples dba NASCUA dba Wide World Lifestyles 2641 West La Palma Avenue, Suite H Anaheim, CA 92801-2664 Bankruptcy Case No.: 07-13744 Chapter 11 Petition Date: November 8, 2007 Court: Central District Of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Michael Jay Berger, Esq. 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 Debtor's list of its 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Robert McGinley $1,005,000 2641 West La Palma Avenue Suite H Anaheim, CA 92801 Desire $560,496 Boulevard Kukulcan km 5 Zona Hotelera American Express Business Platinum $109,943 P.O. Box 297879 Fort Lauderdale, FL 33329-7879 Wells Fargo Line of Credit $96,704 Leffert Jay & Polglaze, P.A. $56,521 Black Belt Programming $15,658 Murray & Sabban LLP $12,503 Network 2000 $9,111 Tele Pacific Communications $5,724 American Express Business Gold Card $5,478 Konica Minolta Bus Solutions - Philadelphia $3,923 IKON Financial Services $3,808 Weston, Garrou & DeWitt $2,155 Wells Fargo Credit Card $1,515 R&R Publishing $1,350 Quick Books Enterprise Solutions $1,200 Konica Minolta Bus Solutions - Los Angeles $1,101 Express Graphics & Printing $987 Complete Printing Company $948 M FABRIKANT: Judge Bernstein Approves Joint Disclosure Statement ---------------------------------------------------------------- The Hon. Stuart M. Bernstein of U.S. Bankruptcy Court for the Southern District of New York approved the Disclosure Statement explaining the Chapter 11 Plan of Liquidation jointly filed by M. Fabrikant & Sons Inc., its debtor-affiliate, Fabrikant-Leer International Ltd., the Official Committee of Unsecured Creditors, and Wilmington Trust Company. The Court determined that the Disclosure Statement contains adequate information within the meaning of Section 1125 of the U.S. Bankruptcy Code. As reported in the Troubled Company Reporter on Oct. 4, 2007, the Plan provides for the liquidation of the assets of the Debtors' estates, including the investigation and prosecution of certain causes of action, by two liquidating trusts to be formed pursuant to the Plan and related liquidating trust agreements. Plan Funding On May 29, 2007, the Debtors obtained Court authority to sell certain of their inventories to Surya Capital LLC for $10.4 million and six remaining lots of assets to Wilmington for $38.5 million. The Surya and Wilmington asset sale agreements closed on June 1, 2007, and July 12, 2007, respectively. The Debtors also obtained Court approval on July 10, 2007, to sell two life insurance policies owned by MFS for Charles Fortgang and Marjorie Fortgang. Each policy provided for a payment of $4 million to MFS upon the death of each respective insured. MFS paid annual premiums on the Charles Fortgang policy in the amount of $136,922 per year, and on the Marjorie Fortgang policy in the amount of $88,087 per year. The surrender value of each policy was zero dollars on account of surrender charges that would have to have been paid by the policy holder upon surrender of each policy. To capitalize on the policies, the Debtors hired Melville Capital, a life settlement broker, to sell the policies. Melville had estimated their value at approximately $1.3 million to $1.75 million in the aggregate. To date, no closing on the sale of the policies has taken place. At first, Charles and Marjorie Fortgang, whose lives are insured by the policies, refused to execute the necessary consents to transfer the Debtors' interests in the policies to the prospective purchaser. After negotiations among the Debtors, Charles and Marjorie Fortgang, and the Plan Proponents, the Fortgangs agreed to sign the necessary documentation only if the proceeds from the sale of the policies are escrowed and that the Debtors, the Committee and Wilmington agree not to pursue the funds in the escrow before Sept. 15, 2007. In an effort to facilitate the sale of the policies and to avoid costly and potentially protracted litigation with the Fortgangs over the issue, the Debtors and the Plan Proponents agreed to this arrangement. Further, under the "sweep" provisions of the Court's final order on the Debtors' use of their lenders' cash collateral, Wilmington has collected numerous cash sweeps throughout the course of the Debtors' cases aggregating approximately $33,000,000. Treatment of Claims Under the Plan, holders of Administrative Expense Claims, Priority Tax Claims, Professional Fee Claims, U.S. Trustee Fees, and Other Priority Claims will receive payments in full, in cash. Class 2 claims, or current lender claims will receive pro rated share of the Shared Assets Trust A Interests, which will entitle the holder to distributions from the Shared Assets Trust as and to the extent set forth in this Plan and in the Shared Assets Trust Agreement and (b) payment in full in Cash of all fees of Wilmington incurred in connection with the Cases. Holders of Class 3 claims, or other secured claims, will receive any of these alternative treatments, at the election of a shared assets trustee: a) payment in full in cash; b) unaltered legal, equitable and contractual rights to which the claim entitles the holder; c) treatment pursuant to Section 1124(2) of the Bankruptcy Code; or d) transfer and surrender of all collateral securing the Claim. Holders of Class 4 Unsecured Claims and Class 5 Unsecured Claims will receive pro rata distribution from the proceeds of any and all claims or causes of action of the Debtors, the estates, or the Committee, against third parties. The plan proponents estimate the distribution for class 4 and 5 unsecured claims to be at 7.5% to 100%. Class 6 Claims, which consists of all interests in any of the Debtors, and all claims arising from rescission of a purchase or sale of those interests, or for damages arising from a purchase or sale, are not entitled to any distribution under the Plan. A full-text copy of the Joint Chapter 11 Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=071003212249 A full-text copy of the Disclosure Statement explaining that Joint Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=071003212044 About M. Fabrikant Headquartered in New York City, M. Fabrikant & Sons, Inc. -- http://www.fabrikant.com/-- sells diamonds and jewelries. The company and its affiliate, Fabrikant-Leer International Ltd., filed for chapter 11 protection on Nov. 17, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-12737). Mitchel H. Perkiel, Esq., Lee W. Stremba, Esq., and Paul H. Deutch, Esq., at Troutman Sanders LLP represent the Debtors in their restructuring efforts. Alan Kolod, Esq., Lawrence L. Ginsberg, Esq., and Christopher J. Caruso, Esq., at Moses & Singer LLP serve as counsel to the Official Committee of Unsecured Creditors. In schedules filed with the Court, M. Fabrikant disclosed total assets of $225,612,204 and total debts of $439,993,890. M FABRIKANT: Plan Confirmation Hearing Slated for December 19 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York scheduled a hearing for Dec. 19, 2007, at 10:00 am, prevailing Eastern Time, to consider confirmation of the Chapter 11 Plan of Liquidation jointly filed by M. Fabrikant & Sons Inc., its debtor- affiliate, Fabrikant-Leer International Ltd., the Official Committee of Unsecured Creditors, and Wilmington Trust Company. The Court ruled that the record holder date for holders of claims in the voting classes is Nov. 7, 2007. Voting classes include holders of class 2 claims (claims of the current lenders), class 3 claims (other secured claims), class 4 claims (unsecured claims against M. Fabrikant), and class 4 claims (unsecured claims against Fabrkikant-Leer). Persons and entities entitled to vote on the Plan must deliver their ballots by mail, hand delivery, or overnight courier no later than 4:00 p.m., prevailing Eastern Time, on Dec. 3, 2007, to the voting agent: a. if by mail: The Garden City Group, Inc. Re: M. Fabrikant & Sons, Inc. PO Box 9000 #6492 Merrick, NY 11566-9000 b. if by hand delivery or overnight courier: The Garden City Group, Inc. Re: M. Fabrikant & Sons, Inc. 105 Maxess Road Melville, NY 11747 Objections to confirmation of the Plan must be filed with the Clerk of the Bankruptcy Court, together with proof of service, no later than 4:00 p.m., prevailing Eastern Time, on Dec. 7, 2007, and must be served on (a) counsel to Wilmington; (b) counsel to the Committee; (c) the United States Trustee for the Southern District of New York; (d) counsel to the Debtors; and (e) any party that has filed a notice of appearance in these cases. Responses to objection to confirmation of the Plan must be filed with the Clerk of the Bankruptcy Court, together with proof of service, no later than 4:00 p.m., prevailing Eastern Time, on Dec. 13, 2007. About M. Fabrikant Headquartered in New York City, M. Fabrikant & Sons, Inc. -- http://www.fabrikant.com/-- sells diamonds and jewelries. The company and its affiliate, Fabrikant-Leer International Ltd., filed for chapter 11 protection on Nov. 17, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-12737). Mitchel H. Perkiel, Esq., Lee W. Stremba, Esq., and Paul H. Deutch, Esq., at Troutman Sanders LLP represent the Debtors in their restructuring efforts. Alan Kolod, Esq., Lawrence L. Ginsberg, Esq., and Christopher J. Caruso, Esq., at Moses & Singer LLP serve as counsel to the Official Committee of Unsecured Creditors. In schedules filed with the Court, M. Fabrikant disclosed total assets of $225,612,204 and total debts of $439,993,890. M FABRIKANT: Last Day of Filing Administrative Claims is Dec. 7 --------------------------------------------------------------- The Hon. Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York set the deadline for filing proofs of administrative claims on Dec. 7, 2007, at 4:00 p.m. Parties must submit claims to the Court Clerk: a. if by mail: United States Bankruptcy Court Southern District of New York Re: M. Fabrikant & Sons, Inc., et al., Claims Processing P.O. Box 5197, Bowling Green Station New York, NY 10274 c. if by hand delivery or overnight courier: United States Bankruptcy Court Southern District of New York Re: M. Fabrikant & Sons, Inc., et al., Claims Processing One Bowling Green, Room 534 New York, NY 10004 Pursuant to section 503(a) of the Bankruptcy Code and Bankruptcy Rule 3003(c)(3), each individual, partnership, joint venture, corporation, estates, trust, and governmental unit, that asserts an administrative expense claim against the Debtors, which claim arose (i) between the applicable commencement date and the administrative expense bar date, or (ii) as the result of goods delivered to the Debtors in the ordinary course of business within twenty days before the applicable commencement date pursuant to section 503(b)(9), will file a request for payment of their administrative expense. The administrative proofs of claim will be deemed timely filed only if actually received on or before the administrative expense bar date. Administrative proofs of claim sent by facsimile or telecopy will not be accepted. About M. Fabrikant Headquartered in New York City, M. Fabrikant & Sons, Inc. -- http://www.fabrikant.com/-- sells diamonds and jewelries. The company and its affiliate, Fabrikant-Leer International Ltd., filed for chapter 11 protection on Nov. 17, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-12737). Mitchel H. Perkiel, Esq., Lee W. Stremba, Esq., and Paul H. Deutch, Esq., at Troutman Sanders LLP represent the Debtors in their restructuring efforts. Alan Kolod, Esq., Lawrence L. Ginsberg, Esq., and Christopher J. Caruso, Esq., at Moses & Singer LLP serve as counsel to the Official Committee of Unsecured Creditors. In schedules filed with the Court, M. Fabrikant disclosed total assets of $225,612,204 and total debts of $439,993,890. MORGAN STANLEY: S&P Places 'B' Rating Under Negative CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' rating on the $3 million class A-10 secured fixed-rate notes from Morgan Stanley ACES SPC?s series 2006-8 on CreditWatch with negative implications. The rating action reflects the Nov. 8, 2007, placement of the ratings on Mediacom Communications Corp. (BB-/Watch Neg/NR) on CreditWatch with negative implications. Morgan Stanley ACES SPC's $46 million secured fixed-rate notes series 2006-8 is a credit-linked note transaction. The rating on each class of notes is based on the lowest of (i) the ratings on the respective reference obligations for each class (with respect to class A-10, the senior notes issued by Mediacom LLC {'B/Watch Neg'}, a subsidiary of Mediacom Communications Corp.); (ii) the rating on the guarantor of the counterparty to the credit default swap, the interest rate swap, and the contingent forward agreement (in each instance, Morgan Stanley {'AA-'}; and (iii) the rating on the underlying securities, BA Master Credit Card Trust II's class A certificates from series 2001-B due 2013 ('AAA'). MATTRESS GALLERY: Wants to Hire Greenberg Traurig as Counsel ------------------------------------------------------------ Gallery Corp. dba Mattress Gallery asks the United States Bankruptcy Court for the District of Delaware for permission to employ Greenberg Traurig LLP as its counsel, nunc pro tunc to Nov. 1, 2007. Greenberg Traurig is expected to: a. provide legal advice with respect to the Debtor's powers and duties as debtor-in-possession in the continued operation of its business and management of its property; b. negotiate, draft pursue confirmation of any plan of reorganization and approval of any accompanying disclosure statement; c. prepare on behalf of the Debtor all applications, motions, answers, orders, reports and other legal papers necessary to the administration of the Debtor's estate; d. appear in Court and protect the interest of the Debtor before the Court; e. assist with any dispostion of the Debtor's assets, by sale or otherwise; f. attending all meetings and negotiate with representative of creditors, the United States Trustee, and other parties-in- interest; and g. perform all other legal services for, and provide all other necessary legal advice to, the Debtor which may be necessary and proper in this case. The firm's professionals and their compensation rates are: Professionals Hourly Rate ------------- ----------- Donald J. Detweiler, Esq. $510 Matthew T. Gensburg, Esq. $580 Sandra G.M. Selzer, Esq. $405 Dennis A. Meloro, Esq. $360 Ethan F. Ostrow $260 Kerry Carlon $190 Elizabeth C. Thomas $190 Designations Hourly Rate ------------ ----------- Attorneys $180-$900 Legal Assistants/Paralegals $75-$300 The Debtor discloses that on Oct. 31, 2007, the firm received a $150,000 retainer fee in connection with the Debtor's petition and various first day motions. Donald J. Detweiler, Esq., a shareholder of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Detweiler can be reached at: Donald J. Detweiler, Esq. Greenberg Traurig LLP The Nemours Building 1007 North Orange Street, Suite 1200 Wilmington, DE 19801 Tel: (302) 661-7000 Fax: (302) 661-7360 http://www.gtlaw.com/ A hearing to consider the Debtor's request has been set for Nov. 21, 2007. Headquartered in Commerce, California, Gallery Corp. dba Mattress Gallery filed for Chapter 11 protection on Nov. 1, 2007 (Bankr. D. Del. Case No. 07-11628). When the Debtor filed for bankruptcy, it listed total assets and debts between $1 million and $100 million. MATTRESS GALLERY: Court Approves Kurtzman Carson as Claims Agent ---------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware gave Gallery Corporation dba Mattress Gallery authority to employ Kurtzman Carson Consultant LLC as its balloting, noticing and claims agent. Kurtzman Carson is expected to: a. serve as the Court's notice agent to mail notices to the estate's creditors and parties-in-interest; b. provide computerized claims, claims objection and balloting database services; and c. provide expertise and consultation and assitance in claim and ballot processing, and other relevant administrative services. Additionally, the firm will: a. notify all potential creditors of the filing of the Chapter 11 petition herein and of the setting of the firt meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code. b. file affidavits of service for all mailings, including a copy of each notice, a list of persons to whom the notice was mailed, and the date mailed. c. maintain an official copry of the Debtor's schedules, listing creditors and amounts owed; d. furnish a notice of the last date for the filing of proofs of claim and a form for filing a proof of claim to creditors and parties-in-interest; e. docket all claims filed and maintaining the official claims register on behalf of the clerk and provide the clerk an exact duplicate thereof; f. specify in the claims register for each claim docket: i. the claims number assigned; ii. the date received; iii. the name and address of the claimant; iv. the filed amount of the claim, if liquidated; and v. the allowed amount of the claim. g. record all transfers of claims and provide notices of the transfers as required pursuant to Bankruptcy Rule 3001(e); h. maintain the official mailing list for all entities who have filed proofs of claim; i. mail the Debtor's disclosure statement, plan, ballots and any other related solicitation materials to holders of impaired claims and equity interests; j. receive any tallying ballots and responding to inquiries respecting voting procedures and the soliciation of votes on the plan; and k. provide any other distribution services as are necessary or required. The Debtor tells the Court that the firm received a retainer in the amount of $20,000 for services to be rendered. In addition, the Debtor agreed to pay $10,000 per month to the firm for this engagement. Robert Q. Klamser, the vice president of the firm, assures the Court that the firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Klamser can be reached at: Robert Q. Klamser Vice President Kurtzman Carson Consultants LLC 2335 Alaska Ave. El Segundo, CA 90245 Tel: (310) 823-9000 Fax: (310) 823-9133 Headquartered in Commerce, California, Gallery Corp. dba Mattress Gallery filed for Chapter 11 protection on Nov. 1, 2007 (Bankr. D. Del. Case No. 07-11628). When the Debtor filed for bankruptcy, it listed total assets and debts between $1 million and $100 million. MCCLATCHY CO: Declining Revenue Cues Moody's to Review Ratings -------------------------------------------------------------- Moody's Investors Service placed The McClatchy Company's Ba1 Corporate Family rating, Ba1 Probability of Default rating, and associated debt ratings on review for downgrade due to ongoing pressure on the company's cash flow from declining advertising revenue that contributed to a $1.5 billion write-down of newspaper assets in the third quarter, and the resulting challenge to reduce leverage to the ranges originally incorporated in the Ba1 rating. On Review for Possible Downgrade: Issuer: McClatchy Company (The) -- Corporate Family Rating, currently Ba1 -- Probability of Default Rating, currently Ba1 -- Senior Unsecured Bank Credit Facility, currently Baa3 -- Senior Unsecured Regular Bond/Debenture, currently Ba2 Rating Outlook Actions: Issuer: McClatchy Company (The) -- Outlook, Changed To Rating Under Review From Negative McClatchy's credit metrics are weak for the rating with debt-to- EBITDA (4.9x LTM June 30, 2007 incorporating Moody's standard adjustments) remaining near the pro forma level at the time of June 2006 Knight Ridder acquisition. Moody's will review the potential for the company to reduce 2008 leverage to the 3.5-4.0x debt-to-EBITDA and 11-15x debt-to-free cash flow ranges originally incorporated in the Ba1 CFR. Moody's will consider the execution risks and feasibility of the company's plan to reduce debt by $600 million through the end of 2008 with free cash flow, asset sale proceeds and tax refunds, as well as the company's willingness to continue to repay debt while its share price is under pressure. Moody's will also review the company's ongoing cost management plans and strategies to stabilize revenue and operating cash flow generation, which stabilization is likely to be integral to realizing the aforementioned credit metrics. LGD assessments are also subject to change as McClatchy's mix of guaranteed bank debt and unguaranteed bonds changes. The McClatchy Company, headquartered in Sacramento, California, is the third largest newspaper company in the U.S., with 31 daily newspapers and approximately 50 non-dailies. McClatchy also owns McClatchy Interactive, Real Cities and equity investments in CareerBuilder, Classified Ventures, and other newspaper and online properties. Annual revenue estimates $2.4 billion. MCMORAN EXPLORATION: Prices $300 Million of 11.875% Notes Offering ------------------------------------------------------------------ McMoRan Exploration Co. has priced $300 million of senior notes due 2014. The senior notes have an interest rate of 11.875% per year. The transaction is expected to settle on Nov. 14, 2007. This offering will generate net proceeds of approximately $292 million, which McMoRan will use to repay borrowings under the bridge facility used in connection with the acquisition of the Gulf of Mexico shelf oil and gas properties of Newfield Exploration Company. McMoRan expects to repay the remaining $58 million of the bridge facility using borrowings from its existing bank credit facility. Borrowings under the bank credit facility at Sept. 30, 2007 totaled $313 million. Interest on the bank credit facility will be LIBOR plus 2.25% based on estimated borrowings. The joint book-running managers for this offering are JPMorgan and Merrill Lynch & Co. BNP Paribas is a co-manager and served as a qualified independent underwriter for this offering. The offering will be made under the company's existing shelf registration statement filed with the Securities and Exchange Commission. Copies of the prospectus supplements and accompanying prospectus relating to this offering may be obtained by contacting: J.P. Morgan Securities Inc. No. 4 Chase Metrotech Center, CS Level Brooklyn, NY 11245 or Merrill Lynch & Co. Attn: Prospectus Department No. 4 World Financial Center New York, NY 10080 About McMoran Exploration Headquartered in New Orleans, McMoRan Exploration Company (NYSE: MMR) -- http://www.mcmoran.com/-- is an independent public company engaged in the exploration, development and production of oil and natural gas offshore in the Gulf of Mexico and onshore in the Gulf Coast area. McMoRan is also pursuing plans for the development of the MPEH(TM) which will be used for the receipt and processing of liquefied natural gas and the storage and distribution of natural gas. As reported in the Troubled Company Reporter on Oct. 23, 2007, McMoRan Exploration Co.'s consolidated balance sheet at Sept. 30, 2007, showed $1.81 billion in total assets and $1.91 billion in total liabilities, resulting in a $100 million total shareholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, moreover showed strained liquidity with $190.5 million in total current assets available to pay $413.5 million in total current liabilities. * * * As reported in the Troubled Company Reporter on Nov. 7, 2007, Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating and stable outlook to McMoRan Exploration Co. At the same time, Standard & Poor's assigned its 'CCC+' rating to McMoRan's proposed $400 million senior unsecured notes. MEGA BRANDS: S&P Puts 'B+' Corp. Credit Rating Under Neg. Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' long-term corporate credit and bank loan ratings on Montreal-based MEGA Brands Inc. on CreditWatch with negative implications. The '3' recovery rating on the bank loan is unchanged. "The CreditWatch placement reflects our concerns that revenues, earnings, and credit protection measures at MEGA Brands did not meet our expectations for the third quarter ended Sept. 30, 2007, and could remain weaker than expected in the medium term due to challenges the company faces," said Standard & Poor's credit analyst Lori Harris. Revenues in third-quarter 2007 declined 9% compared with the same quarter the previous year because of lower Magnetix product sales and production delays in Asia. Reported gross profit (excluding the C$20 million noncash inventory revaluation charge) dropped 38% for the quarter compared with the same period the previous year due to the reasons cited above as well as manufacturing inefficiencies and the sale of excess inventory at a lower gross margin. For the past two years, the company has been involved in litigation related to its Magnetix product, which resulted in product recalls, product replacement, and product liability settlement expenses. The charges related to the litigation have negatively affected the company's debt levels and credit ratios in a material way. MEGA Brands has chosen to be self- insured for Magnetix products manufactured before May 1, 2006, and for incidents occurring after Dec. 1, 2006, because it viewed the cost of insurance as prohibitive. Management's decision to be self-insured raises uncertainty surrounding the company's potential exposure to liability claims and MEGA Brands' ability to financially support these claims without excessively jeopardizing the business' financial strength. In addition, the company is involved in litigation with the former shareholders of Rose Art Industries Inc., concerning contingent payments related to MEGA Brands' acquisition of the business in 2005. An additional $51 million in accrued consideration has yet to be paid because MEGA Brands is disputing the claim. Key credit measures (adjusted for operating leases and excluding certain one-time charges) have weakened considerably in the past couple of years, including debt to EBITDA of more than 5x for the 12 months ended Sept. 30, 2007. MEGA Brands was in compliance with its financial covenants and liquidity remained adequate for the ratings at Sept. 30, 2007. S&P will resolve the CreditWatch listing in the very near term after reviewing Mega Brands' operating, strategic, and financial plans. MORGAN STANLEY: Fitch Holds Junk Rating on Class B-5 Certificates ----------------------------------------------------------------- Fitch Ratings affirmed these Morgan Stanley residential mortgage pass-through certificates: Series 1996-1 -- Class A at 'AAA'; -- Class B-1 at 'AAA'; -- Class B-2 at 'AAA'; -- Class B-3 at 'AA'; -- Class B-4 at 'BBB'; -- Class B-5 at 'CCC/DR2'. Series 2002-WL1, Pool 1 -- Class A at 'AAA'; -- Class B-1 at 'AAA'; -- Class B-2 at 'AAA'; -- Class B-3 at 'AA'; -- Class B-4 at 'A'; -- Class B-5 at 'BBB'. Series 2002-WL1, Pool 2 -- Class A-X-3 at 'AAA'; -- Class 3-B-1 at 'AAA'; -- Class 3-B-2 at 'AAA'; -- Class 3-B-3 at 'AAA'; -- Class 3-B-4 at 'AAA'; -- Class 3-B-5 at 'AA'. The affirmations, affecting about $17.7 million of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. All classes have experienced a growth in CE of at least three times their original CE levels. The collateral of the above transactions primarily consists of conventional, fully amortizing, jumbo-prime, 15-year and 30-year fixed-rate mortgage loans secured by first liens on one- to four- family residential properties. The mortgage loans were acquired by Morgan Stanley from various originators. As of the September 2007 remittance date, the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) of series 1996-1 and 2002-WL1 are 2% and 3%, respectively and the transactions are seasoned 140 and 62 months, respectively. MORGAN STANLEY: Moody's Cuts and Reviews Ratings on 11 Deals ------------------------------------------------------------ Moody's Investors Service downgraded the ratings of 86 tranches and has placed under review for possible downgrade the ratings of 37 tranches from 11 deals issued by Morgan Stanley in 2006 and late 2005. Four downgraded tranches remain on review for possible downgrade. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, Alt-A mortgage loans. The ratings were downgraded and placed under review for downgrade based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. In its analysis Moody's has also applied its published methodology updates to the non delinquent portion of the transactions. Issuer: Morgan Stanley Mortgage Loan Trust 2005-11AR -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A3, previously A1, -- Cl. M-5, Downgraded to Baa3, previously A2, -- Cl. M-6, Downgraded to Ba1, previously A3, -- Cl. B-1, Downgraded to B2, previously Baa1, -- Cl. B-2, Downgraded to B3, previously Baa2, -- Cl. B-3, Downgraded to B3 on review for possible further downgrade, previously Baa2, -- Cl. B-4, Downgraded to Ca, previously Ba2. Issuer: Morgan Stanley Mortgage Loan Trust 2005-6AR -- Cl. 1-M-3 Currently Aa3 on review for possible downgrade, -- Cl. 1-M-4, Downgraded to A2, previously A1, -- Cl. 1-M-5, Downgraded to Baa1, previously A2, -- Cl. 1-M-6, Downgraded to Baa2, previously A3, -- Cl. 1-B-1, Downgraded to Baa3, previously Baa1, -- Cl. 1-B-2, Downgraded to Ba1, previously Baa2, -- Cl. 1-B-3, Downgraded to B2, previously Baa3. Issuer: Morgan Stanley Mortgage Loan Trust 2005-9AR -- Cl. B-3, Downgraded to Ba1, previously Baa2, -- Cl. 1-B-3, Downgraded to Ba1, previously Baa2. Issuer: Morgan Stanley Mortgage Loan Trust 2006-11 -- Cl. 1-M-1 Currently Aa1 on review for possible downgrade, -- Cl. 1-M-2 Currently Aa2 on review for possible downgrade, -- Cl. 1-M-3 Currently Aa3 on review for possible downgrade, -- Cl. 1-M-4, Downgraded to A3, previously A1, -- Cl. 1-M-5, Downgraded to Baa1, previously A2, -- Cl. 1-M-6, Downgraded to Baa2, previously A3, -- Cl. 1-B-1, Downgraded to Ba1, previously Baa1, -- Cl. 1-B-2, Downgraded to Ba2, previously Baa2, -- Cl. 1-B-3, Downgraded to B1, previously Baa3. Issuer: Morgan Stanley Mortgage Loan Trust 2006-13ARX -- Cl. A-3 Currently Aaa on review for possible downgrade, -- Cl. A-4 Currently Aaa on review for possible downgrade, -- Cl. M-1 Currently Aa1 on review for possible downgrade, -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to Baa2, previously A1, -- Cl. M-5, Downgraded to Ba2, previously A2, -- Cl. M-6, Downgraded to Ba3, previously A3, -- Cl. B-1, Downgraded to B2, previously Baa1, -- Cl. B-2, Downgraded to Caa1, previously Baa2, -- Cl. B-3, Downgraded to Ca, previously Baa3. Issuer: Morgan Stanley Mortgage Loan Trust 2006-16AX -- Cl. M-1 Currently Aa1 on review for possible downgrade, -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A3, previously A1, -- Cl. M-5, Downgraded to Baa1, previously A2, -- Cl. M-6, Downgraded to Baa2, previously A3, -- Cl. B-1, Downgraded to Ba2, previously Baa1, -- Cl. B-2, Downgraded to Ba3, previously Baa2, -- Cl. B-3, Downgraded to B1, previously Baa3, -- Cl. 3-M-1 Currently Aa2 on review for possible downgrade, -- Cl. 3-M-2, Downgraded to Baa3, previously A2, -- Cl. 3-B-1, Downgraded to B2, previously Baa2, -- Cl. 3-B-2, Downgraded to Caa2, previously Baa3. Issuer: Morgan Stanley Mortgage Loan Trust 2006-1AR -- Cl. B-1 Currently Aa2 on review for possible downgrade, -- Cl. B-2, Downgraded to Ba1, previously A2, -- Cl. B-3, Downgraded to B3, previously Baa2, -- Cl. 1-M-1 Currently Aa1 on review for possible downgrade, -- Cl. 1-M-2 Currently Aa2 on review for possible downgrade, -- Cl. 1-M-3 Currently Aa3 on review for possible downgrade, -- Cl. 1-M-4, Downgraded to Baa1, previously A1, -- Cl. 1-M-5, Downgraded to Baa3, previously A2, -- Cl. 1-M-6, Downgraded to Ba1, previously A3, -- Cl. 1-B-1, Downgraded to B2, previously Baa1, -- Cl. 1-B-2, Downgraded to B3, previously Baa2, -- Cl. 1-B-3, Downgraded to B3 on review for possible further downgrade, previously Baa3. Issuer: Morgan Stanley Mortgage Loan Trust 2006-3AR -- Cl. M-1 Currently Aa2 on review for possible downgrade, -- Cl. M-2 Currently Aa3 on review for possible downgrade, -- Cl. M-3, Downgraded to Ba1, previously A2, -- Cl. M-4, Downgraded to B1, previously A3, -- Cl. M-5, Downgraded to B3, previously Baa2, -- Cl. M-6, Downgraded to B3 on review for possible further downgrade, previously Baa3, -- Cl. B-1, Downgraded to Caa3, previously Ba2, -- Cl. 1-M-4, Downgraded to A2, previously A1, -- Cl. 1-M-5, Downgraded to A3, previously A2, -- Cl. 1-M-6, Downgraded to Baa1, previously A3, -- Cl. 1-M-7, Downgraded to Ba1, previously Baa1, -- Cl. 1-M-8, Downgraded to B1, previously Baa2, -- Cl. 1-M-9, Downgraded to B2, previously Baa3, -- Cl. 1-B-1, Downgraded to B3, previously Ba1. Issuer: Morgan Stanley Mortgage Loan Trust 2006-5AR -- Cl. M-1 Currently Aa1 on review for possible downgrade, -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to Baa1, previously A1, -- Cl. M-5, Downgraded to Baa3, previously A2, -- Cl. M-6, Downgraded to Ba2, previously A3, -- Cl. M-7, Downgraded to B2, previously Baa1, -- Cl. M-8, Downgraded to B3, previously Baa2, -- Cl. M-9, Downgraded to B3 on review for possible further downgrade, previously Baa3. Issuer: Morgan Stanley Mortgage Loan Trust 2006-6AR -- Cl. B-1 Currently Aa2 on review for possible downgrade, -- Cl. B-2, Downgraded to Baa2, previously A2, -- Cl. B-3, Downgraded to B2, previously Baa2, -- Cl. 1-M-1 Currently Aa1 on review for possible downgrade, -- Cl. 1-M-2 Currently Aa2 on review for possible downgrade, -- Cl. 1-M-3 Currently Aa3 on review for possible downgrade, -- Cl. 1-M-4, Downgraded to Baa1, previously A1, -- Cl. 1-M-5, Downgraded to Baa3, previously A2, -- Cl. 1-M-6, Downgraded to Ba3, previously A3, -- Cl. 1-B-1, Downgraded to B3, previously Baa1, -- Cl. 1-B-2, Downgraded to Caa3, previously Baa2, -- Cl. 1-B-3, Downgraded to C, previously Baa3. Issuer: Morgan Stanley Mortgage Loan Trust 2006-7 -- Cl. 5-M-2, Downgraded to Baa1, previously A2, -- Cl. 5-B-1, Downgraded to Ba2, previously Baa2. Issuer: Morgan Stanley Mortgage Loan Trust 2006-8AR -- Cl. II-B-1 Currently Aa2 on review for possible downgrade, -- Cl. II-B-2, Downgraded to Baa3, previously A2, -- Cl. II-B-3, Downgraded to B3, previously Baa2, -- Cl. 1-M-2 Currently Aa2 on review for possible downgrade, -- Cl. 1-M-3 Currently Aa3 on review for possible downgrade, -- Cl. 1-M-4, Downgraded to A3, previously A1, -- Cl. 1-M-5, Downgraded to Baa2, previously A2, -- Cl. 1-M-6, Downgraded to Ba1, previously A3, -- Cl. 1-B-1, Downgraded to Ba3, previously Baa1, -- Cl. 1-B-2, Downgraded to B1, previously Baa2, -- Cl. 1-B-3, Downgraded to Caa2, previously Baa3. Issuer: Morgan Stanley Mortgage Loan Trust 2006-9AR -- Cl. A-4 Currently Aaa on review for possible downgrade, -- Cl. A-5 Currently Aaa on review for possible downgrade, -- Cl. A-6 Currently Aaa on review for possible downgrade, -- Cl. M-1 Currently Aa1 on review for possible downgrade, -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to Baa1, previously A1, -- Cl. M-5, Downgraded to Ba1, previously A2, -- Cl. M-6, Downgraded to Ba2, previously A3, -- Cl. B-1, Downgraded to B2, previously Baa1, -- Cl. B-2, Downgraded to Caa1, previously Baa2, -- Cl. B-3, Downgraded to Ca, previously Baa3. MORTGAGE ASSET: Fitch Holds Low-B Ratings on Five Cert. Classes --------------------------------------------------------------- Fitch Ratings affirmed these Mortgage Asset Securitization Transactions residential mortgage pass-through certificates: Series 2002-7 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 affirmed at 'AA'; -- Class B-5 affirmed at 'A'. Series 2003-2 Pools 1 & 2 -- Class 1A & 2A affirmed at 'AAA'; -- Class 15-B-5 affirmed at 'B'. Series 2003-2 Pool 3 -- Class 3A affirmed at 'AAA'; -- Class 30-B-1 affirmed at 'AAA'; -- Class 30-B-2 affirmed at 'AAA'; -- Class 30-B-3 affirmed at 'AA-'; -- Class 30-B-4 affirmed at 'A-'; -- Class 30-B-5 affirmed at 'BBB-'. Series 2003-5 -- Class A affirmed at 'AAA'; Series 2003-11 -- Class A affirmed at 'AAA'; Series 2003-12 -- Class A affirmed at 'AAA'; Series 2004-3 -- Class A affirmed at 'AAA'; Series 2004-5 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2006-3 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A+'; -- Class B-3 affirmed at 'A'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. The affirmations, affecting about $2.6 billion of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. All classes have experienced some growth in CE and 8 of the 9 transactions have experienced no loss to date. Series 2003-2 Groups 1& 2 has experienced 0.03% of loss to date. The collateral of the above transactions primarily consists of conventional, fully amortizing, jumbo-prime, 10-year to 30-year fixed-rate mortgage loans secured by first liens on one- to four- family residential properties. The loans were acquired by UBS from various originators and are serviced by various servicers. All of the above transactions are master serviced by Wells Fargo Bank N.A. (rated 'RMS1' by Fitch). As of the September 2007 remittance date, the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) of the above transactions range from 8% (2002-7) to 85% (2006-3) and the transactions are seasoned between 11 months (2006-3) and 59 months (2002-7). MTI TECHNOLOGY: Selects Manatt Phelps as Special SEC Counsel ------------------------------------------------------------ MTI Technology Corporation asks the Honorable Erithe A. Smith of the United States Bankruptcy Court for the District of Delaware for authority to employ Manatt, Phelps & Philipps LLP as its special SEC and corporate counsel, nunc pro tunc to Nov. 1, 2007. Manatt Phelps will: a. analyze, advise, report and disclose required to comply with SEC rules and regulations and for communication with the SEC as necessary and appropriate; and b. advise, assist, negotiate and document corporate transaction on behalf of the Debtor. The firm's professionals and their compensation rates are: Professionals Designation Hourly Rate ------------- ----------- ----------- David M. Grinberg, Esq. Partner $520 Ivan L. Kallick, Esq. Partner $590 Jason Taketa, Esq. Associate $415 Ivan L. Kallick, Esq., a partner of the firm, assures the Court that the firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Kallick can be reached at: Ivan L. Kallick, Esq. Manatt, Phelps & Philipps, LLP 1215 K. Street, Suite 1900 Sacramento, CA 95814 Tel: (916) 552-2300 Fax: (916) 552-2323 http://www.manatt.com/ Headquartered in Tustin, California, M.T.I. Technology Corp. -- http://www.mti.com/-- provides professional services and data storage for mid- to large-sized organizations. In addition, the Company owns all of the issued and outstanding share capital of three European subsidiaries: MTI Technology GmbH in Germany, MTI Technology Limited in Scotland and MTI France S.A.S. in France. The company filed for Chapter 11 protection on October 15, 2007 (Bankr. C.D. Calif. Case No. 07-13347). Scott C. Clarkson, Esq., at Clarkson, Gore & Marsella, A.P.L., represents the Debtor. The Debtor selected Omni Managmeng Group LLC as its claims and noticing agent. The Trustee for Region 26 has not appointed an Official Committee of Unsecured Creditors to date in this case. When the Debtor filed for protection against its creditors, it listed assets and debts at $64,002,000. NASDAQ STOCK: Hellman & Friedman Sells 23.5 Million Stake --------------------------------------------------------- Hellman & Friedman Capital Partners IV L.P., H&F Executive Fund IV L.P., H&F International Partners IV-A L.P. and H&F International Partners IV-B L.P. sold 23,545,368 shares of The Nasdaq Stock Market Inc.'s common stock in a public offering underwritten by Morgan Stanley & Co. Incorporated. The shares sold consisted of shares issued through the conversion of notes and the cashless exercise of warrants, well as shares held outright by the H&F Entities. NASDAQ will not receive any of the proceeds from the offering. A prospectus relating to the offering may be obtained from: Morgan Stanley & Co. Incorporated Prospectus Department 2nd Floor, 180 Varick Street New York, NY 10014 Tel 1-866-718-1649 E-mail prospectus@morganstanley.com Headquartered in New York City, The Nasdaq Stock Market Inc. (Nasdaq: NDAQ) -- http://www.nasdaq.com/-- is an electronic equity securities market in the United States with about 3,200 companies. * * * As reported in the Troubled Company Reporter on Sept. 24, 2007, Moody's Investors Service placed the Ba3 corporate family rating of Nasdaq Stock Market Inc. on review for upgrade. As reported also in the Troubled Company Reporter on Oct. 2, 2007, Moody's Investors Service withdrew its ratings on The Nasdaq Stock Market Inc.'s $750 million Six Year Senior Secured Term Loan, $335 million Six Year Senior Secured Term, and the Five Year$75 million Senior Secured Revolving Credit Facility. The credit facilities have been repaid and terminated. NASH FINCH: Board Declares $0.18 Per Share Quarterly Dividend ------------------------------------------------------------- The board of directors of food distributor Nash-Finch Company has declared a regular quarterly cash dividend of 18 cents per share of common stock. The dividend is payable Dec. 7, 2007, to shareholders of record at the close of business on Nov. 23, 2007. It is the company's 325th consecutive quarterly cash dividend. There are 13,527,024 shares of common stock outstanding. Notice of Default On Sept. 10, 2007, Nash Finch received a purported notice of default, which was subsequently reissued on Sept. 27, 2007, to correct a procedural defect in the initial notice, from certain hedge funds who are beneficial owners purporting to hold at least 25% of the aggregate principal amount of the Notes. The hedge funds alleged in the notice that Nash Finch was in breach of Section 4.08(a)(5) of the Indenture governing the Notes, which provides for an adjustment of the conversion rate on the Notes in the event of an increase in the amount of certain cash dividends to holders of Nash Finch's common stock. Nash Finch believes it made all required adjustments to the conversion rate on the Notes after it increased the quarterly dividends paid to shareholders from $0.135 to $0.18 per share and, accordingly, does not believe that a default has occurred under the Indenture. However, to avoid any uncertainty, Nash Finch has asked the Trustee to execute a supplemental indenture clarifying the company's obligations with respect to such increases in its quarterly dividends. The Indenture trustee has filed an action in the Hennepin County District Court, in Minneapolis, Minnesota for an order determining its obligations with respect to the supplemental indenture. Nash Finch has filed its own action in the same court, seeking a determination that the supplemental indenture is proper and should be executed, and that regardless of whether the supplemental indenture is executed, no default has occurred under the Indenture. Under the terms of the Indenture, if a default has occurred, Nash Finch would have 30 days from the date of receipt of a valid notice of default to cure. Nash Finch has asked the Court to toll the 30 day cure period while the Court determines whether the Indenture trustee must execute the supplemental indenture and whether Nash Finch adjusted the conversion rate in accordance with the requirements of the Indenture. If the Court determines the hedge fund's assertion to be correct, Nash Finch would cure the default by making an upward adjustment in the conversion rate of 0.4307 shares per $1,000 bond. "In consultation with our legal and financial advisors, Nash Finch determined that it made all required adjustments to the conversion rate on the Notes, and therefore we are confident that no event of default has occurred," Bob Dimond, Executive Vice President and CFO of Nash Finch, said. "We are disappointed that this small group of noteholders has chosen to pursue this path -- it appears to be nothing more than an opportunistic attempt to achieve financial gain that is well beyond what they are due." About Nash Finch Headquartered in Minneapolis, Minnesota, Nash Finch Company (NASDAQ:NAFC) -- http://www.nashfinch.com/-- distributes food products. Nash Finch's core business, food distribution, serves independent retailers and military commissaries in 31 states, the District of Columbia, Europe, Cuba, Puerto Rico, the Azores and Egypt. The company also owns and operates a base of retail stores, primarily supermarkets under the Econofoods(R), Family Thrift Center(R) and Sun Mart(R) trade names. NATIONAL CENTURY: L. Poulsen Arrested for Obstruction of Justice ---------------------------------------------------------------- Lance K. Poulsen, the former president and chief executive officer of National Century Financial Enterprises, and his longtime associate, Karl A. Demmler, were arrested on federal conspiracy, obstruction of justice, and witness tampering charges, on October 22, 2007. Mr. Poulsen was arrested in Tampa, Florida, while Mr. Demmler was arrested in Columbus, Ohio. Both were arrested by Federal Bureau of Investigation agents without incident. The affidavit in support of the complaint alleges that Mr. Poulsen used Mr. Demmler to frequently contact a witness for the government since June 2007, and offer her cash in exchange for her not giving damaging testimony against Mr. Poulsen in his fraud trial, currently scheduled for February 8, 2008. Messrs. Poulsen and Demmler "hatched a scheme to give a former NCFE executive who had agreed to be a government witness $500,000 if she would have "amnesia" when testifying about how the company collapsed," reports Kevin Kemper of Business First of Columbus. Mr. Poulsen also wanted the witness to fire her attorney and hire a new one. The indictment alleged that in October, Messrs. Poulsen and Demmler agreed that Mr. Demmler would act as a conduit for the money between Mr. Poulsen and the witness, says Business First. Mr. Poulsen would allegedly fund Mr. Demmler's legal research company with monthly checks of varying amounts, never less than $5,000, which would then be paid to the witness. If convicted of the charges, Messrs. Poulsen and Demmler could face a maximum punishment of five years in prison for federal conspiracy. Witness tampering and obstruction of justice are punishable by imprisonment of up to 10 years. As previously reported, a federal grand jury returned a superseding indictment against Mr. Poulsen and seven other NCFE executives on July 10, 2007, charging the NCFE Officers with conspiring to defraud investors by diverting more than $2,000,000,000 in investors' funds, fabricating data in investor reports, and moving money back and forth between accounts in order to conceal investor fund shortfalls. NCFE, based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002. If convicted of those charges, Mr. Poulsen faces a potential term of incarceration of 360 months to life, according to the United States Sentencing Guidelines. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represented the Debtors. (National Century Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NATIONAL COAL: Weak Profile Cues Moody's to Junk Ratings -------------------------------------------------------- Moody's Investors Service downgraded National Coal's corporate family rating, senior secured rating, and probability of default rating to Ca from Caa2. At the same time, Moody's assigned a negative outlook and affirmed the SGL-4 speculative grade liquidity rating, indicating weak liquidity. The downgrade was prompted by a weakening of the company's liquidity profile, and ongoing challenges in meeting production targets, which, in combination with a high cost structure and soft coal prices in Central Appalachia, will likely result in a continuation of poor earnings and negative free cash flow. Operational characteristics such as the very small size of the company's mines, lack of efficiencies and poor geologic and operating conditions contribute to the company's difficulties. This concludes Moody's review of National Coal, which was initiated on June 26, 2007, and was prompted by National Coal's continued poor operating performance, and by the announcement that it had entered into a stock purchase agreement to acquire 100% of the stock of Mann Steel Products Inc., an Alabama based producer of steam and industrial coal, for $55 million. The acquisition of Mann Coal has been completed on a stand-alone basis and will have minimal positive impact on National Coal and its rated debt. Moody's downgraded these ratings: Issuer: National Coal Corp -- Corporate Family Rating, downgraded to Ca from Caa2 -- Probability of Default Rating, downgraded to Ca from Caa2 -- Senior Secured Notes due 2010, downgraded to Ca , LGD4, 55% from Caa2, LGD4, 56% Outlook Actions: Issuer: National Coal Corp -- Outlook, Negative Moody's last rating action on National Coal was to place its Caa2 ratings under review for downgrade in June 2007. National Coal, headquartered in Knoxville, Tennessee, engages in mining and distribution of bituminous steam and industrial coal. National Coal had revenue of $88 million in 2006. NEOMEDIA TECH: Sept. 30 Balance Sheet Upside-Down by $76.7 Million ------------------------------------------------------------------ NeoMedia Technologies Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $21.6 million in total assets and $98.4 million in total liabilities, resulting in a $76.7 million total shareholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $7.2 million in total current assets available to pay $98.4 million in total current liabilties. The company reported a net loss of $26.1 million on net sales of $287,000 for the third quarter ended Sept. 30, 2007, compared with a net loss of $18.1 million on net sales of $430,000 in the same period last year. The decrease in net sales resulted from $112,000 decreased net sales in 2007 from Gavitec, and a decrease of $31,000 in net sales from the company's underlying business represented by qode(R) and NeoMedia's legacy software products. The increased loss primarily reflects increased interest expense recorded during 2007, impairment charges recorded to adjust the carrying values of the Telecom Services and Micro Paint Repair asset groups to their estimated fair values, and an increased loss on derivative financial instruments. 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?252d Going Concern Doubt As reported in the Troubled Company Reporter on April 13, 2007, Stonefield Josephson Inc. expressed substantial doubt about NeoMedia 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. Stonefield Josephson pointed to the company's significant operating losses, negative cash flows from operations and working capital deficit. About NeoMedia Technologies Headquartered in Fort Myers, Florida, NeoMedia Technologies Inc. (OTC BB: NEOM) -- http://www.neom.com/-- is a mobile enterprise and marketing technology company and offers direct-to-mobile-Web technology solutions. NeoMedia's flagship qode(R) service links users to the wireless, electronic world. OGLEBAY NORTON: Shareholders Approve Merger Deal with Carmeuse NA ----------------------------------------------------------------- Oglebay Norton Company shareholders voted to approve the company's merger with Carmeuse North America, a subsidiary of Carmeuse Group, at a Nov. 9 special meeting of shareholders. As reported in the Troubled Company Reporter on Oct. 16, 2007, Carmeuse North America and Oglebay Norton have entered into a definitive agreement under which Carmeuse will acquire all of the outstanding shares of Oglebay Norton for $36 per share in cash. "We are extremely pleased with the outcome of the vote," said Michael Lundin, president and chief executive officer of Oglebay. "On behalf of Oglebay Norton's board of directors and management team, I want to thank our shareholders, customers and dedicated employees for their support throughout this process. We look forward to completing the merger and we anticipate a smooth integration of the two companies." In accordance with the terms of the merger agreement, at the closing, each outstanding share of common stock of Oglebay Norton will be cancelled and converted into the right to receive $36 in cash, without interest, less any applicable withholding taxes. The transaction remains subject to satisfaction of customary conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. About Carmeuse North America Based in Pittsburgh, Pennsylvania, Carmeuse North America -- http://www.carmeusena.com/-- is producing lime and limestone products in North America, manufacturing and distributing over 6 million tons per year of lime products, and a further 4 million tons of chemical grade limestone and aggregates. Its 14 manufacturing facilities supply and serve 27 states and provinces in the eastern USA and Canada, and employ over 1,200 employees. About Oglebay Norton Company Based in Cleveland, Ohio, Oglebay Norton Company (OGBY.PK) -- http://www.oglebaynorton.com/-- provides essential minerals and aggregates to a broad range of markets, from building materials and environmental remediation to energy and industrial applications. * * * Moody's Investor Services placed Oglebay Norton Company's long term corporate family, probability of default and bank loan debt ratings at 'B1' in October 2007. The ratings still hold to date. OPEN TEXT: Moody's Affirms B1 Corporate Family Rating ----------------------------------------------------- Moody's Investors Service affirmed the B1 corporate family rating and Ba3 senior secured bank facilities of Open Text Corp. while revising the outlook to positive. The outlook revision reflects the company's positive operating trends, its successful integration of the Hummingbird acquisition and its success in reducing debt ahead of plan. Factors that could change the ratings up include 1) continued revenue growth driven by new license sales as a result of better cross-selling into its installed customer base and improved traction with strategic partners such as SAP, Microsoft, and Accenture, 2) stability in operating margins, and 3) sustained free cash flow generation. Open Text will need to demonstrate that its current level of margins and cash flows are sustainable and that it can continue to generate synergies from the Hummingbird acquisition. Moody's also expects the company to maintain fiscal discipline that will further reduce debt as currently planned. Since Moody's first assigned a B1 CFR to Open Text in September 2006 at the time of the Hummingbird acquisition, the company has demonstrated good revenue growth throughout combined product offerings. Moody's believes that Open Text is well positioned to grow its installed base over the intermediate term. Consistent and well managed operating expenses, partly arising from cost synergies achieved, have contributed to operating margins remaining in the 10%+ range. Importantly, the company has accelerated the reduction of secured debt in its capital structure to $330 million, down from over $390 million at March 2007. The debt paydown has reduced leverage to about 2.4 times on a Moody's adjusted basis. Liquidity remains solid, with cash balances of $150 million at September 2007 plus access to an unused $75 million secured revolving credit facility, for which covenant room is expected to remain ample. Combined with our expectations of stable to improving annual free cash flow ($130 million on a Moody's adjusted basis for the latest twelve months ended Sept. 30, 2007), Open Text is well positioned to further de-lever over the next year. Open Text Corp., headquartered in Waterloo, Ontario, Canada, is the largest independent provider of enterprise content software used by global organizations on intranets, extranets, and the Internet. The company's software applications allow users to capture, manage, store, preserve, and deliver content, and documents related to organizational processes. For twelve months ended Sept. 30, 2007, revenues were $658 million. OTTIMO FUNDING: Debt Enhancement Breach Cues S&P's Default Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on the extendible asset-backed commercial paper notes issued by Ottimo Funding Ltd. to 'D' from 'C'. At the same time, Standard & Poor's also lowered its rating on the subordinated notes to 'D' from 'CCC'. Due to the recent market volatility for U.S. residential mortgage- backed securities, Ottimo breached certain credit enhancement tests, which led to an event of default on the ABCP and subordinated notes. As a result of the event of default and pursuant to the program documentation, the collateral agent conducted an auction of Ottimo's collateral (all 'AAA' rated Alternative-A U.S. RMBS) to generate funds to repay the notes. The details surrounding the auction have not been made publicly available; however, Deutsche Bank Trust Co. Americas (the collateral agent and trustee) has informed Standard & Poor's that the auction did not generate cash proceeds to repay the ABCP and subordinated notes. Ratings Lowered Ottimo Funding Ltd. Series Rating ------ ------ To From -- ---- Extendible ABCP notes D C/Watch Neg 2007-A notes D CCC/Watch Neg 2007-B notes D CCC/Watch Neg 2007-C notes D CCC/Watch Neg PENN NATIONAL: Sets Special Shareholders Meeting on December 12 --------------------------------------------------------------- Penn National Gaming Inc. has set a special shareholder meeting to consider and vote upon a proposal to approve and adopt a merger agreement on Wednesday, Dec. 12, 2007, beginning at 10:00 a.m., eastern time, at the offices of: Ballard Spahr Andrews & Ingersoll LLP 42nd Floor, 1735 Market Street Philadelphia, PA 19103 Penn National shareholders of record at the close of business on Wednesday, Nov. 7, 2007, will be entitled to notice of the special meeting and to vote on the proposal. The Agreement and Plan of Merger, dated as of June 15, 2007, provides for the merger of PNG Merger Sub Inc., wholly owned by affiliates of Fortress Investment Group LLC and Centerbridge Partners L.P with and into the company, with the company continuing as the surviving corporation after the merger and becoming a wholly owned subsidiary of PNG Acquisition Company Inc., also wholly owned by affiliates of Fortress and Centerbridge. If the merger is completed by June 15, 2008, Penn National Gaming shareholders will be entitled to receive $67 in cash, without interest, for each share of Company common stock they own. If the merger is not completed by June 15, 2008, the $67 per share merger consideration will be increased $0.0149 per day. About Fortress Investment Group LLC Headquartered in New York, Fortress Investment Group LLC is a leading global alternative asset manager with approximately $36 billion in assets under management as of March 31, 2007. Fortress manages private equity funds, hedge funds and publicly traded alternative investment vehicles. Fortress was founded in 1998, and has affiliates with offices in Dallas, San Diego, Toronto, London, Rome, Frankfurt and Sydney. About Centerbridge Partners LP Centerbridge is a $3.2 billion multi-strategy private investment fund. The firm is dedicated to partnering with world class management teams in a range of industry verticals. Centerbridge's investment style provides the flexibility to employ various structures to help companies achieve their operating and financial objectives. The limited partners of Centerbridge include many of the world's most prominent financial institutions, university endowments, pension funds, and charitable trusts. About Penn National Gaming Headquartered in Wyomissing, Pennsylvania, Penn National Gaming Inc. (PENN: Nasdaq) -- http://www.pngaming.com/-- owns and operates casino and horse racing facilities with a focus on slot machine entertainment. The company presently operates eighteen facilities in fourteen jurisdictions including Colorado, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's operated facilities feature nearly 23,000 slot machines, over 400 table games, approximately 1,731 hotel rooms and approximately 808,000 square feet of gaming floor space. * * * Moody's Investor Service placed Penn National Gaming Inc.'s long term corporate family and probability of default ratings at 'Ba2' in June 2007. The ratings still hold to date. PERKINELMER INC: Completes Cash Tender Offer for ViaCell Inc. ------------------------------------------------------------- PerkinElmer Inc. has completed its tender offer to acquire all outstanding shares of common stock of ViaCell Inc. at a price of $7.25 per share, in cash. As reported in the Troubled Company Reporter on Oct. 16, 2007, Victor Acquisition Corp., an indirect wholly owned subsidiary of PerkinElmer Inc., commenced a tender offer to acquire all outstanding shares of common stock of ViaCell Inc. at a price of $7.25 per share, in cash, pursuant to a Agreement and Plan of Merger among PerkinElmer Inc., Victor Acquisition Corp. and ViaCell Inc., dated Oct. 1, 2007. Victor Acquisition Corp.'s obligation to accept for payment and pay for shares of ViaCell common stock tendered in the offer is subject to customary conditions, including: * at least a majority of the outstanding shares of ViaCell common stock on a fully diluted basis will be validly tendered in accordance with the terms of the offer and not properly withdrawn; and, * the expiration or termination of applicable waiting periods under the United States Hart-Scott-Rodino Antitrust Improvements Act. The initial offering period for the tender offer expired at 12:00 midnight, New York City time, Thursday, Nov. 8, 2007, with approximately 37.9 million shares of ViaCell common stock being tendered, including approximately 6.8 million shares tendered under guaranteed delivery procedures, for $7.25 per share. All shares that were validly tendered and not withdrawn have been accepted for purchase. The shares tendered and accepted for purchase represent more than 90% of the outstanding shares of ViaCell common stock. PerkinElmer intends to promptly acquire all of the remaining ViaCell shares by means of a short-form merger under Delaware law at the same price per share paid in the tender offer. Upon completion of the merger, ViaCell will become an indirect wholly owned subsidiary of PerkinElmer Inc. About ViaCell Inc. Headquartered in Cambridge, Massachussetts, ViaCell Inc. -- http://www.viacellinc.com/-- is a biotechnology company that enables the widespread application of human cells as medicine. ViaCell markets ViaCord, a product offering through which families can preserve their baby's umbilical cord blood at the time of birth for possible future medical use in treating over 40 diseases including certain blood cancers and genetic diseases. ViaCell also conducts research and development to investigate other potential therapeutic uses of umbilical cord blood-derived stem cells and on technology for expanding populations of these cells. ViaCell's pipeline is focused in the areas of cancer, cardiac disease, and diabetes. About PerkinElmer Inc. Headquartered in Waltham, Massachussetts, PerkinElmer Inc. (NYSE:PKI) -- http://www.perkinelmer.com/-- is a provider of scientific instruments, consumables and services to the pharmaceutical, biomedical, environmental testing and general industrial markets, commonly referred to as the health sciences and photonics markets. The company designs, manufactures, markets and services products and systems within two business segments: Life and Analytical Sciences and Optoelectronics. The health sciences markets include all of the businesses in the company's Life and Analytical Sciences segment and the medical imaging business, well as elements of the medical sensors and lighting businesses in the company's Optoelectronics segment. The photonics markets include the remaining businesses in the company's Optoelectronics segment. * * * In November 2005, Moody's placed the company's subordinate debt rating at Ba1. The rating still holds to date with a stable outlook. PLANET TECH: Completes $10 Million Acquisition of Antigen Labs -------------------------------------------------------------- Planet Technologies Inc. has completed the acquisition of Antigen Laboratories Inc. Under the agreement, Planet acquired all of the outstanding equity of Antigen for $10 million, plus the payment of certain liabilities, contingent upon Planet procuring the required financing to complete the transaction. As reported in the Troubled Company Reporter on Sept. 6, 2007, Planet Technologies and Antigen Laboratories have entered into a definitive agreement under which Planet will acquire Antigen. "The acquisition of Antigen's allergenic extract immunotherapy business complements our existing allergen avoidance product business," Ed Steube, chief executive officer and president of Planet, said. "The Antigen transaction continues to deliver on our strategy to acquire and build specialty allergy businesses, focused on marketing value-added products to allergy sufferers through allergy-related physicians in the United States," Antigen will operate as a wholly owned subsidiary of Planet. Physicians use Antigen's allergenic extracts for immunotherapy, which historically have been administered to patients in controlled doses by subcutaneous injections. Importantly, upon completion of the acquisition, the company intends to commence a sublingual immunotherapy clinical development program. SLIT is the administration of immunotherapy through drops of allergenic extract being placed under the tongue, versus the traditional SCIT route of administration. The company believes that an FDA-approved SLIT product will substantially expand the U.S. market for allergen immunotherapy, as allergy-related physicians will have the enhanced option of offering either SCIT or SLIT based immunotherapy for their patients. "We also are pleased that the company completed a private placement of approximately $19.9 million of its preferred stock," Mr. Steube said. "The financing was led by Aisling Capital, a leading private equity health care investor, which supplied capital to fund the acquisition, the prospective costs associated with the SLIT clinical development and regulatory approval program, capacity expansion at Antigen and incremental working capital." "We look forward to continuing to execute our strategy, working closely with Aisling Capital to build our position as a market leader," Mr. Steube said. "When convertible, the preferred stock will be convertible into common stock at the conversion price of $2.25 per common share, subject to adjust upon the occurrence of certain events." As part of the preferred stock financing, the company agreed to file a Form 15 with the SEC to deregister the company common stock under Section 12 of the Security Exchange Act of 1934. As a result, once filed, the company will no longer file annual or quarterly reports with the SEC and the company's common stock will likely stop trading on the OTC Bulletin Board. The shares frequently do not trade and the average daily trading volume has recently been below the 200 shares per day at prices ranging from $1 to $5 per share. The infrequency of trading and wide fluctuation in prices has led management to believe the company would be better situated for future opportunities as a private, non-reporting company. Concurrently with the closing of the acquisition of Antigen and preferred stock financing, Ellen Preston, Eric Freedus, H. Mac Busby, Mike Trinkle and Michael Walsh agreed to step down as directors of Planet. Tom Willoughby, the president of Antigen Laboratories Inc., and Andrew Schiff and Brett Zbar, both affiliated with Aisling Capital were appointed to the board of directors. "We thank very much our former directors for their dedicated services and are pleased Tom, Andrew and Brett have agreed to join the Planet board," Mr. Steube said. About Antigen Laboratories Inc. Headquartered in Liberty, Missouri, Antigen Laboratories Inc. -- http://www.antigenlab.com/-- is a privately-held FDA licensed manufacturer of allergenic extracts for immunotherapy. The company manufactures a full line of stock extracts, prepares custom prescription treatment sets and carries a full line of ancillary supplies needed for the practice of allergy. Going Concern Doubt J.H. Cohn LLP, in Jericho, New York, expressed substantial doubt about Planet 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 recurring net losses resulting in an accumulated deficit of $6,413,133 as of Dec. 31, 2006, and working capital deficiency of $865,720 as of Dec. 31, 2006. About Planet Technologies Inc. Based in Ridgefield, Connecticut, Planet Technologies Inc. (PLNT.OB) (Nasdaq: PLNT) -- http://www.planettechinc.com/-- fka Planet Polymer Technologies Inc., is engaged in the business of designing, manufacturing, selling and distributing common products for use by allergy sensitive persons, including, without limitation, air filters, bedding, room air cleaners, and related allergen avoidance products. The business strategy is based upon promotion of products directly to the consumer by telemarketing to the company's database of customers who have purchased the Allergy Free Electrostatic Filter. POLYMER GROUP: Weak Business Prompts S&P to Hold 'BB-' Rating ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Polymer Group Inc., including its 'BB-' corporate credit rating. The outlook is negative. "If Polymer Group completes its proposed public offering of common stock, including $92 million of net proceeds to the company, and it uses the proceeds to reduce debt, we will revise the outlook to stable," said Standard & Poor's credit analyst Cynthia Werneth. The ratings on Charlotte, North Carolina-based Polymer Group reflect the company's weak business position and aggressive financial profile. Although it has a narrow product focus, Polymer Group is one of the top producers of nonwoven and oriented polyolefin products. The company has leading positions in niche markets, good geographic sales and manufacturing diversity, favorable long-term growth prospects in certain end markets, and opportunities to increase sales and earnings following several recently-completed capacity expansions. Polymer Group recently announced plans to sell 5,455,000 shares of common stock, consisting of 3,636,000 shares to be sold by the company and 1,819,000 shares to be sold by the selling shareholders, primarily MatlinPatterson Global Advisors LLC. Net proceeds to the company should be about $92 million. If the transaction is consummated, MatlinPatterson would still own roughly 50% of Polymer Group. The company will use all the net proceeds that it receives to repay outstanding debt under its first-lien term loan. This will reduce total debt (which S&P adjust to include capitalized operating leases as well as modest off-balance-sheet receivables financing and postretirement obligations) to about $400 million, $310 million of which consists of a first-lien term loan maturing in 2012. Pro forma for the transaction, funds from operations to adjusted total debt would strengthen to about 18% from about 15% at Sept. 30, 2007. This key ratio is still somewhat below S&P's expectation of 20% at the current rating. However, S&P believe that incremental volume from recent capacity expansions should lift earnings and cash flow to the appropriate level in 2008, even if debt does not drop much further. Total adjusted debt to EBITDA would decline after the transaction, but remain aggressive at 3.3x. Although S&P believe that operating cash flow will strengthen during the next one to two years, S&P do not expect significant additional debt reduction. PREGO DELLA: Michael Carlevale Mulls Declaring Bankruptcy --------------------------------------------------------- Michael Carlevale, Prego della Piazza's owner, filed a notice of intent to declare bankruptcy and has about a month of relief from creditors' actions, Rita Zekas writes for The Star. However, Mr. Carlevale refused to disclose details on the matter but assures customers that it's still business as usual at the restaurant, the report relates. Headquartered in Toronto, Ontario, Prego della Piazza -- http://www.pregodellapiazza.ca/-- serves Italian cuisine and offers a full range of function and party menus. Established in 1987 by Michael Carlevale, Prego is one of the longest established fine dining destinations in Toronto. It is located behind the Church of the Redeemer at the corner of Bloor and Avenue Road. PROVIDENCE SERVICE: S&P Assigns 'B+' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Tucson, Arizona-based home- and community-based social services provider Providence Service Corp. The outlook is stable. At the same time, Standard & Poor's assigned its bank loan and recovery ratings to Providence's proposed first-lien credit facilities, consisting of a $40 million revolving credit facility, a $173 million term loan, and a $40 million delayed-draw term loan. The credit facilities are rated 'BB', with a recovery rating of '1', indicating the expectation for very high (90%-100%) recovery in the event of a payment default. The debt is being issued, along with $70 million of privately placed convertible notes, to finance the acquisition of case management coordinator for nonemergency transportation, Charter LCI Corp., parent company of LogistiCare Inc., and to refinance existing Providence debt. "The ratings reflect the company's exposure to reimbursement risk, its reliance on contracts with state and local agencies, its aggressive leverage, and the uncertain success of a significant investment in a new business," said Standard & Poor's credit analyst Alain Pelanne. "These factors are offset partially by the company's leading position in niche markets, its strong track record of contract retention, and strong dynamics supporting growth in spending on the company's services." PSEG ENERGY: S&P Holds 'BB-' Corp. Rating and Revises Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on PSEG Energy Holdings LLC. In addition, Standard & Poor's revised the outlook on the rating to stable from negative. The rating on Newark, New Jersey-based Holdings is based on the company's stand-alone credit quality, separate from other members of the Public Service Enterprise Group Inc. companies (Enterprise; BBB/Stable/A-2). "We view Holdings' ability to successfully complete asset sales and use funds to retire future debt maturities as favorable," said Standard & Poor's credit analyst Aneesh Prabhu. "The ongoing, $609 million debt retirement since January 2006 and projected $607 million debt retirement in 2008 result in a significantly improved credit profile," he continued. The outlook revision to stable reflects this improvement. Holdings is an intermediate holding company. Its credit quality and liquidity profile are characterized by investments made by its two operating subsidiaries, PSEG Global and PSEG Resources. In past years, PSEG Global invested in electric generation projects and electric distribution systems. Many of these investments were made in unstable foreign markets, which exposed PSEG Global and, in turn, Holdings, to volatile currencies and regulatory environments. PSEG Global has curtailed new investments, but its subsidiaries continue to invest in capital improvements. Holdings' other operating subsidiary, PSEG Resources, invests in financial transactions with an emphasis on leveraged leases in the energy sector. The outlook on Holdings is stable. Holdings' improving credit profile could result in a higher corporate rating, but still reflects credit concerns associated with the sizable contingent liabilities from the ongoing IRS investigations into the accelerated tax deductions related to leasing transactions. RALI SERIES: Moody's Downgrades and Reviews Ratings on 12 Deals --------------------------------------------------------------- Moody's Investors Service downgraded the ratings of 59 tranches and has placed under review for possible downgrade the ratings of 15 tranches from 12 RALI deals issued in 2006 and late 2005. Two downgraded tranches remain on review for possible downgrade. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, Alt-A mortgage loans. The ratings were downgraded and placed under review for downgrade based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. In its analysis Moody's has also applied its published methodology updates to the non delinquent portion of the transactions. Issuer: RALI Series 2005-QA13 Trust -- Cl. M-2, Downgraded to A3, previously A2, -- Cl. M-3, Downgraded to Ba1, previously Baa2, Issuer: RALI Series 2006-QA1 Trust -- Cl. M-1 Currently Aa2 on review for possible downgrade, -- Cl. M-2, Downgraded to Baa3, previously A2, -- Cl. M-3, Downgraded to B2, previously Baa2. Issuer: RALI Series 2006-QA10 Trust -- Cl. M-1 Currently Aa2 on review for possible downgrade, -- Cl. M-2, Downgraded to Ba1, previously A2, -- Cl. M-3, Downgraded to Ba3, previously Baa1, -- Cl. M-4, Downgraded to B1, previously Baa2, -- Cl. M-5, Downgraded to B2, previously Baa3, -- Cl. M-6, Downgraded to Ca, previously Ba1. Issuer: RALI Series 2006-QA11 Trust -- Cl. M-1 Currently Aa2 on review for possible downgrade, -- Cl. M-2, Downgraded to Ba1, previously A2, -- Cl. M-3, Downgraded to Ba3, previously Baa1, -- Cl. M-4, Downgraded to B2, previously Baa2, -- Cl. M-5, Downgraded to Caa1, previously Baa3, Issuer: RALI Series 2006-QA2 Trust -- Cl. M-2, Downgraded to Baa2, previously A2, -- Cl. M-3, Downgraded to B2, previously Baa2. Issuer: RALI Series 2006-QA3 Trust -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A2, previously A1, -- Cl. M-5, Downgraded to A3, previously A2, -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. M-7, Downgraded to Baa3, previously Baa1, -- Cl. M-8, Downgraded to Ba1, previously Baa2, -- Cl. M-9, Downgraded to Ba3, previously Baa3. Issuer: RALI Series 2006-QA4 Trust -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A2, previously A1, -- Cl. M-5, Downgraded to A3, previously A2, -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. M-7, Downgraded to Baa3, previously Baa1, -- Cl. M-8, Downgraded to Ba1, previously Baa2, -- Cl. M-9, Downgraded to Ba3, previously Baa3, -- Cl. M-10, Downgraded to Caa1, previously Ba2. Issuer: RALI Series 2006-QA5 Trust -- Cl. I-M-1 Currently Aa1 on review for possible downgrade, -- Cl. I-M-2 Currently Aa2 on review for possible downgrade, -- Cl. I-M-3 Currently Aa3 on review for possible downgrade, -- Cl. I-M-4, Downgraded to A3, previously A1, -- Cl. I-M-5, Downgraded to Baa1, previously A2, -- Cl. I-M-6, Downgraded to Baa2, previously A3, -- Cl. I-M-7, Downgraded to Ba2, previously Baa1, -- Cl. I-M-8, Downgraded to Ba3, previously Baa2, -- Cl. I-M-9, Downgraded to B3 on review for possible further downgrade, previously Baa3. Issuer: RALI Series 2006-QA6 Trust -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A2, previously A1, -- Cl. M-5, Downgraded to A3, previously A2, -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. M-7, Downgraded to Baa3, previously Baa1, -- Cl. M-8, Downgraded to Ba1, previously Baa2, -- Cl. M-9, Downgraded to Ba3, previously Baa3, -- Cl. B, Downgraded to B3 on review for possible further downgrade, previously Ba1. Issuer: RALI Series 2006-QA7 Trust -- Cl. M-1 Currently Aa1 on review for possible downgrade, -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A2, previously A1, -- Cl. M-5, Downgraded to Baa1, previously A2, -- Cl. M-6, Downgraded to Baa2, previously A3, -- Cl. M-7, Downgraded to Ba1, previously Baa1, -- Cl. M-8, Downgraded to Ba2, previously Baa2, -- Cl. M-9, Downgraded to Ba3, previously Baa3, -- Cl. M-10, Downgraded to Caa1, previously Ba1. Issuer: RALI Series 2006-QA8 Trust -- Cl. M-1 Currently Aa1 on review for possible downgrade, -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A3, previously A1, -- Cl. M-5, Downgraded to Baa2, previously A2, -- Cl. M-6, Downgraded to Baa3, previously A3, -- Cl. M-7, Downgraded to Ba2, previously Baa1, -- Cl. M-8, Downgraded to Ba3, previously Baa2, -- Cl. M-9, Downgraded to B2, previously Baa3. Issuer: RALI Series 2006-QA9 Trust -- Cl. M-2, Downgraded to A3, previously A2, -- Cl. M-3, Downgraded to Baa2, previously Baa1, -- Cl. M-4, Downgraded to Ba1, previously Baa2, -- Cl. M-5, Downgraded to Ba2, previously Baa3, -- Cl. M-6, Downgraded to B1, previously Ba1. SAINT GERMAIN: Moody's Junks Ratings on $50 Mil. Capital Notes -------------------------------------------------------------- Moody's Investors Service took these rating action on the Capital Notes Due 2022 (program for issuance of up to $250,000,000 of Capital Notes) issued by Saint Germain Holdings Ltd.: Issued Series: -- $10,000,000 Capital Notes, Series 2003-1; -- $40,000,000 Capital Notes, Series 2005-1 Prior Rating: Ba3 (on Watchlist for Downgrade) Current Rating: Ca Moody's rating action on the Capital Notes program reflects Moody's expectation of the losses to be realized by holders of the Capital Notes following the execution on Nov. 5, 2007 of an amendment agreement involving the undertaking of a plan of liquidation. In calling for a liquidation of the assets and redemption of the Capital Notes, the program administrator cites the recent financial market dislocations that have resulted in an operating environment incompatible with the issuer's business goals. In particular, rationed access to commercial paper funding has made it increasingly difficult to operate SGH Ltd. in an economically viable manner. As such, the program administrator believes that it is in the best interests of the Capital Notes holders to wind down the operations of the issuer. The liquidation plan will result in the sale (to be completed on or before Nov. 15, 2007) of all investment assets owned by the issuer, and the payment in full of all outstanding Commercial Paper Notes as they mature. Remaining amounts (after payment of any outstanding administrative expenses and put and other hedge contract payables, if any) will be distributed to the Capital Notes holders as consideration for the redemption of the Capital Notes. According to the program administrator, the highest market bids on a significant proportion of the issuer's assets are lower than the strike prices of the related puts owned by the issuer. As a result, the liquidation is largely being consummated through the exercise by SGH Ltd. of the related put contracts wriiten by Natixis Financial Products Inc. (as put counterparty). Consequently, asset liquidation proceeds are provided a floor value - in all cases this value should exceed the outstanding amount of Commercial Paper Notes. Moody's notes that the issuer is not currently in violation of any enforcement triggers requiring mandatory liquidation of the assets and redemption of the Capital Notes. While not unexpected in view of exigent market realities, the election to liquidate assets and redeem the Capital Notes nonetheless has the effect of accelerating permanent realization of losses by the Capital Notes holders. SGH Ltd. is a special purpose finance company managed by Natixis Securities North America Inc. that incorporates a number of structural features common to Structured Investment Vehicles. SATCON TECH: Retires Conv. Loan Using Note Purchase Pact Proceeds ----------------------------------------------------------------- SatCon Technology Corporation has borrowed $10 million under its note purchase agreement with RockPort Capital Partners and NGP Energy Technology Partners. Approximately $8.5 million of the proceeds have been used to retire its existing convertible secured notes. Subsequent to retiring the existing convertible secured notes, the company entered into a definitive agreement with RockPort and NGP ETP for a new Series C Convertible Preferred Stock equity financing of $25 million of preferred stock and warrants, $10 million of which would be used to retire the new short-term debt. The first $10 million tranche of the equity financing has closed. The second tranche, which will be subject to stockholder approval, would be for approximately $15 million. The preferred stock is convertible into common stock at an initial conversion price of $1.04 per share and accrues a 5% annual dividend. In connection with the first closing, the investors received warrants to purchase approximately 15.3 million shares of common stock at an exercise price of $1.44 per share. In connection with the second closing, the investors will receive warrants to purchase up to approximately 4.45 million shares at an exercise price of $1.25 per share. All of the warrants have a seven-year term. Upon receipt of stockholder approval, the warrants issued in connection with the first closing will be repriced to be exercisable at $1.25 per share. After retiring the newly issued short-term notes, the company will use the remaining net proceeds of the equity financing to accelerate its growth in the alternative energy market, and support ongoing research and development activities. David Prend, Managing General Partner at RockPort Capital Partners, and Philip Deutch, managing partner of NGP Energy Technology Partners, have been appointed to the board of directors of SatCon Technology Corporation. "This event represents a turning point in SatCon's history," David Eisenhaure, current president and chief executive officer of SatCon Technology Corporation, said. "With the backing of our new preferred stockholders I have confidence that we now have the tools to exploit the rapidly growing alternative energy marketplace." The second tranche of the equity financing will be subject to customary closing conditions as well as receipt of stockholder approval. SatCon intends to hold a special stockholder meeting on Dec. 20, 2007, for the vote on the second tranche of the equity transaction. Ardour Capital Investments LLC advised SatCon with respect to the financial aspects of the combined financing. Wilson Sonsini Goodrich & Rosati P.C. represented the investors and Greenberg Traurig LLP represented SatCon Technology Corporation. The proxy statement and other documents which are filed by SatCon with the Securities and Exchange Commission will be available free of charge by directing a request to SatCon Technology Corporation Attn: Investor Relations 27 Drydock Avenue Boston, MA 02210 About SatCon Technology SatCon Technology Corporation (NasdaqCM: SATC) -- http://www.satcon.com/-- is a developer and manufacturer of electronics and motors for the Alternative Energy, Hybrid-Electric Vehicle, Grid Support, High Reliability Electronics and Advanced Power Technology markets. As reported in the Troubled Company Reporter on Aug. 14, 2007, SatCon Technology Corp.'s consolidated balance sheet at June 30, 2007, showed $34.9 million in total assets, $38.9 million in total liabilities, resulting in a $4 million total stockholders' deficit. Going Concern Doubt Vitale, Caturano and Company Ltd. expressed substantial doubt about SatCon Technology Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm reported that the company incurred a net loss of $19.8 million and used $9.8 million of cash in its operating activities and as of Dec. 31, 2006, has a stockholders' deficit of $2.5 million. In addition, the company has historically incurred losses and used cash, rather than provided cash, from operations. SCOTTISH RE: S&P Revises Outlook to Negative from Developing ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Scottish Re Group Ltd. and its operating companies to negative from developing. Standard & Poor's also said that it affirmed its ratings on Scottish Re, Scottish Re's operating companies, and dependent unwrapped securitized deals related to Scottish Re. In addition, Standard & Poor's affirmed its ratings on securitizations that are wrapped or independent of the credit quality of Scottish Re. "We revised the outlook to reflect the adverse developments announced in Scottish Re's third-quarter 2007 earnings release," said Standard & Poor's credit analyst Robert A. Hafner. "These developments increase uncertainty, forestall prospects for ratings improvement, and heighten pressures that could lead to a downgrade." Scottish Re's very high exposure to subprime ($1.9 billion) and Alt-A ($1.1 billion) mortgage securities and persistent market value decline hurt the quality of its capitalization. Although these securities are heavily skewed to very highly rated tranches, on a percentage basis, this is one of the highest concentrations among rated firms. The ratings reflect Scottish Re's strong number-three position in U.S. life reinsurance in-force market; the capital infusion by MassMutual Capital Partners LLC and Cerberus Capital Management L.P. in the second quarter of 2007, which helped improve the stability of liquidity and capital; and the positive effect of consolidation in the life reinsurance sector. The company has begun to address the issues of weak enterprise risk management as it improves its inadequate operational processes, which led to earnings surprises over the past several quarters. Corporate governance will benefit from a renewed focus from a new board of seasoned executives under a new structure, which should provide a strong oversight role. The open executive management positions appear close to being filled, which will enhance leadership. Scottish Re is also demonstrating modest progress in operating fundamentals and reported positive pretax operating income ($1.6 million) for the third-quarter for the first time in several periods. Scottish Re also won three new treaties--one each in the U.K., Asia, and North America--and it did not report any treaty recaptures. In September 2007, Scottish Re closed the Clearwater Re Triple-X financing transaction that eliminates the potential for a collateral call from previous financing. S&P will likely lower the ratings if earnings volatility remains high, the subprime and Alt-A market value declines gain permanence and replacement capital is not secured, revenue growth is poor, or management is unable to refocus the company on consistent, profitable growth. S&P could revise the outlook back to stable if financial management continues to improve but sales and earnings are stagnant. The outlook could be revised to positive if the depressed subprime and Alt-A valuations prove temporary and operational issues are resolved such that earnings volatility decreases, new sales grow, and the new management team is able to provide leadership to the company and thereby recover from the events of the past several quarters. SEMCO ENERGY: Closed Cap Rock Deal Cues S&P to Withdraw Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on SEMCO Energy Inc. (BB-/Watch Pos/--), following the completion of its acquisition by Cap Rock Holding Corp. The ratings were on CreditWatch with positive implications, where they were placed on June 8, 2007, reflecting Standard & Poor's expectation that leverage would decline and SEMCO's financial condition would improve after the acquisition by Cap Rock. Cap Rock, through its wholly owned subsidiary Cap Rock Energy, transmits and distributes electricity to about 35,000 customers in 28 counties in Texas. Cap Rock is ultimately owned by Lindsay, Goldberg, a New York City-based private equity investment firm. Shareholders approved the acquisition at a special meeting held June 7, 2007. The Regulatory Commission of Alaska granted its approval on Oct. 9, 2007, which was the most significant legal hurdle. The acquisition was expected to be completed on Nov. 9, 2007. SEMCO's two largest existing debt issues, its 7.75% senior notes due 2013 ($200 million original issue) and 7.125% senior notes due in 2008 ($150 million) had a change of control put provision that required the company to redeem the debt at 101% of their principal amounts if the holder exercises the put. As of Oct. 24, 2007, all but about $5 million of the two notes combined had been tendered. According to its filing with RCA, Cap Rock would acquire SEMCO's series B preferred stock for about $55 million, convert that into common equity, and inject an additional $40 million to $45 million of cash common equity into SEMCO. When this is completed, SEMCO's adjusted debt to capital ratio would decline to about 50% (a sharp improvement from 66.7% as of Dec. 31, 2006), remove the preferred stock dividend (which cost SEMCO about $2.7 million in 2006, or 26% of net income), and would have had positive implications for its credit ratings. SEQUOIA MORTGAGE: Fitch Holds Low-B Ratings on 10 Cert. Classes --------------------------------------------------------------- Fitch Ratings took rating actions on these Sequoia Mortgage Funding Corporation mortgage pass-through certificates: Series 2004-4 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA+'; -- Class B-2 affirmed at 'A+'; -- Class B-3 affirmed at 'BBB+'; -- Class B-4 affirmed at 'BB+'; -- Class B-5 affirmed at 'B+'. Series 2004-5 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA+'; -- Class B-2 affirmed at 'A+'; -- Class B-3 affirmed at 'BBB+'; -- Class B-4 affirmed at 'BB+'; -- Class B-5 affirmed at 'B+'. Series 2004-6 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA+'; -- Class B-2 affirmed at 'A+'; -- Class B-3 affirmed at 'BBB+'; -- Class B-4 affirmed at 'BB+'; -- Class B-5 affirmed at 'B+'. Series 2004-8 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA+'; -- Class B-2 affirmed at 'A+'; -- Class B-3 affirmed at 'BBB+'; -- Class B-4 affirmed at 'BB+'; -- Class B-5 affirmed at 'B+'. Series 2004-10 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA+'; -- Class B-2 affirmed at 'A+'; -- Class B-3 affirmed at 'BBB+'; -- Class B-4 affirmed at 'BB+'; -- Class B-5 affirmed at 'B+'. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect about $674 million of outstanding certificates. As of the September distribution date, the transactions are seasoned from 35 (2004-10) to 41 months (2004-4). The pool factors (current principal balance as a percentage of original) range approximately from 14% (2004-4) to 22% (2004-10). The underlying collateral for Sequoia Mortgage Funding Corporation transactions consists of prime adjustable-rate mortgage loans indexed to one-month LIBOR and six-month LIBOR. The mortgage term is typically 25 or 30 years with a 3, 5 or 10-year interest-only period. The Sequoia Mortgage Funding Corporation loans are acquired from various originators by a subsidiary of Redwood Trust Inc., a mortgage real estate investment trust that invests in residential real estate loans and securities. The master servicer for the above deals is Wells Fargo Bank N.A., which is currently rated 'RMS1' by Fitch. SIX FLAGS: Moody's Junks Corporate Family Rating ------------------------------------------------ Moody's Investors Service downgraded the corporate family rating for Six Flags Inc. to Caa1 from B3 and its probability of default rating to Caa1 from B3. Six Flags did not demonstrate meaningful progress in improving operational trends during the 2007 operating season, and recent results suggest an inability to grow into the capital structure. Moody's considers the Caa1 corporate family rating more appropriate based on its unsustainable capital structure and anticipates that Six Flags will continue to consume cash in 2008, as it has each year since 2004. The outlook is stable. In addition, Moody's affirmed the SGL-3 speculative grade liquidity rating and continues to characterize the company's liquidity as adequate. Moody's also downgraded the individual instrument ratings. Six Flags Inc. -- Probability of Default Rating, Downgraded to Caa1 from B3 -- Corporate Family Rating, Downgraded to Caa1 from B3 -- Preferred Stock, Downgraded to Caa3 from Caa2 -- Senior Unsecured Bonds, Downgraded to Caa2, LGD5, 76% from Caa1 -- Affirmed SGL-3 liquidity rating -- Outlook: Stable Six Flags Theme Parks Inc. -- Senior Secured Bank Credit Facility, Downgraded B1, LGD2, 19% from Ba3 The Caa1 corporate family rating reflects high financial risk, including unsustainable leverage (about 14 times as per Moody's standard adjustments) and negative free cash flow. Despite limited financial flexibility, management increased costs as part of a turnaround strategy, expecting increased revenue and cash flow to follow. Two years into this transition, EBITDA and attendance for Six Flags remain below the levels of 2004 and 2005 (pro forma for park sales). However, asset sales and a bank refinancing in the first half of 2007 improved liquidity, and Six Flags benefits from about $100 million of balance sheet cash (as of the end of the September quarter) and its $275 million revolving credit facility. Scale, geographic diversity, and the value of owned real estate also support the rating. The stable outlook at Caa1 assumes continued cash consumption over the next several years. Growth in EBITDA could contribute to a decline in leverage, but Moody's remains concerned about the company's ability to grow into its capital structure. Moody's would consider a positive outlook or upgrade with a clear trajectory toward positive free cash flow and sustainable leverage below 10 times. Conversely, evidence of deteriorating liquidity, such as inability to access its revolving credit facility or a more rapid than expected depletion of balance sheet cash, could result in a negative outlook or downgrade. Continued worsening of operational trends, such as declining attendance or revenue, could also pressure the rating. Six Flags, headquartered in New York City, is the world's largest regional theme park company with annual revenue of about $1 billion. SIX FLAGS: Declining Profitability Cues S&P to Lower Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on theme park operator Six Flags Inc., including the corporate credit rating to 'CCC+' from 'B-'. The rating outlook remains negative. "The downgrade is based on declining profitability, negative discretionary cash flow, and rising debt leverage that has not been meaningfully addressed by asset sales," explained Standard & Poor's credit analyst Hal Diamond. The company's turnaround effort has been more challenging than Standard & Poor's had anticipated, involving more time, investment, and uncertainty. Additional operating expenses associated with new management's plan to make the parks more appealing to families and to enhance the guest experience, as well as unsuccessful marketing expenditures, have hampered financial performance. Management's strategy of attracting family audiences has faced challenges on account of negative brand perception among parents, which has proven increasingly difficult to reverse. New York-based regional theme park owner and operator Six Flags had $2.5 billion of debt and preferred stock outstanding as of Sept. 30, 2007. SMART SERIES: Moody's Assigns (P)B2 Rating on Class E Notes ----------------------------------------------------------- Moody's Investors Service assigned provisional long-term ratings to the notes issued by SMART Series 2007-3E Trust. The transaction is a securitisation of a portfolio of Australian motor vehicle leases originated by Macquarie Leasing Pty Limited, a division of Macquarie Bank Limited. Complete rating action: -- (P)P-1 to the Class A-1 Notes; -- (P)Aaa to the Class A-2 Notes; -- (P)A1 to the Class B Notes; -- (P)Baa2 to the Class C Notes; -- (P)Ba2 to the Class D Notes; -- (P)B2 to the Class E Notes; -- The Seller Notes are not rated. The ratings address the expected loss posed to investors by the legal final maturity. The structure allows for timely payment of interest and ultimate payment of principal with respect to the Notes by the legal final maturity. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect Moody's preliminary credit opinion regarding the transaction. Upon a conclusive review of the final versions of all the documents and legal opinions, Moody's will endeavour to assign a definitive rating to the transaction. A definitive rating may differ from a provisional rating. Moody's ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed, but may have significant effect on yield to investors. Moody's ratings are subject to revision, suspension or withdrawal at any time at our absolute discretion. The ratings are expressions of opinion and not recommendations to purchase, sell or hold securities. SOLUTIA INC: Judge Beatty Approves $250 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 million to be put toward retiree pensions and $75 million 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. STRUCTURED ASSET: Fitch Assigns Low-B Ratings on $21.3MM Certs. --------------------------------------------------------------- Fitch rates Structured Asset Securities Corporation $691.6 million mortgage pass-through certificates, series 2007- BNC1, as: -- $541.6 million classes A1, A2, A3, and A4 'AAA'; -- $18.3 million classes M1 'AA+'; -- $18.3 million classes M2 'AA'; -- $32.1 million classes M3 'AA-'; -- $11.6 million classes M4 'A+'; -- $13.1 million classes M5 'A'; -- $9.7 million class M6 'A-'; -- $7.8 million class M7 'BBB+'; -- $10.1 million class M8 'BBB'; -- $7.8 million class M9 'BBB-'; -- $10.1 million class B1 'BB+' (144A); -- $11.2 million class B2 'BB' (144A). The 'AAA' rating on the senior certificates reflects the 27.45% total credit enhancement provided by the 2.45% class M1, the 2.45% class M2, the 4.30% class M3, the 1.55% class M4, the 1.75% class M5, the 1.30% class M6, the 1.05% class M7, the 1.35% class M8, the 1.05% class M9, the privately offered 1.35% class B1, the privately offered 1.50% class B2 and the privately offered non- rated 3.70% class B3, as well as the initial 3.65% overcollateralization. Fitch believes that the amount of credit enhancement will be sufficient to cover credit losses. In addition, the ratings also reflect the quality of the underlying mortgage collateral, the strength of the legal and financial structures and the master and primary servicing capabilities of Aurora Loans Services LLC, which is rated 'RMS1-' by Fitch, as well as the primary servicing capabilities of JP Morgan Chase Bank N.A. 'RPS1' and Wells Fargo Bank N.A. 'RPS2'. The trust fund will primarily consist of two pools of conventional, first and second lien, fixed rate, fully amortizing and balloon, residential mortgage loans, all of which have original terms to maturity of not more than 30 years. As of the cut-off date (Oct. 1, 2007), the mortgage trust has an aggregate principal balance of about $746,499,907 and an average balance of $232,554. The mortgage pool has a weighted average original loan- to-value ratio of 86.42%, a weighted average coupon of 9.321%, and a weighted average FICO of 611. The top three states are California (30.29%), Florida (11.36%) and Illinois (6.61%). All mortgage loans originated or purchased by BNC were underwritten in accordance with BNC's Underwriting Guidelines. All mortgage loans were acquired by Lehman Brothers Holdings Inc. from BNC Mortgage Inc. SASCO, a special purpose corporation, deposited the loans in the trust, which issued the certificates. U.S. Bank National Association will act as trustee of the trust fund, which is rated 'AA-/F1+' by Fitch. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. TERADYNE INC: Boards Approves New $400 Million Stock Repurchase --------------------------------------------------------------- Teradyne Inc.'s board of directors has authorized a new Stock Repurchase Program. Under the program, the company is permitted to spend an aggregate of $400 million to repurchase shares of its common stock in open market purchases, in privately negotiated transactions or through other appropriate means. Shares are to be repurchased at the company's discretion, subject to market conditions and other factors. Teradyne completed its recent authorized stock repurchase program in October. Under that program, which started in the third quarter of 2006, Teradyne repurchased 27,947,230 shares at an average price of $14.31. Headquartered in North Reading, Massachussetts, Teradyne Inc. (NYSE: TER) -- http://www.teradyne.com/-- is a supplier of Automatic Test Equipment used to test complex electronics used in the consumer electronics, automotive, computing, telecommunications, and aerospace and defense industries. Teradyne employs about 3,600 people worldwide. * * * Teradyne Inc. still carries S&P's "B+" Long Term Foreign Issuer Credit and Long Term Local Issuer Credit Ratings which was placed on Dec. 13, 2002. TLC VISION: Posts $22.6 Million Net Loss in Quarter Ended Sept. 30 ------------------------------------------------------------------ TLC Vision Corporation reported last week results for the third quarter ended Sept. 30, 2007. Consolidated net loss for the third quarter was $22.6 million, compared to net income of $301,000 from the prior year period. The quarterly net loss includes charges totaling $16.2 million related principally to the impairment of the company's investments in stand-alone ambulatory surgery centers (which TLC Vision is in advanced discussions to sell), and one time non-cash income tax expenses. Revenue for the third quarter was $70.7 million, a 10% increase over prior year revenue of $64.5 million. Jim Wachtman, president and chief executive officer of TLCVision, commented, "The overall company strategy continues to gain traction as evidenced by the procedure and revenue growth announced today. We remain very focused on continuing to improve the performance of our refractive centers while leveraging the strength of the doctor services and eye care businesses. "Consistent with that mission, today we are announcing that the company is in advanced discussions to sell our stand-alone ambulatory surgery business. The potential sale of these facilities will provide a better overall strategic alignment for TLCV. We are confident that these initiatives will drive increased shareholder value for the long-term." Business Unit Review Refractive Centers includes the company's 80 centers that provide laser vision correction surgery. Total centers revenues were up 13% to $39.8 million. Total procedures of 28,700, including minority-owned centers, growing 6% overall and growing 7% on a same store basis. Doctor Services revenues increased 4.9% to $24.8 million, led by an 8.7% increase in mobile cataract access revenue. Eye Care revenues grew 10% over prior year as a result of new franchises and higher fees per franchisee. Year-to Date Results Revenue for the nine months ended Sept. 30, 2007, was $235.0 million, compared to $218.3 million for the prior year period, an increase of 8%. Consolidated net loss was $18.2 million compared to net income of $13.9 million for the prior year period, and reflects the impact of the non-cash charges in the third quarter. Operating cash flow for the nine months ended Sept. 30, 2007, was $29.8 million, compared to $30.5 million in the prior year period. At Sept. 30, 2007, the company's consolidated balance sheet showed $257.0 million in total assets, $169.6 million in total liabilities, and $87.4 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?252b About TLC Vision Headquartered in Mississauga, Ontario, Canada, TLC Vision Corp. (NASDAQ: TLCV; TSX: TLC) -- http://www.tlcvision.com/-- is a North American eye care services company, providing eye doctors with the tools and technologies needed to deliver high-quality patient care. * * * TLC Vision Corp. still carries Moody's Investors Service 'B1' long term corporate family and 'B1' bank loan debt ratings which were placed on June 8, 2007. The rating outlook is stable. VALLEY HEALTH: Voters Trash Measure G; Cutler To Woe Public Again ----------------------------------------------------------------- Matthew Cutler, president and chief executive officer of Select HealthCare Solutions, remained confident in purchasing Valley Health System although voters trashed Measure G proposal at an election last week, Herbert Atienza of The Press Enterprise reports. Mr. Cutler said he hadn't thought of a defeat and hadn't prepared any contingency plans, Valerie Detwiler writes for The Valley Chronicle. Measure G advocates lost to opposition, 47% to 53%, The Valley Chronicle says. Mr. Cutler says, according to The Press Enterprise, he will move on to buy Valley Health's Moreno Valley Community Hospital for $47 million, pursuant to the purchase agreement under Measure G. However, Mr. Cutler indicated plans to woe the public again to allow him to buy the district hospitals, PE relates. Valley Health's board met behind closed doors to discuss its other alternatives after the Measure G defeat but have not come up with definite decisions, The Press Enterprise reports. About Measure G Measure G is California Local Health Care District's recommendation to sell Valley Health to Select Care for $135 million in hopes to bring "much needed capital and new services" to the District. The District discloses it has been running out of cash reserves and is losing about $1 million to $2 million per month. Based on the Measure G offer, if voters approve the sale, approximately $105 million of $135 million will be used to pay off bonds, fees, and interim operating costs until the sale closes. The remaining portion of the proceeds will be used by the District to provide public health programs. However, in the event the communities do not approve the sale, Select is obligated to purchase Moreno Valley Community Hospital (which, by itself, would not require approval of the voters) for $47 million and the District would maintain ownership of its other assets. However, the District Board would still have to pursue other solutions. If the sale is not approved, the District will have to take drastic measures to reduce debt and losses. These will include staff layoffs and reducing services currently provided by the hospitals. In the worst scenario, bankruptcy would have to be considered. Valley Health, according to the Measure G proposal at its Web site, has been facing several financial problems which includes the investment in Moreno Valley Hospital that, since its inception 17 years ago, has never had a positive bottom line. Measure G also mentions the constant turmoil and recall in the District's board, the failure of the bond issue in 2006 that aimed to replace several buildings that won't meet State seismic codes in 2013, and the escalating employee salaries, wages and benefits costs that rose rapidly over the past two years, leading to operating deficits. Asset Sale Agreement On Aug. 8, 2007, Valley Health Board approved the acquisition of substantially all of the District's assets - including Hemet Valley Hospital, Menifee Valley Medical Center, Moreno Valley Community Hospital and Hemet Healthcare Center - to Select Healthcare for $135 million, a fair market value as assessed by the Valuation and Information Group. As part of this agreement, Select Healthcare will relieve Valley Health of substantially all of VHS's debts incurred in the ordinary course of business, including obligations under Valley Health's outstanding revenue bonds incurred to construct various Valley Health facilities. The agreement terminates the existing management contract Valley Health Care Management Solutions LLC, the principals of which are prohibited from participating in the management of Valley Health Hospitals for at least five years. State law requires that a majority of voters in the Valley Health System district approve the sale agreement. Voters decided against the sale on Nov. 6, 2007. About Select Select Heathcare Solutions is a health care development company committed to bringing world-class management expertise and new financial resources to the physicians, nurses and patients of Hemet Valley Medical Center, Menifee Valley Medical Center, and other Valley Health System facilities. About Valley Health System Valley Health System, -- http://www.valleyhealthsystem.com/-- a California Local Health Care District, owns and operates three acute hospitals and a skilled nursing facility; Hemet Valley Medical Center, a 340-bed facility located in Hemet, Menifee Valley Medical Center an 84-bed facility located in Sun City, and Moreno Valley Community Hospital a 95-bed facility located in the city of Moreno Valley. Hemet Valley HealthCare Center, a 113-bed skilled nursing facility located in Hemet. Currently the District encompasses approximately 882 square miles in the San Jacinto Valley in west central Riverside County. It includes the City of Hemet, the City of San Jacinto, the City of Sun City, and the surrounding unincorporated areas. Population of the District is approximately 360,000, however Moreno Valley and its primary service area are located outside the boundaries of the District. The District was formed in 1946 and purchased as existing 18-bed hospital from the City of Hemet. Since then, Hemet Valley Medical Center has undertaken a number of projects in expanding to its present 240 licensed bed capacity. Menifee Valley Medical Center and Moreno Valley Community Hospital were opened in 1989 and 1990 respectively. VESCOR DEV'T.: Section 341(a) Meeting Slated for December 12 ------------------------------------------------------------ The U.S. Trustee for Region 17 will convene a meeting of creditors in the bankruptcy cases of Vescor Development LLC and its debtor- affiliates at 1:00 p.m., on Dec. 12, 2007, at Foley Building, Room 1500. This is a continuation of the previous meeting scheduled last Sept. 12, 2007. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About Vescor Development Henderson, Nevada-based Vescor Development LLC develops real estate. The company and its affiliates share common management and ownership. Apex MM serves as the Debtors' manager. The company and three of its affiliates, ADL 1 LLC, IDL 9 LLC and JDL 10 LLC, filed for chapter 11 bankruptcy protection on Aug. 20, 2007 (Bankr. D. Nev. Case Nos. 07-15210 through 07-15213). Laurel E. Davis, Esq. at Fennemore Craig, P.C. represents the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed total assets of $151,954,690 and total debts of $85,590,847. The company's affiliates, Vescor Development 3 LLC, BDL 2 LLC and EDL 5 LLC had filed for chapter 11 protection on Aug. 26, 2006 (Bankr. D. Nev. Lead Case No. 06-12094). Laurel E. Davis, Esq., at Lionel Sawyer & Collins serves as the Debtors' counsel. When Vescor filed for protection from its creditors, it listed total assets of $109,570,385 and total debts of $63,290,195. Vescor Development 3 and its debtor-affiliates delivered its reorganization plan and disclosure statement in January 2007, whereby they planned to pay its general unsecured creditors in full. The Court confirmed that plan on March 20, 2007, with a condition to retain a qualified chief restructuring officer. VESCOR DEV'T.: Committee Taps Pachulski Stang as Co-Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors in Vescor Development LLC and its debtor-affiliates' Chapter 11 cases asks authority from the U.S. Bankruptcy Court for the District of Nevada to retain Pachulski Stang Ziehl & Jones LLP as its co- counsel. The firm will represent the Committee as co-counsel with Fennemore Craig P.C. The firm will be taking the lead in negotiations and restructuring work that it has been working on prior to the bankruptcy, and with respect to formulation and drafting of a plan of reorganization and will also be taking the lead in responding to the motion of the United States Trustee for appointment of a chapter 11 Trustee. On the other hand, Laurel Davis, Esq., at Fennemore Craig, will be taking lead on administration of the cases and appearances at hearings on day to day matters, including filing of the Debtors statements and schedules and postpetition financing, with input assistance from PSZJ on specific matters. Specifically, the firm will: a. advise and represent Debtors concerning the rights and remedies od the estate in regard to the assets of the estate, and with respect to the secured, priority and general claims of creditors; b. advise and represent the Debtors in connection with financial and business matters, including the sale of any assets; c. advise and represent the Debtors in connection with investigation of potential causes fo action against persons or entities, including, but not limited to, avoidance actions, and the litigation thereof if warranted; d. represent the Debtors in any proceeding or hearing in the Bankruptcy Court, and in any action in other courts where the rights of the estates may be litigated or affected; e. conduct examinations of witnesses, claimants, or adverse parties and preparing and assisting in the preparation of reports, accounts, applications and orders; f. advise and representat the Debtors in the negotiation, formulation, and drafting of any plan of reorganization and disclosure statement; g. advise and represent the Debtors in the performance of their duties and exercise of their posers under the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules and the Region 17 United States Trustee Guidelines; and h. provide to the Debtors such other necessary advice and services as the Debtors may require in connection with these Chapter 11 Cases. The Debtors will pay the firm its customary hourly rates in effect from time to time and to reimburse the Firm for its expenses according to its customary reimbursement policies. The attorneys and paralegal will be paid in these hourly rates: Professionals Hourly Rate ------------- ----------- Richard M. Pachulski, Esq. $795 Dean A. Ziehl, Esq. $750 Stanley E. Goldich, Esq. $575 Nina L. Hong, Esq. $450 Patricia J. Jeffries $200 The firm can be reached at: Pachulski Stang Zeihl & Jones LLP 10100 Santa Monica Boulevard, 11th Floor Los Angeles, California 90067-4100 Tel: (310) 277-6910 http://www.pszjlaw.com/ The firm and its partners, of counsel, and associates are "disinterested persons" as that term is defined in sections 101(14) of the Bankruptcy Code. About Vescor Development Henderson, Nevada-based Vescor Development LLC develops real estate. The company and its affiliates share common management and ownership. Apex MM serves as the Debtors' manager. The company and three of its affiliates, ADL 1 LLC, IDL 9 LLC and JDL 10 LLC, filed for chapter 11 bankruptcy protection on Aug. 20, 2007 (Bankr. D. Nev. Case Nos. 07-15210 through 07-15213). Laurel E. Davis, Esq. at Fennemore Craig, P.C. represents the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed total assets of $151,954,690 and total debts of $85,590,847. The company's affiliates, Vescor Development 3 LLC, BDL 2 LLC and EDL 5 LLC had filed for chapter 11 protection on Aug. 26, 2006 (Bankr. D. Nev. Lead Case No. 06-12094). Laurel E. Davis, Esq., at Lionel Sawyer & Collins serves as the Debtors' counsel. When Vescor filed for protection from its creditors, it listed total assets of $109,570,385 and total debts of $63,290,195. Vescor Development 3 and its debtor-affiliates delivered its reorganization plan and disclosure statement in January 2007, whereby they planned to pay its general unsecured creditors in full. The Court confirmed that plan on March 20, 2007, with a condition to retain a qualified chief restructuring officer. WILLIAMS COS: S&P Lifts Corporate Credit Rating to BBB- from BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on The Williams Companies Inc. and its affiliates, including its corporate credit rating to 'BBB-' from 'BB+'. In addition, Standard & Poor's removed the ratings from CreditWatch with positive implications. The outlook is stable. Affiliate credits affected by the Williams upgrade include Northwest Pipeline Corp., Transcontinental Gas Pipe Line Corp. and Williams Partners L.P. S&P placed the ratings on CreditWatch on May 21, 2007, following the announced sale of William's power business to Bear Energy LP, a unit of The Bear Sterns Companies Inc. for an adjusted purchase price of $496 million. The upgrade reflects the consummation of the sale of the power unit and the extinguishment of approximately $2.0 billion of imputed debt related to tolling agreements that are assumed by Bear Sterns. The sale also relieves Williams of volatile operating cash flows and the need to post collateral for its mark- to-market power transactions, which should free up to $450 million of liquidity. The rating also reflects the company's improved financial metrics resulting from strong business results across all business segments. Tulsa, Oklahoma-based Williams' business risk profile is considered satisfactory. The company's ongoing business segments include gas pipeline, exploration and production, midstream, and gas marketing services. The stable outlook reflects the expectation that Williams' financial metrics will continue to improve as a result of the strong business performance at the both E&P and midstream segments and the stable cash flow generated from the regulated pipeline business. S&P also expect the company to benefit from low-cost capital. These factors are somewhat offset by the company's inclination to pursue projects aggressively, which could increase capital spending. The outlook could be revised to positive if Williams continues to strengthen its financial metrics and exhibits greater capital discipline. A negative outlook would be warranted if performance deteriorates at the E&P or midstream segments, financial metrics weaken, or debt increases to fund share repurchases or an aggressive capital spending program. WORLDGATE COMMS: Posts $2.7 Million Net Loss in Third Quarter ------------------------------------------------------------- WorldGate Communications Inc. reported Friday its financial results for the third quarter ended Sept. 30, 2007. For the three months ended Sept. 30, 2007, the net loss was $2.7 million compared to a net loss of $3.6 million for the three month period ended Sept. 30, 2006. The three months ended Sept. 30, 2007, included a non-cash charge of $917,000 million associated with amortization of the debt discount of the company's outstanding debentures offset by a $500,000 gain on the assignment of one of the company's trademarks. Revenues for the three months ended Sept. 30, 2007, were $1.5 million. This represented an increase of $570,000 versus the three months ended Sept. 30, 2006. The quarter results reflect the launch shipments to Snap!VRS as well as units shipped to Turkey, in addition to $370,000 from service revenue and development fees. At Sept. 30, 2007, the company's consolidated balance sheet showed $4,659,000 in total assets, $4,339,000 in total liabilities, and $320,000 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?252e Going Concern Doubt As reported in the Troubled Company Reporter on March 21, 2007, Marcum & Kliegman LLP, in Melville, New York, expressed substantial doubt about WorldGate Communications Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and accumulated deficit of $247 million at Dec. 31, 2006. About WorldGate Communications Based in Trevose, Pennsylvania, WorldGate Communications Inc. (NASDAQ: WGAT) -- http://www.wgate.com/-- designs, manufactures, and distributes the Ojo line of personal video phones. Ojo personal video phones offer real-time, two-way video communications with video messaging. YUKOS OIL: Owners Get Nothing from $35.6 Billion Sale Proceeds -------------------------------------------------------------- A series of bankruptcy auctions for OAO Yukos Oil Co.'s assets, which began in March 2007, has raised RUR877.06 billion ($35.6 billion) this year, about $3 billion less than the company's total liabilities, including taxes, debts and fines, Bloomberg relates. However, Nikolai Lashkevich, spokesman for Yukos' court- appointed manager Eduard Rebgun, told Bloomberg that shareholders will not get anything from the amount as "there is no money from the asset sales" available to pay them. As reported in the TCR-Europe on Nov. 5, 2007, Yukos has paid up to RUR1.867 trillion to its bankruptcy creditors, with RUR76 billion in outstanding claims left, RIA Novosti reports, citing Mr. Rebgun. According to the report, Yukos has paid: -- RUR995 billion in taxes, RUR579 billion of which incurred during the company's bankruptcy process, to Russia's federal budget; and -- RUR872 billion in claims by commercial creditors, including Deutsche Bank AG, Banque Societe Generale Vostok and Mazeikiu Nafta. About Yukos Oil Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. A few days later, the Russian Government sold its main production unit Yugansk to a little-known firm Baikalfinansgroup for $9.35 billion, as payment for $27.5 billion in tax arrears for 2000-2003. Yugansk eventually was bought by state-owned Rosneft, which is now claiming more than $12 billion from Yukos. On March 10, 2006, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a $1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state- owned oil company as plaintiff. On April 13, 2006, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06-0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, 2006, Yukos signed a $1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. On Aug. 1, 2006, the Hon. Pavel Markov of the Moscow Arbitration Court upheld creditors' vote to liquidate OAO Yukos Oil Co. and declared what was once Russia's biggest oil firm bankrupt. * Entergy's Nuclear Spinco Spin-off Will Have Moderate Risk ----------------------------------------------------------- Fitch Ratings believes that Entergy's spin-off company, Nuclear Spinco, will have a moderate to moderately high operating risk profile. This report follows Entergy's November 5th announcement that it would divest its non-utility nuclear generating assets into an independent company. Based on Fitch's base case for energy and capacity prices, Nuclear Spinco's estimated EBITDA is about $990 million. At this cash flow level, Fitch believes that Nuclear Spinco's Issuer Default Rating and $4.5 billion of new debt would be rated in the 'BB' range, assuming a moderate operating risk profile. If Spinco has a moderately high operating risk profile, Fitch believes the IDR and new debt would be rated in the 'BB' to 'B' range. Fitch's ultimate assessment of Spinco's credit and risk profile will be made once the company discloses additional details on its operating strategy, including the hedging program and the capital structure. The spin-off's bearing on ETR's ratings ultimately will be determined by the amount of debt reduction at the parent company level relative to the loss of cash flow from the nuclear business. Fitch currently rates ETR at 'BBB-' with an Evolving Rating Outlook. Fitch recognizes that nuclear generation ownership, while entailing some financial advantages, also presents significant additional risks. These include operating complexities, additional regulatory and administrative costs due to heavy government oversight, financial risks from prolonged unplanned outages, and the mutualized financial liability for accidents at nuclear sites under different ownership. * S&P Places Ratings on 484 Classes of RMBS Under Negative Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on 484 classes of U.S. residential mortgage-backed securities backed by U.S. first-lien Alternative-A mortgage loans issued from the beginning of 2005 through the end of 2006 on CreditWatch with negative implications. In addition, Standard & Poor's placed on CreditWatch with negative implications its ratings on 63 classes of U.S. net interest margin securities transactions backed by the affected U.S. first-lien Alt-A mortgage securities. Alt-A loans are first-lien residential mortgages that generally conform to traditional "prime" credit guidelines. However, the loan-to-value ratio, loan documentation, occupancy status, property type, or other factors cause these loans not to qualify under standard underwriting programs for prime jumbo and prime quality conforming loans. This review includes transactions backed by payment option ARM (adjustable-rate mortgage) residential mortgage loans which have, as a subgroup of Alt-A, exhibited lower severe delinquency rates and have greater credit protection than the average for the entire Alt-A sector. NIMS are derivatives of RMBS. The primary source of payments to NIMS comes from the difference between the interest payments collected from subprime mortgages and the interest owed to subprime securities, together with prepayment penalties. The current levels of delinquencies and losses occurring in the subprime mortgage market have significantly reduced the levels of excess interest available to some of the NIMS. Unlike the underlying securitization, a NIMS transaction does not benefit from or contain subordination or overcollateralization. NIMS are generally short-term instruments with average tenures of less than 36 months. The Alt-A RMBS CreditWatch actions affect a total of 334 U.S. Alt- A RMBS transactions. The 484 Alt-A classes had an original total balance of approximately $2.09 billion, which represents 0.03% of the approximately $675.9 billion in U.S. RMBS backed by first-lien Alt-A mortgage loans rated by Standard & Poor's from the beginning of 2005 through the end of 2006. During the same period, the total balance of U.S. RMBS securities backed by all types of residential mortgage loans issued in the non- agency market was more than $2.2 trillion. No 'AAA' or 'AA' ratings were affected by these actions. The Alt-A NIMS CreditWatch actions affect a total of 38 U.S. Alt-A RMBS NIMS transactions. The 63 Alt-A NIMS classes with ratings placed on CreditWatch have a current balance of approximately $398 million, which represents roughly 44% of their approximate $905 million original balance. No 'AAA' or 'AA' Alt-A NIMS ratings were affected by these actions. S&P are also conducting a review of its ratings on collateralized debt obligation, structured investment vehicle, and asset-backed commercial paper transactions in which the underlying portfolios contain any of the securities affected by these rating actions. These actions reflect a persistent rise in the level of delinquencies among the Alt-A mortgage loans supporting these transactions. As of the October 2007 distribution, total delinquencies and severe delinquencies (90-plus days, foreclosures, and real estate owned) for the transactions with ratings placed on CreditWatch exceed those of Alt-A transactions with ratings not placed on CreditWatch by 36.38% and 55.69%, respectively. Total delinquencies for Alt-A transactions issued during 2005 and 2006 have increased 43.27% to 9.90% since July 2007. Over the same period, severe delinquencies have increased 52.06% to 5.17%. The following data shows the trending decline in credit quality for Alt-A transactions by four relevant groupings: 2005-2006 Alt-A transactions with ratings placed on CreditWatch negative: Total 90-plus-day Date delinquencies delinquencies Cum. loss ---- ------------- ------------- -------- Oct-07 11.77% 6.57% 0.09% Sep-07 10.15% 5.93% 0.07% Aug-07 9.35% 5.17% 0.05% Jul-07 8.50% 4.45% 0.04% 2005-2006 Alt-A transactions with no CreditWatch actions: Total 90-plus-day Date delinquencies delinquencies Cum. loss ---- ------------- ------------- --------- Oct-07 8.63% 4.22% 0.06% Sep-07 7.10% 3.66% 0.05% Aug-07 6.39% 3.10% 0.04% Jul-07 5.81% 2.67% 0.03% Alt-A transactions issued in 2005 and 2006: Total 90-plus-day Date delinquencies delinquencies Cum. loss ---- ------------- ------------- --------- Oct-07 9.90% 5.17% 0.07% Sep-07 8.33% 4.57% 0.06% Aug-07 7.58% 3.93% 0.05% Jul-07 6.91% 3.40% 0.04% All outstanding Alt-A transactions: Total 90-plus-day Date delinquencies delinquencies Cum. loss ---- ------------- ------------- --------- Oct-07 7.56% 4.02% 0.07% Sep-07 6.96% 3.59% 0.07% Aug-07 6.20% 3.02% 0.06% Jul-07 5.58% 2.56% 0.05% Realized cumulative losses within U.S. RMBS transactions backed by Alt-A mortgage loans issued during this period have remained relatively low to date, at approximately 7 basis points. The 2005 and 2006 transactions affected by these actions have experienced losses of 10 bps and 6 bps to date, respectively. Impact on Current Ratings The CreditWatch actions on the 484 different classes of first-lien U.S. RMBS backed by Alt-A mortgage loans are spread across the various rating categories: 4.48% are from the 'A' rating category; 16.97% are from the 'BBB' rating category; 20.66% are from the 'BB' rating category; and 57.89% are from the 'B' rating category. Overall, 95.52% of the affected classes are rated 'BBB+' or lower. No 'AAA' or 'AA' ratings are affected. Rating No. of Orig. cert % of total category Watch actions balance actions by bal. ------ ---------- -------- ------------ A+ 3 $8,072,000 0.20 A 11 $48,279,000 1.17 A- 10 $35,919,000 0.87 BBB+ 16 $81,910,315 1.99 BBB 15 $54,090,618 1.31 BBB- 43 $213,367,706 5.18 BB+ 32 $148,636,000 3.61 BB 61 $270,859,593 6.58 BB- 3 $6,044,875 0.15 B+ 0 0 0.00 B 284 $1,174,072,037 28.51 B- 6 $18,052,720 0.44 Total 484 $2,059,303,864 The CreditWatch actions on the 63 different classes of U.S. Alt-A NIMS are spread across the various rating categories: 39.14% are from the 'A' rating category; 33.51% are from the 'BBB' rating category; 15.00% are from the 'BB' rating category; and 12.35% are from the 'B' rating category. Overall, 60.86% are rated 'BBB' or lower. No 'AAA' or 'AA' Alt-A NIMS ratings were affected. Rating No. of Orig. cert % of total category Watch actions balance actions by bal. ------ ------- --------- ------------ A 2 $29,630,000 3.27 A- 13 $324,993,000 35.87 BBB 6 $81,600,900 9.01 BBB- 14 $221,966,000 24.50 BB 12 $33,533,900 3.70 BB- 9 $102,366,000 11.30 B 6 $103,475,000 11.42 B- 1 $8,371,000 0.92 Total 63 $905,935,800 100.00 The first-lien Alt-A RMBS classes with ratings placed on CreditWatch evidence high current delinquencies and increasing loss exposure relative to available credit enhancement. The level of severe delinquencies among the affected transactions exceeded credit support by a multiple of more than four times. S&P expect to resolve these CreditWatch placements within the next several weeks. S&P will perform a cash flow analysis for each transaction that stresses prepayment speeds together with its transaction- specific loss projections, which S&P expect to yield collateral- specific default curves (including various prepayment and delinquency stresses involving loan resets). It is possible that the ratings on classes not included in this CreditWatch action could be adversely affected at the conclusion of S&P's analysis. S&P will take rating actions on the transactions in which its loss assumptions exceed the available subordination and reserve funds. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------ ------- Absolute Software ABT (3) 77 28 AFC Enterprises AFCE (31) 158 3 Alaska Comm Sys ALSK (28) 557 24 Apex Silver Mine SIL (281) 1,366 (167) Bare Escentuals BARE (162) 196 68 Bearingpoint Inc BE (365) 2,021 384 Blount International BLT (78) 472 140 CableVision System CVC (5,131) 9,807 (630) Carrols Restaurant TAST (18) 459 (36) Centennial Comm CYCL (1,078) 1,322 20 Cheniere Energy CQP (203) 1,962 109 Choice Hotels CHH (149) 338 (31) Cincinnati Bell CBB (671) 1,966 17 Claymont Stell PLTE (40) 158 80 Compass Minerals CMP (48) 722 145 Corel Corp. CRE (20) 249 (19) Crown Holdings I CCK (65) 6,949 440 Crown Media HL CRWN (619) 703 48 CV Therapeutics CVTX (157) 281 204 Cyberonics CYBX (17) 135 (28) Denny's Corporation DENN (201) 413 (65) Domino's Pizza DPZ (1,434) 497 82 Dun & Bradstreet DNB (467) 1,419 (262) Einstein Noah Re BAGL (41) 146 0 Extendicare Real EXE-U (16) 1,277 161 Foamex Intl FMXI (257) 566 146 Gencorp Inc. GY (31) 1,082 74 General Motors GM (40,071) 149,500 (1,798) Healthsouth Corp. HLS (1,025) 2,529 (351) ICO Global C-New ICOG (116) 628 146 IDEARC Inc IAR (8,531) 1,658 391 IMAX Corp IMX (64) 220 12 IMAX Corp IMAX (64) 220 12 Incyte Corp. INCY (141) 283 238 Indevus Pharma IDEV (75) 156 14 Intermune Inc ITMN (13) 292 231 ITC Deltacom Inc ITCD (49) 409 9 Koppers Holdings KOP (24) 676 186 Life Sciences Re LSR 0 236 7 Linear Tech Corp LLTC (636) 1,334 827 Lodgenet Entertn LNET (18) 709 18 McMoran Exploration MMR (100) 1,807 (223) Mediacom Comm MCCC (187,531) 4 TRI (276,257) National Cinemed NCMI (579) 439 40 Navisite Inc NAVI (14) 116 11 Neurochem Inc NRM (1) 116 79 Nexstar Broadcasting NXST (81) 704 (20) NPS Pharm Inc NPSP (210) 361 (119) ON Semiconductor ONNN (35) 1,526 395 PRG-Schultz Intl PRGX (29) 115 21 Primedia Inc PRM (426) 1,233 770 Protection One PONN (4) 678 (302) Radnet Inc. RDNT (49) 393 38 Ram Energy Resources RAME (1) 203 (8) Regal Entertainment RGC (93) 2,594 (41) Riviera Holdings RIV (42) 219 18 RSC Holdings Inc RRR (73) 3,554 (283) Rural Cellular RCCC (602) 1,260 14 Sealy Corp. ZZ (128) 1,023 40 Sipex Corp SIPX (18) 44 2 Sirius Satellite SIRI (641) 1,587 (262) Sonic Corp SONC (107) 759 (41) St. John Knits Inc. SJKI (52) 213 80 Station Casinos STN (291) 3,932 (50) Stelco Inc STE (64) 2,657 693 Town Sports Int. CLUB (6) 483 (71) Voyager Learning VLCY (53) 917 (637) Weight Watchers WTW (945) 1,037 (134) Western Union WU (146) 5,685 (2,261) Westmoreland Coal WLB (115) 764 (51) Worldspace Inc. WRSP (1,683) 424 (20) WR Grace & Co. GRA (343) 3,794 1,246 XM Satellite XMSR (724) 1,709 (244) ********* 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 ***