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/raid1/www/Hosts/bankrupt/TCR_Public/071226.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, December 26, 2007, Vol. 11, No. 304 Headlines ACE SECURITIES: Moody's Puts Ratings on Two Certs. Under Review ACE SECURITIES: Moody's Junks Four 2005-SL1 Certificate Classes ACTIVISION INC: Earns $698,000 in Second Quarter Ended Sept. 30 ACXIOM CORP: Elects Three Board Members at 2007 Annual Meeting ACXIOM CORP: Buyout Termination Prompts S&P to Affirm BB Rating AEGIS MORTGAGE: Wants Liens Released on Unfunded Loans AFFINITY GROUP: Sale Delay Prompts S&P's Stable Outlook ARKANSAS CATFISH: Auction for Assets Scheduled Tomorrow AMERICAN HOME: Wants Limited Recourse Funds Increased by $50 Mil. AMERICAN HOME: Wants Agreement with Texas Comptroller Approved AMERICAN HOME: 2nd ABN Construction Loans Sale Pact Approved AMP'D MOBILE: Pinnacle Wants Collection Contract Reviewed AMP'D MOBILE: Court Approves Deal with Valutech and Brightpoint ASSET BACKED: Fitch Junks Ratings on $7.2 Million Certificates ASSOCIATED MATERIALS: Earns $17.4 Million in Third Quarter ATSI COMM: Posts $293,000 Net Loss in Quarter Ended October 31 ATRIUM CORP: Operating Pressure Cues Moody's to Review Ratings AVADO BRANDS: Wants February 8 Set as Claims Bar Date AVISTA CORP: Debt Reduction Cue Moody's to Lift All Ratings AVNET INC: Completes Purchase of Acal IT Solution for $200 Mil. BAY COVE: Moody's Holds Ba2 Rating on $5 Mil. Outstanding Bonds BEAR STEARNS: Moody's Holds Low-B Ratings on Six Certificates BEAR STEARNS: Moody's Junks Four Certificates' Ratings BOMBAY CO: Selling Intellectual Property to Bombay Brands BOYD GAMING: Moody's Holds Ratings and Revises Outlook to Stable BRANDYWINE REALTY: Closes $245.4 Mil. Sale of 29 Properties to DRA BROWN & COLE: Judge Steiner Approves Plan of Reorganization BURLINGTON COAT: Weak Revenue Cues Moody's to Revise Outlook CAVTEL HOLDINGS: Moody's Cuts Corporate Family Rating to B3 CENTRO NP: Financial Difficulties Cue Fitch to Junk Ratings CHARLES SCHWAB: Good Performance Prompts Fitch to Lift Rating CHEVY CHASE: High Delinquency Cues Moody's to Review Ratings CHRYSLER LLC: "Operationally" Bankrupt, CEO Nardelli Says COBALT CMBS: Limited Amortization Cues Fitch to Hold Ratings COINMACH SERVICE: Babcok & Brown Deal Cues S&P to Remove Watch COMMERCIAL CAPITAL: Fitch Holds 'BB' Rating on $10.8MM Loans DANA VILLAS: Section 341(a) Meeting Scheduled for January 17 DELTA FINANCIAL: Former Employees Say Debtors Violated WARN Act DILLON READ: Stable Performance Cues Fitch to Affirm Ratings DIVERSIFIED REIT: Fitch Affirms 'BB-' Rating on $150.3MM Notes DIVERSIFIED REIT: Fitch Holds Low-B Ratings on Three Classes DYNCORP INT'L: Bags Airlift Wing Support Contract for $357.9 Mil. EL PASO: Moody's Holds Ba3 Rating on $1.425 Mil. Junior Bonds EL POLLO: S&P Affirms B- Rating and Removes Negative CreditWatch EUROFRESH INC: Moody's Cuts Corporate Family Rating to Caa3 FGX INTERNATIONAL: Completes Bank Credit Facility Refinancing FIRST FRANKLIN: Moody's Junks Ratings on Two Loan Classes FIRST INTERNATIONAL: Fitch Retains Junk Ratings on Seven Classes FIRST MERCURY: Moody's Puts Ratings Under Review & May Upgrade FOREST CITY: S&P Affirms Low-B Ratings and Says Outlook is Stable FOUR STARS: Court Okays Day Brzustowicz as Bankruptcy Counsel GE BUSINESS: Fitch Holds 'BB' Ratings on Three Loan Classes GENESIS CLO: Moody's Assigns Low-B Ratings to Two Notes GIBSON GUITAR: Weak Credit Metrics Cue Moody's to Cut Ratings GILBERT TUSCANY: Section 341(a) Meeting Scheduled for January 22 GILBERT TUSCANY: Files List of 20 Largest Unsecured Creditors GINN-LA CS: Moody's Cuts Corporate Rating with Negative Outlook GLOBAL POWER: To Emerge from Chapter 11 by End of January 2008 GREAT ATLANTIC: Consummates Public Offering of Senior Notes GREENMAN TECH: Sept. 30 Balance Sheet upside-Down by $10.9 Mil. GREENPOINT MORTGAGE: Moody's Junks Ratings on Two Certificates GREENWICH CAPITAL: Fitch Holds Low-B Ratings on Six Cert. Classes GRUSAF LLC: Case Summary & 20 Largest Unsecured Creditors GSAMP 2005-HE4: Fitch Chips Rating on $18.3MM Certs. to BB GSAMP 2007-H1: Fitch Cuts Ratings on $57.6 Million 2007-H1 Certs. GSAMP TRUST: Moody's Junks Ratings on Three Classes of Certs. GS MORTGAGE: Fitch Downgrades Rating on Class M-2 Certs. to B- GSC ABS: Moody's Junks Ratings on Two Classes of Notes HARRAH'S ENT: Completes Regulatory Approvals on Merger Deal HARRAH'S ENT: Commences Tender Offers for Conv. Debt Securities HELLER SBA: Fitch Affirms 'BB' Rating on Class B Certificates HOUGHTON INT'L: Moody's Withdraws Ratings After Sale HOVNANIAN ENT: Posts $469 Mil. Net Loss in 4th Qtr. Ended Oct. 31 INERGY LP: Moody's Revises Outlook on Improved Financial Profile INTERNATIONAL POWER: Fitch Holds 'BB' Issuer Default Rating INTERTAPE POLYMER: Debt Reduction Prompts S&P to Upgrade Ratings KINGSWAY LINKED: LROC Preferred Units' Rating Cut by S&P to BB+ L-3 COMMS: Good Performance Cues Moody's to Revise Outlook LAKE AT LAS VEGAS: Moody's Cuts Corporate Family Rating to Caa3 LANDRY'S RESTAURANTS: Posts $4.3 Mil. Net Loss in 3rd Quarter 2007 LB-UBS: S&P Affirms Ratings on 24 Classes of Certificates LBREP/L SUNCAL: Moody's Downgrades Corporate Family Rating LEGENDS GAMING: Moody's Downgrades Corporate Family Rating to B3 LEGENDS GAMING: S&P Places Ratings on CreditWatch Negative LIN TV: S&P Holds Ratings and Revises Outlook to Stable LNR CFL: S&P Affirms Low-B Ratings on Four Classes of Certs. MAJESTIC STAR: Discloses Buffington Harbor Facility Dev't Plans MANOR CARE: Earns $39.4 Million in Third Quarter Ended Sept. 30 MASONITE INT'L: S&P Lowers Ratings and Says Outlook is Negative MAXJET AIRWAYS: Files for Bankruptcy Amid High Fuel Prices MAXJET AIRWAYS: Case Summary & 20 Largest Unsecured Creditors MAXUM PETROLEUM: S&P Assigns B- Rating to $155 Mil. Senior Loan MBS COS: Fitch Reviews Ratings on Imminent Default of 56 Loans MERIDIAN GOLD: Shareholders OKs Plan of Arrangement Completion MILACRON INC: Weak Credit Metric Cues Moody's to Cut Ratings MIRANT CORP: Cash Flow Improvement Cues Moody's to Lift Ratings MORGAN STANLEY: Moody's Downgrades Ratings on Two Certificates MOUNTAINEER GAS: Fitch Rates $90 Million Notes at BB MOVIE GALLERY: Files Joint Plan and Disclosure Statement NORTH AMERICAN: Offering $15.5 Million of Common Stock & Warrants NORTH CAROLINA MEDICAL: S&P Revises Outlook to Positive from Neg. NORTH PARK: Files List of 20 Largest Unsecured Creditors NORTH PARK: Files Schedules of Assets and Liabilities NORTH PARK: Wants to Hire Hebert Schenk as Bankruptcy Counsel NOVELL INC: Posts $17.9 Mil. Net Loss in Quarter Ended October 31 OMNICARE INC: Senior Unsecured Ratings Downgraded by S&P to B+ ORLANDO CITYPLACE: Judge Jennemann Consents to Two-Part Asset Sale PANHANDLE (TX): Moody's Downgrades Revenue Bonds' Ratings PERFORMANCE TRANS: Creditors Back Tight Budget on Professionals PERFORMANCE TRANS: Can Hire FTI Consulting as Financial Advisors PERFORMANCE TRANS: Can Employ Sitrick as Comms. Consultants PERKINS AND MARIE: Moody's Junks Corporate Family Rating PIKE NURSERY: Can Hire Scroggins & Williamson as Bankr. Counsel PIKE NURSERY: Taps BMC Group as Claims and Noticing Agent PLASTECH ENGINEERED: Moody's Places Ratings Under Review PUERTO RICO INDUSTRIAL: S&P Affirms BB- Rating with Stable Outlook PHARMED GROUP: Seeks Court OK on Bidding Procedure Sale of Assets PORTOLA CLO: Moody's Puts Ba2 Rating to $16.5 Mil. Class E Notes PREMIER WEALTH: Posts $368,899 Net Loss in Quarter Ended Sept. 30 RADIO ONE: Moody's Cuts Ratings on $800 Mil. Credit Facility RELIANT PHARMACEUTICALS: All Ratings Withdrawn by S&P RESOURCE REAL: Fitch Affirms Ratings From All Note Classes RURAL CELLULAR: Sept. 30 Balance Sheet Upside-Down by $792.1 Mil. SANMINA SCI: Moody's Downgrades Senior Notes' Ratings to B1 SANMINA-SCI: Calls for Redemption of $120 Million Senior Notes SENIOR HOUSING: S&P Affirms BB+ Ratings with Stable Outlook SOFA EXPRESS: Has Until January 17 to File Schedules as Statements SOUTHERN STAR MORTGAGE: Voluntary Chapter 11 Case Summary SPEEDWAY MOTORSPORTS: Moody's Lowers Sr. Credit Facility Rating STANADYNE HOLDINGS: Moody's Lifts Senior Notes Ratings' to B3 STRUCTURED ASSET: Fitch Junks Ratings on Two Cert. Classes STRUCTURED ASSET: Fitch Lowers Ratings on Three Classes to B- SUN-TIMES MEDIA: Sept. 30 Balance Sheet Upside-Down by $33.6 Mil. TAXABLE WORLD: Moody's Upgrades B3 Revenue Bond Rating to Baa3 TEEKAY CORP: Moody's Holds Ratings and Says Outlook is Stable TEMBEC INC: S&P Downgrades Corporate Credit Rating to CC TERWIN MORTGAGE: Moody's Junks Ratings on Two Certificates THORNBURG MORTGAGE: S&P Affirms Low-B Ratings on 6 Class Certs. TOPPS MEAT: Premio Foods Unit Wants to Buy Beef for $190,000 TRIBUNE CO: Closed Going Private Deal Cues Fitch to Cut Ratings TRIBUNE CO: S&P Cuts Ratings from B+ to B with Negative Outlook TRICADIA CDO: Moody's Junks Ratings on Five Classes of Notes UNITED RENTALS: Ends Merger Dispute With Cerberus WACHOVIA CRE: Fitch Affirms 'B-' Rating on $6.5MM Class O Notes WELLMAN INC: Posts $18 Million Net Loss in 3rd Qtr. Ended Sept. 30 WELLS FARGO: Fitch Rates $722,000 Class B-5 Certificates at B WESTWAYS FUNDING: Moody's Junks Ratings on Four Note Classes WILSON JONES MEDICAL: Moody's Lifts $80 Mil. Debt's Rating to Ba3 * 793 US Securities' Ratings Amounting to $22.92 Bil. Lowered * Upcoming Meetings, Conferences and Seminar ********* ACE SECURITIES: Moody's Puts Ratings on Two Certs. Under Review --------------------------------------------------------------- Moody's Investors Service placed on review for possible downgrade five certificates from two deals issued by ACE Securities Corp. in 2003. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization, excess spread and mortgage insurance relative to the expected loss. The deals are backed by subprime, fixed and adjustable-rate mortgage loans. Complete rating actions are: Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2003-HS1 -- Class M-6, current rating Baa3, under review for possible downgrade; Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2003-NC1 -- Class M-3, current rating A3, under review for possible downgrade; -- Class M-4, current rating Baa1, under review for possible downgrade; -- Class M-5, current rating Ba3, under review for possible downgrade; -- Class M-6, current rating B2, under review for possible downgrade. ACE SECURITIES: Moody's Junks Four 2005-SL1 Certificate Classes --------------------------------------------------------------- Moody's Investors Service downgraded seven classes of certificates from a deal issued by Ace Securities Corp. Home Equity Loan Trust in 2005. The transaction is backed by closed-end second lien loans. The projected pipeline loss has been continuously increasing over the past few months and is likely to affect the credit support for these certificates. Furthermore, many underlying first lien loans are likely to have pending interest rate resets, which may cause an increase in delinquencies and defaults on the second lien loans in the pool. The certificates were downgraded as the bonds' current credit enhancement levels, including excess spread, compared to the current projected losses may not be consistent with the existing ratings on the bonds. Complete rating actions are: Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2005-SL1 -- Cl. M-2, Downgraded to Baa1 from A1 -- Cl. M-3, Downgraded to Ba1 from A2 -- Cl. M-4, Downgraded to B1 from A3 -- Cl. M-5, Downgraded to Caa2 from Baa1 -- Cl. M-6, Downgraded to C from Ba2 -- Cl. M-7, Downgraded to C from B3 -- Cl. B-1, Downgraded to C from Ca ACTIVISION INC: Earns $698,000 in Second Quarter Ended Sept. 30 --------------------------------------------------------------- Activision Inc. reported net income of $698,000 for the second fiscal quarter ended Sept. 30, 2007, as compared to a net loss of $24.3 million for the second quarter ended Sept. 30, 2006. Excluding the impact of expenses related to equity-based compensation, the company had net income of $4.9 million for the second quarter. This compares to a net loss of $21.3 million, excluding the impact of expenses related to equity-based compensation for the second quarter of last fiscal year. Net revenues for the second quarter were $317.7 million, a 69% increase, as compared to net revenues of $188.2 million reported for the same quarter last fiscal year. Robert Kotick, chairman and chief executive officer of Activision, stated, "Our second quarter net revenues were the highest in our company's history and we ended the quarter with $962 million in cash and short-term investments. We significantly strengthened our development capabilities through our acquisition of Bizarre Creations, a proven top-tier developer of racing games which will facilitate our entry into this important segment." Six-Month Results Net revenues for the six-month period ended Sept. 30, 2007, were $813.2 million, as compared to net revenues of $376.2 million reported for the six-month period of last fiscal year. Net income for the first six months was $28.5 million, as compared with a net loss of $42.6 million reported for the same period last fiscal year. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $1.96 billion in total assets, $431.6 million in total liabilities, and $1.53 billion in total stockholders' 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?268c About Activision Inc. Headquartered in Santa Monica, California, Activision Inc. (Nasdaq: ATVI) -- http://www.activision.com/ -- is a worldwide developer, publisher and distributor of interactive entertainment and leisure products. Founded in 1979, Activision has more than 2,000 employees worldwide. Activision maintains operations in the United States, Canada, the United Kingdom, France, Germany, Ireland, Italy, Scandinavia, Spain, the Netherlands, Australia, Japan and South Korea. * * * As reported in the Troubled Company Reporter on Dec. 10, 2007, Standard & Poor's Ratings Services placed its 'BB-' corporate credit rating on Activision Inc. on CreditWatch with positive implications, indicating the potential for an upward rating action, based on Activision's definitive agreement to combine with Vivendi Games, a unit of Vivendi S.A. (BBB/Stable/A-2). ACXIOM CORP: Elects Three Board Members at 2007 Annual Meeting -------------------------------------------------------------- Acxiom Corporation re-elected Dr. Mary L. Good and Stephen M. Patterson to its board of directors at its 2007 annual shareholders meeting held on December 21. In addition, Kevin M. Twomey was elected to his first term as a director, filling the board seat previously occupied by Rodger S. Kline. Additionally, shareholders approved a change to the company's 2005 Equity Compensation Plan to increase the pool of shares available for grant from 13.3 million to 20.3 million shares. The company also said it has purchased about 3.6 million shares of its stock pursuant to the repurchase program announced on Oct. 29, 2007. Headquartered in Little Rock, Arkansas, Acxiom Corporation, (Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's innovative solutions are Customer Data Integration technology, data, database services, IT outsourcing, risk mitigation, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom has locations throughout the United States and Europe, and in Australia, China and Canada. * * * As reported in the Troubled Company Reporter on Dec. 17, 2007, Moody's Investors Service has confirmed Acxiom's Ba2 corporate family rating and assigned a negative rating outlook, concluding a review for possible downgrade initiated on May 17, 2007, following the company's announcement that it had entered into a definitive agreement to be acquired by Silver Lake and ValueAct Capital for $3 billion. On Oct. 1, 2007, Acxiom reached a settlement agreement with Silver Lake and ValueAct Capital to terminate the previously announced acquisition pursuant to which Acxiom received $65 million in cash. ACXIOM CORP: Buyout Termination Prompts S&P to Affirm BB Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirms its 'BB' corporate credit rating on Little Rock, Arkansas-based Acxiom Corp. and removes it from CreditWatch where it was placed with negative implications on May 17, 2007. The outlook is negative. At the same time, S&P raised its senior secured debt ratings to 'BB+' from 'BB', with a recovery rating of '2', indicating a substantial (70%-90%) expectation of recovery, and also removed it from CreditWatch. "The affirmation follows the termination of the $3 billion buyout by private-equity firm Silver Lake and hedge fund ValueAct Capital Partners L.P.," said Standard & Poor's credit analyst Philip Schrank. The company received $65 million related to the termination of the merger agreement, which is expected to be substantially more than one-time expenses related to the merger agreement. Acxiom's rating reflects the company's good niche market position and adequate cash flow generation. Business risk is tempered by Acxiom's expertise in managing its comprehensive consumer databases. More than half of its direct-marketing assignments are performed for long-term clients, and outsourcing contracts generally cover multiple years, offsetting a concentrated customer base and providing some revenue predictability. However, the company is still a relatively small participant in a growing and fragmented industry that may see the entrance of several much larger competitors. S&P believes channel partnerships and moderate acquisitions could continue, primarily to expand the company's participation in selected vertical markets, enhance its distribution capability, and provide additional operational diversity. Acxiom has implemented cost reduction actions to bolster profitability and to help offset sluggish revenue growth, primarily driven by the downturn in the financial services segment, which represents about one-fourth of its total business. Although Acxiom's current debt levels are moderate for the rating, in the 2x area, the company has exhibited a much more aggressive financial policy by its willingness to pursue an LBO, and could continue to pursue ongoing acquisitions and share repurchases. While S&P expects a near-term focus on improving operations, Acxiom's dissident shareholder, ValueAct Capital Partners L.P., retains its seat on Acxiom's board, and could continue to pursue a more aggressive shareholder oriented agenda. At the 'BB' rating level, S&P expects Acxiom to continue generating good free cash flow and manage its debt under 4x over the intermediate term. S&P will continue to monitor management's succession plans following the retirement of its CEO, and how it might affect the company's business strategy and financial policy. AEGIS MORTGAGE: Wants Liens Released on Unfunded Loans ------------------------------------------------------ Aegis Mortgage Corp. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to release liens and interests on loans, which they have never funded. James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, relates that although the Debtors already terminated their loan origination business, they may still have recorded liens on certain properties for loans that were never funded as a result of the termination, or loans purportedly assigned to them, but which the Debtors could not identify as a loan they formerly owned or serviced. "In some cases, the Debtors recorded liens on some properties that were the subject of the unfunded loans in preparation for the disbursement and funding of loans that were never made because of the termination of their loan origination business," Mr. O'Neill states. "In other cases, the Debtors' records do not show any ownership interest in certain unfunded loans that were allegedly assigned or transferred to the Debtors at one point in time, but which the Debtors believe do not constitute property of their estates." Mr. O'Neill says that certain borrowers may file lawsuits to compel the release of the Debtors' liens on the properties subject of the unfunded loans. He adds that if the Court approves the request, the Debtors will avoid spending unnecessary legal fees for responding to lawsuits. Mr. O'Neill contends that there is sufficient cause to grant the request. "If no funds were ever disbursed either by the Debtors or any other third party with respect to the unfunded loans, there is no loan amount for which the borrower is obligated to repay the Debtors," Mr. O'Neill points out. He adds that even if the Debtors at one time had an interest in unfunded loans, the Debtors' records indicate that the loans no longer belong to the Debtors and are not property of the estates. Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119) Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P., serve as counsel to the Debtors. The Official Committee of Unsecured Creditors is represented by Landis Rath & Cobb LLP. In schedules filed with the Court, Aegis disclosed total assets of $138,265,342 and total debts of $4,125,470. (Aegis Bankruptcy News, Issue No. 13, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AFFINITY GROUP: Sale Delay Prompts S&P's Stable Outlook ------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Affinity Group Holding Inc. and its operating subsidiary, Affinity Group Inc., to stable from positive. At the same time, S&P affirmed the ratings, including the 'B' corporate credit rating, on the company. Total debt outstanding was $395 million as of Sept. 30, 2007. "The outlook revision reflects the delay in the sale of the company's retail segment to FreedomRoads Holding Co. LLC and the related repayment of Affinity's term loan because of tight credit market conditions," explained Standard & Poor's credit analyst Tulip Lim. On April 16, 2007, Affinity Group announced that it had entered into a stock purchase agreement with FreedomRoads Holding Co. LLC, under which FreedomRoads would have acquired Affinity Group's retail segment, Camping World Inc., for $175 million. Affinity had planned to use the estimated net proceeds of $132 million from the sale to pay down its term loan. The proposed transaction would have improved Affinity's financial metrics. Although the retail segment contributes more than 50% of Affinity's total revenue, the segment has EBITDA margins lower than those of the company's membership and publishing segments and higher required capital expenditures, working capital usage, and operating lease expenses. The company announced in its third-quarter earnings call that the sale of the retail segment has been postponed because uncertainty in the capital markets has prevented FreedomRoads from achieving its optimal funding. S&P is concerned that these conditions will persist, hindering the prospects of completion for this transaction. Meanwhile, Affinity's term loan, of which $129 million was outstanding at Sept. 30, 2007, will mature on June 24, 2009. Affinity Group is a direct marketing firm targeting North American recreational vehicle owners and outdoor enthusiasts. Through its membership operations, books, and magazines, Affinity Group markets products and services targeting RV owners. The company's retail business consists of a chain of Camping World stores, mail- order catalogs, and Web sites. The ratings reflect weak operating performance at the company's Camping World stores, soft membership trends at Affinity Group's RV resort network and golf discount clubs, reduced liquidity, and high debt leverage. The company's good competitive position and the relatively stable earnings of its core RV clubs and publishing niches only modestly offset these factors. ARKANSAS CATFISH: Auction for Assets Scheduled Tomorrow ------------------------------------------------------- Special Commissioner Frank G. Power is selling, pursuant to an order of the Chancery Court of Washington County in Mississippi, Arkansas Catfish Growers, LLC,'s (dba SeaCat): a) accounts, accounts receivable, inventory, and deposit accounts, and furniture, fixtures, and equipment located at the facility in 1616 Rice Mill Road in Hollandale, Mississippi; and b) real property in Washington County, Mississippi, on Dec. 27, 2007, between 11:00 a.m. and 4:00 p.m. Central Standard Time at the Washington County Courthouse in Greenville, Mississippi. Arkansas Catfish Growers LLC dba SeaCat is a limited liability Corporation created and existing under the laws of the State of Arkansas. AMERICAN HOME: Wants Limited Recourse Funds Increased by $50 Mil. ----------------------------------------------------------------- American Home Mortgage Investment Corp., American Home Mortgage Corp., and American Home Mortgage Servicing Inc., previously obtained approval from the U.S. Bankruptcy Court for the District of Delaware to enter into a $50,000,000 debtor-in-possession loan and security agreement dated Nov. 16, 2007, among the Debtors- Borrowers, several lenders, and AH Mortgage Acquisition Co. Inc., in its capacity as lender and administrative agent. Accordingly, the Debtors-Borrowers seek the Court's authority to amend the limited recourse facility, so as to increase the financing commitment from $50,000,000 to $100,000,000, pursuant to and on the terms and conditions of an amended agreement among them and the lenders. James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, tells the Court that since operating the Debtors' mortgage loan servicing business from its initial closing without the use of the cash collateral, the Debtors determined that additional availability is necessary to satisfy the obligations associated with the Servicing Business. He contends that the necessity for additional funding is due to, among other reasons, the increased amount of servicing advances and other costs. The Debtors-Borrowers believe that by increasing the financing commitment, they will be able to meet the borrowing needs necessary to operate the Servicing Business to the final closing of its sale, and thus, enable them to operate the business as required under the Asset Purchase Agreement. About American Home 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 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. 21, 2007. (American Home Bankruptcy News, Issue No. 20, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Wants Agreement with Texas Comptroller Approved -------------------------------------------------------------- American Home Mortgage Investment Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve their settlement agreement with Texas Comptroller of Public Accounts, pursuant to Sections 105, 362 and 553 of the Bankruptcy Code and Rules 4001(d) and 9019 of the Federal Rules of Bankruptcy Procedure. Prior to bankruptcy filing, the Debtors conducted operations in many states, including Texas. As part of the taxing obligations to Texas, the Debtors were required to pay certain franchise taxes. The Debtors and the Texas Comptroller determined that a franchise tax credit of $1,919,729, plus additional interest exists for the 2006 tax year. The interest is accruing at a rate of 5.066% from December 14 to 31, 2007, and at a certain rate set by Texas' Tax Code from January 1, 2008, through date of payment. The Parties also determined that a franchise tax liability of $134,939, plus additional interest accruing at 9.25%, exists for 2007 tax year. Pursuant to their agreement, the Parties agree that the automatic stay imposed by Section 362 of the Bankruptcy Code will be lifted for the sole and express purpose of permitting the set-off of the Tax Credit and the Tax Liability. As a result of the set-off, the Parties agree that the Debtors are owed $1,780,937, which amount is subject to slight variation because of the accruing interests. The Texas Comptroller has agreed to pay the Debtors in full and in cash within 10 business days upon the approval of the request. The Debtors believe that the Settlement Agreement avoids the administrative burden associated with requiring the Texas Comptroller to draft and file a request to exercise its set-off. Hence, they ask the Court to approve the Settlement Agreement. About American Home 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 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. 21, 2007. (American Home Bankruptcy News, Issue No. 20, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: 2nd ABN Construction Loans Sale Pact Approved ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved the second stipulation among American Home Mortgage Acceptance Inc., American Home Mortgage Corp., American Home Mortgage Investment Corp., American Home Mortgage Servicing Inc., and ABN AMRO Bank N.V. regarding postpetition advances and sale of construction loan portfolio. The parties' previous sale stipulation provided that (i) if there were no qualified bidder for certain mortgage loans, which were subject of a master repurchase agreement between the Parties, or (ii) if ABN AMRO exercised its right to notify the Debtors not to accept the successful bid at the auction, then: -- ABN AMRO would pay to the Debtors $700,000, which it did on November 8, 2007; and -- within 20 business days of the bid deadline, or other date as agreed to, the Debtors would transfer, convey and turn over to ABN AMRO all of their rights in and to the Mortgage Loans. ABN AMRO has previously asked that the applicable 20-day deadline be extended to provide it additional time to find a substitute servicer and transferee with respect to the Mortgage Loans. In addition, the Debtors have agreed to use commercially reasonable efforts to keep in place the construction loan servicing group to service the Mortgage Loans through the remainder of calendar 2007 and the first quarter of calendar 2008, as long as ABN AMRO (i) continues to make additional mortgagor advances and servicing payments in accordance with the provisions of the Parties' postpetition advances stipulation, and (ii) agrees the waiver of claims provision will be effective. Among the salient terms of the Second Stipulation are: -- The funding requests to ABN AMRO to fund additional mortgagor advances with respect to the Mortgage Loans, pursuant to the Postpetition Advances Stipulation is increased from $32,000,000 to $70,000,000; -- ABN AMRO will pay its pro-rata share of the 2008 budget amounts, on the same terms as provided in the Postpetition Advances Stipulation; -- The turnover of the Debtors' rights in the Mortgage Loans to ABN AMRO will: (a) be conditioned upon ABN AMRO's performance of each of the payment obligations contained in the Postpetition Advances Stipulation and the Second Stipulation; and (b) occur on the first business day that is 15 calendar days after ABN AMRO provides written notice to the Debtors and their counsel that it has obtained an acceptable substitute servicer or transferee, and upon the transfer and substitution of servicer, ABN AMRO will no longer be obligated to make any further servicing payments; and -- On the date the Debtors turnover and deliver possession of the Mortgage Loans and Servicing Rights to ABN AMRO, it will not retain, nor assert, a claim in the Debtors' bankruptcy estates, under or with respect to the ABN MRA Agreements, the Mortgage Loans, or the Servicing Rights, provided that ABN AMRO will retain the right to pursue recovery of any of the ABN advances applied or used by any of the Debtors in any manner inconsistent with the ABN MRA Agreements, the Postpetition Advances Stipulation, the Advances Order, or the Second Stipulation. Budget for Construction and Renovation Lending The Debtors submitted a budget for the servicing of the construction loan portfolio for first quarter of calendar year 2008: Projected Expenses Jan08 Feb08 Mar08 ------------------ ----- ----- ----- Inspections $10,900 $9,400 $5,100 Appraisals 2,362 2,126 1,913 Data Processing 1,500 1,500 1,500 Overnight & Postage 1,837 1,653 1,488 Facilities 4,500 4,500 4,500 Salaries 176,301 92,968 261,467 Benefits 6,000 6,000 6,000 Misc 5,000 5,000 5,000 ------- ------- ------- Total Expenses $208,400 $123,147 $286,968 Actual Expenses $128,822 $122,970 About American Home 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 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. 21, 2007. (American Home Bankruptcy News, Issue No. 20, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMP'D MOBILE: Pinnacle Wants Collection Contract Reviewed --------------------------------------------------------- Pinnacle Financial Group asks the U.S. Bankruptcy Court for the District of Delaware to review the contingency collection agreement entered with Amp'd Mobile Inc., and grant it a contingency fee that is reasonable based on the nature of collection work it provided to the Debtor. Pinnacle is a licensed inbound and outbound call center and collection agency that provides recovery and customer support. It serves as a collection agency for the Debtor. Pinnacle, complained that the information the Debtor provided during the parties' negotiations was inaccurate and misleading. Based on the misinformation the Debtor provided and due to their extremely poor forecasting, Pinnacle has incurred significant losses while servicing the Debtor's account, Mr. Michel tells the Court. To offset the deficit it incurred in servicing the Debtor, Pinnacle proposes two options: (a) Pinnacle should receive 21% on all payments made after July 31 on all of the Debtor's accounts; or (b) The contingency fee should be changed to 50% on all payments on the accounts placed after July 31. The fee should be retroactive to all payments made since the accounts were placed with Pinnacle. Headquartered in Los Angeles, California, Amp'd Mobile Inc. aka Amp'D Mobile LLC -- http://www.ampd.com/-- is a mobile virtual network operator that provides voice, text and entertainment content to subscribers who contract for cellular telephone service. The company filed for chapter 11 protection on June 1, 2007 (Bankr. D. Del. Case No. 07-10739). Steven M. Yoder, Esq., Eric M. Sutty, Esq. and Mary E. Augustine, Esq. at The Bayard Firm represent the Debtor in its restructuring efforts. Attorneys at Otterbourg, Steindler, Houston & Rosen, P.C. and Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor listed total assets of $47,603,629 and total debts of $164, 569,842. The Debtor's exclusive period to file a plan expired on Sept. 29, 2007. (Amp'd Mobile Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). AMP'D MOBILE: Court Approves Deal with Valutech and Brightpoint --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved the supplemental agreement, Amp'd Mobile Inc. has entered with Valutech Outsourcing LLC, and Brightpoint North America LP, to settle disputes on the asserted liens on the Debtor's assets to be sold to Cellupage. The Court ruled that the purchase price for the Valutech Inventory, amounting to $195,030, that is currently held in escrow be immediately transferred to Kings Road Investment Ltd., the Debtor's secured lender. Under the terms of the agreement: (a) The Tucson Payment amounting to $100,000 be released from escrow to the Debtor. (b) Valutech will complete the repairs to the Mexico Work In Progress Inventory and deliver those units to Cellupage. Payment for the Mexico Inventory will be conducted in this manner: * Cellupage will pay $95,030 via wire transfer to the Debtor; and * Cellupage will pay $362,192 via wire transfer to Valutech. The Valutech Payment will serve as full and final payment for the Refurbishing Services. (c) The $100,000 Tucson Payment, the $95,030 Amp'd Payment, and the $362,192 Valutech Payment will constitute full and final payment for the Tucson and Mexico Inventories. (d) Upon receipt of payment, Valutech will remanufacture and refurbish the handsets to a state of working condition while the Debtor will supply the software that Valutech will install into the handsets. (e) Within 30 days upon receipt of the $362,192 payment, Valutech must deliver the remaining Work In Progress Inventory to the Calexico Warehouse, the warehouse designated by the parties as the pick up point for Cellupage. Valutech will shoulder shipment costs of the handsets. (f) Upon the delivery of the completed Mexico Inventory to the Calexico Warehouse, Amp'd or Cellupage will have 30 days to inspect and test the refurbished units. Any units found defective will be returned by Cellupage to Valutech, at Cellupage's cost, and will be repaired by Valutech, at Valutech's cost, within 10 days. (g) Upon the entry of a final Court order approving the Agreement and the receipt of all payments, the Debtor will cause the Adversary Proceeding to be dismissed, in its entirety, with prejudice. (h) Upon dismissal of the Adversary Proceeding, Valutech will immediately ship the remaining 7,000 completed phones to the Calexico Warehouse for Cellupage to pick up. Cellupage will shoulder shipment costs from the Calexico Warehouse to their location in Los Angeles. (i) The parties will exchange mutual releases. Headquartered in Los Angeles, California, Amp'd Mobile Inc. aka Amp'D Mobile LLC -- http://www.ampd.com/-- is a mobile virtual network operator that provides voice, text and entertainment content to subscribers who contract for cellular telephone service. The company filed for chapter 11 protection on June 1, 2007 (Bankr. D. Del. Case No. 07-10739). Steven M. Yoder, Esq., Eric M. Sutty, Esq. and Mary E. Augustine, Esq. at The Bayard Firm represent the Debtor in its restructuring efforts. Attorneys at Otterbourg, Steindler, Houston & Rosen, P.C. and Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor listed total assets of $47,603,629 and total debts of $164, 569,842. The Debtor's exclusive period to file a plan expired on Sept. 29, 2007. (Amp'd Mobile Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). ASSET BACKED: Fitch Junks Ratings on $7.2 Million Certificates -------------------------------------------------------------- Fitch Ratings has taken these rating actions on Asset Backed Funding Corp. mortgage pass-through certificates. Affirmations total $160.1 million and downgrades total $33.5 million. In addition, $11.6 million is placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: ABFC, Series 2005-OPT1 -- $105.5 million class A affirmed at 'AAA' (BL: 55.12, LCR: 4.01); -- $22.1 million class M-1 affirmed at 'AA+' (BL: 43.52, LCR: 3.17); -- $19.9 million class M-2 affirmed at 'AA' (BL: 33.37, LCR: 2.43); -- $6.2 million class M-3 affirmed at 'AA-' (BL: 30.15, LCR: 2.19); -- $6.4 million class M-4 affirmed at 'A+' (BL: 26.72, LCR: 1.94); -- $6 million class M-5 downgraded to 'BBB+' from 'A' (BL: 18.41, LCR: 1.34); -- $6.2 million class M-6 downgraded to 'BBB-' from 'A-'; placed on Rating Watch Negative (BL: 16.01, LCR: 1.16); -- $5.4 million class M-7 downgraded to 'BBB-' from 'BBB+'; placed on Rating Watch Negative (BL: 15.87, LCR: 1.15); -- $3.5 million class M-8 downgraded to 'B' from 'BBB' (BL: 12.44, LCR: 0.90); -- $5.2 million class M-9 downgraded to 'B' from 'BBB-' (BL:10.55, LCR: 0.77); -- $4.2 million class B-1 downgraded to 'CC/DR2' from 'BB+'; -- $3 million class B-2 downgraded to 'C/DR4' from 'BB'. Deal Summary -- Originators: Option One Mortgage Corp. (100%); -- 60+ day Delinquency: 26.78%; -- Realized Losses to date (% of Original Balance): 0.82%; -- Expected Remaining Losses (% of Current Balance): 13.75%; -- Cumulative Expected Losses (% of Original Balance): 6.30%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. ASSOCIATED MATERIALS: Earns $17.4 Million in Third Quarter ---------------------------------------------------------- Associated Materials Incorporated reported net income of $17.4 million for the third quarter of 2007 ended Sept. 29, 2007, compared to net income of $14.6 million for the same period in 2006. For the nine months ended Sept. 29, 2007, net income was $29.8 million compared to net income of $31.0 million for the same period in 2006. Net sales for the quarter ended Sept. 29, 2007, were $349.6 million, a 1.8% increase from net sales of $343.4 million for the same period in 2006. For the nine months ended Sept. 29, 2007, net sales were $905.7 million, or 4.8% lower than net sales of $951.0 million for the same period in 2006. Adjusted EBITDA was $44.0 million for the third quarter of 2007 compared to adjusted EBITDA of $40.0 million for the same period in 2006. For the nine months ended Sept. 29, 2007, adjusted EBITDA was $93.5 million compared to adjusted EBITDA of $95.9 million for the same period in 2006. Tom Chieffe, president and chief executive officer, commented, "I am pleased with our performance given the current state of the housing market and building products industry. Our third quarter of 2007 marked the highest third quarter adjusted EBITDA in company history. The various cost reduction initiatives we have implemented across the entire business have allowed us to sustain our EBITDA performance and should position us for improved profitability when macroeconomic conditions improve." Net sales increased 1.8%, or $6.2 million, during the third quarter of 2007 compared to the same period in 2006 primarily due to growth in third party manufactured product sales, improved unit volumes in the company's vinyl window operations, and the benefit from the stronger Canadian dollar, partially offset by decreased unit volumes in the company's vinyl siding operations. Gross profit in the third quarter of 2007 was $91.6 million, or 26.2% of net sales, compared to gross profit of $85.1 million, or 24.8% of net sales, for the same period in 2006. Selling, general and administrative expense increased to $53.1 million, or 15.2% of net sales, for the third quarter of 2007 versus $50.7 million, or 14.8% of net sales, for the same period in 2006. Income from operations was $38.4 million for the third quarter of 2007 compared to $34.4 million for the same period in 2006. At Sept. 29, 2007, the company's consolidated balance sheet showed $842.8 million in total assets, $544.1 million in total liabilities, and $298.7 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 29, 2007, are available for free at http://researcharchives.com/t/s?2692 About Associated Materials Headquartered in Cuyahoga Falls, Ohio, Associated Materials Incorporated -- http://www.associatedmaterials.com/-- is a manufacturer of exterior residential building products, which are distributed through company-owned distribution centers and independent distributors across North America. AMI produces a broad range of vinyl windows, vinyl siding, aluminum trim coil, aluminum and steel siding and accessories, as well as vinyl fencing and railing. AMI is a privately held, wholly-owned subsidiary of Associated Materials Holdings Inc., which is a wholly-owned subsidiary of AMH, which is a wholly-owned subsidiary of AMH II, which is controlled by affiliates of Investcorp S.A. and Harvest Partners Inc. * * * Associated Materials still carries Moody's Investors Service 'Ba3' Bank Loan Debt and 'B3' Subordinated Debt ratings which were placed on Sept. 22, 2006. Outlook is stable. ATSI COMM: Posts $293,000 Net Loss in Quarter Ended October 31 -------------------------------------------------------------- ATSI Communications Inc. reported net loss of $293,000 for quarter ended Oct. 31, 2007, compared to a net loss of $184,000 for the same period in the previous year. The first quarter operating highlights include: -- $3 million accounts receivable financing package entered with Wells Fargo; -- Joseph M. Troche appointed as sr. vice president of global sales; and -- becoming a member of Arbinet-thexchange Inc., a NASDAQ company, to buy, sell, deliver and settle VoIP transactions using Arbinet's Internet-based electronic platform. The company incurred $519,000 in non-cash expense during the quarter ended Oct. 31, 2007 vs. $429,000 during the quarter ended Oct. 31, 2006. Non-cash expenses incurred during the period include depreciation, amortization, interest, and stock compensation. "We are extremely pleased with our quarterly results," Arthur L. Smith, CEO of ATSI stated. "Our global VoIP strategy continues to pay-off as evidenced by increased voice communications traffic on our network and continued revenue growth. Against this backdrop, our trend for improvement in gross profit has continued and we are optimistic that our commitment to control expenses will contribute to stronger bottom-line results going forward." At Oct.31, 2007, the company's balance sheet showed total assets of $2.24 million and total liabilities of $2.66 million resulting to a total shareholders' deficit of $0.42 million. About ATSI Communications ATSI Communications Inc. -- http://www.atsi.net/-- (OTCBB: ATSX) operates through its two wholly owned subsidiaries, Digerati Networks, Inc., and Telefamilia Communications, Inc. Digerati Networks, Inc., is a premier global VoIP carrier serving rapidly expanding markets in Asia, Europe, the Middle East, and Latin America, with an emphasis on Mexico. Through Digerati's partnerships with established foreign carriers and network operators, interconnection and service agreements, and a NexTone powered VoIP network, ATSI believes it has clear advantages over its competition. Telefamilia Communications provides specialized retail communication services that include VoIP services to the high-growth Hispanic market in the United States. ATSI also owns a minority interest of a subsidiary in Mexico, ATSI Comunicaciones, S.A. de C.V., which operates under a 30-year government issued telecommunications license. Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 22, 2007, Malone & Bailey PC in Houston, Tex., raised substantial doubt about ATSI Communications Inc.'s ability to continue as a going concern after it audited the company's financial statements for the year ended July 31, 2007. The auditing firm stated that ATSI has a working capital deficit, has suffered recurring losses from operations and has a stockholders' deficit. ATRIUM CORP: Operating Pressure Cues Moody's to Review Ratings -------------------------------------------------------------- Moody's Investors service has placed Atrium Corp. and its holco on review for possible downgrade. The ratings action reflects the operating pressure from the homebuilding and remodeling market slowdown on Atrium's sales and cash flow generation, high leverage, and concerns that the company's cost cutting initiatives will not be sufficient to maintain positive free cash flow generation in 2008. These ratings for ACIH have been placed on review for possible downgrade: -- Corporate Family Rating, previously at B2; -- Probability of Default Rating, previously at B2; -- $174 million senior discount notes due 2012, previously at Caa1 (LGD6, 90%); -- Speculative Grade Liquidity Rating, downgraded to SGL-4 from SGL-3. These ratings/assessments for Atrium Companies, Inc. have been placed under review for possible downgrade: -- $378.5 million senior secured term loan B, due 2012, previously B1, at (LGD3, 35%); -- $50 million senior secured revolving credit facility, due 2011, previously B1, at (LGD3, 35%). The review will focus on the company's strategy to address weak demand including initiatives to sell more into the remodeling market, its cost cutting initiatives, and new product offerings. The review will also focus on the company's liquidity because the company's accounts securitization currently has a rating trigger. Atrium has access to a $50 million revolving credit facility that is used intermittently for working capital purposes. Were the account securitization facility to be called, the company would likely need to tap cash and draw from the revolver. The revolver's availability is affected by the company's covenants. As a result, the review will consider the level of room under the covenants and the likelihood that the company may trip its covenants. A renegotiation of the company's rating trigger or covenants would be considered a positive credit event. The downgrade in the speculative grade liquidity rating to SGL-4 reflects the expectation that the company's free cash flow generation will likely be weak over the next four quarters. The SGL rating also reflects reduced headroom under the company's covenants governing the senior secured credit facilities. Moody's notes that the company's fixed charge and debt leverage coverage covenants remain relatively tight particularly when one considers current market conditions. Headquartered in Dallas, Texas, Atrium Companies, Inc. is one of the largest window manufacturers in North America. Revenues for the LTM period ended 9/30/07 were $791 million. AVADO BRANDS: Wants February 8 Set as Claims Bar Date ----------------------------------------------------- Avado Brands Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware to establish Feb. 8, 2008, at 4:00 p.m., prevailing Eastern Time, as the deadline for creditors to file proofs of claim arising before Sept. 5, 2007. The Debtor also ask the Court to set March, 3, 2008, at 4:00 p.m., prevailing eastern time, as the last day for all governmental units to file proofs of claim. All proofs of claim must be filed with: Avado Brands Inc. c/o Kurtzman Carson Consultants LLC 2335 Alaska Avenue El Segundo, California 90245 Madison, Georgia-based Avado Brands Inc., aka Applesouth, -- http://www.avado.com/-- operates about 120 casual dining restaurants under the banners Don Pablo's Mexican Kitchen and Hops Grillhouse & Brewery. The restaurants are located in 22 states in the U.S. As of Sept. 5, 2007, the Debtors employed about 9,970 people. For the year ended July 31, 2007, the Debtors generated about $227.8 million in revenues and a negative EBITDA of $7.8 million. The Debtor filed for chapter 11 protection on Feb. 4, 2004 (Bankr. N.D. Tex. Case No. 04-1555). On April 26, 2005, Judge Steven Felsenthal confirmed Avado's Modified Plan of Reorganization and that Plan became effective on May 19, 2005. On Sept. 5, 2007, Avado filed a voluntary chapter 22 petition (Bankr. D. Del. Case No. 07-11276) to complete an orderly sale of its assets, via Section 363 of the Bankruptcy Code. About 10 of Avado's affiliates also filed for bankruptcy protection on the same date (Bankr. D. Del. Case Nos. 07-11277 through 07-11286). Michael Tuchin, Esq., and Stacia A. Neeley, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, represent the Debtors. Donald J. Detweiler, Esq., at Greenberg Traurig, LLP, is the Debtors' local counsel. Kurtzman Carson Consultants LLC acts as the Debtors claims and noticing agent. In their second filing, the Debtors disclosed estimated assets and debts between $1 million to $100 million. Scott L Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and David B. Stratton, Esq., at Pepper Hamilton LLP, represent the Official Committee of Unsecured Creditors. AVISTA CORP: Debt Reduction Cue Moody's to Lift All Ratings ----------------------------------------------------------- Moody's Investors Service upgraded all of the debt ratings of Avista Corp. (Avista; senior unsecured to Baa3 from Ba1). The rating actions conclude a review for possible upgrade of Avista's debt ratings, which was initiated on June 22, 2007. The rating outlook for Avista is stable. The upgrades of Avista's ratings primarily reflect the sale of its unregulated subsidiary, Avista Energy, Inc., and the use of sale proceeds initially to reduce debt, in line with Moody's expectations. "Historically, it has been Moody's opinion that Avista needed to maintain stronger credit metrics than might otherwise be necessary for its former ratings in light of its higher degree of business risk; however, without Avista Energy, the company's current and expected key credit metrics should be adequate to support a Baa3 senior unsecured rating, according to Moody's Global Rating Methodology for Regulated Electric Utilities," said Mr. Kevin Rose, Vice President and Senior Analyst. "The rating actions also take into account the recent approval by the Washington Utilities and Transportation Commission of a settlement agreement to resolve Avista's latest general rate case, which we believe provides Avista with reasonable rate relief and an improved opportunity to bolster the utility division's earned returns on its investments in the Washington jurisdiction," said Mr. Rose. The sale of Avista Energy was completed on June 30, 2007, when Avista Energy sold substantially all of its contracts and ongoing operations to Coral Energy Holding, L.P. and certain of its subsidiaries, a subsidiary of Shell. The transaction involved the sale of Avista Energy's trading portfolio at net book value. The net assets, which were largely comprised of receivables and restricted cash and deposits with counterparties, generated proceeds that allowed Avista Energy to pay a cash dividend of $169 million to Avista Capital; Avista Capital then paid a cash dividend of $155 million to Avista Corp. At the same time, Avista Corp. liquidated assets not subject to the sale or transfer to Coral Energy. The completion of this transaction ends substantially all of Avista's operations in the energy trading and marketing business, which markedly reduces the volatility of Avista's overall earnings and cash flows and lowers Avista Corp.'s overall business risk profile which leaves it largely focused on the regulated electric and natural gas utility businesses operated through the Avista Utilities division. The lone remaining non-regulated business activity of any significance is now the facility and information and cost management services business conducted by Advantage IQ. The recent rate increases approved by the WUTC should enable Avista to improve its key credit metrics, especially as the company addresses the near term refinancing of a high cost debt issue (i.e., approximately $273 million of 9.75% senior unsecured notes due June 2008). In particular, Moody's expects Avista's cash flow from operations (before changes in working capital) to interest and debt to approach 3.0x or better and be maintained in the low- to mid-teens, respectively, over the next couple of years. At the same time, Moody's rating actions also incorporate the ongoing challenges that Moody's believes Avista still faces given its expected higher capital spending program over the next couple of years. Against this backdrop, Moody's is assuming that the company's regulators in its Washington, Idaho, and Oregon jurisdictions will continue to support timely and adequate recovery of, and return on, the capital investments through decisions in future general rate cases that Moody's expect will be filed on a regular basis. In Moody's overall assessment of regulatory risk, the degree of support from the WUTC is more heavily weighted than the degree of support from the other jurisdictions since Washington is the company's largest jurisdiction, by far. Avista's stable rating outlook reflects its favorable business risk profile centered on a back-to-basics strategy that focuses on less risky regulated utility operations, as well as expected progress in improving its earned returns from utility operations and shoring up its balance sheet, while maintaining sufficient liquidity. Avista's ratings upgraded include: -- senior secured debt to Baa2 from Baa3 -- senior unsecured debt and Issuer Rating to Baa3 from Ba1 -- senior secured shelf to (P)Baa2 from (P)Baa3 -- senior unsecured shelf to (P)Baa3 from (P)Ba1 -- preferred stock shelf to (P)Ba2 from (P)Ba3 -- AVA Trust III, trust preferred securities to Ba1 from Ba2 -- Avista Corp Capital II, trust preferred securities to Ba1 from Ba2 Avista Corp. is an energy company, primarily involved in the production, transmission and distribution of energy through its Avista Utilities division, as well as other modest-sized energy- related businesses. Avista's headquarters are in Spokane, Washington. AVNET INC: Completes Purchase of Acal IT Solution for $200 Mil. --------------------------------------------------------------- Avnet Inc. has completed its acquisition of the IT Solutions Division of Acal plc. The acquired business, which has annual revenues of approximately $200 million, is a leading European value-added distributor for Storage Networking, Networking, Security, Electronic Document Management, as well as managed and professional services. The division, which has operations in the UK, the Netherlands, Belgium, Germany, France and Sweden, will be integrated into Avnet Technology Solutions' EMEA business. Dick Borsboom, President of Avnet Technology Solutions EMEA, commented, "This acquisition extends our depth of expertise in the IT solutions and services arena by adding new competencies in high growth areas and expanding our ability to deliver multi- vendor solutions. The addition of 200 skilled employees and 2000 Acal resellers broadens our solutions-selling portfolio and creates additional opportunities for cross selling." Following on the recently completed acquisition of the Magirus Enterprise Division, Avnet Technology Solutions is substantially building its market presence in the areas of managed and professional services, SAN, Networking and Security solutions. The acquisition also opens new markets to Avnet Technology Solutions, such as Electronic Document Management today operating under the name Headway Technologies. "We are executing well on our goal to be the premier, value-add distributor in Europe," added Mr. Borsboom. "The acquisition of Acal is another clear affirmation of our vision to be the leader in delivering solutions that can accelerate the growth of our trading partners." About Avnet Electronics Avnet Electronics Marketing -- http://www.em.avnet.com/-- is an operating group of Phoenix-based Avnet, Inc. (NYSE:AVT), a Fortune 500 company. Avnet Electronics Marketing serves electronic original equipment manufacturers and electronic manufacturing services providers in more than 70 countries, distributing electronic components from leading manufacturers and providing associated design-chain and supply-chain services. About Avnet Inc. Headquartered in Phoenix, Arizona, Avnet, Inc. -- http://www.avnet.com/-- distributes electronic components and computer products, primarily for industrial customers. It has operations in the following countries: Australia, Belgium, China, Germany, Hong Kong, India, Indonesia, Italy, Japan, Malaysia, New Zealand, Philippines, Singapore, and Sweden, Brazil, Mexico and Puerto Rico. * * * Moody's Investors Service affirmed Avnet's Ba1 corporate family long-term debt ratings in March 2007. Moody's said the outlook is positive. BAY COVE: Moody's Holds Ba2 Rating on $5 Mil. Outstanding Bonds --------------------------------------------------------------- Moody's Investors Service affirmed the Ba2 bond rating assigned to Bay Cove Human Services' $5.0 million of outstanding Series 1998 bonds issued by the Massachusetts Health & Educational Facilities Authority. The outlook has been revised to negative from stable, reflecting a decline in liquidity following the acquisition of another agency. Legal Security: The Series 1998 Bonds are secured by first mortgage liens on and security interests in certain real properties of Bay Cove, including the organization's main administrative building. Additionally, the bonds are secured by a lien on and security interest in the Department of Mental Retardation Contract Receivables. The bonds are also secured by a pledge of the DMR contract for the sole benefit of the bond Trustee, under which payments are to be made to Bay Cove annually in an amount not less than 150% of the Maximum Annual Debt Service (the Pledged Provider Contract). Interest Rate Derivatives: None. Strengths Position as a large human service provider of essential services in the Boston area, with specialization in services to individuals with multiple disabilities and ranked within the top ten human service providers in Massachusetts in terms of size and reputation . Acquisition of agency which provides senior care services (Kit Clark Senior Services, Inc.) increased revenue by 23% in fiscal year 2007 and adds complementary service lines and mental health clinic license. Historically stable financial results with consistent operating margins of 1.0% and 1.5% in fiscal years 2006 and 2007. Profitable operations throughout its 34-year history (a highly unusual accomplishment for the human service provider sector) due to disciplined management style. Kit Clark Senior Services, Inc. recorded a small operating deficit that management is seeking to reduce through operating efficiencies. Diverse revenue stream from different state departments (Departments of Mental Health, Mental Retardation, Public Health and Medicaid) as well as private funding mitigates its vulnerability to reductions to any one area of social service funding. Addition of elder care services adds a new funding source and further diversifies revenue base. Annual fundraising goals of close to one million dollars that supplements ongoing operations was met in 2007 and is expected to continue. Moody's includes these funds as other operating revenues since dollars are matched with current programs and are not designated for endowment or long term investment. Restructuring of its health benefits in July 2005 has controlled future benefit expense growth in this area. Stabilized staffing due to favorable benefits and training with minimal vacancies now noted. Challenges Dependence on state funding that could result in contract reimbursement reductions for Bay Cove if the state experiences budget shortfalls in future years. The majority of existing contracts lack revenue updates, and so do not provide adequate inflationary escalators for salary and benefit increases. Decline in liquidity to $2.7 million at fiscal year end 2007 from $4.4 million at FYE 2006 due to the acquisition of Kit Clark and increase in receivables, resulting in cash-on-hand declining to 18 days from a peak level of 35 days. Cash improved through the first five months of FY 2008 (Oct. 31, 2007) to $3.7 million (28 days), however, limited liquid resources provide minimal operating flexibility. Bay Cove views reserves more as providing flexibility for short-term strategic spending rather than as a long-term financial cushion that is anticipated to grow. Bay Cove had been building its cash reserves over the last four years for such an opportunity at the Kit Clark acquisition. However, the short term impact of liquidity decline affects credit quality and modest cash resources will be a limiting factor to pursuing future growth opportunities. Debt load increased by $3.9 million in FY 2007 weakening debt measures, with debt-to-cash flow high at 6.3 times yet maximum annual debt service coverage good at 2.42 times in FY 2007. Auditors reported certain significant deficiencies in internal control over financial reporting at Kit Clark that are being addressed. Outlook The negative outlook reflects a recent decline in liquidity as a result of the purchase of a complementary human service provider agency. While cash has improved in the current fiscal year, days cash-on-hand remains below historical levels and will need to improve to maintain the current rating. Our expectation is that Bay Cove will continue to leverage its market position as a provider of essential services and be able to demonstrate moderate annual growth and consistent financial performance. What could change the rating- Up Growth in liquidity reserves and an increased position as a sizable human service provider; improvement in operating results; greater security in funding sources What could change the rating- Down Budget shortfalls in the Commonwealth of Massachusetts that would force the state to scale back on important social and health services; operating losses; further deterioration of cash reserves; increase in debt load without a commensurate increase in cash flow Key Indicators Assumptions & Adjustments: -- Based on combined financial statements for Bay Cove Human Services, Inc. and Affiliates -- First number reflects audit year ended June 30, 2006 -- Second number reflects audit year ended June 30, 2007 -- Investment returns normalized at 6% unless otherwise noted Total operating revenues: $46.7 million; $57.4 million Moody's adjusted net revenue available for debt service: $2.2 million; $3.0 million Total debt outstanding: $9.5 million; $13.9 million Maximum annual debt service (MADS): $1.1 million; $1.2 million MADS Coverage with reported investment income: 1.77 times; 2.18 times Moody's adjusted MADS Coverage with normalized investment income: 1.97 times; 2.42 times Debt-to-cash flow: 6.0 times; 6.3 times Days cash on hand: 36 days; 18 days Cash-to-debt: 46%; 20% Operating margin: 1.0%; 1.5% Operating cash flow margin: 3.8%; 4.4% Debt Outstanding (as of June 30, 2007) -- Series 1998, $4.8 million outstanding; Ba2 rating BEAR STEARNS: Moody's Holds Low-B Ratings on Six Certificates ------------------------------------------------------------- Moody's Investors Service affirmed the ratings of 22 classes of Bear Stearns Commercial Mortgage Securities Trust Series 2006- PWR12. Commercial Mortgage Pass-Through Certificates are: -- Class A-1, $56,262,929, affirmed at Aaa -- Class A-2, $49,000,000, affirmed at Aaa -- Class A-3, $150,500,000, affirmed at Aaa -- Class A-AB, $119,800,000, affirmed at Aaa -- Class A-4, $873,250,000, affirmed at Aaa -- Class A-1A, $192,265,378 affirmed at Aaa -- Class A-M, $207,903,000, affirmed at Aaa -- Class A-J, $161,124,000, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $44,180,000, affirmed at Aa2 -- Class C, $18,191,000, affirmed at Aa3 -- Class D, $33,785,000, affirmed at A2 -- Class E, $20,790,000, affirmed at A3 -- Class F, $25,988,000, affirmed at Baa1 -- Class G, $20,790,000, affirmed at Baa2 -- Class H, $25,988,000, affirmed at Baa3 -- Class J, $7,796,000, affirmed at Ba1 -- Class K, $7,797,000, affirmed at Ba2 -- Class L, $7,796,000, affirmed at Ba3 -- Class M, $5,198,000, affirmed at B1 -- Class N, $5,197,000, affirmed at B2 -- Class O, $5,198,000, affirmed at B3 As of the Dec. 13, 2007 distribution date, the transaction's aggregate principal balance has decreased by approximately 0.7% to $2.06 billion from $2.08 billion at securitization. The Certificates are collateralized by 213 loans, ranging in size from less than 1.0% to 7.6% of the pool, with the top ten loans representing 32.3% of the pool. The pool includes one shadow rated loan, which represent 7.6% of the pool. No loans have defeased, been liquidated from the pool or are in special servicing. Twelve loans, representing 6.0% of the pool, are on the master servicer's watchlist. Moody's was provided with full year 2006 operating results for 98.0% of the performing loans. Moody's weighted average loan to value ratio for the conduit component is 102.4% compared to 100.9% at securitization. The shadow rated loan is the 1675 Broadway Loan ($155.0 million -- 7.5%), which is secured by a 35-story, 761,092 square foot office building located in the Midtown West submarket of New York City. There is also a junior non-trust component of $25.0 million. The loan is interest only for the first 60 months of its term and thereafter amortizes on a 360 month schedule. Moody's current shadow rating is Baa3, the same as at securitization. The top three conduit exposures represent 14.3% of the pool. The largest conduit loan is the Woodland Mall Loan ($156.5 million -- 7.6%), which is secured by the borrower's interest in a 1.2 million square foot (397,897 square feet is collateral) regional mall located in Grand Rapids, Michigan. The mall is anchored by J.C. Penney, Sears, Marshalls and Kohl's. The loan is interest only for 36 months and then amortizes on a 360 month schedule. Moody's LTV is 110.9% compared to 107.7% at securitization. The second largest conduit exposure is the Orange Plaza Loan ($90.5 million -- 4.4%), which is secured by a 765,390 square foot retail property located in Middletown, New York. The loan is interest only for 24 months and then amortizes on a 360 month schedule. Moody's LTV is 108.9%, the same as at securitization. The third largest conduit exposure is the Broken Sound Portfolio Loan ($47.0 million -- 2.3%), which is secured by the fee interest in a cross-collateralized and cross-defaulted portfolio of five office/retail buildings with a total of 369,444 square feet located in Boca Raton and Deerfield Beach, Florida. The loan is interest only for the entire term. Moody's LTV is 107.5%, the same as at securitization. BEAR STEARNS: Moody's Junks Four Certificates' Ratings ------------------------------------------------------ Moody's Investors Service has downgraded and maintained on review for further downgrade 1 class of certificates, placed on review for possible downgrade 1 class of certificates, and downgraded 6 certificates from Bear Stearns Second Lien Trust 2007-1. The transaction is backed by home equity lines of credit loans. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. The underlying pool of loans has seen a high rate of early default with continued growth in the delinquency pipeline despite the realization of losses. As of November 2007, the pool has $36,091,254 of loans that are 60 or more days delinquent, in bankruptcy, foreclosure or REO. The complete rating actions are: Issuer: Bear Stearns Second Lien Trust 2007-1 Downgrade and Review for Possible Downgrade: -- Class I-M-4, Downgraded to B3 from A3 and on review for possible further downgrade. Review for Possible Downgrade: Class I-M-1, current rating Aa3, on review for possible downgrade. Downgrade: -- Class I-M-2, Downgraded to B1 from A1; -- Class I-M-3, Downgraded to B2 from A2; -- Class I-B-1, Downgraded to Ca from Baa1; -- Class I-B-2, Downgraded to C from Baa2; -- Class I-B-3, Downgraded to C from Baa3; -- Class I-B-4, Downgraded to C from Ba1. BOMBAY CO: Selling Intellectual Property to Bombay Brands --------------------------------------------------------- The Bombay Company Inc. has agreed to sell its intellectual property, which includes the Bombay brand name, to Bombay Brands LLC, a joint venture of Hilco Consumer Capital and Gordon Brothers Group. In a transaction structure, The Bombay Company bankruptcy estate retains a 25% interest in Bombay Brands. The acquisition is subject to approval by the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division. Hilco Consumer Capital will assume day-to-day brand management responsibilities and will immediately undertake a strategic brand rebuilding program designed to leverage the intrinsic value of the Bombay name. Through licensing strategies with retailers, wholesalers and franchisees, a broad-range of new consumer products will be created and marketed internationally. Assistance will be provided by The Bombay Company estate and the respected brand strategies and marketing firm, Graj + Gustavsen, also a partner in the joint venture group. John Collins, an executive with Hilco Consumer Capital, was named president and chief marketing officer of Bombay Brands. Mr. Collins is also president of Hilco TAG, owner of Tommy Armour Golf and RAM Golf. He has more than 25 years of experience in managing and marketing famous-name brands, including Nike, Bauer, Tommy Armour Golf, Volant Ski, Canon Inc., and Kubik. "The Bombay brand differentiates itself through a lifestyle approach in the home furnishings category," Mr. Collins stated. "It offers terrific opportunities for expansion and development into a whole new range of highly desirable and affordable consumer lifestyle products. Our plan will generate new products through licensed wholesalers and bring them to market through strategic retail and brand franchisee partners." "We are fortunate to have made the acquisition with Gordon Brothers Group," James "Jamie" Salter, chief executive officer of Hilco Consumer Capital, said. "We are also happy that we were able to structure the transaction in a way that allows the creditors of The Bombay Company Inc. to participate in the overall success of our strategy." "We are very pleased that the Bombay name will have the opportunity to flourish under the new venture," Elaine D. Crowley, SVP, CFO & Treasurer of The Bombay Company, noted. "We believe the expertise that Hilco Consumer Capital brings creates a unique opportunity to rebuild the Bombay brand and will ultimately provide loyal Bombay customers a solution for their home decorating needs. We look forward to working with the venture partners to rebuild the Bombay brand." About Hilco Consumer Capital Hilco Consumer Capital - http://www.hilcocc.com/-- was formed in 2006 to make private equity investments in consumer brands and build significant, additional value in them through innovative product development, creative marketing and licensing strategies. HCC is a unit of The Hilco Organization -- http://www.hilcotrading.com/-- a privately-held, diversified financial services firm specializing in appraising, purchasing, selling, financing and enhancing the performance of tangible and intangible business assets through a platform of 22 integrated business units located in North America and the European Union. About Gordon Brothers Gordon Brothers Group -- http://www.gordonbrothers.com/-- is an advisory, restructuring and investment firm specializing in the retail, consumer products, real estate and industrial sectors. Founded in 1903, Gordon Brothers provides asset valuations and appraisals, dispositions, real estate consulting, lending and advisory services. About Bombay Company Based in Fort Worth, Texas, The Bombay Company Inc., (OTC Bulletin Board: BBAO) -- http://www.bombaycompany.com/-- designs, sources and markets a unique line of home accessories, wall d�cor and furniture through 384 retail outlets and the Internet in the U.S. and internationally, including Cayman Islands. The company and five of its debtor-affiliates filed for Chapter 11 protection on Sept. 20, 2007 (Bankr. N.D. Tex. Lead Case No. 07-44084). Robert D. Albergotti, Esq., John D. Penn, Esq., Ian T. Peck, Esq., and Jason B. Binford, Esq., at Haynes and Boone, LLP, represent the Debtors. Attorneys at Cooley, Godward, Kronish LLP act as counsel for the Official Committee of Unsecured Creditors. Forshey & Prostok LLP is the Committee's local counsel. As of May 5, 2007, the Debtors listed total assets of $239,400,000 and total debts of $173,400,000. BOYD GAMING: Moody's Holds Ratings and Revises Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service affirmed Boyd Gaming Corporation's Ba2 corporate family rating and probability of default rating. At the same time, the company's rating outlook was revised to stable from positive, and its $900 million of senior subordinated debt was lowered to B1 (LGD-5, 89%) from Ba3 (LGD-5, 83%). Boyd's speculative grade liquidity rating remains at SGL-2. The affirmation of Boyd's Ba2 corporate family rating reflects the company's significant and geographically diverse portfolio of casino assets, strong operating performance despite increased competition in some markets, and moderate leverage. Adjusted Debt/EBITDA for the 12-month period ended Sept. 30, 2007 was 4.0x and falls in the middle of the 'Ba' indicated rating category as defined in Moody's Global Gaming methodology. Boyd's rating also considers the company's favorable regulatory risk profile. Approximately half of the company's wholly-owned property level EBITDA comes from the Las Vegas locals market in Nevada which has a "Low" regulatory risk designation. Key credit concerns include the ongoing development risks inherent in Echelon, particularly given its size, scope, and strategic importance to Boyd. Also considered is the negative impact on the Blue Chip facility from August 2007 opening of the Four Winds Casino in New Buffalo, Michigan which is located approximately fifteen miles from Blue Chip. The downgrade to B1 of Boyd's $900 million senior subordinated notes results from a re-application of Moody's Loss Given Default Methodology recognizing that the larger $4.0 billion un-rated revolver, which was successfully syndicated in May 2007, is in a superior position relative to the company's senior subordinated debt, which results in a higher recovery rate and depresses the recovery rate for the senior subordinated notes. The outlook revision to stable from positive considers that the recent increase in competition in the Midwest and Northeast regions, coupled with relatively flat year-to-date results in the company's Las Vegas locals business segment and a $400 million increase in the Echelon budget announced earlier this year, will make it more difficult for Boyd to achieve and maintain the credit metrics need to achieve a higher corporate family rating. Boyd's SGL-2 speculative grade liquidity rating acknowledges that the company will generate positive cash flow after interest, taxes, dividends and maintenance capital expenditures, but will also be a net borrower through fiscal 2008 as a result of continued investment in Echelon. Boyd wholly-owns and operates gaming entertainment facilities located in Nevada, Mississippi, Illinois, Louisiana, Indiana and Florida. The company is also 50% partner in a joint venture that owns a limited liability company, operating Borgata Hotel Casino and Spa in Atlantic City, New Jersey, which is accounted for using the equity method. The company is also entered into two joint ventures associated with its Echelon development. BRANDYWINE REALTY: Closes $245.4 Mil. Sale of 29 Properties to DRA ------------------------------------------------------------------ Brandywine Realty Trust has completed the sale and contribution of 29 suburban Philadelphia office properties to a joint venture consisting of DRA Advisors LLC with an 80% interest and affiliates of Brandywine Realty Trust with a 20% interest. An 89% interest was sold in three of the properties, while 100% interests were sold or contributed in the rest. The portfolio valuation of $245.4 million (reflecting 100% interests throughout) represents a capitalization rate of approximately 7.4% GAAP and 7.2% cash based on trailing twelve-month net operating income (NOI) through Sept. 30, 2007 and approximately 7.9% cash based on preliminary 2008 NOI projections. The 29 properties, which are listed below, comprise approximately 1.6 million square feet and were 95.3% occupied and 96.4% leased (reflecting future executed leases) as of September 30, 2007. The joint venture has secured $184 million of seven-year, non- recourse, property financings at a rate of 5.78% with an initial, thirty-six month interest-only period followed by monthly principal and interest payments pursuant to a 30-year principal amortization schedule until the January 1, 2015 maturity date. As a result of the sales and contribution transactions, the proceeds from the property financings, the joint venture s payment of its transaction expenses and certain other financial transactions between the parties, Brandywine has realized $235.4 million of gross proceeds and $230.9 million of net proceeds after deducting its own transaction expenses. Brandywine will use the net proceeds from the transaction to reduce outstanding indebtedness under its unsecured revolving credit facility. A subsidiary of Brandywine will be responsible for the management and leasing of the joint venture properties under a separate agreement. Brandywine does not expect that it will declare a special distribution on account of this transaction, subject to a final review of its calendar year 2007 taxable income. "We are delighted to complete this transaction with DRA Advisors," Gerard H. Sweeney, President and Chief Executive Officer of Brandywine Realty Trust, stated. "Working with DRA to structure and close this joint venture has enabled us to get to know this fine organization and benefit from its impressive track record in public-private transactions. The capital we have raised enhances our balance sheet flexibility and will ultimately get recycled into a variety of growth opportunities in our target markets including our current and planned development projects. By retaining a 20% ownership stake and managing the properties, we will share in the upside from this portfolio and contribute to its future success. Overall, this transaction demonstrates the strength of our properties and creates significant value for our stockholders. "DRA is excited to close on this joint venture with Brandywine," David Luski, Executive Vice President of New York-based DRA Advisors LLC, said. "Brandywine has an excellent reputation in the marketplace and we are looking forward to expanding this relationship in the future. The Philadelphia office of CB Richard Ellis served as Brandywine s exclusive marketing advisor for the transaction. Three properties, aggregating 260,000 square feet, were previously excluded from the joint venture transaction and have been retained by Brandywine." Headquartered in Radnor, Pennsylvania, Brandywine Realty Trust (NYSE: BDN), http://www.brandywinerealty.com/-- is one of the full-service, integrated real estate companies in the United States and is focused primarily on the ownership, management and development of class A, suburban and urban office buildings in selected markets aggregating approximately 42 million square feet. * * * Fitch assigned a 'BB+' rating on Brandywine Realty Trust's Preferred Stock. The outlook is positive. BROWN & COLE: Judge Steiner Approves Plan of Reorganization ----------------------------------------------------------- The Hon. Samuel J. Steiner of the U.S. Bankruptcy Court for the Western District of Washington approved Brown and Cole Stores LLC's plan of reorganization on Dec. 20, 2007, Dave Gallagher of The Bellingham Herald reports. Under the Debtor's reorganization plan, the Debtor will continue operations at its main office and intends to keep its current workers and stores, as well as employment agreements, Bellingham Herald relates. The Debtor received funding from Hancock Park Associates of California for store developments in exchange of about $43 million equity interest, Bellingham Herald says. President and CEO Craig Cole told Bellingham Herald that Brown & Cole now has a "solid financial backing" for the company to keep operating "for years to come." Bellingham, Washington-based Brown and Cole Stores LLC -- http://www.brownandcole.com/-- is Washington state's oldest grocery company, founded in 1909. The Debtor currently operates 20 supermarkets across the state and has 1,200 employees. The Debtor filed for chapter 11 petition on Nov. 7, 2006 (Bankr. W.D. Wa. Case No. 06-13950). Aimee S. Willig, Esq., Armand J. Kornfeld, Esq., Gayle E. Bush, Esq., and Katriana L. Samiljan, Esq., at Bush Strout & Kornfeld represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets between $1 million and $100 million and liabilities of more than $100 million. BURLINGTON COAT: Weak Revenue Cues Moody's to Revise Outlook ------------------------------------------------------------ Moody's Investors Service changed Burlington Coat Factory Warehouse, Inc.'s rating outlook to negative from stable and affirmed all the company's existing ratings. The change in outlook to negative is as a result of the company's weak revenue and earnings performance that has led to a weakening in credit metrics. These ratings are affirmed: -- Corporate family rating at B2, -- Probability of default rating at B2, -- $900 million senior secured term loan at B2 (LGD 4, 51%), -- $305 million of senior unsecured guaranteed notes at B3 (LGD 5, 74%), -- Speculative grade liquidity rating at SGL-2. -- The rating outlook is negative. The corporate family rating is constrained by the company's weak financial metrics as a result of its leveraged buyout by Bain Capital in 2006 which also results in financial policies that will likely favor shareholders going forward. The rating is also constrained by the company's low level of profitability (EBITA margin of 3.2%) that is well below the average of its retail apparel peers. The corporate family rating reflects the company's secondary competitive position in the off-price retail segment against TJX, its very high seasonality with nearly 98% of its cash flow from operations being generated during the second fiscal quarter, and the moderately high product volatility associated with the off-price apparel and home goods segments. Lending support to the corporate family rating is company's concentration in the off-price retail segment which has generated solid performance and is more resilient to negative macro economic consumer pressures than the full price channel for apparel and home fashions. Ratings are also supported by its good liquidity, its national diversification, and the company's well recognized brand name. The negative outlook reflects the company's weak sales and earning performance which has resulted in credit metrics that are weak for the rating category and weaker than Moody's original expectation. Ratings could be downgraded should the company's performance continue to be weak making it likely that debt/EBITDA will be sustained over 6.75x , should EBITDA/interest expense less capital expenditures likely be sustained below 1.2 times, or should liquidity erode. Burlington Coat Factory Warehouse Corporation, headquartered in Burlington, New Jersey, is a nationwide off-price apparel retailer that operates approximately 384 stores in 44 states under the nameplates of Burlington Coat Factory, Cohoes, MJM, and Baby Depot. Revenues for the LTM period ended Sept. 1, 2007 were approximately $3.4 billion. CAVTEL HOLDINGS: Moody's Cuts Corporate Family Rating to B3 ----------------------------------------------------------- Moody's Investors Service downgraded CavTel Holdings, LLC.'s corporate family rating to B3, from B2, and the B2 rating of the Company's senior secured credit facilities to B3. Moody's had assigned the ratings in November 2006 in connection with Cavalier's acquisition of TalkAmerica Holdings, which closed in December 2006. The outlook for ratings remains stable. The downgrade reflects Cavalier's weaker-than-expected revenue and free cash flow generation due to operational challenges in integrating Talk America and intense competitive pressures. Cavalier's 2007 debt to EBITDA leverage is expected to exceed Moody's previously indicated downward trigger of 4.0x and the rating agency is concerned about the Company's residential churn rates of close to 5% (Moody's leverage calculations include 75% of preferred stock accounted as debt and capitalized operating leases, in accordance with Moody's methodology). In addition, Moody's is concerned about potential covenant violations in the Company's credit facility in 2008. Although Cavalier continues to realize expected cost synergies from the integration of Talk America, weaker sales to residential and commercial customers, higher churn of residential customers due to poor credit quality and related bad debt expenses, have contributed to free cash flow falling short of the rating agency's previous projections. Moody's now expects Cavalier's YoY revenue to remain flat in 2008 and increase by mid-single digits in 2009. As a result of revised expectations of weaker EBITDA growth and free cash flow generation, Moody's expects Cavalier's leverage of 3.8x at year- end 2008 -- slightly more than a turn above previous projections. - Issuer: CavTel Holdings, LLC -- Corporate Family Rating: Downgraded to B3, from B2 -- Probability of Default Rating: Downgraded to Caa1, from B3 -- Senior 1st lien secured Revolving Credit Facility Due 2011: Downgraded to B3, LGD3 -- 32%, from B2, LGD3 -- 31% -- Senior 1st lien secured Term Loan Due 2012: Downgraded to B3, LGD3 -- 32%, from B2, LGD3 -- 31% -- Outlook: Stable The B3 corporate family rating reflects Cavalier's reduced financial flexibility amid intense competition and increased capital spending on the Company's IPTV initiative, and the Company's financial risk. The rating incorporates the complexity of integrating Talk America, which Cavalier acquired in December 2006, and the inherent risk of Cavalier's greater exposure to the residential telephony market relative to its CLEC peers, as residential customers typically have higher churn rates. The stable outlook reflects Moody's expectations that the Cavalier's revenue will stabilize in 2008 and the Company will generate free cash flow of 1% of its adjusted debt. Richmond, Virginia- based Cavalier is a competitive local exchange carrier servicing approximately 750,000 access lines and generated nearly $680 million in annualized revenues. CENTRO NP: Financial Difficulties Cue Fitch to Junk Ratings ----------------------------------------------------------- Fitch Ratings has downgraded the ratings for Centro NP LLC (formerly New Plan Excel Realty Trust) as: -- Issuer Default Rating to 'CCC' from 'BBB+'; -- $350 million revolving bank credit facility to 'CC/RR6' from 'BBB+'; -- $830 million senior unsecured notes to 'CC/RR6' from 'BBB+'. Centro NP LLC remains on Rating Watch Negative by Fitch. Fitch has withdrawn its New Plan Excel Realty Trust preferred stock rating as these securities were redeemed in connection with the acquisition of New Plan by affiliates of Centro Property Group. The downgrade of Centro NP LLC ratings is due to the financial difficulties of the entity's Australian based parent company Centro Property Group in connection with the refinancing of over $2.3 billion of indebtedness due to dislocations in the credit markets. CNP has negotiated an extension on its maturing facilities to Feb. 15, 2008; however, given the current state of the credit markets, there is a great deal of uncertainty surrounding CNP's ability to refinance this indebtedness. Centro NP bondholders are protected by several financial covenants in its bond indentures including total debt to total historical book assets less than 65%; debt service coverage ratio greater than 1.5 times; secured debt to total historical book assets under 40% and unencumbered historical book assets to unsecured debt greater than 1.0x. However, Fitch is concerned that Centro NP assets could be consolidated in a CNP liquidation scenario and the covenants waived. The ratings concerns center on CNP liquidity issues and do not pertain to the operating performance of Centro NP. The portfolio of needs-based, grocery-anchored shopping centers across the U.S. is performing well and expected to be well positioned in an economic slowdown. The strong geographic and tenant diversity of the portfolio helps insulate the company from regional downturns or tenant credit deterioration. Furthermore the company has seasoned executive and regional management teams and a strong regional infrastructure. Fitch expects the Rating Watch Negative will be resolved once there is more clarity regarding CNP's financial stability. Centro NP is a $5.9 billion total assets real estate company focusing on the ownership, management and development of community and neighborhood shopping centers. Centro NP operates a national portfolio of community and neighborhood shopping centers across the U.S. with approximately 67 million square feet of GLA. Centro Properties Group is a Melbourne-based company (ASX: CNP) focusing on the ownership, management, and development of retail shopping centers. Centro has AUD26.6 billion of retail property assets. CHARLES SCHWAB: Good Performance Prompts Fitch to Lift Rating ------------------------------------------------------------- Fitch Ratings affirms the long-term Issuer Default Rating of Charles Schwab Corp. at 'A'. The Individual rating is upgraded to 'B' from 'B/C'. The Rating Outlook is Stable. The upgrade of the Individual rating was based on SCHW's improved financial performance in the past several quarters. The stronger earnings characteristics are attributed to a steady trend of rising asset-related revenues and the renewed focus on its core businesses. SCHW's ratings are based on the company's strong franchise in online brokerage, modest leverage and overall sound financial position. Potential upgrades to SCHW's ratings depend on sustained earnings growth and ability to garner client assets. The Structured Investment Vehicles exposure is not viewed as a current rating concern, though Fitch will monitor the impact of exposure levels and/or potential losses on the firm's overall franchise and reputation. Financial leverage at SCHW is prudent with sufficient cash flows at the parent supporting outstanding long-term debt of $625 million as of Sept. 30, 2007. Capital is appropriate for the SCHW's risk profile. The recent buybacks and dividends conducted concurrent with the sale of U.S. Trust did not materially change Fitch's view of the adequacy of the capital base. Fitch affirms these ratings: The Charles Schwab Corporation -- IDR 'A'; -- Senior unsecured debt 'A'; -- Short-term issuer 'F1'; -- Short-term debt 'F1'; -- Support '5'; -- Support Floor 'NF'; Rating Outlook Stable. SCHWAB Capital Trust I -- Preferred 'A-'; Fitch upgrades this rating: The Charles Schwab Corporation -- Individual to 'B' from 'B/C'. CHEVY CHASE: High Delinquency Cues Moody's to Review Ratings ------------------------------------------------------------ Moody's Investors Service has placed under review for possible downgrade the ratings of ten tranches from four transactions issued by Chevy Chase Funding LLC, in 2006. The collateral backing these classes consists of primarily first lien, adjustable-rate negative amortizing 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: Chevy Chase Funding LLC, Mortgage-Backed Certificates, Series 2006-1 -- Cl. B-5 Currently B2 on review for possible downgrade, Issuer: Chevy Chase Funding LLC, Mortgage-Backed Certificates, Series 2006-2 -- Cl. B-4 Currently Baa3 on review for possible downgrade, -- Cl. B-5 Currently B2 on review for possible downgrade, Issuer: Chevy Chase Funding LLC, Mortgage-Backed Certificates, Series 2006-3 -- Cl. B-3 Currently A2 on review for possible downgrade, -- Cl. B-3I Currently A2 on review for possible downgrade, -- Cl. B-3NA Currently A2 on review for possible downgrade, -- Cl. B-4 Currently Baa3 on review for possible downgrade, -- Cl. B-5 Currently B2 on review for possible downgrade, Issuer: Chevy Chase Funding LLC, Mortgage-Backed Certificates, Series 2006-4 -- Cl. B-4 Currently Baa3 on review for possible downgrade, -- Cl. B-5 Currently B2 on review for possible downgrade. CHRYSLER LLC: "Operationally" Bankrupt, CEO Nardelli Says --------------------------------------------------------- Chrysler LLC is "operationally" bankrupt, was how chief executive officer Robert Nardelli described the company's status at a meeting held earlier this month, The Wall Street Journal reports, citing an account by two people present that meeting. "The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with," Mr. Nardelli said at the meeting, WSJ's sources relate. As reported in the Troubled Company Reporter on Dec. 7, 2007, various papers cited Mr. Nardelli as saying that Chrysler is in for a wider financial loss of $1.6 billion. It would be the Chrysler's second consecutive year of losses if Mr. Nardelli's forecast is right, according to the Associated Press citing an unnamed source. The company reported a loss of $618 million in 2006 but disclosed earnings of $1.8 billion in 2005. 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. COBALT CMBS: Limited Amortization Cues Fitch to Hold Ratings ------------------------------------------------------------ Fitch Ratings has affirmed Cobalt CMBS Commercial Trust commercial mortgage pass-through certificates, series 2006-C1, as: -- $41.1 million class A-1 at 'AAA'; -- $358.7 million class A-2 at 'AAA'; -- $138.9 million class A-AB at 'AAA'; -- $102.3 million class A-3 at 'AAA'; -- $723.7 million class A-4 at 'AAA'; -- $400.9 million class A-1A at 'AAA'; -- Interest-only class IO at 'AAA'; -- $253.1 million class A-M at 'AAA'; -- $208.8 million class A-J at 'AAA'; -- $50.6 million class B at 'AA'; -- $28.5 million class C at 'AA-'; -- $34.8 million class D at 'A'; -- $22.1 million class E at 'A-'; -- $28.5 million class F at 'BBB+'; -- $25.3 million class G at 'BBB'; -- $34.8 million class H at 'BBB-'; -- $6.3 million class J at 'BB+'; -- $9.5 million class K at 'BB'; -- $9.5 million class L at 'BB-'; -- $3.2 million class M at 'B+'; -- $6.3 million class N at 'B'; -- $6.3 million class O at 'B-'; -- $18 million class AMP-E1 at 'BB'; -- $7 million class AMP-E2 at 'BB'. The $31.6 million class P is not rated by Fitch. The affirmations are the result of limited amortization and stable pool performance since issuance. As of the November 2007 distribution report the transaction's principal balance has decreased 0.3% to $2.55 billion from $2.56 billion at issuance. There are no delinquent or specially serviced loans. Fitch reviewed the most recent operating statement analysis reports and occupancy figures for the five shadow rated loans in the transaction: Ala Moana Portfolio (8.9%), Fortress/Ryan's Portfolio (2.5%), Manoa Marketplace (0.8%), Wesco Self Storage (0.4%) and Cerritos Nissan (0.2%). Based on their stable performance since issuance the loans maintain their investment grade shadow ratings. The largest shadow rated loan, Ala Moana Portfolio (8.9%), is collateralized by a two million square foot mixed use retail and office property located in Honolulu, Hawaii. Retail anchors include Sears, Macy's, Shirokiya and Old Navy. Major tenants include Barnes & Noble, Longs Drugs, Kaiser Foundation and Gap. In-line tenants include Tiffany, Cartier, Louis Vuitton, Chanel, Dior, Banana Republic, Prada, Williams Sonoma, Apple and Disney. The retail portion of the collateral is occupied by nearly 275 tenants while the office portion is occupied by 184 tenants. The property benefits from the experienced sponsorship and management of GGP LP, a real estate investment trust which currently owns and manages a portfolio of 200 regional malls totaling 200 million sf. Occupancy as of July 1, 2007, has increased slightly to 97.1% from 96.9% since issuance. The second largest shadow rated loan, Fortress/Ryan's Portfolio (2.5%), is collateralized by a portfolio consisting of 114 fee and 16 leasehold interests in a total of 130 retail properties located in 22 different states. As of June 30, 2007, occupancy has remained stable at 100% since issuance. COINMACH SERVICE: Babcok & Brown Deal Cues S&P to Remove Watch -------------------------------------------------------------- Standard & Poor's affirmed its 'B' corporate credit rating on Coinmach Service Corp., and removed the rating from CreditWatch, where it was originally placed on June 15, 2007, with negative implications, following the announcement that the company had agreed to be acquired by Babcock & Brown Ltd. for $13.55 per share in cash, plus the assumption of debt, for a transaction value of about $1.3 billion. The acquisition was recently financed with a combination of debt and equity. Estimated pro forma debt is about $ 1.1 billion. The rating outlook is negative, and the ratings are subsequently withdrawn. COMMERCIAL CAPITAL: Fitch Holds 'BB' Rating on $10.8MM Loans ------------------------------------------------------------ Fitch Ratings has affirmed Commercial Capital Access One, Inc.'s commercial mortgage series 3, as: -- $94.3 million class 3A2 at 'AAA'; -- $100,000 class 3X at 'AAA'; -- $45.5 million class 3B at 'AAA'; -- $43.4 million class 3C at 'A+'; -- $19.5 million class 3D at 'BBB+'; -- $6.5 million class 3E at 'BBB'; -- $10.8 million class 3F at 'BB'; The $10.1 million class 3G remains at 'CC/DR2'. Fitch does not rate class 3H, which has been reduced to zero due to losses. Class 3A-1 has been paid in full. The affirmations are a result of stable performance of the collateral pool since Fitch's last rating action. As of the November 2007 distribution report, the transaction has paid down 46.9% to $230.1 million from $433.7 million at issuance. Of the original 108 loans, 82 remain in the pool. There are two assets (0.7%) in special servicing. The first specially serviced asset (0.6%) is a golf course in East St. Louis, Illinois. It has been real estate owned since October 2007. Based on the most recent valuation of the property, 100% losses to the trust are expected upon liquidation of the asset. One loan (11.8%) of the remaining pool is covered by a limited guaranty provided by Sun America, Inc and has a Sept. 30, 2007 servicer reported DSCR of 1.09. The guaranty requires Sun America to pay the special servicer, on behalf of the trustee, an amount equal to any realized losses arising from specially serviced loans, or to purchase the specially serviced loans directly from the trust. Prior losses have reduced the outstanding coverage from $14.4 million at issuance to approximately $6.7 million. The assets currently in special servicing are not covered by the guaranty. Nine loans (20.4%) were identified as Fitch loans of concern due to declining performance. The largest Fitch loan of concern is secured by an office property located in Burlington, Massachussetts and had a servicer reported year-end 2006 DSCR of 0.51x. DANA VILLAS: Section 341(a) Meeting Scheduled for January 17 ------------------------------------------------------------ The U.S. Trustee for Region 16 will convene a meeting of Dana Villas Associates LLC's creditors on Jan. 17, 2008, at 10:00 a.m., at 411 West Fourth Street, Room 1-159 in Santa Ana, California. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Mission Viejo, California, Dana Villas Associates L.L.C. filed for Chapter 11 protection on Dec. 11, 2007 (Bankr. C.D. Calif. Case No. 07-14228). Richard J. Reynolds, Esq., at Turner, Reynolds, Greco & O'Hara, represents the Debtor in its restructuring efforts. When the Debtor filed for protection against it creditors, it listed total assets of $40,850,000 and total debts of $27,500,000. DELTA FINANCIAL: Former Employees Say Debtors Violated WARN Act --------------------------------------------------------------- Laura Bressmer, Paula Capone and Tracy Prince, on behalf of themselves and other similarly situated former employees, seek the U.S. Bankruptcy Court for the District of Delaware's determination that the Delta Financial Corporation, Delta Funding Corporation and Fidelity Mortgage Inc., violated the WARN Act when they failed to provide proper advance notice of layoffs. Bressmer, et al., and about 1,000 other employees of Delta Financial and its two wholly owned subsidiaries, were allegedly terminated without cause, as part of, or as the result of, mass layoffs or plan closing ordered by the Defendants, on or about August 22, 2007, and November 8, 2007. The Defendants, however, failed to provide 60 days' advance written notice of the employees' terminations, as required by the Worker Adjustment and Retraining Notification Act, 29 U.S.C Section 2101 et seq. The Plaintiffs and other similarly situated employees seek to recover 60 days wages and benefits, pursuant to 29 U.S.C. Section 2104, from the Defendants. Representing Bressmer, et al., Christopher D. Loizides, Esq., at Loizides, P.A., in Wilmington, Delaware, asserts that the Defendants failed to pay the Former Employees their respective wages, salary, commissions, bonuses, accrued holiday pay and accrued vacation for 60 calendar days following their respective terminations and failed to make 401(k) contributions and provide them with health insurance coverage and other employee benefits under the Employee Retirement Income Security Act for 60 calendar days from and after the dates of their respective terminations. Since the Former Employees seek back-pay attributable to a period of time after the filing of the Debtors' bankruptcy petition and which arose as the result of the Defendants' violation of a federal law, their claim against the Defendants is entitled to administrative priority status pursuant to the Section 503(b)(1)(A) of the Bankruptcy Code, Mr. Loizides asserts. The Plaintiffs also contend that Delta Financial Corporation and its wholly owned subsidiaries Delta Funding Corporation and Fidelity Mortgage, Inc., were a "single employer" and are each liable under the WARN Act. The plaintiffs were either under the payrolls of Delta Funding or non-debtor Fidelity Mortgage, Inc. Ms. Bressmer, until her termination on August 22, 2007, and Ms. Capone, until her termination on November 8, 2007, worked at the Debtors' corporate headquarters in Woodbury, New York. Mr. Prince worked at the Debtors' branch at Tempe, Arizona, until his termination on November 8, 2007. Class Action Bressmer, et al., seek to pursue a class action on behalf other similarly situated employees, pursuant to Rules 23(a) and (b) of the Federal Rules of Civil Procedure. Mr. Loizides asserts that a class action is superior to other available method for the fair and efficient adjudication of this controversy -- particularly in the context of WARN Act litigation, where individual plaintiffs and class members may lack the financial resources to vigorously prosecute a lawsuit in federal court against a corporate defendant. He explains that concentrating all the potential litigation concerning the WARN Act rights of the members of the class in the Bankruptcy Court will avoid multiplicity of suits, will conserve the judicial resources and the resources of the parties and is the most efficient means of resolving the WARN Act rights of all the members of the class. Bressmer et al., aver that they have retained counsel competent, experienced in complex class action employment litigation. The Plaintiffs have retained Loizides, P.A., and Outten & Golden LLP. Prayer for Relief Bressmer, et al., seek from the Bankruptcy Court: A. certification that, pursuant to Fed. R. Civ. P. 23 (a) and (b) and 29 U.S.C. Section 2104(a)(5), Plaintiffs and the other similarly situated former employees constitute a single class; B. designation of the Plaintiffs as Class Representatives; C. appointment of Loizides and Outten & Golden as Class Counsel; D. a judgment in favor of the Plaintiffs and each of the "affected employees" equal to the sum of: their unpaid wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions and other ERISA benefits, for 60 days, that would have been covered and paid under the then- applicable employee benefit plans had that coverage continued for that period, all determined in accordance with the WARN Act, including an administrative expense claim pursuant to 11 U.S.C. Section 503(b)(a)(A) in favor of the Plaintiffs and the Class members equal to the above sums or alternatively, determining that the first $10,950 of the WARN Act claims of the Plaintiffs and each other Class member is entitled to priority status, under Section 507(a)(4) of the Bankruptcy Code, and the remainder as a general unsecured claim. E. Interest as allowed by law on the amounts owed; and F. Plaintiffs' reasonable attorneys' fees and the costs and disbursements that the Plaintiffs. incurred in prosecuting this action, as authorized by the WARN Act, including an allowed administrative priority claim under Section 503 of the Bankruptcy Code for the fees, costs and disbursements. Class Action Ms. Bressmer, on behalf of herself and fired co-workers, filed a class action lawsuit on Dec. 12, 2007, before the U.S. District Court for the Eastern District of New York. The Lawsuit raised the same allegations that Ms. Bressmer and two other employees had forwarded in the Adversary Proceeding. The District Court Lawsuit was assigned to Magistrate Judge A. Kathleen Tomlinson and was filed five days before Delta Financial and Delta Funding petitioned for Chapter 11 protection. Section 362(a) of the Bankruptcy Code prohibits, among other things, the commencement or continuation of judicial, administrative or other action or proceeding against a debtor that was or could have commenced before the Petition Date. The stay may be lifted, however, under Section 362(d) for "cause." "We have a good basis to believe the layoffs met the requirement of the WARN Act" for notice, said Jack Raisner, an attorney for Bressmer at the firm Outten & Golden in Manhattan, Newsday reports. Mr. Raisner said employees released in the final layoff on Dec. 6 also could be eligible to join the suit. The most recent layoffs by the Debtors in December affected 450 employees, and left the mortgage lender with only 49 to complete the wind- down operations. About Delta Financial Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. The company filed a chapter 11 petition on December 17, 2007 (Bankr. D. Del. Lead Case No. 07-11880). On the same day, three affiliates filed separate chapter 11 petitions -- Delta Funding Corp., Renaissance Mortgage Acceptance Corp., and Renaissance R.E.I.T. Investment Corp. -- (Bankr. D. Del. Case Nos. 07-11881 to 07-11883). The Debtors selected David B. Stratton, Esq. and James C. Carignan, Esq. at Pepper Hamilton LLP as their counsel. The Debtors' amended consolidated quarterly financial condition as of Sept. 30, 2007, showed $7,223,528,000 in total assets and $7,108,232,000 in total liabilities. The Debtors' petition listed D.B. Structured Products Inc. as their largest unsecured creditor holding a $19,500,000 claim. The Debtors' exclusive period to file a plan expires on April 15, 2008. (Delta Financial Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). DILLON READ: Stable Performance Cues Fitch to Affirm Ratings ------------------------------------------------------------ Fitch affirms nine classes of notes issued by Dillon Read CMBS CDO 2006-1, Ltd. and Dillon Read CMBS CDO 2006-1, Corp. (Dillon Read CMBS CDO 2006-1). These rating actions are effective immediately: -- $650,000,000 class A-S1VF senior secured floating rate notes at 'AAA'; -- $150,000,000 class A1 senior secured floating rate notes at 'AAA'; -- $60,000,000 class A2 senior secured floating rate notes at 'AA'; -- $41,250,000 class A3 secured deferrable interest floating rate notes at 'A'; -- $12,500,000 class A4 secured deferrable interest floating rate notes at 'A-'; -- $28,750,000 class B1 mezzanine deferrable interest floating rate notes at 'BBB'; -- $11,250,000 class B2 mezzanine deferrable interest floating rate notes at 'BBB'; -- $8,750,000 class B3 mezzanine deferrable interest floating rate notes at 'BBB-'; -- $10,000,000 class B4 mezzanine deferrable interest fixed rate notes at 'BB'. Dillon Read CMBS CDO 2006-1 represents a hybrid revolving collateralized debt obligation transaction that combines the use of synthetic and cash assets, as well as unfunded and funded liabilities. Dillon Read CMBS CDO 2006-1 closed on Nov. 2, 2006 and is managed by Dillon Read Capital Management LLC. The capital structure of the deal includes a $650 million unfunded super senior facility and $350 million of funded notes and subordinated notes. The deal gains 75% of its exposure to structured finance assets synthetically. Synthetic exposure can be created through the use of both funded and unfunded synthetic securities backed by a combination of a super senior facility, a liquidity facility and a reserve account. The portfolio is currently composed of commercial mortgage-backed securities ([CMBS] 85.5%), real estate investment trust debt securities (9.5%) and commercial real estate (CRE) CDOs (5.0%). The collateral manager has the ability to sell 15% of the collateral per annum on a discretionary basis during the 5 year reinvestment period. Dillon Read CMBS CDO 2006-1 will end its reinvestment period in December 2011. The affirmations are the result of stable portfolio performance measures, such as overcollateralization ratios and weighted average rating factor. As of the most recent trustee report dated Nov. 29, 2007 all OC ratios have remained stable and continue to pass their covenants. The current WARF on the collateral is 7.00 ('BBB'/'BBB-'). The collateral has a maximum Fitch WARF of 7.20 ('BBB'/'BBB-'). There have been no defaulted or distressed securities in the portfolio, to date. Fitch will continue to monitor this transaction as the CDO is currently in its revolving period in which new collateral may be purchased to replace existing collateral, subject to re-investment criteria. The ratings of the class A1 and A2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class A3, A4, B1, B2, B3 and B4 notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. DIVERSIFIED REIT: Fitch Affirms 'BB-' Rating on $150.3MM Notes -------------------------------------------------------------- Fitch Ratings affirms nine classes of notes issued by Diversified REIT Trust 2000-1 Ltd./Corp. (DREIT 2000-1). These rating actions are effective immediately: -- $58,986,000 class A-2 notes affirm at 'AAA'; -- $18,090,000 class B notes affirm at 'AAA'; -- $26,992,000 class C notes affirm at 'AAA'; -- $21,249,000 class D notes affirm at 'AA'; -- $11,343,000 class E notes affirm at 'A-'; -- $4,307,000 class F notes affirm 'BBB-'; -- $5,025,000 class G notes affirm at 'BB+'; -- $4,308,000 class H notes affirm at 'BB-'; -- $150,300,000 class X notes (interest only) affirm at 'AAA'. DREIT 2000-1 is a collateralized debt obligation which closed Apr. 13, 2000. DREIT 2000-1 is composed of a static pool of senior unsecured real estate investment trust securities. Fitch has reviewed the credit quality of the individual assets comprising the portfolio. The rating affirmations reflect the stable performance of the collateral, reduced weighted average life due to seasoning of the portfolio, and improved credit enhancement. Since the last review, approximately 20.79% of the original capital structure has paid down. While 9.02% of the collateral is on rating watch negative, the overall collateral performance is expected to remain stable. In addition, the weighted average coupon slightly increased to 7.91% from 7.73%. The weighted average life, demonstrating seasoning, has decreased slightly to 1.22, as of Dec. 18, 2007, from 1.82 at last review. The notes pay principal in sequential order and there are no over- collateralization or interest coverage tests. DIVERSIFIED REIT: Fitch Holds Low-B Ratings on Three Classes ------------------------------------------------------------ Fitch Ratings affirms all nine classes of notes issued by Diversified REIT Trust 1999-1 Ltd./Corp. These rating actions are effective immediately: -- $120,942,200 class A-2 notes affirm at 'AAA'; -- $31,125,600 class B notes affirm at 'AAA'; -- $31,125,600 class C notes affirm at 'AAA'; -- $41,500,800 class D notes affirm at 'AA'; -- $23,344,200 class E notes affirm at 'BBB'; -- $5,187,600 class F notes affirm at 'BB+'; -- $7,781,400 class G notes affirm at 'BB-'; -- $5,187,600 class H notes affirm at 'B'; -- class X notes (interest only) affirm at 'AAA'. DREIT 1999-1 is a collateralized debt obligation which closed May 26, 1999. DREIT 1999-1 is composed of a static pool of senior unsecured real estate investment trust securities. Since the last review on Dec. 15, 2006, an additional 23.09% of the original capital structure has paid down. Fitch has reviewed the credit quality of the individual assets comprising the portfolio. According to the Sept. 19, 2007 trustee report with an adjustment for the bond that was fully paid off, the Fitch weighted average rating factor has remained stable at 'BBB/BBB-' as of Dec. 18, 2007. The calculated weighted average coupon has also remained stable and is currently at 7.49%. The seasoning of the collateral can be illustrated by the declining weighted average life. Fitch's WAL of the portfolio declined to 0.87 years as of Dec. 18, 2007 versus 1.52 years at last review. The notes pay principal in sequential order and there are no over- collateralization or interest coverage tests. There are currently no defaulted assets in the portfolio. DYNCORP INT'L: Bags Airlift Wing Support Contract for $357.9 Mil. ----------------------------------------------------------------- DynCorp International Inc. has been awarded an additional option year by the USAF 89th Airlift Wing to support the Presidential Airlift Fleet. The contract -- originally worth $280 million -- is now valued at $357.9 million. The DynCorp International team received a 7th consecutive "Excellent" evaluation by the Award Determining Board, resulting in the award of the option through September 2010. DI employs 500 people at Andrews Air Force Base to support this effort. About Dyncorp. DynCorp International Inc. -- http://www.dyn-intl.com/-- (NYSE: DCP) through its operating company DynCorp International LLC, is a provider of specialized mission-critical technical services, mostly to civilian and military government agencies. It operates major programs in law enforcement training and support, security services, base operations, aviation services and operations, and logistics support worldwide. Headquartered in Falls Church, Virginia, DynCorp International LLC has approximately 14,600 employees worldwide including Haiti. * * * DynCorp still carries Standard and Poor's BB- rating assigned on June 15, 2006. S&P said the outlook is stable. EL PASO: Moody's Holds Ba3 Rating on $1.425 Mil. Junior Bonds ------------------------------------------------------------- Moody's Investors Service affirmed the ratings on various series of El Paso Housing Financing Corporation, Multifamily Mortgage Revenue Bonds (American Village Communities - Wallington Plaza and Timberwolf Apartments) Series 2000. The rating on $8,790,000 of outstanding Senior Series 2000A bonds is A3. The rating on $1,300,000 of outstanding Subordinate Series 2000B bonds is Baa3. The rating on $1,425,000 of outstanding Junior Subordinate Series 2000D bonds is Ba3. The outlook on all series of bonds is stable. The rating affirmations reflect the strong financial performance of the property during 2006 and resulting high debt service coverage levels. Legal Security: The bonds are secured by rental revenues from Wallington Plaza and Timberwolf Apartments, as well as several reserve funds held by the Trustee and pledged to the benefit of bondholders. Interest Rate Derivatives: none Credit Strength Financial performance was consistent in 2006 with 2005 levels; Audited financial statements for FY2006 indicate that debt service coverage was 1.65x for Senior bonds, 1.43x for Subordinate bonds and 1.21x for Junior Subordinate bonds. This compares to 1.70x for Seniors bonds, 1.46x for Subordinate bonds and 1.23x for Junior Subordinate bonds in 2005. The debt service coverage levels are calculated based on annual debt service for each year and consider the contributions to the replacement reserve fund as operating expenses. Physical occupancy remains high, with year-to-date 2007 data showing a 97.6% occupancy rate, an improvement from 2006 occupancy levels. Economic occupancy is reported as 92.3%. Management continues to maintain the properties by making various capital repairs According to the unaudited, rolling ledger provided by the property management, debt service coverage has improved in 2007 Credit Challenges Properties are located in El Paso, Texas, which offers competitive single family housing alternatives to multifamily housing, as measured by Moody's. Risks inherent in the affordable multifamily housing sector. Moody's considers this housing sector particularly volatile due to the market forces that determine occupancy rates and the number of underperforming properties that Moody's reviews. Outlook The outlook on the bonds has been affirmed at stable. The outlook reflects the consistent performance of the property and debt service coverage levels. What could change the rating - Up Significant and consistent improvement in debt service coverage What could change the rating - Down Decline in debt service coverage for any series of bonds Decline in occupancy rates EL POLLO: S&P Affirms B- Rating and Removes Negative CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Costa Mesa, California-based- El Pollo Loco Inc., including the 'B-' corporate credit rating, and removed the ratings from CreditWatch, where they were originally placed with negative implications on Dec. 10, 2007. The outlook is negative. "The rating action follows the company's announcement that its principal indirect shareholder, Trimaran Fund II LLC, has entered into agreements that will facilitate its issuing a letter of credit on behalf of El Pollo Loco," explained Standard & Poor's credit analyst Mr. Charles Pinson-Rose. That LOC in conjunction with one issued by El Pollo Loco will be used as collateral against a bond in the amount of the total estimated damages (including legal fees and interest) awarded to El Pollo Loco S.A. de C.V. by a U.S. District Court in Texas in a trademark lawsuit. El Pollo Loco must post this bond while it appeals the decision. Standard & Poor's believes that the company now has sufficient albeit weak liquidity to fund its operations. The ratings on El Pollo Loco reflect its competition in the quick- service chicken segment of the restaurant industry, regional concentration, and highly leveraged capital structure that results in weak cash flow protection. EUROFRESH INC: Moody's Cuts Corporate Family Rating to Caa3 ----------------------------------------------------------- Moody's Investors Service downgraded Eurofresh, Inc.'s ratings, including its corporate family rating to Caa3 from Caa2 and its probability of default rating to Ca from Caa3. The rating outlook remains negative. The downgrade reflects the continued erosion in reported operating profit margin in the recent third fiscal quarter, Moody's concerns about Eurofresh's liquidity and its need to obtain an amendment and waiver under covenants in its bank agreement, and the increased possibility that the company could have difficulty meeting its debt service requirements as scheduled. Challenges to profitability in the first six months -- high energy costs, legal fees, high employee turnover and relatively high number of inexperienced workers -- also hurt the third fiscal quarter, as expected. However, the company has begun the process of sequentially sterilizing all its greenhouses over the next 12-18 months in response to plant disease. Because of this disruption, Moody's expects that fiscal 2007 EBITDA will fall short of original expectations. Eurofresh has violated a covenant in its senior bank agreement, and also expects to violate covenants at the end of December, unless the covenants are amended. The company is discussing a waiver and an amendment to its bank covenants with its agent bank. The senior bank agreement was amended in October 2006 and March 2007. Eurofresh Inc.'s Caa3 corporate family rating reflects the company's very weak financial metrics, tight liquidity, and limited financial flexibility, and the increased possibility that the company may be unable to meet its scheduled debt service requirements. It also reflects the company's small size and very narrow product focus relative to larger and more diversified competitors in the fresh fruit and vegetable industry. The company's ratings also incorporate the very strong market position it has created, with likely good recovery values for secured debt in the event of default, despite deteriorating enterprise value due to expected softness in EBITDA. However, there could be material losses for unsecured senior and subordinated creditors in the event of default. The negative rating outlook reflects the possibility that the company's liquidity and financial flexibility could tighten further creating additional downward rating pressure. This could occur if Eurofresh fails to receive covenant relief, or if Eurofresh exhausts availability under its $40 million bank revolving credit facility. Ratings downgraded: -- Corporate family rating to Caa3 from Caa2 -- Probability of default rating to Ca from Caa3 -- $170 million senior unsecured discount notes due 2013 to Caa3 (LGD3, 40%) from Caa2 (LGD2, 29%) -- $44.17 million senior subordinated discount notes due 2014 at C (LGD5, 83%) from Ca (LGD5,71%) Based in Wilcox, Arizona, Eurofresh, Inc., is a leading producer of greenhouse-grown tomatoes. Sales for the twelve months ended Sept. 30, 2007 were approximately $169 million. FGX INTERNATIONAL: Completes Bank Credit Facility Refinancing ------------------------------------------------------------- FGX International has completed the refinancing of its existing bank credit facility, resulting in a reduction in interest rates going forward and increased borrowing capacity. The company entered into a new $175 million credit facility consisting of a $100 million five year term loan and a $75 million revolving credit facility, both initially priced at LIBOR plus 1.75%. Proceeds from this new facility, combined with $97.2 million in net proceeds from the company's initial public stock offering completed Oct. 24, 2007, were used to repay approximately $218.2 million in higher interest rate indebtedness. The new credit facility is secured by substantially all the company's assets. The company has an outstanding loan balance under the new credit facility of $120 million. The company is expected to realize interest savings of approximately $13 million in 2008 compared with 2007 as a result of the debt repayments from the IPO proceeds and refinancing of the company's remaining debt at lower rates. These savings were outlined in the company's Dec. 6, 2007, earnings guidance. In the fourth quarter of 2007, the company will record a pre-tax charge on the early extinguishment of debt of $2.8 million related to both the December 2007 refinancing and the pay-down of debt in October 2007 with proceeds from the IPO. "The combined effect of repaying a portion of the company's debt with the proceeds from its IPO, and refinancing of the remaining debt at lower rates and increased borrowing capacity, gives the company greater financial flexibility to support its growth initiatives," Alec Taylor, chief executive officer of FGX International, stated. "We will continue our strategy of investing in our Foster Grant(R) and Magnivision(R) brands and pursuing other strategic opportunities for growth." The company's new credit facility is led by SunTrust Robinson Humphrey Inc. Branch Banking and Trust Company is syndication agent on the credit agreement. TD Banknorth N.A. is documentation agent. About FGX International Headquartered in Smithfield, Rhode Island, FGX International Holdings Limited (Nasdaq: FGXI) -- http://www.fgxi.com/-- is a designer and marketer of non-prescription reading glasses, sunglasses and costume jewelry with a portfolio of established, recognized eyewear brands including Foster Grant(R) and Magnivision(R). As reported in the Troubled Company Reporter on Dec. 13, 2007, The company's balance sheet, at Sept. 29, 2007, showed total assets of $214.26 million, total liabilities of $292.3 million, resulting to a shareholders' deficit of $78.04 million. * * * As reported in the Troubled Company Reporter on Oct. 10, 2007, Standard & Poor's Ratings Services revised its ratings outlook on FGX International Inc. to stable from negative. At the same time, Standard & Poor's affirmed its ratings on the company, including the 'B' corporate credit rating. FIRST FRANKLIN: Moody's Junks Ratings on Two Loan Classes --------------------------------------------------------- Moody's Investors Service has downgraded three classes of certificates from a deal issued by First Franklin Mortgage Loan Trust in 2005. The transaction is backed by closed-end second lien loans. The projected pipeline loss has been continuously increasing over the past few months and is likely to affect the credit support for these certificates. Furthermore, many underlying first lien loans are likely to have pending interest rate resets, which may cause an increase in delinquencies and defaults on the second lien loans in the pool. The certificates were downgraded as the bonds' current credit enhancement levels, including excess spread, compared to the current projected losses may not be consistent with the existing ratings on the bonds. Complete rating actions are: Issuer: First Franklin Mortgage Loan Trust 2005-FFA -- Cl. B-2, Downgraded to Ba2 from Baa2 -- Cl. B-3, Downgraded to Ca from Baa3 -- Cl. B-4, Downgraded to C from B3 FIRST INTERNATIONAL: Fitch Retains Junk Ratings on Seven Classes ---------------------------------------------------------------- Fitch Ratings affirms these First International Bank transactions: FNBNE Business Loan Notes, series 1998-A -- Class A affirmed at 'AA'; -- Class M-1 affirmed at 'BBB'; -- Class M-2 affirmed at 'BB'. FIB Business Loan Notes, series 2000-A -- Class A affirmed at 'B-/DR2' -- Class M-1 remains at 'C/DR6'; -- Class M-2 remains at 'C/DR6'; -- Class B remains at 'C/DR6'. FIB SBA Loan-Backed Adjustable Rate Certificates, series 1999-1 -- Class A affirmed at 'B/DR1'; -- Class M remains at 'C/DR4'; -- Class B remains at 'C/DR6'. Series 2000-1 -- Class A remains at 'CCC/DR3'; -- Class M remains at 'C/DR6'; Series 2000-2 -- Class A affirmed at 'BB+'; -- Class M affirmed at 'B-/DR1'. The affirmations are due to stable performance since Fitch's last rating action on July 27, 2007. The transactions have continued to exhibit stable portfolio performance with delinquency levels declining. The pace of net losses has also slowed down with none of the transactions experiencing any new net losses since last action. Furthermore, credit enhancement for the certificates is sufficient at their current rating levels. FIRST MERCURY: Moody's Puts Ratings Under Review & May Upgrade -------------------------------------------------------------- Moody's Investors Service placed the Baa3 insurance financial strength rating of First Mercury Insurance Company and the Ba3 long-term issuer rating of its parent company, First Mercury Financial Corporation, on review for possible upgrade. At the time of First Mercury's IPO in October 2006, Moody's had noted that several factors could place positive pressure on the ratings, including marked progress toward Section 404 compliance, implementation of a new corporate governance framework by year end 2007 while maintaining solid profit margins in its business. Accordingly, Moody's review for upgrade will focus on Section 404 compliance and details of the impending American Management Corporation acquisition. First Mercury's ratings reflect the company's established position in providing general and professional liability insurance for the security industry (e.g., security guards), its modest catastrophe exposure, strong profit margins in its core business, and significant cash flows from unregulated subsidiaries. These strengths are partly offset by the challenges associated with being a new publicly-traded company, risks associated with recent growth, and the company's focus on medium-tail casualty business - - which results in uncertainty with respect to the adequacy of loss reserves. In addition to the factors noted above, an enduring commitment to a financial leverage profile below 35%, together with ROEs above 10%, would be needed to move the rating higher. Conversely, the following factors could return the ratings to a stable outlook: combined ratio greater than 95%, adverse reserve development in excess of 7% of carried reserves, and operating leverage (NPW to statutory surplus) above 1.3 times. The last rating action on First Mercury occurred on Oct. 27, 2006 when Moody's affirmed the Baa3 rating on FMIC following the company's IPO. * These ratings have been placed on review for possible upgrade: -- First Mercury Financial Corporation: long-term issuer rating at Ba3. -- First Mercury Insurance Company: insurance financial strength at Baa3. First Mercury Financial Corporation, headquartered in Southfield, Michigan, is the holding company for two insurance operating companies, a wholesale insurance broker, and a third-party administrator for public entity insurance pools. Its insurance subsidiaries provide specialty insurance products and services to the excess and surplus lines market in the United States, with particular expertise in the security industry (e.g., security guards, etc.). FOREST CITY: S&P Affirms Low-B Ratings and Says Outlook is Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' issuer credit and 'BB-' senior unsecured ratings on Forest City Enterprises Inc. The rating affirmations affect $837.5 million in rated senior notes. The outlook remains stable. "The ratings on Forest City reflect risks associated with a large and complex development pipeline that is dilutive in the near term, resulting in slim debt service coverage measures," said credit analyst Ms. Elizabeth Campbell. "The ratings also acknowledge a high level of secured debt that structurally subordinates the interests of unsecured creditors. However, development risk is somewhat mitigated by the company's established development track record, deep and well-seasoned management team, and significant project pre-leasing." The stable outlook is supported by the predictable cash flow generated by Forest City's core real estate portfolio and S&P's expectation that the company will continue to derive and extract value from its assets through re-financings and sales to meet ongoing capital needs. Debt service coverage measures are minimally acceptable for the current ratings, which limits upward rating momentum. If coverage measures fall below 1.2x, we would revise the outlook to negative and/or lower the credit rating. FOUR STARS: Court Okays Day Brzustowicz as Bankruptcy Counsel ------------------------------------------------------------- Four Star Homes, Inc. obtained authority from the U.S. Bankruptcy Court for the Western District of Pennsylvania to employ Day, Brzustowicz & Malkin, P.C., as its general bankruptcy counsel. Day Brzustowicz is expected to: 1) assist in administration of the estate and represent the Debtor on any legal & bankruptcy issues; 2) prepare any legal documentation on behalf of the Debtor; 3) furnish information and review reports for legal sufficiency; 4) provide other necessary legal services connected with the Debtor's bankruptcy proceedings. The Debtor tells the Court that the firm's professionals bill: Professional Hourly Rate ------------ ----------- John C. Brzustowicz, Esq. $275 Marjorie M. Malkin, Esq. $275 Paralegal $100 The Debtor assures the Court that no one from the firm has any connection with the Debtor, or represent any interest that is adverse to the Debtor's estates. Four Stars Homes, Inc. filed for Chapter 11 protection on Dec. 6, 2007 (Bankr. W.D. Pa. Case No. 07-27727). Marjorie M. Malkin, Esq. and John C. Brzustowicz, Esq., at Day, Brzustowicz & Malkin, P.C., represent the Debtor in its restructuring efforts. The Debtor did not disclose the amount of its assets and debts at the date of bankruptcy. GE BUSINESS: Fitch Holds 'BB' Ratings on Three Loan Classes ----------------------------------------------------------- Fitch Ratings affirms these series for GE Business Loan Trust: Series 2003-1 -- Class A at 'AAA'; -- Class B at 'A'. Series 2003-2 -- Class A at 'AAA'; -- Class B at 'A'; -- Class C at 'BBB'. Series 2004-2 -- Class IO at 'AAA'; -- Class A at 'AAA'; -- Class B at 'A'; -- Class C at 'BBB'; -- Class D at 'BB'. Series 2005-1 -- Class IO at 'AAA'; -- Class A-1 at 'AAA'; -- Class A-2 at 'AAA'; -- Class A-3 at 'AAA'; -- Class B at 'A'; -- Class C at 'BBB'; -- Class D at 'BB'. Series 2005-2 -- Class IO at 'AAA'; -- Class A at 'AAA'; -- Class B at 'A'; -- Class C at 'BBB'; -- Class D at 'BB'. Series 2006-1 -- Class IO at 'AAA'; -- Class A at 'AAA'; -- Class B at 'AA'; -- Class C at 'A'; -- Class D at 'BBB'. Series 2006-2 -- Class A at 'AAA'; -- Class B at 'AA'; -- Class C at 'A'; -- Class D at 'BBB'. The affirmations are due to stable performance since Fitch's last rating action on Nov. 22, 2006. The transactions have continued to exhibit stable portfolio performance with low levels of delinquencies, and zero net losses to date. Furthermore, credit enhancement for the certificates is sufficient at their current rating levels. GENESIS CLO: Moody's Assigns Low-B Ratings to Two Notes ------------------------------------------------------- Moody's Investors Service has assigned these ratings to Notes issued by Genesis CLO 2007-2 Ltd.: (1) Aaa to the $1,236,000,000 Class A Senior Secured Floating Rate Notes, Due 2016; (2) Aa2 to the $65,000,000 Class B Senior Secured Floating Rate Notes, Due 2016; (3) A2 to the $70,000,000 Class C Senior Secured Deferrable Floating Rate Notes, Due 2016; (4) Baa2 to the $55,000,000 Class D Secured Deferrable Floating Rate Notes, Due 2016; (5) Ba2 to the $46,000,000 Class E Secured Deferrable Floating Rate Notes, Due 2016; and (6) B3 to the $48,000,000 Class F Secured Deferrable Floating Rate Notes, Due 2016. The Moody's ratings of the Notes address the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and are based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. The ratings reflect the risks due to the diminishment of cash flow from the underlying portfolio consisting of senior secured loans, second lien loans, third lien loans, senior unsecured loans, and high yield bonds due to defaults, the transaction's legal structure and the characteristics of the underlying assets. LLCP Advisors LLC will manage the disposition of collateral on behalf of the Issuer. GIBSON GUITAR: Weak Credit Metrics Cue Moody's to Cut Ratings ------------------------------------------------------------- Moody's Investors Service downgraded Gibson Guitar Corp.'s corporate family rating to B2 and probability of default rating to B3 following ongoing operating performance difficulties and Moody's expectation of continued softness in discretionary consumer spending during 2008. At the same time, Moody's downgraded the rating of the first lien senior secured credit facilities to B2 from B1. "The downgrade reflects Gibson's continued weakening credit metrics and Moody's expectation that discretionary consumer spending will remain soft throughout 2008" said Kevin Cassidy Vice President/Senior Credit Officer at Moody's Investors Service. Gibson's consolidated operating margins (EBITA/revenue) have continued to decrease in the twelve months ended September 2007 to the mid single digits from high single digits, while operating margins at the "core" subsidiaries also decreased but not as significantly. "The downgrade also incorporates Moody's continued concerns over the accelerated operating weakness of Gibson's non core subsidiaries" said Mr. Cassidy. "The negative outlook continues to reflect Moody's concern that Gibson's moderating operating performance and expected weak discretionary consumer spending in 2008 may necessitate a need for the company to revise its senior secured credit facility and amend its covenants" said Mr. Cassidy. He further added that "the outlook could be stabilized if the company increases the head-room under its leverage covenant to the high single digits or low double digits either through paying down debt or increasing profitability" These ratings/assessments were downgraded/revised: -- Corporate family rating to B2 from B1: -- Probability-of-default rating to B3 from B2; -- $50 million senior secured revolving credit facility due 2012 to B2 (LGD3, 31%) from B1 (LGD3, 30%); -- $100 million senior secured term loan B due 2014 B2 (LGD3, 31%) from B1 (LGD3, 30%); Headquartered in Nashville, Tennessee, Gibson Guitar Corp. primarily manufactures and markets acoustic and electric guitars under the Gibson and Epiphone brand names. The company also sells other stringed instruments and instrument-related accessories such as amplifiers, speakers, and picks/straps. GILBERT TUSCANY: Section 341(a) Meeting Scheduled for January 22 ---------------------------------------------------------------- The U.S. Trustee for Region 14 will convene a meeting of Gilbert Tuscany Village LLC's creditors on Jan. 22, 2008, at 1:30 p.m., at the U.S. Trustee Meeting Room, 230 North First Avenue, Suite 102, in Phoenix, Arizona. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Gilbert Tuscany Village LLC filed for Chapter 11 protection on Dec. 6, 2007 (Bankr. D. Ariz. Case No. 07-06605). Dewain D. Fox, Esq., at Fennemore Craig, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and liabilities of $1 million to $100 million. GILBERT TUSCANY: Files List of 20 Largest Unsecured Creditors ------------------------------------------------------------- Gilbert Tuscany Village, LLC submitted to the U.S. Bankruptcy Court for the District of Arizona its list of 20 largest unsecured creditors, disclosing: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ken Schaub Broker Fees $215,243 Riverside Office Plaza 1095 West Rio Salado Parkway, Suite 201 Temppe, AZ 85281 Maricopa County Treasurer Tax Obligation $121,319 P.O. Box 52133 Phoenix, AZ 85072-2133 KSI Steel & Ironworks Trade Debt $69,106 14403 South Power Road Higley, AZ 85236 Pinon Blanco Trade Debt $67,400 Griffin Brothers Trade Debt $55,511 Ferrin Electric Co. Inc. Trade Debt $50,305 JLM Roofing Company Trade Debt $40,000 Arnett Plumbing Trade Debt $38,083 Shelley Bethea Gillete, P.C. Trade Debt $32,520 Apex National Decorators, Inc. Trade Debt $25,290 Father and Son Masonry Trade Debt $24,224 Fountain Hills Doors & Supply Trade Debt $23,674 Norman K. Lewis Trade Debt $20,000 Inback Construction LLC Trade Debt $19,486 DeRito Partners Commission $15,900 Magnum Opus Trade Debt $13,245 Screwy & Magoo's LLC Security Deposit $11,650 Oracle Architecture & Planning Trade Debt $9,279 Southwest Install & Rework Inc. Trade Debt $8,725 Farnsworth Fire Protection LLC Trade Debt $5,900 Gilbert Tuscany Village LLC filed for Chapter 11 protection on Dec. 6, 2007 (Bankr. D. Ariz. Case No. 07-06605). Dewain D. Fox, Esq., at Fennemore Craig, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and liabilities of $1 million to $100 million. GINN-LA CS: Moody's Cuts Corporate Rating with Negative Outlook --------------------------------------------------------------- Moody's Investors Service lowered the corporate family ratings of these three land developers to Caa3 from Caa1: Ginn-LA CS Borrower, LLC; LBREP/L SunCAL Master I, LLC; and Lake at Las Vegas Joint Venture, together with the co-borrowers of each entity. The rating outlooks for the three remain negative, and the ratings of Ginn are taken off review for downgrade. The downgrades of the three land developers reflect the substantially slower than expected absorption rates of lots, which is expected to continue at least until 2009; negative cash flow generation; covenant compliance difficulties; and the likelihood that the appraisals underpinning the ratings will be declining steadily going forward. These ratings were affected: -- Ginn-LA CS Borrower, LLC and Ginn-LA Conduit Lender, Inc.: -- Corporate family rating lowered to Caa3 from Caa1 -- Probability of default rating lowered to Caa3 from Caa1 -- Rating on 1st lien bank credit facility lowered to Caa2 (LGD3,40) from B3 (LGD3,37%) -- Rating on 2nd lien bank credit facility lowered to Ca (LGD6,91) from Caa3 (LGD5, 88%) LBREP/L SunCAL Master I, LLC: -- Corporate family rating lowered to Caa3 from Caa1 -- Probability of default rating lowered to Caa3 from Caa1 -- Rating on 1st lien bank credit facility lowered to Caa2 (LGD3,30) from B2 (LGD3,31%) -- Rating on 2nd lien bank credit facility lowered to Ca (LGD5,76) from Caa2 (LGD5, 77%) Lake at Las Vegas Joint Venture and LLV-1, LLC: -- Corporate family rating lowered to Caa3 from Caa1 -- Probability of default rating lowered to Caa3 from Caa2 -- Rating on 1st lien bank credit facilities lowered to Caa3 (LGD3,37) from Caa1(LGD3,33%) Ginn-LA CS Borrower, LLC and Ginn-LA Conduit Lender, Inc. were formed in 2006 by affiliates of Lubert Adler funds and the Ginn Companies to acquire and develop four resort or private club projects in Grand Bahama Island, Naples and Port St. Lucie, Florida and Boone, N.C. LBREP/L SunCal Master I, LLC is a single-purpose entity formed by affiliates of SunCal Companies and Lehman Real Estate to acquire and develop four master planned communities encompassing a total of 11,702 lots on 5,452 acres located in Southern California. The communities being developed are located in Kern County, Ventura County, and Riverside County. Headquartered in Las Vegas, Nevada, Lake at Las Vegas Joint Venture and its co-borrower, LLV-1, LLC, own and operate the Lake Las Vegas Resort, a 3592-acre master planned residential and resort destination located 17 miles east of the Las Vegas strip. GLOBAL POWER: To Emerge from Chapter 11 by End of January 2008 -------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware confirmed Global Power Equipment Group Inc.'s plan of reorganization. Based on the Court's ruling, Global Power expects to emerge from chapter 11 by the end of January 2008. Following a confirmation hearing held on Thursday, Dec. 20, 2007, the Hon. Brendan L. Shannon said the company had met all of the necessary requirements to confirm its plan. The confirmation hearing followed a creditor vote in which all impaired classes under the plan overwhelmingly voted in favor of the plan. The plan will become effective and the company will emerge from chapter 11 once certain conditions are satisfied, including the closing of the company's exit financing. As previously said, Global Power's Plan includes a rights offering available to existing equity holders for the issuance of new common stock of the reorganized company backstopped in an amount up to $90 million by a group of existing equity holders. It also provides payment in full, in cash, of all allowed claims of creditors of the company and the company's Williams and Braden subsidiaries. Allowed unsecured claims against the company's Deltak subsidiary will be satisfied by the establishment of a cash reserve of $34 million which will be used to fund payments (of up to 100%) to holders of allowed unsecured claims against Deltak. John Matheson, President and Chief Executive Officer of Global Power, said, "Confirmation of our plan marks a significant achievement and is the result of the tireless efforts of the company and representatives of its major constituencies in gaining consensus with literally thousands of stakeholders. We want to thank our customers, employees and stakeholders for their continued support throughout our successful reorganization. The company looks forward to emerging as a stronger enterprise that will continue to provide our customers with the highest quality products and service." About Global Power Based in Oklahoma, Global Power Equipment Group Inc. (Pink Sheets: GEGQQ) -- http://www.globalpower.com/-- is a design, engineering and manufacturing firm providing an array of equipment and services to the energy, power infrastructure and process industries. The company designs, engineers and manufactures a comprehensive portfolio of equipment for gas turbine power plants and power-related equipment for industrial operations, and has over 40 years of power generation industry experience. The company's equipment is installed in power plants and in industrial operations in more than 40 countries on six continents. In addition, the company provides routine and specialty maintenance services to nuclear, coal-fired, fossil, and hydroelectric power plants and other industrial operations. The company has facilities in Plymouth, Minnesota; Tulsa, Oklahoma; Auburn, Massachusetts; Atlanta, Georgia; Monterrey, Mexico; Shanghai, China; Nanjing, China; and Heerleen, The Netherlands. The company filed for chapter 11 protection on Sept. 28, 2006 (Bankr. D. Del. Case No. 06-11045). Thomas E. Lauria, Esq., Matthew C. Brown, Esq., Gerard Uzzi, Esq., John Cunningham, Esq., and Frank Eaton, Esq., at White & Case LLP; and Jeffrey M. Schlerf, Esq., Eric M. Sutty, Esq., and Mary E. Augustine, Esq., at The Bayard Firm, represent the Debtors. Kurtzman Carson Consultants LLC acts as the Debtors' noticing and claims agent. At Oct. 31, 2006, Global Power's balance sheet showed total assets of $177,758,000 and total debts of $99,017,000 Jeffrey S. Sabin, Esq., and David M. Hillman, Esq., at Schulte Roth & Zabel LLP; and Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP, represent the Official Committee of Unsecured Creditors. The Official Committee of Equity Security Holders is represented by Howard L. Siegel, Esq., and Steven D. Pohl, Esq., at Brown Rudnick Berlack Israels LLP. GREAT ATLANTIC: Consummates Public Offering of Senior Notes ----------------------------------------------------------- The Great Atlantic & Pacific Tea Company Inc. has consummated its public offering of $165 million aggregate principal amount of convertible senior notes due 2011 and $255 million aggregate principal amount of convertible senior notes due 2012. The principal amount of the notes issued reflects the full exercise of the underwriters' over-allotment options with respect to both series of notes. Banc of America Securities LLC and Lehman Brothers Inc. acted as joint book running managers for the offering. The company entered into convertible note hedge and warrant transactions with financial institutions that are affiliates of the underwriters of the notes to increase the effective conversion price of the notes. The company had also entered into share lending agreements with affiliates of the underwriters to lend such affiliates up to 11,278,988 shares of the company's common stock. Pursuant to these agreements, the company loaned 8,134,002 shares of its common stock to these entities who then sold 6,300,752 of them to the public in a public offering which was consummated. The company did not receive any proceeds from the sale of these shares, other than a nominal lending fee. The net proceeds of the offering of the notes were used to prepay in full and terminate the company's $370 bridge loan facility and pay a portion of the net costs of the convertible note hedge and warrant transactions. UBS served as financial advisor to the company in these financing transactions. Founded in 1859, A&P is one of the nation's first supermarket chains. The Company About Great Atlantic Founded in 1859, The Great Atlantic & Pacific Tea Company Inc. (NYSE: GAP) -- http://www.aptea.com/-- operates 455 stores in 8 states and the District of Columbia under the following trade names: A&P, Pathmark, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh and Food Basics. * * * As reported in the Troubled Company Reporter on Dec. 13, 2007, Moody's Investors Service confirmed A&P's ratings, including its corporate family rating at B3 and speculative grade liquidity rating of SGL-3. Moody's also assigned a B2 rating to the company's new $370 million senior secured bridge loan, well as a prospective (P)Caa1 rating to a planned issue of senior unsecured convertible bonds. The outlook on all ratings is stable. As reported in the Troubled Company Reporter on Dec. 12, 2007, Standard & Poor's Ratings Services raised its corporate credit rating on the Great Atlantic & Pacific Tea Co. Inc. to 'B' from 'B-' and removed all of the ratings from CreditWatch, where they were placed with positive implications on Sept. 17, 2007. GREENMAN TECH: Sept. 30 Balance Sheet upside-Down by $10.9 Mil. --------------------------------------------------------------- GreenMan Technologies Inc. reported results for the three and twelve months ended Sept. 30, 2007. The company has net income for the three months ended Sept. 30, 2007 was $657,000 as compared to a net loss of $38,000 for the three months ended Sept. 30, 2006. The company reported net income of $313,000 for the fiscal year ended Sept. 30, 2007 was as compared to a net loss of $3.7 million for the fiscal year ended Sept. 30, 2006. At Sept. 30, 2007, the company's balance sheet showed total assets of $9.29 million total liabilities of $20.19 million and total shareholders' deficit of $10.90 million. The company's balance sheet at Sept. 30, 2007, also showed strained liquidity with $3.76 million in total current assets available to pay $4.24 million in total current liabilities. About GreenMan Technologies Based in Lynnfield, Massachusetts, GreenMan Technologies Inc. (OTCBB: GMTI) -- http://www.greenman.biz/-- together with its subsidiaries, engages in collecting, processing, and marketing scrap tires in whole, shredded, or granular form in the United States and Canada. The company recycles this material into many interesting and useful applications. The company markets its products and services through a direct sales staff. The company was founded in 1992 and currently operates processing facilities in Savage, Minnesota, and Des Moines, Iowa. The two facilities process nearly 14 million tires out of the nearly 300 million scrap tires created in the U.S. each year. GREENPOINT MORTGAGE: Moody's Junks Ratings on Two Certificates -------------------------------------------------------------- Moody's Investors Service has downgraded 2 certificates from Greenpoint Mortgage Funding Trust 2007-HE1, Mortgage-Backed Notes, Series 2007-HE1. The transaction is backed by home equity lines of credit loans. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. The underlying pool of loans has seen a high rate of early default with continued growth in the delinquency pipeline despite the realization of losses. As of November 2007, the pool has $51,666,836 loans that are 60 or more days delinquent, in bankruptcy, foreclosure or REO. The complete rating actions are: Issuer: Greenpoint Mortgage Funding Trust 2007-HE1 Downgrade: -- Class B-1, Downgraded to C from Baa2; -- Class B-2, Downgraded to C from Ba1. GREENWICH CAPITAL: Fitch Holds Low-B Ratings on Six Cert. Classes ----------------------------------------------------------------- Fitch has affirmed all classes of Greenwich Capital Commercial Mortgage Trust 2006-RR1, commercial mortgage-backed securities pass-through certificates, as: -- $429.6 million class A1 'AAA'; -- $122.3 million class A2 'AAA'; -- $16.5 million class B 'AA+'; -- $9.9 million class C 'AA'; -- $5.0 million class D 'AA-'; -- $13.2 million class E 'A+'; -- $5.8 million class F 'A'; -- $14.9 million class G 'A-'; -- $11.6 million class H 'BBB+'; -- $5.0 million class J 'BBB'; -- $6.6 million class K 'BBB-'; -- $5.0 million class L 'BB+'; -- $3.3 million class M 'BB'; -- $2.5 million class N 'BB-'; -- $3.3 million class O 'B+'; -- $0.8 million class P 'B'; -- $1.7 million class Q 'B-'; Fitch does not rate class S. GCCFC 2006-RR1 is a static CMBS resecuritization, which closed Nov. 8, 2006. Redwood Asset Management, rated 'CAM1-' by Fitch as a CDO asset manager, serves as the collateral administrator. The affirmations reflect the expected performance of the underlying collateral. The certificates are collateralized by all or a portion of 74 classes of fixed rate CMBS in 34 separate underlying transactions representing a well-diversified portfolio. Two assets, representing 1.3% of the portfolio, are below investment grade. The CDO has no exposure to assets rated below 'BB', and does not contain any first losses pieces. As of the November 2007 trustee report, the transaction has had no rating migration and has had no changes to the outstanding collateral balance since issuance. Based on Fitch's actual rating or on Fitch's internal credit assessment for those classes not rated by Fitch, the weighted average rating factor of the underlying bonds has remained stable in the 'BBB/BBB-' category since last review. The CMBS assets in the collateral pool are concentrated in the 2006 vintage (86.6%), and also contain assets from 1998 (0.5%) and 2005(13.0%) vintages. Approximately 80% of all underlying transactions have a named special servicer with a Fitch rating of 'CSS1'. Delinquencies in the underlying transactions are: 30 days (0.03%); 60 days (0.09%); 90 days or more (0.07%); foreclosure (0.33%) and REO (0.0%). The ratings of all classes address the likelihood that investors will receive full and timely payment of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. GRUSAF LLC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Grusaf, L.L.C. 211 East International Boulevard Daytona Beach, FL 32118 Bankruptcy Case No.: 07-12701 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- R.X. Realty, Inc. 07-08444 F.E.M.I. International, Inc. 07-10904 C.W.C. Construction Group, L.L.C. 07-11943 Madeira South, L.L.C. 07-12104 Type of Business: The Debtor develops condominiums. Chapter 11 Petition Date: December 21, 2007 Court: Middle District of Florida (Tampa) Judge: Michael G. Williamson Debtor's Counsel: Buddy D. Ford, Esq. 115 North MacDill Avenue Tampa, FL 33609 Tel: (813) 877-4669 Fax: (813) 877-5543 Grusaf, LLC's Financial Condition: Total Assets: $8,597,605 Total Debts: $11,215,902 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carter Electric Co. Lien $86,510 231 Jean Street Daytona Beach, FL 32114 General Electric Appliances Lien $80,314 P.O. Box 281865 Atlanta, GA 30384-1865 Tri-County Reinforcing Lien $65,463 95 port Royal Drive Palm Coast, FL 32164 Fashion Tile Services $49,570 Exotic Marble Lien Litigation $49,349 East Coast Underground Lien $47,242 Workers Temporary Staffing $38,840 Koontz Heating & Air Lien $32,039 Wiginton Fire Systems Lien $28,773 I.C.I. Paints Lien Litigation $25,488 Plummer, Inc. Lien $24,637 United Construction $20,746 A.A.A. Welding & Security Lien $20,704 Rental Service Corp Service $17,290 Volusia County Tax Col. Property Taxes $15,986 Lloyd's Exercise Equipment Purchases $12,567 Valiant Products $12,281 D.E.V.M.A.X., L.L.C. Project Management, $11,886 Acetg.,Legal Mark Dowst & Associates Lien $10,983 Planson, III Lien $10,086 GSAMP 2005-HE4: Fitch Chips Rating on $18.3MM Certs. to BB ---------------------------------------------------------- Fitch Ratings has taken these rating actions on GSAMP 2005-HE4 mortgage pass-through certificate. Affirmations total $500.7 million and downgrades total $38 million. Break Loss percentages and Loss Coverage Ratios for each class is included with the rating actions as: Series GSAMP 2005-HE4 -- $231.1 million class A-1, R-1, R-2, R-3, A-2B, A-2C affirmed at 'AAA' (BL: 69.88, LCR: 3.99); -- $57.8 million class M-1 affirmed at 'AA+' (BL: 60.04, LCR: 3.43); -- $54.9 million class M-2 affirmed at 'AA+' (BL: 50.68, LCR: 2.89); -- $37.3 million class M-3 affirmed at 'AA' (BL: 43.88, LCR: 2.51); -- $26.3 million class M-4 affirmed at 'AA-' (BL: 39.51, LCR: 2.26); -- $26.3 million class M-5 affirmed at 'A+' (BL: 35.03, LCR: / 2.00); -- $23.4 million class M-6 affirmed at 'A' (BL: 30.99, LCR: 1.77); -- $24.9 million class B-1 affirmed at 'A-' (BL: 26.63, LCR: 1.52); -- $18.3 million class B-2 affirmed at 'BBB+' (BL: 23.47, LCR: 1.34); -- $19.7 million class B-3 downgraded to 'BBB-' from 'BBB' (BL: 20.12, LCR: 1.15); -- $18.3 million class B-4 downgraded to 'BB' from 'BBB-' (BL: 17.66, LCR: 1.01). Deal Summary -- Originators: %: Fremont (49%), GS Conduit (21%); -- 60+ day Delinquency: 28.97%; -- Realized Losses to date (% of Original Balance): 1.75%; -- Expected Remaining Losses (% of Current Balance): 17.51%; -- Cumulative Expected Losses (% of Original Balance): 8.75%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. GSAMP 2007-H1: Fitch Cuts Ratings on $57.6 Million 2007-H1 Certs. ----------------------------------------------------------------- Fitch Ratings affirms $188.9 million and downgrades $57.6 million on GSAMP 2007-H1 mortgage pass-through certificate. In addition, $23.1 million is placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class is included with the rating actions as: GSAMP 2007-H1 -- $33.8 million class A-1A affirmed at 'AAA' (BL: 55.51, LCR: 2.86); -- $26.6 million class A-1B affirmed at 'AAA' (BL: 43.32, LCR: 2.23); -- $10.6 million class A-1C rated 'AAA', placed on Rating Watch Negative (BL: 41.55, LCR: 2.14); -- $33.9 million class A-2A1 affirmed at 'AAA' (BL: 55.51, LCR: 2.86); -- $8.2 million class A-2A2M affirmed at 'AAA' (BL: 55.51, LCR: 2.86); -- $24.6 million class A-2A2S affirmed at 'AAA' (BL: 55.51, LCR: 2.86); -- $61.5 million class A-2B affirmed at 'AAA' (BL: 42.27, LCR: 2.18); -- $12.4 million class A-2C rated 'AAA', placed on Rating Watch Negative (BL: 39.11, LCR: 2.01); -- $11.5 million class M-1 downgraded to 'AA-' from 'AA+' (BL: 35.19, LCR: 1.81); -- $10.6 million class M-2 downgraded to 'A+' from 'AA' (BL: 31.39, LCR: 1.62); -- $6 million class M-3 downgraded to 'A' from 'AA-' (BL: 29.15, LCR: 1.5); -- $5.6 million class M-4 downgraded to 'BBB+' from 'A+' (BL: 27.03, LCR: 1.39); -- $5.6 million class M-5 downgraded to 'BBB' from 'A' (BL: 24.85, LCR: 1.28); -- $5 million class M-6 downgraded to 'BBB-' from 'A-' (BL: 22.76, LCR: 1.17); -- $4.5 million class M-7 downgraded to 'BB' from 'BBB+' (BL: 20.70, LCR: 1.07); -- $4.2 million class M-8 downgraded to 'BB' from 'BBB' (BL: 20.03, LCR: 1.03); -- $4.4 million class M-9 downgraded to 'BB' from 'BBB-' (BL: 20.03, LCR: 1.03). Deal Summary -- Originators: Decision One (42.27%), SouthStar (29.79%); -- 60+ day Delinquency: 14.70%; -- Realized Losses to date (% of Original Balance): 0.21%; -- Expected Remaining Losses (% of Current Balance): 19.41%; -- Cumulative Expected Losses (% of Original Balance): 18.25%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. GSAMP TRUST: Moody's Junks Ratings on Three Classes of Certs. ------------------------------------------------------------- Moody's Investors Service has downgraded nine classes of certificates and placed on review for possible downgrade one class of certificates from two deals issued by GSAMP Trust in 2005. The transactions are backed by closed-end second lien loans. The projected pipeline has been continuously increasing over the past few months and is likely to affect the credit support for these certificates. Furthermore, many underlying first lien loans are likely to have pending interest rate resets, which may cause an increase in delinquencies and defaults on the second lien loans in the pool. The certificates were downgraded as the bonds' current credit enhancement levels, including excess spread, compared to the current projected losses may not be consistent with the existing ratings on the bonds. Complete rating actions are: Issuer: GSAMP Trust 2005-S1, Deal Factor 9.3% -- Cl. M-2, Downgraded to Baa2 from A2 -- Cl. B-1, Downgraded to Ca from Baa2 -- Cl. B-2, Downgraded to C from Baa3 -- Cl. B-3, Downgraded to C from Caa1 Issuer: GSAMP Trust 2005-S2, Deal Factor 9.7% -- Cl. M-2, Placed on Review for Possible Downgrade, currently A2 -- Cl. M-3, Downgraded to Ba1 from A3 -- Cl. M-4, Downgraded to Ba3 from Baa1 -- Cl. B-1, Downgraded to B1 from Baa2 -- Cl. B-2, Downgraded to Ca from Baa3 -- Cl. B-3, Downgraded to C from B2 GS MORTGAGE: Fitch Downgrades Rating on Class M-2 Certs. to B- -------------------------------------------------------------- Fitch has taken rating actions on GS Mortgage Securities Corp. mortgage pass-through certificate: GSRPM 2002-1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'A'; -- Class M-2 downgraded to 'B-/DR1' from 'BB'; -- Class B remains at 'C/DR5'; The affirmations, affecting approximately $37.5 million of the outstanding balances, are taken as a result of a satisfactory relationship of credit enhancement to expected losses. The downgrades, affecting approximately $9.3 million of the outstanding balances, are taken as a result of a deteriorating relationship between expected losses and credit enhancement. The collateral of the above transaction consists of performing and re-performing, seasoned, residential mortgage loans. As of the November 2007 distribution date, delinquencies (loans delinquent more than 60 days, inclusive of loans in foreclosure, bankruptcy, and real estate owned) are 35.65%, with losses to date of 11.31%. The above transaction is 66 months seasoned, with pool factor of 17%. GSC ABS: Moody's Junks Ratings on Two Classes of Notes ------------------------------------------------------ Moody's Investors Service has downgraded ratings of four classes of notes issued by GSC ABS CDO 2006-4u, Ltd., and left on review for possible further downgrade ratings of three of these classes of notes. The notes affected by the rating action are: Class Description: Up to $502,000,000 Class A-S1VF Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $85,000,000 Class A1 Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Class Description: $45,000,000 Class A2 Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $45,000,000 Class A3 Senior Secured Deferrable Floating Rate Notes Due 2046 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: Ca The rating actions reflect severe deterioration in the credit quality of the underlying portfolio, as well as the occurrence, as reported by the Trustee on Oct. 31, 2007, of an event of default caused by a failure of the Net Outstanding Portfolio Collateral Balance plus the balance of the Short Synthetic Security Reserve Account to be greater than or equal to the sum of the Commitment Amount plus the Aggregate Outstanding Amount of the Class A-1S1VF Notes plus the Aggregate Outstanding Amount of the Class A1 Notes, as required under Section 5.1(h) of the Indenture dated Oct. 6, 2006. GSC ABS CDO 2006-4u, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS and CDO securities. Recent ratings downgrades on the underlying portfolio caused ratings-based haircuts to affect the calculation of overcollateralization. Thus, the Net outstanding Portfolio Collateral Balance plus the balance of the Short Synthetic Security Reserve Account failed to be greater than or equal to the sum of the amounts described above. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by certain Noteholders. Because of this uncertainty, the ratings assigned to Class A-S1VF, Class A1, and the Class A2 Notes remain on review for possible downgrade. HARRAH'S ENT: Completes Regulatory Approvals on Merger Deal ----------------------------------------------------------- Harrah's Entertainment Inc. recently obtained regulatory approval from the National Indian Gaming Commission allowing the consummation of the proposed acquisition of Harrah's by affiliates of Apollo Global Management L.P. and TPG Capital to proceed while the NIGC finalizes its review. NIGC's approval completes all regulatory approvals needed to close the transaction. Harrah's previously obtained regulatory approvals from these state agencies: Nevada Gaming Commission Pennsylvania Gaming Control Board Louisiana Gaming Control Board Iowa Racing and Gaming Commission Missouri Gaming Commission Illinois Gaming Board Indiana Gaming Commission Mississippi Gaming Commission New Jersey Casino Control Commission The transaction is expected to close in early 2008. As reported in the Troubled Company Reporter on Dec. 20, 2006, Harrah's entered into a definitive agreement for affiliates of Texas Pacific Group and Apollo Management L.P. to acquire Harrah's in an all-cash transaction valued at approximately $27.8 billion, including the assumption of approximately $10.7 billion of debt. Under the terms of the agreement, Harrah's stockholders will receive $90.00 in cash for each outstanding Harrah's share. This represents a premium of approximately 36% over Harrah's closing share price on Sept. 29, 2006, the last trading day before disclosure of the initial offer made by Apollo and TPG to acquire Harrah's for $81.00 per share. About Apollo Management L.P. Based in New York, Apollo Management L.P. is a private equity L.P. firm, founded in 1990 by Leon Black. It also has offices in Los Angeles and London. It has invested over $16 billion in companies inside and outside the of the United States. About TPG Capital Headquartered in Fort Worth, Texas, TPG Capital, also known as Texas Pacific Group -- http://www.texaspacificgroup.com/-- has staked its claim on the buyout frontier. The company, which does not get involved in the day-to-day operations of the companies in which it invests, usually holds onto an investment for at least five years, although consistent moneymakers may be kept indefinitely. About Harrah's Entertainment Headquartered in Las Vegas, Nevada, Harrah's Entertainment Inc.(NYSE: HET) -- http://www.harrahs.com/-- has grown through development of new properties, expansions and acquisitions, and now owns or manages casino resorts on four continents and hosts over 100 million visitors per year. The company's properties operate under the Harrah's, Caesars and Horseshoe brand names; Harrah's also owns the London Clubs International family of casinos and the World Series of Poker. Harrah's also owns the London Clubs International family of casinos. * * * Harrah's Entertainment Inc. continues to carry Standard & Poor's "BB" long term foreign and local issuer credit ratings, which were placed in December 2006. HARRAH'S ENT: Commences Tender Offers for Conv. Debt Securities --------------------------------------------------------------- Harrah's Operating Company Inc., a subsidiary of Harrah's Entertainment Inc., is commencing cash tender offers and consent solicitations for five series of outstanding debt securities. In addition, Harrah's Operating and Harrah's Entertainment are commencing a cash tender offer and consent solicitation for one series of outstanding convertible debt securities. The tender offers and consent solicitations are being conducted in connection with the previously announced agreement of Harrah's Entertainment to be merged with an affiliate of Apollo Global Management LLC and TPG Capital LP. Completion of the tender offers and consent solicitations is not a condition to completion of the merger. However, each tender offer and consent solicitation is itself subject to the satisfaction of certain conditions, including the satisfaction of the conditions precedent to the merger as stated in the agreement and plan of merger dated as of Dec. 19, 2006, by and among Harrah's Entertainment, Hamlet Holdings LLC and Hamlet Merger Inc., and the receipt of consents of the noteholders representing a majority of the outstanding principal amount of each series of the securities. The consent solicitation with respect to each series of securities is not conditioned upon receipt by the company of the requisite consent for any other series of securities. If Harrah's Operating and, in the case of the convertible debt securities, Harrah's Entertainment, make a material change in the terms of any offer or consent solicitation or the information concerning any offer or consent solicitation, they will then disseminate additional offering materials and extend such offer or, if applicable, consent solicitation, to the extent required by law. Debt Securities The tender offers and consent solicitations with respect to the $250,000,000 principal amount outstanding of Senior Floating Rate Notes due 2008 (CUSIP No. 413627AR1) and the other notes will expire at 8:00 a.m., New York City time, on Jan. 23, 2008, unless extended or earlier terminated by Harrah's Operating. In order to be eligible to receive the total consideration, which includes the consent payment, holders must validly tender, and not validly withdraw, their Debt Securities prior to 5:00 p.m., New York City time on Jan. 7, 2008, unless extended or earlier terminated by Harrah's Operating. Holders tendering their Debt Securities after the applicable Consent Payment Deadline but prior to the applicable Expiration Date will be eligible to receive an amount equal to the tender offer consideration, which is the total consideration less the consent payment. Debt Securities purchased in the tender offers will be paid for on the applicable payment date for each tender offer, which, assuming the tender offers are not extended, is expected to be promptly after the applicable Expiration Date. Payment for Debt Securities validly tendered and accepted will include accrued and unpaid interest to, but not including, the applicable payment date. Tenders of debt securities prior to the Consent Payment Deadline may be validly withdrawn and consents may be validly revoked at any time prior to the Consent Payment Deadline, but not thereafter. Accordingly, tenders of Debt Securities and the related consents delivered after the Consent Payment Deadline will be irrevocable. The tender offer consideration for the Floating Rate Notes (CUSIP No. 413627AR1; ISIN No. US413627AR15) is $970, and the total consideration for the Floating Rate Notes is $1,000, in each case for each of the $1,000 principal amount of the Floating Rate Notes tendered and accepted for purchase, pursuant to the tender offers. The consent payment included in the total consideration for the Floating Rate Notes is $30.00 for each $1,000 principal amount of the Floating Rate Notes validly tendered and not validly withdrawn prior to the Consent Payment Deadline. The total consideration for each $1,000 principal amount of the remaining series of Debt Securities validly tendered and not validly withdrawn pursuant to the tender offers is the price equal to: (i) the sum of: (a) the present value, determined in accordance with standard market practice, on the payment date for purchased Debt Securities of $1,000 on the applicable maturity date for the Debt Securities; plus (b) the present value on the scheduled payment date for purchased Debt Securities of the interest that would be payable on, or accrue from, the last interest payment date prior to such scheduled payment date until the applicable maturity date for the Notes, in each case determined on the basis of a yield to such maturity date equal to the sum of: (A) the yield to maturity on the applicable U.S. Treasury Security, as calculated by Citi, as lead dealer manager, in accordance with standard market practice, based on the bid-side price of such reference security as of 2:00 p.m., New York City time, on Jan. 8, 2008, unless modified by Harrah's Operating in its sole discretion, as displayed on the page of the Bloomberg Government Pricing Monitor or any recognized quotation source selected by Citi in its sole discretion if the Bloomberg Government Pricing Monitor is not available or is manifestly erroneous; plus (B) the Applicable Spread, minus (ii) accrued and unpaid interest to, but not including, the scheduled payment date. Holders tendering their Debt Securities will be required to consent to the proposed amendments to the indentures governing the Debt Securities, which would eliminate or make less restrictive substantially all of the restrictive covenants, as well as certain events of default and related provisions, in the indentures. The tender offers and consent solicitations are being made pursuant to the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated December 21, 2007 for the Debt Securities and the related Letter of Transmittal and Consent (the "Debt Securities Offer to Purchase"). Convertible Debt Securities Concurrent with the tender offers and consent solicitations for the Debt Securities, Harrah's Operating and Harrah's Entertainment are separately commencing a cash tender offer and consent solicitation with respect to the $375,000,000 principal amount outstanding of Floating Rate Contingent Convertible Senior Notes due 2024 of Harrah's Operating (CUSIP No. 127687AA9; CUSIP No. 127687AB7; ISIN No. US127687AB73; ISIN No. US127687AA90). The tender offer and consent solicitation with respect to the Convertible Debt Securities will expire at 8:00 a.m., New York City time, on Jan. 23, 2008, unless extended or earlier terminated by Harrah's Operating and Harrah's Entertainment. The consideration for each $1,000 principal amount of Convertible Debt Securities validly tendered and not validly withdrawn pursuant to the tender offer and consent solicitation is $1,379.52, plus accrued and unpaid interest to, but not including, the payment date, which is expected to be promptly after the expiration date. Holders tendering their Convertible Debt Securities will be required to consent to the proposed amendments to the indenture governing the Convertible Debt Securities, which would eliminate or make less restrictive substantially all of the restrictive covenants, as well as certain events of default and related provisions, in the indenture. The tender offer and consent solicitation is being made pursuant to the terms and conditions stated in the Offer to Purchase and Consent Solicitation Statement dated Dec. 21, 2007 for the Convertible Securities and the related Letter of Transmittal and Consent. Harrah's Operating and Harrah's Entertainment have retained Citi to act as lead dealer manager in connection with the tender offers and consent solicitations. Questions about the tender offers and consent solicitations may be directed to Citi at (800) 558-3745 (toll free) or (212) 723-6106 (collect). Copies of the Offer Documents and other related documents may be obtained from Global Bondholder Services Corporation, the information agent for the tender offers and consent solicitations, at (866) 924-2200 (toll free) or (212) 430-3774 (for banks and brokers only). About Apollo Management L.P. Based in New York, Apollo Management L.P. is a private equity L.P. firm, founded in 1990 by Leon Black. It also has offices in Los Angeles and London. It has invested over $16 billion in companies inside and outside the of the United States. About TPG Capital Headquartered in Fort Worth, Texas, TPG Capital, also known as Texas Pacific Group -- http://www.texaspacificgroup.com/-- has staked its claim on the buyout frontier. The company, which does not get involved in the day-to-day operations of the companies in which it invests, usually holds onto an investment for at least five years, although consistent moneymakers may be kept indefinitely. About Harrah's Entertainment Headquartered in Las Vegas, Nevada, Harrah's Entertainment Inc.(NYSE: HET) -- http://www.harrahs.com/-- has grown through development of new properties, expansions and acquisitions, and now owns or manages casino resorts on four continents and hosts over 100 million visitors per year. The company's properties operate under the Harrah's, Caesars and Horseshoe brand names; Harrah's also owns the London Clubs International family of casinos and the World Series of Poker. Harrah's also owns the London Clubs International family of casinos. * * * Harrah's Entertainment Inc. continues to carry Standard & Poor's "BB" long term foreign and local issuer credit ratings, which were placed in December 2006. HELLER SBA: Fitch Affirms 'BB' Rating on Class B Certificates ------------------------------------------------------------- Fitch Ratings has affirmed these Heller SBA Pass-Through Adjustable Rate Certificates: Series 1998-1: -- Class X at 'AAA'; -- Class A at 'AAA'; -- Class M-1 at 'AA'; -- Class M-2 at 'A'; -- Class M-3 at 'BBB'; -- Class B at 'BB'. The affirmations are due to stable performance since Fitch's last rating action on Nov. 22, 2006. The transaction has seen a slight uptick in delinquencies, but the pace of net losses has slowed down as no new net losses have been realized since the last action. Furthermore, credit enhancement for the certificates is sufficient at their current rating levels. HOUGHTON INT'L: Moody's Withdraws Ratings After Sale ---------------------------------------------------- Moody's Investors Service withdrew Houghton International, Inc.'s corporate family rating and issue ratings following the acquisition of the company by an affiliate of AEA Investors LLC. The rated debt was repaid upon closing of the acquisition on Dec. 19, 2007. The ratings actions are: - Ratings withdrawn: Houghton International, Inc. -- Corporate family rating -- B2 -- Probability of default rating -- B2 -- $90mm Gtd Sr Sec Term Loan due 2011, B2 -- $25mm Gtd Sr Sec Revolving Credit Facility due 2010, B2 Houghton is a closely-held specialty chemicals manufacturer and services firm headquartered in Valley Forge, Pennsylvania, with a focus on metalworking fluids and chemical management services. Revenues were $503 million for LTM ended Sept. 30, 2007. HOVNANIAN ENT: Posts $469 Mil. Net Loss in 4th Qtr. Ended Oct. 31 ----------------------------------------------------------------- Hovnanian Enterprises Inc. reported results for its fourth quarter and fiscal year ended Oct. 31, 2007. Including the effect of the company's accounting interpretation of FAS 109, the company reported an after tax loss of $469 million for the final three months of fiscal 2007, compared with a net loss of $118 million in the fourth quarter of fiscal 2006. For the full year, the company reported an after tax loss of $638 million, compared with net income of $139 million in fiscal 2006. Total revenues were $4.8 billion for fiscal 2007, a decrease of 21.9% compared to last year. Fourth quarter revenues were $1.4 billion for fiscal 2007, down 20.3% from last year's fourth quarter. Excluding unconsolidated joint ventures, the company delivered 13,564 homes with an aggregate sales value of $4.6 billion in fiscal 2007, down 24.4% from 17,940 home deliveries with an aggregate sales value of $5.9 billion in fiscal 2006. In the fourth quarter, the company delivered 3,969 homes with an aggregate sales value of $1.3 billion in fiscal 2007, a decline of 22.0% in sales value from the fourth quarter in fiscal 2006. The company generated $376 million of positive cash flow from operations during the fourth quarter of fiscal 2007. Excluding land-related and intangible charges, the company reported a pretax loss of $21 million for the twelve month period. For the fourth quarter, the pretax loss excluding land-related and intangible charges was $30 million. Including all land-related and intangible charges, the company reported a pre-tax loss of $647 million for the full year and $413 million for the fourth quarter. During the fourth quarter of fiscal 2007, the company incurred a total of $383 million of pretax charges including land impairments of $168 million, intangible impairments of $78 million and write- offs of predevelopment costs and land deposits of $105 million, as well as $32 million representing its equity portion of write-offs and impairment charges in unconsolidated joint ventures. Similar charges in the fourth quarter of fiscal 2006 totaled $322 million. For the full year, the company recognized pre-tax charges totaling $626 million, including $332 million related to land impairments, $135 million of charges associated with intangible impairments, write-off of predevelopment costs and land deposits of $126 million and $33 million representing its equity portion of write-offs and impairment charges in unconsolidated joint ventures. Similar charges in fiscal 2006 totaled $343 million. FAS 109 Non-Cash Tax Charge After a recent consultation with its auditors and the company's own research regarding the application of FAS 109, the company concluded it should book a $216 million after-tax non-cash valuation allowance during its fourth quarter by recording a reserve of that amount against its deferred tax assets. The FAS 109 charge was for GAAP purposes only. For tax purposes, the tax deductions associated with the company's deferred tax assets may be carried forward for 20 years. Total Debt The company reduced its total debt outstanding by $390 million from the end of the third quarter, leaving $207 million drawn on its $1.5 billion revolving credit facility after repayment of $140 million of 10-1/2% senior notes that matured in October and were discharged early in August. The company's average ratio of net recourse debt to capital for the year was 56.3% and the ratio was 61.4% at year end. Excluding the impact of the FAS 109 charge, the company's ratio of net recourse debt to capital at year end would have been 57.8%. Comments from Management "Considering the challenging market conditions that homebuilders are continuing to face, we are pleased to have exceeded our expectations for cash generation in the fourth quarter and to have paid down our debt levels more than we projected," commented Ara K. Hovnanian, president and chief executive officer of the company. "We are focused on generating cash and strengthening our balance sheet by reducing both our debt and inventory levels while at the same time reducing our operating costs and overhead costs to prevent further contraction in our margins. We are continuing to carefully manage our land development expenditures and generate cash by delivering significantly more lots under homes than the number of lots we are purchasing," stated Mr. Hovnanian. "We have reduced our total land position 47% from the peak in April of 2006, and we expect to see this come down even further during fiscal 2008," said J. Larry Sorsby, executive vice president and chief financial officer. "In addition, a significant portion of our remaining lot option contracts are in markets that have been less impacted by the housing slowdown, including more than 6,500 lots in Texas and about 4,400 lots in North Carolina. The vast majority of the remaining lot option position, which includes about 7,700 lots in the Northeast and 8,500 in the Washington D.C. market, have been renegotiated in price, terms or both, such that they remain economically viable even in today's market conditions." "Our bank group provided a waiver under our $1.5 billion revolving credit facility as of Oct. 31, 2007, for the covenants related to tangible net worth that were impacted by the non-cash FAS 109 tax charge," Mr. Sorsby said. "We have strong, longstanding relationships with many of the banks in our revolving credit facility, and we have initiated discussions with the bank group to further modify our covenants with respect to future periods. Based on our initial discussions, we believe that we will be able to successfully negotiate changes that are needed to the credit agreement to adjust for the change in tax treatment, as well as to provide us with adequate operating room as we manage through the remainder of the current housing slowdown. We expect to close the amendment in January," Mr. Sorsby said. "We remain focused on strengthening our balance sheet," Mr. Sorsby continued. "We intend to use cash that we generate during fiscal 2008 to enhance our liquidity and further reduce our net outstanding debt. We anticipate increasing our bank borrowings modestly in the first half of the year, with reductions weighted towards the second half of the year, which follows our typical seasonal pattern. Also, as a result of restrictions in the indentures governing our senior and senior subordinated notes, we will not pay dividends on our Series A Preferred Stock during fiscal 2008," Mr. Sorsby concluded. Balance Sheet As of Oct. 31, 2007, the company's consolidated balance sheet showed $4.54 billion in total assets, $3.16 billion in total liabilities, $62.2 million in minority interest from inventory not owned, $1.5 million in minority interest from consolidated ventures, and $1.32 billion in total stockholders' equity. About Hovnanian Enterprises Headquartered in Red Bank, New Jersey, Hovnanian Enterprises Inc. (NYSE: HOV) -- http://www.khov.com/-- is a homebuilder with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. Hovnanian is a member of the Public Home Builders Council of America -- http://www.phbca.org/-- a nonprofit group devoted to improving understanding of the business practices of America's largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA's 14 member companies build one out of every five homes in the United States. * * * As reported in the Troubled Company Reporter on Aug. 30, 2007, Fitch Ratings downgraded Hovnanian Enterprises Inc.'s ratings including the company's Issuer Default Rating to BB- from BB+. The Rating Outlook remains Negative. INERGY LP: Moody's Revises Outlook on Improved Financial Profile ---------------------------------------------------------------- Moody's Investors Service changed Inergy, L.P.'s ratings outlook to positive from stable and affirmed the company's Ba3 corporate family, Ba3 probability of default rating, the B1 and LGD 4 (66%) ratings on the senior unsecured notes, and its SGL-3 speculative grade liquidity ratings. Moody's does not rate the company's $425 million senior secured revolving credit facilities ($350 million acquisition facility and $75 million working capital facility) or the company's general partner, Inergy Holdings L.P. The positive outlook is supported by the improvement in its financial profile largely due to the reduction in financial leverage (as measured by Debt / EBITDA including NRGP's $32 million of debt that is supported by its equity distribution interest in NRGY). This improvement in leverage was achieved through a combination of a common equity offering that was used to repay revolver borrowings and the company's growth of earnings and cash flows driven largely by acquisitions over the past year. These events brought the company's leverage to approximately 3.5x at the end of Sept. 30, 2007, which is in-line with Ba3 rated MLP companies and should improve through 2008. While Moody's expects Inergy to remain a consolidator in the fragmented propane industry, the positive outlook assumes the company will fund those acquisitions with sufficient equity so as to maintain it its trajectory of lower leverage that is more in-line with a higher rating. The positive outlook also considers Inergy's continued diversification strategy into the midstream arena which provides the company with growth of its more durable fee-based earnings and cash flows that also help with the seasonality of its propane cash flows. Inergy recently acquired Arlington Storage Corporation, LLC a 55% majority shareholder and operator of Steuben Gas Storage Company which owns the Adrian Storage Facility, a 6.2 Bcf natural gas storage facility based in Steuben, New York. ASC also owns full development rights to the Thomas Corner natural gas storage facility, a potential 5.7 Bcf natural gas storage development also located in Steuben County, New York. The assets are complementary to Inergy's current midstream portfolio comprised of Bath and Stagecoach natural gas storage facilities. In addition to the Northeast storage operations, Inergy operates a West Coast midstream portfolio based in Bakersfield area of California comprising of: 1) An NGL fractionation plant, 2) Five NGL storage facilities, 3) NGL transporting and terminaling facilities 4) NGL product pipelines. Both the Northeast and West Coast facilities are currently undergoing major expansion and development plans and after completion in 2010, Inergy is poised to become one of the largest natural gas storage operators in Northeastern US with about 30% to 40% of its consolidated EBITDA expected to be generated from the midstream segment. The Ba3 corporate family rating is supported by the company's increased scale based on asset size, which is in-line with other Ba3 rated MLP propane peers. However, with completion of expansion projects at the Northeast storage facilities and West Coast NGL facilities, NRGY's pro-forma scale is expected to be on the higher end of the Ba3 MLP Propane ratings universe. The company's expansion into the midstream sector provides durable fee-based recurring earnings to offset the seasonal cash flows from propane operations, providing NRGY greater diversification than some of its similarly rated peers, though somewhat offset by its larger wholesale business which carries lower margins. The company's average profitability and returns, leverage, and expected cash flow coverage of interest, cash distributions, and capital spending are also in line with the other Ba rated propane companies. Moody's expect Inergy to remain acquisitive while the highly fragmented propane distribution industry heads towards consolidation, however, the Ba3 rating is supportive of future acquisitions as long as sufficient equity financing is provided. The Ba3 also assumes that retail propane margins will have rebounded from the impact of the run-up in propane prices in the last quarter and are back in-line with industry average levels. The affirmation of NRGY's SGL-3 rating reflects Moody's expectation of adequate liquidity over the next four quarters. The SGL-3 rating is supported by the expectation that internal cash flows will cover the majority of budgeted maintenance capital expenditures, interest payments, working capital requirements, and cash distributions to unit holders; sufficient cushion under facility covenants; and ample availability under the revolving credit facilities. The SGL-3 rating continues to be tempered by the company's need to distribute all of its free cash flow to the Master Limited Partnership unit holders; significant scale of organic projects which may require some funding under the credit facilities assuming no equity offerings; the seasonality of the propane business which requires use of the credit facilities during inventory build up and subsequent receivable collections. The credit facilities are secured by all Inergy's assets leaving no alternate sources of readily available liquidity. The ratings could be positively impacted by greater scale, regional, and cash flow diversification while maintaining leverage as measured by fully-adjusted Debt / EBITDA within the 3.0x range. Successful execution and integration of the company's organic growth projects at levels the company has indicated both from a funding as well as an operating perspective, specifically the West Coast, Bath and Thomas corners expansion plans, would also be credit accretive as long as leverage remains within the parameters listed above. While the company's continued expansion into the more durable fee based midstream business would be considered a credit positive if it fits into the current asset base and strategy and is funded with ample equity. However, taking on more margin based processing side of the midstream business would be viewed as less supportive. The outlook may face downward pressure if the company cannot meet its guidance on successful on-time and on-budget completion of the West Coast expansion plans which can delay the related cashflows and possibly push leverage higher than expected. Also, the outlook and ratings could face negative pressure if the company fails to consistently keep leverage within the 3.5x-4.0x range. Current outlook can be impeded if post West Coast expansion funds from operations does not appear to be covering maintenance capex, interest, and distributions in excess of 100%; or if management's strategy is diverted away from the durable contract storage business to more speculative marketing activities. Failure to restore margins while propane retail industry is facing stiffer competition and possibilities of consolidation can also put downward pressure on the current outlook/rating. The outlook / ratings can also be strained if future acquisitions are not adequately funded with equity. Inergy, L.P., headquartered in Kansas City, Missuori, is a publicly traded master limited partnership that owns and operates one of the largest geographically diverse retail and wholesale propane supply, marketing, and distribution businesses in the United States. Additionally, NRGY owns and operates a natural gas storage facility located approximately 150 miles northwest of New York City and a natural gas liquids business located near Bakersfield, California. INTERNATIONAL POWER: Fitch Holds 'BB' Issuer Default Rating ----------------------------------------------------------- Fitch Ratings has affirmed International Power plc's Long-term Issuer Default Rating at 'BB' with Stable Outlook. IPR is a UK holding company for a portfolio of international power assets. The ratings reflect IPR's relatively conservative debt levels and management's prudent approach to expansion of the business and to financing. Unlike several of its peers, IPR has not aggressively pursued double leverage - the use of holding company debt to fund the "equity" in subsidiaries, associates or joint ventures which are, themselves, predominantly debt- funded. The Stable Outlook reflects Fitch's expectation that management will maintain its prudent acquisition and financing strategy. Since the last credit review, IPR has enlarged its engagement in renewable energy sources with its acquisition of Levanto, Maestrale and Schkortleben wind farm portfolios. Further acquisitions included the oil-fired OCGT Indian Queens peaking plant in Cornwall, England and the purchase of the 50% remaining stake in a partnership with Energy Australia. IPR also strengthened its cooperation with Mitsui by creating a common ownership platform for its UK assets in June 2007. Debt finance at the subsidiaries is of non-recourse nature to IPR and almost all of the group's assets are project-financed. For groups financed in this manner, Fitch focuses on debt and cash- flows at the holding company rather than for the consolidated group, since the holding company has limited access to the subsidiaries' assets other than the dividends and has no, or limited, liability associated with the subsidiaries' debts. INTERTAPE POLYMER: Debt Reduction Prompts S&P to Upgrade Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Intertape Polymer Group Inc. including its corporate credit rating to 'B' from 'B-'. The outlook is stable. S&P also raised its rating on Intertape's senior secured first- lien credit facilities, consisting of a $117 million term loan due 2011 and a $60 million revolving credit facility due 2009, to 'BB- ' from 'B-', and revised the recovery rating to '1' from '3'. This indicates S&P's expectation of very high recovery (90%-100%) in the event of a payment default. In addition, S&P raised its issue rating on Intertape's senior subordinated notes to 'CCC+' from 'CCC'. S&P removed all ratings from CreditWatch with positive implications where they were placed on Sept. 10, 2007, following an improvement in second-quarter earnings, and the company's plan for a rights equity issue and a paydown of debt. As of Sept. 30, 2007, total debt (adjusted for capitalized operating leases and underfunded retiree benefits) was $288 million. "The upgrade reflects a meaningful reduction in debt and the continuation of a recent trend of improvement in operating earnings," said Standard & Poor's credit analyst Paul Kurias. Debt declined during the third quarter of 2007 after the paydown of debt, utilizing approximately $60 million from proceeds of the equity rights issue. Earnings for the quarter improved on a sequential basis, partly reflecting the continuing impact of recent management actions to reduce fixed costs. As a result, credit metrics including the ratio of funds from operations to total debt improved to about 12% as of Sept. 30, 2007, from about 2% in the previous quarter. Standard and Poor's expectations is that the earnings improvement is sustainable, and that there will be no meaningful increase in debt. S&P also expects the company to maintain adequate liquidity levels and maintain sufficient cushion under its covenants. The improvement in earnings and lower debt addressed S&P's concerns on liquidity and leverage, following a decline in earnings in the third quarter of 2006, and subsequent issues with covenant compliance. The ratings reflect the company's vulnerable business position, including its limited scope of operations in the tapes niche of the North American packaging sector, a small presence in films, low margins with some volatility in earnings, vulnerability to cyclical end markets including to some extent the currently weak housing market, and a highly leveraged financial profile. The company's fair position in its market niches, breadth of customer base, and positive long-term growth prospects for industrial tape demand in North America are mitigating factors. With annual sales of approximately $800 million, the company is a manufacturer of tapes, engineered coated products, and films. KINGSWAY LINKED: LROC Preferred Units' Rating Cut by S&P to BB+ --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the LROC preferred units of Kingsway Linked Return of Capital Trust. The lowering of these ratings mirrors the lowering of the Kingsway ROC GP's senior unsecured 10-year note to which the issue of LROC preferred units is linked. Ratings Lowered Kingsway Linked Return of Capital Trust Rating ------ Class To From ----- -- ---- LROC preferred units Canadian national scale P-3(high) P-2(low) Global scale: BB+ BBB- L-3 COMMS: Good Performance Cues Moody's to Revise Outlook ---------------------------------------------------------- Moody's Investors Service affirmed all ratings of L-3 Communications Holdings, Inc. and L-3 Communications Corporation, including the Ba2 Corporate Family Rating and Ba3 unsecured notes rating, and changed the outlook to positive from stable. The company has a Speculative Grade Liquidity Rating of SGL-1. The change in outlook was prompted by recognition of L-3's continued strong operating performance and expectations of robust free cash flow generation over the near term. With the growth and improving operating results, credit metrics have improved substantially. Moody's believes that the company's credit profile will continue to improve over the near term, despite recently announced increases in share repurchase activity. The Ba2 Corporate Family rating continues to reflect L-3's sizeable revenue base and backlog, as well as the company's increasing lead position in a variety of segments in the U.S. Government (predominantly DoD) contracting sector, which supports expectations for strong free cash generation over the next few years. However, the rating also takes into consideration L-3's continued heavy debt levels, which have not changed materially over the past few years despite strong cash generation. Leverage, however, has been reduced substantially through operational improvements. While many rating factors would suggest a higher rating than the current Ba2, uncertainty about the company's commitment to debt reduction and risks associated with potential acquisitions remain a concern. The positive outlook reflects Moody's expectations that L-3 will continue to grow its revenue base in 2008 through organic growth as well as through continued use of acquisitions. However, L-3's acquisition pace is expected to moderate over the next few years, suggesting a more focused approach on creating value from its existing business lines rather than from opportunistic acquisition patterns exhibited by the company until recently. Moody's further expects that the company will be able to achieve growth while maintaining operating margins in the 10% range, likely resulting in substantial free cash flows. Although such cash flows should provide the company with the ability to repay substantial amounts of debt, Moody's believes that the company is not likely to do so to a great extent, as it will instead balance the use of cash between share repurchases and acquisition opportunities. L-3 has stated its intention to fund the share repurchase program through cash flow generated from operations rather than through use of additional borrowings. Ratings may be upgraded if the company continues to maintain current credit metrics during 2008, while pursuing a measured pace of share repurchases as outlined in its plan through this period. Ratings would be subject to downward pressure if the company were to undertake an increased pace of levered acquisitions, or pursue other leveraging transactions that increased the company's risk profile, resulting in leverage in excess 4.5 times, EBIT/Interest below 2.5 times, or free cash flow below 7% of total debt. These ratings have been affirmed/revised: - Issuer: L-3 Communications Corporation -- Senior Subordinated Regular Bond/Debenture at Ba3 (LGD4- 67%) - Issuer: L-3 Communications Holdings, Inc. -- Senior Unsecured Conv./Exch. Bond/Debenture at Ba3 (LGD4- 67%) Outlook Actions: - Issuer: L-3 Communications Corporation -- Outlook, Changed To Positive From Stable -- Issuer: L-3 Communications Holdings, Inc. -- Outlook, Changed To Positive From Stable Headquartered in New York City, L-3 Communications is a prime system contractor in aircraft modernization and maintenance, C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems and government services. L-3 is also a leading provider of high technology products, systems and subsystems LAKE AT LAS VEGAS: Moody's Cuts Corporate Family Rating to Caa3 --------------------------------------------------------------- Moody's Investors Service lowered the corporate family ratings of these three land developers to Caa3 from Caa1: Ginn-LA CS Borrower, LLC; LBREP/L SunCAL Master I, LLC; and Lake at Las Vegas Joint Venture, together with the co-borrowers of each entity. The rating outlooks for the three remain negative, and the ratings of Ginn are taken off review for downgrade. The downgrades of the three land developers reflect the substantially slower than expected absorption rates of lots, which is expected to continue at least until 2009; negative cash flow generation; covenant compliance difficulties; and the likelihood that the appraisals underpinning the ratings will be declining steadily going forward. These ratings were affected: -- Ginn-LA CS Borrower, LLC and Ginn-LA Conduit Lender, Inc.: -- Corporate family rating lowered to Caa3 from Caa1 -- Probability of default rating lowered to Caa3 from Caa1 -- Rating on 1st lien bank credit facility lowered to Caa2 (LGD3,40) from B3 (LGD3,37%) -- Rating on 2nd lien bank credit facility lowered to Ca (LGD6,91) from Caa3 (LGD5, 88%) LBREP/L SunCAL Master I, LLC: -- Corporate family rating lowered to Caa3 from Caa1 -- Probability of default rating lowered to Caa3 from Caa1 -- Rating on 1st lien bank credit facility lowered to Caa2 (LGD3,30) from B2 (LGD3,31%) -- Rating on 2nd lien bank credit facility lowered to Ca (LGD5,76) from Caa2 (LGD5, 77%) Lake at Las Vegas Joint Venture and LLV-1, LLC: -- Corporate family rating lowered to Caa3 from Caa1 -- Probability of default rating lowered to Caa3 from Caa2 -- Rating on 1st lien bank credit facilities lowered to Caa3 (LGD3,37) from Caa1(LGD3,33%) Ginn-LA CS Borrower, LLC and Ginn-LA Conduit Lender, Inc. were formed in 2006 by affiliates of Lubert Adler funds and the Ginn Companies to acquire and develop four resort or private club projects in Grand Bahama Island, Naples and Port St. Lucie, Florida and Boone, N.C. LBREP/L SunCal Master I, LLC is a single-purpose entity formed by affiliates of SunCal Companies and Lehman Real Estate to acquire and develop four master planned communities encompassing a total of 11,702 lots on 5,452 acres located in Southern California. The communities being developed are located in Kern County, Ventura County, and Riverside County. Headquartered in Las Vegas, Nevada, Lake at Las Vegas Joint Venture and its co-borrower, LLV-1, LLC, own and operate the Lake Las Vegas Resort, a 3592-acre master planned residential and resort destination located 17 miles east of the Las Vegas strip. LANDRY'S RESTAURANTS: Posts $4.3 Mil. Net Loss in 3rd Quarter 2007 ------------------------------------------------------------------ Landry's Restaurants, Inc. disclosed its earnings for the third quarter ended Sept. 30, 2007. The company reported a net loss of $4.3 million for the quarter ended Sept. 30, 2007, compared to a net loss of $29.9 million for the same quarter last year. Revenues from continuing operations for the three months ended Sept. 30, 2007, totaled $301.9 million, compared to $287.2 million a year earlier. Net loss from continuing operations for the quarter was $3.2 million, compared to $6.0 million reported last year. During the three months ended Sept. 30, 2007, the company entered into a settlement agreement with its note holders whereby the interest rate on the $400.0 million Senior Notes increased from 7.5% to 9.5%, effective Aug. 29, 2007 which will increase pre-tax interest expense by $8.0 million annually. In addition, the company refinanced the Golden Nugget in June 2007, resulting in higher outstanding borrowings and associated interest expense. The impact of these items on the three months ended Sept. 30, 2007 was approximately $4.0 million after tax. Impairment charges of $3.6 million after tax were included in the comparable period in the prior year. Same store sales for the company's restaurants were approximately 1% for the quarter. The three months ended Sept. 30, 2007 also includes a number of non-recurring costs associated with the exchange of its 7.5% Senior Notes for 9.5% Senior Exchange Notes. These costs include the write off of deferred financing, consent and commitment fees of $8.4 million after-tax. In addition, as a result of exchanging the Senior Notes, two interest rate swap agreements with a notional value of $100.0 million previously qualifying for hedge accounting, along with a new interest rate swap agreement related to the $120.0 million delayed draw term loan are not designated as hedges, and the $1.9 million after tax, decrease in the fair market value of these agreements is now recorded as a non-cash expense in the financial statements. Revenues from continuing operations for the nine months ended Sept. 30, 2007, totaled $896.7 million, compared to $849.6 million a year earlier. Net earnings from continuing operations for the nine months were $28.2 million, compared to $29.6 million reported last year. Earnings per share from continuing operations for the nine months were $1.38, compared to $1.34 in the prior year. Included in earnings from continuing operations for the nine months ended Sept. 30, 2007, are gains on property sales and investments of approximately $13.0 million after-tax, offset by costs associated with refinancing the Golden Nugget and the Senior Notes of approximately $12.8 million and approximately $1.9 million related to interest rate swaps not designated as hedges. Impairment charges of $3.6 million after tax were included in the comparable period in the prior year. As a result of our 2006 sale of 120 Joe's Crab Shack restaurants and closure of certain additional locations, the results of operations for these restaurants are reflected as discontinued operations in the company's financial statements. The loss from discontinued operations, net of taxes, for the quarter was $1.1 million compared to a loss of $35.9 million in the prior year. The 2006 loss includes impairment and store closing charges of $34.6 million, after tax. Therefore, the consolidated net loss for the quarter was $4.3 million, compared to a net loss of $30.0 million in 2006. The loss from discontinued operations, net of taxes, was $3.5 million for the nine months ended Sept. 30, 2007 as compared to a loss of $43.0 million for the prior year and the consolidated net income (loss) for such periods were $24.7 million and ($13.4) million, respectively. "Our higher-end restaurant concepts and our hospitality and gaming businesses performed well in the third quarter, despite a difficult operating environment," Rick H. Liem, Executive Vice President and Chief Financial Officer stated. "We look forward to continuing our strategy of concentrating on these businesses. Furthermore, we anticipate refinancing the Landry's debt prior to the fourth quarter of 2008 due to the put provisions under the New Notes. We will monitor the credit markets for an appropriate entry point." At Sept. 30, 2007, the company's balance sheet showed total assets of $1.5 billion and total liabilities of $1.1 billion, resulting in a total stockholders' equity of $355.3 million. Equity, at Dec. 31, 2006, was $494.7 million. Headquartered in Houston, Texas, Landry's Restaurants Inc. (NYSE: LNY) -- http://www.landrysrestaurants.com/-- is a diversified restaurant hospitality and entertainment company principally engaged in the ownership and operation of full-service, casual dining restaurants, primarily under the names of Rainforest Cafe, Saltgrass Steak House, Landry's Seafood House, The Crab House, Charley's Crab and The Chart House. Its portfolio of restaurants consists of an array of formats, menus and price points that appeal to a wide range of markets and customer tastes. It offers concepts ranging from upscale steak and seafood restaurants to casual theme-based restaurants. The company is also engaged in the ownership and operation of select hospitality businesses, including hotel and casino resorts that provide dining, leisure and entertainment experiences. * * * As reported in the Troubled Company Reporter on Dec. 21, 2007, Moody's Investors Service assigned a negative outlook and confirmed all debt ratings for Landry's Restaurants Inc., including its B2 corporate family rating; B2 Probability of default rating; $300 million senior secured revolving credit facility, due Dec. 28, 2009 rated Ba2, 14%, LGD2 (previously 7%, LGD1); and $400 million, guaranteed senior global notes, due Dec. 15, 2014 rated B3, 75%, LGD5 (previously 70%, LGD5). LB-UBS: S&P Affirms Ratings on 24 Classes of Certificates --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 24 classes of commercial mortgage pass-through certificates from LB- UBS Commercial Mortgage Trust 2004-C6. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Nov. 19, 2007, remittance report, the collateral pool consisted of 94 loans with an aggregate trust balance of $1.312 billion, compared with the same number of loans totaling $1.347 billion at issuance. Fourteen percent of the trust represents defeased collateral. The master servicer, Wachovia Bank N.A., reported financial information for 99% of the nondefeased loans. Ninety-eight percent of the servicer-provided information was full-year 2006 or more recent data. Using this information, Standard & Poor's calculated a weighted average debt service coverage of 1.83x, up from 1.63x at issuance. All the loans in the pool are current, and there are no loans with the special servicer. To date, the trust has not experienced any losses. The top 10 exposures secured by real estate have an aggregate outstanding balance of $714.4 million (54%) and a weighted average DSC of 1.87x, up from 1.84x at issuance. The fifth- and 10th- largest loans are on the watchlist and are discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures and all of the properties were characterized as "good." Credit characteristics for three of the top 10 loans and two other loans are consistent with those of investment-grade obligations, and the seventh-largest loan is no longer consistent with those of investment-grade obligations. Details of the loans in the top 10 are: -- The largest exposure in the pool, Northshore Mall ($208.1 million, 16%), is secured by a fee and leasehold interest in 808,380 sq. ft. of a 1.7 million-sq.-ft. super regional mall in Peabody, Massachusetts. Northshore Mall is undergoing a three-phase renovation, which will replace the Macy's anchor with a Nordstrom's anchor. The master servicer reported a DSC of 2.53x and 87% occupancy as of June 30, 2007. The reported DSC is based on a partial interest-only period. Including amortization, the adjusted DSC is 2.25x. Standard & Poor's underwritten net cash flow (NCF) is comparable to its level at issuance. -- The second-largest exposure in the pool, the Westfield North Bridge loan, has a trust balance of $136.7 million (10%) and a whole-loan balance of $205 million. The pari- passu loan is secured by the fee and leasehold interests in a 682,418-sq.-ft. urban office/retail center in Chicago, Ill. Morgan Stanley Capital I Trust 2004-IQ8 holds the other $68.3 million pari-passu piece. For the year ended Dec. 31, 2006, the DSC was 2.48x and occupancy was 96%. Standard & Poor's adjusted NCF is comparable to its level at issuance. -- The third-largest exposure in the pool, Two Penn Plaza, has a trust balance of $118.7 million (9%) and a whole- loan balance of $245 million. The whole loan consists of a two pari-passu A notes and a $55 million B note. The other $122.5 million pari-passu piece is held in LB-UBS Commercial Mortgage Trust 2004-C4. The collateral consists of a 1.5 million-sq.-ft., 31-story, class A office building in midtown, Manhattan, New York. For the year ended Dec. 31, 2006, the in-trust DSC was 1.90x and occupancy was 98%. Standard & Poor's adjusted NCF is down 8% from its level at issuance due to higher expenses. Despite the decline in NCF, the loan continues to have credit characteristics of investment-grade obligations. -- The seventh-largest exposure in the pool, Pacific Beach Hotel ($33.2 million, 3%), is secured by leasehold interest in a 837-room full service resort hotel in the Central Business District of Waikiki Beach in Honolulu, Hawaii. For the year ended Dec. 31, 2006, the DSC was 2.38x and occupancy was 78%. Standard & Poor's adjusted NCF is down 14% from its level at issuance due to increased operating expenses, and as a result, the loan is no longer considered to be consistent with those of investment-grade obligations. Wachovia reported a watchlist of 21 loans ($132.1 million, 10%). Columbia Self Storage Portfolio ($35.1 million, 3%) is the largest loan on the watchlist and the sixth-largest loan in the pool. The loan is secured by four, self storage properties totaling 371,350 sq. ft. in the greater New York City area. The loan appears on the watchlist because the property reported a June 30, 2007, DSC of 1.07x. Harrisonburg Crossing, the 10th-largest loan in the pool ($26.7 million, 2%) is secured by a 203,007-sq.-ft. retail property in Harrisonburg, Virginia. The loan appears on the watchlist due to delinquent tax payments on two out-parcel spaces not owned by the borrower. Subsequently, the taxes have been paid and Wachovia is awaiting verification of the tax payments prior to taking the loan off the watchlist. The DSC and occupancy were 1.67x and 99%, respectively, as of June 30, 2007. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the rating affirmations. Ratings Affirmed LB-UBS Commercial Mortgage Trust 2004-C6 Commercial mortgage pass-through certificates Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 12.57% A-2 AAA 12.57% A-3 AAA 12.57% A-4 AAA 12.57% A-5 AAA 12.57% A-6 AAA 12.57% A-1A AAA 12.57% B AA+ 11.55% C AA 9.75% D AA- 8.60% E A+ 7.57% F A 6.41% G A- 5.52% H BBB+ 4.62% J BBB 3.98% K BBB- 2.69% L BB+ 2.57% M BB 2.05% N BB- 1.67% P B+ 1.41% Q B 1.28% S B- 1.15% X-CL AAA N/A% X-CP AAA N/A% N/A - Not applicable. LBREP/L SUNCAL: Moody's Downgrades Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service lowered the corporate family ratings of these three land developers to Caa3 from Caa1: Ginn-LA CS Borrower, LLC; LBREP/L SunCAL Master I, LLC; and Lake at Las Vegas Joint Venture, together with the co-borrowers of each entity. The rating outlooks for the three remain negative, and the ratings of Ginn are taken off review for downgrade. The downgrades of the three land developers reflect the substantially slower than expected absorption rates of lots, which is expected to continue at least until 2009; negative cash flow generation; covenant compliance difficulties; and the likelihood that the appraisals underpinning the ratings will be declining steadily going forward. These ratings were affected: -- Ginn-LA CS Borrower, LLC and Ginn-LA Conduit Lender, Inc.: -- Corporate family rating lowered to Caa3 from Caa1 -- Probability of default rating lowered to Caa3 from Caa1 -- Rating on 1st lien bank credit facility lowered to Caa2 (LGD3,40) from B3 (LGD3,37%) -- Rating on 2nd lien bank credit facility lowered to Ca (LGD6,91) from Caa3 (LGD5, 88%) LBREP/L SunCAL Master I, LLC: -- Corporate family rating lowered to Caa3 from Caa1 -- Probability of default rating lowered to Caa3 from Caa1 -- Rating on 1st lien bank credit facility lowered to Caa2 (LGD3,30) from B2 (LGD3,31%) -- Rating on 2nd lien bank credit facility lowered to Ca (LGD5,76) from Caa2 (LGD5, 77%) Lake at Las Vegas Joint Venture and LLV-1, LLC: -- Corporate family rating lowered to Caa3 from Caa1 -- Probability of default rating lowered to Caa3 from Caa2 -- Rating on 1st lien bank credit facilities lowered to Caa3 (LGD3,37) from Caa1(LGD3,33%) Ginn-LA CS Borrower, LLC and Ginn-LA Conduit Lender, Inc. were formed in 2006 by affiliates of Lubert Adler funds and the Ginn Companies to acquire and develop four resort or private club projects in Grand Bahama Island, Naples and Port St. Lucie, Florida and Boone, N.C. LBREP/L SunCal Master I, LLC is a single-purpose entity formed by affiliates of SunCal Companies and Lehman Real Estate to acquire and develop four master planned communities encompassing a total of 11,702 lots on 5,452 acres located in Southern California. The communities being developed are located in Kern County, Ventura County, and Riverside County. Headquartered in Las Vegas, Nevada, Lake at Las Vegas Joint Venture and its co-borrower, LLV-1, LLC, own and operate the Lake Las Vegas Resort, a 3592-acre master planned residential and resort destination located 17 miles east of the Las Vegas strip. LEGENDS GAMING: Moody's Downgrades Corporate Family Rating to B3 ---------------------------------------------------------------- Moody's Investors Service downgraded Legends Gaming LLC's corporate family rating and probability of default rating to B3. It also downgraded the senior secured first-lien term loan and senior secured first lien revolver to B2 as well as the senior secured second-lien term loan to Caa2, with unchanged LGD assessments. These ratings remain under review for possible downgrade. Moody's also withdrew the ratings of the proposed $160 million senior secured notes due September 2012 and $60 million senior secured subordinated notes due December 2012. The rating actions follow the unsuccessful marketing of the company's proposed senior secured and senior subordinated secured notes offering and factor in Moody's concerns about Legends' ability to meet some of the financial covenants under its existing bank facilities and to cope with its mandatory term loan repayments in the next few quarters. Moody's noted that (1) the company had very limited leeway under its total leverage and first lien leverage covenants as of Sept. 30, 2007 and (2) step down clauses will make covenant tests increasingly challenging for the next two quarters. The rating agency also observes that the company will have to face mandatory quarterly repayments under its first lien term loan, which could potentially raise liquidity issues and support the review for further downgrade. During its review, Moody's will examine Legends' ability to secure adequate liquidity as well as the trend with regards to the company's operating performance and internal cash flow generation following its recently completed renovation capital expenditure program. The rating agency will also assess Legends' de-levering prospects in the intermediate term. Moody's previous rating action on Legends occurred on Dec. 11, 2007 with the assignment of the ratings on the proposed notes. Legends Gaming, LLC, headquartered in Frankfort, Illinois, currently owns and operates two gaming properties located in Bossier City, Los Angeles and Vicksburg, Mississippi under the DiamondJacks Casino brand. For the twelve-month period ended Sept. 30, 2007 the company generated approximately $150 million in net revenues. LEGENDS GAMING: S&P Places Ratings on CreditWatch Negative ---------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings for Legends Gaming LLC, including the 'B' corporate credit rating, on CreditWatch with negative implications. At the same time, S&P has withdrawn its 'B+' issue-level rating and '2' recovery rating on the proposed $160 million senior secured notes that were to be issued by Legends Gaming and Legends Finance Corp. S&P has also withdrawn the 'CCC+' issue-level and '6' recovery rating on these entities' proposed $60 million senior subordinated secured notes. The CreditWatch listing follows the unsuccessful marketing of the company's proposed senior secured and senior subordinated secured notes offerings, initially rated on Dec. 11, 2007. The company had sought this financing in order to refinance its existing first- and second-lien bank loans, in part due to the tight financial covenants that exist under them, including limitations on future capital investments. With the refinancing not occurring, S&P is concerned about the remaining covenant cushion and how the company plans to address the constraints imposed by the existing capital structure. "In resolving the CreditWatch listing, we will discuss with management any further proposed changes to Legends' current capital structure, as well as assess the company's operating performance and covenant cushion," said Standard & Poor's credit analyst Ariel Silverberg. LIN TV: S&P Holds Ratings and Revises Outlook to Stable ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on LIN TV Corp., including the 'B+' corporate credit rating, and revised the outlook to stable from negative. "The outlook change reflects the company's announcement that the board of directors has concluded its review of strategic alternatives," explained Standard & Poor's credit analyst Ms. Debbie Kinzer. The rating on LIN reflects financial risk from debt-financed TV station acquisitions, increasing competition for audiences and advertising revenue, and advertising cyclicality. The company's competitive positions in midsize TV markets, broadcasting's good margin and free cash flow potential, recent improvements in financial leverage, and relatively resilient station asset values only partially offset these factors. LNR CFL: S&P Affirms Low-B Ratings on Four Classes of Certs. ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on 14 classes from two commercial mortgage-backed securities transactions. S&P affirmed its ratings on all 13 outstanding classes of certificates from LNR CFL 2004-1 Ltd. and on one class certificates from Structured Asset Securities Corp.'s series 1996- CFL. LNR CFL 2004-1 Ltd. is a resecuritization of the unrated class I from SASCO 1996-CFL. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The ratings on LNR CFL 2004-1 are constrained by concentration risk as well as concerns regarding loans that are either not reporting financial information or are reporting debt service coverages that are below 1.00x. As of the Nov. 26, 2007, remittance report, SASCO 1996-CFL's collateral pool consisted of 40 loans with an aggregate balance of $104.8 million, down from 564 loans with a balance of just under $2 billion at issuance. The master servicer, Midland Loan Services Inc., reported primarily full-year 2006 financial information for 77% of the loans. The remaining $23.9 million (23%) of the pool is not reporting financial information, which includes the Kmart Distribution Center loan as discussed in detail below. Using this information, Standard & Poor's calculated a weighted average DSC of 1.32x, compared with 1.33x at issuance. On a balance basis, $12.9 million (12%) of the reported DSC figures were below 1.00x. As of the November 2007 remittance report date, all of the loans in the pool were classified as current except for one loan ($703,585; 1%), which was classified as 30-days delinquent. The loan is now classified as current. To date, the trust has experienced $45.7 million (2%) in losses. The current top 10 loans have an aggregate outstanding balance of $69 million (66%). The largest, eighth-, and ninth-largest loans in the pool are on the master servicer's watchlist. Excluding the largest and seventh-largest loans, for which no current DSC information is available, the weighted average DSC for the top 10 loans is 1.17x. Standard & Poor's reviewed property inspections provided by Midland for all of the assets underlying the top 10 loans, and all were characterized as either "good" or "excellent." The only loan with the special servicer, LNR Partners Inc., is the South Macon Plaza loan. The loan is secured by a 101,255-sq.-ft retail property located in Macon, Ga. The loan was transferred to the special servicer on Nov. 20, 2007, after it was classified as 60-days delinquent. The loan is now classified as current, and the special servicer will monitor the loan before returning it to the master servicer. As of the November 2007 remittance date, Midland reported a watchlist of eight loans with an aggregate outstanding balance of $27.2 million (26%), which includes the loan currently with the special servicer. The largest loan, Kmart Distribution Center, has an outstanding balance of $18.6 million (18%) and is secured by a 1.6 million-sq.-ft. warehouse facility in Ocala, Florida. The property is leased entirely to Sears Holdings Corp. on a triple net basis. The eighth-largest loan, 630-640 Dowd Avenue ($3 million, 3%), is secured by a 203,225-sq.-ft. industrial property in Elizabeth, New Jersey, and appears on the watchlist due to a low DSC of 0.77x. Occupancy was 100% as of year-end 2006. The ninth-largest loan, 2225 South 43rd Avenue ($2.8 million, 3%), is secured by a 264,117-sq.-ft. industrial property in Phoenix, Arizona, and appears on the watchlist due to a significant decrease in its DSC since issuance. Year-end 2006 DSC and occupancy were 1.10x and 100%, respectively. Standard and Poor's additional concern was the geographic concentration of the underlying properties in Florida (42%) and New Jersey (19%). The remaining properties are located across 11 other states. The pool consists of retail (33%), office (22%), warehouse (20%), multifamily (17%), and industrial (8%) property types. Standard & Poor's stressed the specially serviced and watchlisted loans, along with other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels support the affirmed ratings on the transactions. Ratings Affirmed Structured Asset Securities Corp. Commercial mortgage pass-through certificates series 1996-CFL Class Rating Credit enhancement ----- ------ ------------------ H AAA 76.65% LNR CFL 2004-1 Ltd. Commercial mortgage pass-through certificates series 2004-CFL Class Rating ----- ------ I-1 AA+ I-2 AA I-3 AA- I-4 A+ I-5 A I-6 A- I-7 BBB+ I-8 BBB I-9 BBB- I-10 BB+ I-11 BB I-12 BB- I-13 B+ MAJESTIC STAR: Discloses Buffington Harbor Facility Dev't Plans --------------------------------------------------------------- The Majestic Star Casino LLC disclosed, in response to inquiries from investors and others, its plans for the development of new and improved dockside gaming and land based facilities at Buffington Harbor in Gary, Indiana are on hold. At the Buffington Harbor location the company owns two dockside casino vessels, Majestic Star and Majestic Star II, various land based amenities, including a 300 room hotel and 2,000 space parking garage, over 300 acres of land and the harbor in which the casinos reside. Improvements contemplated one or two gaming vessels that contained the majority of the casino operation on a single floor and new land based amenities, including a possible hotel, to support casino operations. "As we have indicated, we have been exploring plans to redevelop our Gary facilities into one or two single level casinos," Kirk Saylor, chief operating officer of the company, commented. "Weakness in the capital markets, our lack of financial flexibility and an inability to solidify definitive plans has led us to the decision to put the development on hold." "As a result, our efforts for the next several months will be devoted principally to enhancing the gaming experience at our Buffington Harbor facilities, while operating as efficiently as possible," Mr. Saylor added. "We will continue to pursue the transfer of one gaming license to another city within Indiana. Any such transfer will require legislative action and the company is unable to predict whether such approval can be obtained, and if it is obtained, the feasibility of constructing another casino facility given our current leverage and weakness in the capital markets." About Majestic Star Headquartered in Las Vegas, Nevada, Majestic Star Casino LLC -- http://www.majesticstar.com/-- directly and indirectly owns and operates riverboat casinos in Gary, Indiana; Tunica, Mississippi; and Black Hawk, Colorado. Majestic Star Holdco LLC, owns 100% of Majestic Star Casino LLC. Mr. Barden indirectly holds 100% of the company's membership interests. As reported in the Troubled Company Reporter on Nov. 26, 2007, The company's balance sheet, at Sept. 30, 2007, showed total assets of $509.3 million and total liabilities of $666.7 million, resulting in a stockholders' deficit of $157.4 million. Deficit at Dec. 31, 2006, was $139.5 million. * * * As reported in the Troubled Company Reporter on Nov. 15, 2007, Moody's Investors Service lowered The Majestic Star Casino LLC's senior secured note rating to B2 (LGD-3, 34%) from B1 (LGD-3, 33%) while its senior unsecured note rating was lowered to Caa2 (LGD-5, 80%) from Caa1 (LGD-5, 80%). As reported in the Troubled Company Reporter on Oct. 29, 2007, Standard & Poor's Ratings Services lowered its corporate credit rating on Majestic Star Casino LLC to 'B-' from 'B'. This and other ratings on the company were removed from CreditWatch, where they were placed Sept. 10, 2007 with negative implications. The rating outlook is negative. MANOR CARE: Earns $39.4 Million in Third Quarter Ended Sept. 30 --------------------------------------------------------------- Manor Care Inc. reported net earnings of $39.4 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $46.5 million in the corresponding period a year ago. Revenues increased $52.3 million, or 6%, to $967.8 million during the three months ended Sept. 30, 2007, from revenues of $915.5 million in the comparable 2006 period. Revenues from long-term care and rehabilitation segment increased $51.4 million, or 7%, due to increases in rates/patient mix of $54.5 million and capacity of $2.2 million that were partially offset by a decrease in occupancy of $5.3 million. Revenues from the hospice and home health segment increased $3.4 million, or 3%. Operating expenses in the third quarter of 2007 increased $45.1 million, or 6%, compared with the third quarter of 2006. Operating expenses from the company's long-term care and rehabilitation segment increased $37.9 million, or 6%, between the third quarters of 2006 and 2007. The largest portion of the operating expense increase related to labor costs of $30.6 million and ancillary costs, excluding internal labor, of $8.7 million. Operating expenses from the hospice and home health segment increased $6.4 million, or 6%, between the third quarters of 2006 and 2007. The increase related to labor costs of $5.0 million and ancillary costs, including pharmaceuticals, of $1.0 million. General and administrative expenses increased $11.0 million. G&A expenses in the third quarter of 2007 included $13.7 million of transaction costs as a result of the company's evaluation of strategic alternatives and entering into the merger agreement with MHCHR-CP Merger Sub Inc. The costs associated with stock-based compensation and deferred compensation expense decreased $3.0 million between the third quarters of 2006 and 2007. The company's effective tax rate was 43.7% in the third quarter of 2007, compared with 36.4% in the third quarter of 2006. The effective tax rate in the third quarter of 2007 was higher than expected as some of the expenses incurred with the merger are expected to be nondeductible for tax purposes. The effective tax rate in the third quarter of 2006 was lower than expected due primarily to the favorable revision of estimated tax liabilities for prior tax years. Nine Month Results Revenues in the first nine months of 2007 increased $205.6 million, or 8%, compared with the first nine months of 2006. Revenues from our long-term care and rehabilitation segment increased $162.4 million, or 7%, while revenues from the hospice and home health segment increased $51.3 million, or 15%. Net earnings decreased to $112.9 million during the three months ended Sept. 30, 2007, versus net income of $116.6 million during the prior period quarter. Liquidity and Capital Resources As of Sept. 30, 2007, there were no loans outstanding under the company's $400 million revolving credit facility, with an uncommitted option available to increase the facility by up to an additional $100 million. After consideration of usage for letters of credit, $269.7 million, plus the accordion feature, was available for future borrowings. During the second quarter of 2007, the holders of $5.3 million principal amount of New Notes due 2023 elected to convert their notes. The holders received the principal value in cash and 90,751 shares of the company's common stock for the excess value. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $2.69 billion in total assets, $1.92 billion in total liabilities, and $767.6 million in total stockholders' equity. The company's balance sheet at Sept. 30, 2007, also showed strained liquidity with $955.8 million in total current assets available to pay $1.05 billion 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?268b About Manor Care Inc. Headquartered in in Toledo, Ohio, Manor Care Inc. (NYSE: HCR) -- http://www.hcr-manorcare.com/-- through its operating group HCR Manor Care, is a provider of short-term post-acute services and long-term care. The company's nearly 60,000 employees provide high-quality care for patients and residents through a network of more than 500 skilled nursing and rehabilitation centers, assisted living facilities, outpatient rehabilitation clinics, and hospice and home care agencies. The company operates primarily under the Heartland, ManorCare Health Services and Arden Courts names. * * * As reported in the Troubled Company Reporter on Oct. 29, 2007, Moody's Investors Service assigned a B2 Corporate Family Rating to HCR Healthcare LLC, which is expected to be a newly formed entity that will house the operations of Manor Care Inc. The real estate assets of Manor Care Inc. will be transferred to a separate entity. Both HCR Healthcare LLC and PropCo will be wholly owned subsidiaries of Manor Care Inc. Moody's also assigned a Ba3 rating to HCR Healthcare's proposed senior secured credit facilities, consisting of a $200 million revolver and a $700 million term loan. The outlook for the ratings is stable. As of Sept. 4, 2007, Manor Care carries Standard & Poor's "B+" long-term foreign and local issuer credits ratings. MASONITE INT'L: S&P Lowers Ratings and Says Outlook is Negative --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Masonite International Inc. to 'B' from 'B+'. The outlook is negative. At the same time, S&P lowered the debt rating on the senior secured debt to 'BB-' from 'BB', two notches above the corporate credit rating on Masonite. The recovery rating on the senior secured debt is unchanged at '1', reflecting a very high recovery (90%-100%) in the event of default. "The downgrade reflects the company's increasing liquidity challenges, as well as tight financial covenants in 2008, which could restrict access to its revolver," said Standard & Poor's credit analyst Mr. Kevin Hibbert. North American housing weakness in 2007 and into 2008 has depressed demand for Masonite's products. Meanwhile, the company remains highly levered in the wake of a 2005 leveraged buyout, and faces increasingly tight financial covenants in 2008 that could restrict access to its revolver. These challenges are offset somewhat by the company's leading position as the largest door manufacturer in the world, historically stable profitability and cash flow, and renewed management commitment to pricing and cost discipline. S&P forecasts 2008 U.S. housing starts to be about 1 million, and 1.27 million for 2009, which are down 52% and 40%, respectively, compared with the housing start highs of approximately 2.1 million in 2005. Masonite is one of the world's leading producers of both interior and exterior doors, with an estimated 40% market share in its primary North American market. It has vertically integrated operations, 65 facilities in 18 countries, and customers in approximately 70 countries around the world. North America accounts for about 72% of Masonite's sales, while Europe accounts for the majority of the remaining 28%. In 2007, Masonite generated about 65% of its total sales from new home construction, which tends to be more cyclical than home renovations, which accounted for about 35% of total sales. Masonite's diverse distribution network, however, is overshadowed by its concentrated customer base, with its top 10 customers accounting for more than half its total revenues. In 2007, Masonite lost 50% of its Home Depot sales volumes because of a disagreement over price increases instituted in 2006. The full effect of the business loss culminated in third-quarter 2007. With cost-cutting initiatives and facilities rationalization well under way, management believes it can preserve operating margins despite the loss of meaningful sales volumes, and eventually reclaim some of the lost Home Depot business but in a more profitable way in the future. The outlook is negative. Although Masonite has taken steps to strengthen its cash flow, the ratings are still constrained by its heavy debt burden and efforts to reduce leverage will be hampered by deteriorating market conditions. In addition, the loss of Home Depot sales volumes, continuing residential construction and renovation weakness in 2008, and increasingly tighter covenants will pressure the company's financial risk profile. Little tolerance for additional debt or weaker earnings exists at the current rating level, and failure to meaningfully improve operating earnings and reduce gross debt in the near term could lead to covenant compliance challenges and, potentially, Standard and Poor's lowering the rating again. MAXJET AIRWAYS: Files for Bankruptcy Amid High Fuel Prices ---------------------------------------------------------- MAXjet Airways Inc. has filed for Chapter 11 protection due to fuel prices and the resulting impact on the credit climate for airlines, the company said on its Web site. Reuters relates that the company suspended trading of its stock on December 7 as a result of an "inability to clarify its financial position" and expected to liquidate all or part of its business. William D. Stockbridge, MAXjet's president and chief executive officer, assured customers that they will be provided assistance in securing alternative flight accommodations. MAXjet said it has contracted with Eos Airlines for seats on Eos' scheduled all-Premium service to accommodate passengers awaiting a return flight between New York and London. Passengers needing return travel between London, Los Angeles and Las Vegas will be contacted regarding their flight re-accommodations. The company also advised that customers who choose to make flight accommodations directly should seek a refund from their point of purchase (credit card or travel agency) for the unused leg of their journey. MAXjet further told customers that it has secured hotel rooms in London, New York, Las Vegas and Los Angeles through early January 2008 which it will provide to affected passengers whose travel plans have been disrupted. Based in Dulles, Va., MAXjet Airways Inc. (LSE:MAXJ.L) -- http://www.maxjet.com/-- is an all-business class airline serving trans-Atlantic routes. MAXJET AIRWAYS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: MAXjet Airways, Inc. 45025 Aviation Drive, Suite 400 Dulles, VA 20166 Bankruptcy Case No.: 07-11912 Type of Business: The Debtor is an all-business class, long-haul airline company. It has introduced scheduled services with flights from London Stansted Airport to New York. As of December, 2006, it leased five B767 aircraft. Its customers are both business and leisure travelers. At the airport, its product features check-in facilities located in primary terminals, security and a business class departure lounge and arrivals facility. Its flights features deep-recline seats (170 degree) spaced at a 60 inch pitch, portable entertainment systems, stowage space and business class catering. See http://www.maxjet.com/ Chapter 11 Petition Date: December 24, 2007 Court: District of Delaware (Delaware) Judge: Peter J. Walsh Debtor's Counsel: Laura Davis Jones, Esq. Pachulski, Stang, Ziehl & Jones, L.L.P. 919 North Market Street, 17th Floor Wilmington, DE 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 Estimated Assets: $10 Million to $50 Million Estimated Debts: $50 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Israeli Aicraft Trade $2,378,074 9.7239E+io Avi Katz Israel Aerospace Industries Ben Gurion International Airport L.O.D. 70100- Department 1611 Bedek Aviation Group Tel Aviv, Israel Alitalia Servizi Trade $995,536 390665434314 Maura Francazi Piazza Almerica da Sohia s.n.c. PaL. R.P.U. R.E.A. di Roma n. 1081498 P.I.V. A e Cfiscale 08228671007 Lufthansa Technk AG Trade $981,400 40507064762 Ina Hauke Weg beim Jager 193 D-22335 Hamburg Alpha Flight Services Trade $926,843 208-580-3376 Raymond Adjei Europa House, 804 Bath Road, Cranford, Middlesex, TW5 9US Raisson Trade $571,336 1279661012 Hilary Hibbs Waltham Close London Stansted Airport Essex CM24 I.P.P., U.K. Delta Air Lines, Inc. Trade $569,691 404-773-1634 Jean Francis 1030 Delta Boulevard Atlanta GA 30320 J.L. T. Aerospace Trade $510,058 703-459-2382 Claudia Lewis 13873 Park Center Road Herndon, VA 20171 Digecor Digital Trade $426,740 801-489-2140 Eric Vemon P.O. Box 584 Springvile, UT 84663 Her Majesties Revenue & Governent debt $350,079 Customs 00441895817334 Malcolm Clarke Valiant House 1 Park Road, Uxbridge Middlesex, UB78 lRW S.R. Technics U.K., Ltd. Trade $349,377 1279825241 Malcolm Head Long Border Road Stansted Airport, Essex, CM24 IRE, UK B.A.A. Businss Support Centre Trade $337,960 141-585-6020 Lisa Sullivan Carlson House Mossland Road Hilington, Glasgow G62 4RX Mezzo Movies Trade $267,581 207 -092-1780 Daniel Nagler Moor Lane Derby, DE24 8BJ S.H.&E. Trade $200,000 N.A.T.S. Trade $193,567 Servisair Globeground Trade $183,255 Los Angeles World Airports Trade $181,623 Lifeline Cirtical Logistics Trade $176,283 Ultimate Aircraft Trade $168,222 A.T.&T. Mobility Trade $150,912 71H Floor Consultancy, Ltd. Trade $140,524 MAXUM PETROLEUM: S&P Assigns B- Rating to $155 Mil. Senior Loan --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-' loan rating and '5' recovery rating on the $155 million senior secured term loan of Maxum Petroleum Inc. (no corporate credit rating) on CreditWatch with negative implications. At the same time, S&P affirmed the 'B' corporate credit rating and stable outlook on Maxum's parent company, SPI Petroleum LLC. "The CreditWatch listing reflects the disadvantaged position of the term loan given the recent increase of $50 million to the firm's senior secured $335 million first-lien revolving credit facility," said Standard & Poor's credit analyst Ms. Amy Eddy. However, Maxum plans to complete an IPO of common stock in early January 2008, with proceeds used to pay off the term loan. It is not clear if the IPO will be successful, given the current volatility of the equity markets. In the event the company is not successful, S&P would lower the term loan rating to 'CCC+' (two notches below the 'B' corporate credit rating on the parent company) from 'B-' and lower the recovery rating to '6', indicating expectation of negligible (0%-10%) recovery in the event of a payment default, from '5'. The '5' recovery rating indicates expectation of modest (10%-30%) recovery in the event of a payment default. Maxum participates in the very fragmented distribution market for diesel fuel, lubricants, and chemicals. Diesel fuel distribution is Maxum's most significant market, at approximately half of gross profits. MBS COS: Fitch Reviews Ratings on Imminent Default of 56 Loans -------------------------------------------------------------- Fitch Ratings has reviewed the potential ratings impact of the existing or imminent default of 56 loans in 37 commercial mortgage-backed securities deals where MBS Cos. is the current borrower. MBS is an owner and operator of apartment properties in Texas. Of the total $777 million of MBS exposure, Fitch has identified 34 loans, representing $376 million, in 17 Fitch rated CMBS deals. Exposure to MBS by outstanding balance ranges from 0.16% to 3.6% in each transaction. The transactions were securitized between 1999 and 2006. Each transaction has a first loss unrated bond ranging from $15 million to $53 million to absorb expected losses. When Fitch applies a 40% hypothetical loss severity to each MBS loan, this could result in impairment to selected bonds rated 'B-' and below. MERIDIAN GOLD: Shareholders OKs Plan of Arrangement Completion -------------------------------------------------------------- Meridian Gold Inc. has received shareholder approval relating to the completion of the plan of arrangement under which Yamana Gold Inc. will acquire the remaining approximate 10% of Meridian common shares. The remaining Meridian shares will be acquired for the same consideration as the offer of CDN$7 cash plus 2.235 Yamana common shares for each Meridian share. The transaction is expected to become effective on Dec. 31, 2007, followed by the delisting of Meridian common shares from the Toronto Stock Exchange and the New York Stock Exchange during the first week of January 2008. Meridian shareholders who have not yet delivered their Meridian share certificate and a letter of transmittal to CIBC Mellon Trust Company in Toronto, Ontario must do so in order to receive the consideration the shareholder is entitled to following the effective date of the transaction. Cheques and Yamana share certificates will be sent to all shareholders who have delivered their Meridian share certificate and a letter of transmittal to CIBC Mellon Trust Company in Toronto, Ontario following the effective date of the transaction. For further information regarding the delivery of share certificates and letter of transmittal, contact: CIBC Mellon Trust Company P.O. Box 1036 Adelaide Street Postal Station Toronto, Ontario Tel (416) 643-5500 1-800-387-0825 (Toll-free) Email inquiries@cibcmellon.com About Yamana Gold Inc. Yamana Gold Inc. (TSX:YRI)(NYSE:AUY)(LSE:YAU) is a Canadian gold producer with gold production, gold development stage properties, exploration properties, and land positions in Brazil, Argentina, Chile, Mexico, Central America and the United States. Yamana is producing gold at intermediate company production levels in addition to significant copper and silver production. Company management plans to continue to build on this base through existing operating mine expansions and throughput increases, the advancement of its exploration properties and by targeting other gold consolidation opportunities in Brazil, Argentina and elsewhere in the Americas. About Meridian Gold Inc. Headquartered in Reno, Nevada, Meridian Gold Inc. (TSE:MNG) (nyse:mdg) -- http://www.meridiangold.com/-- is a mid-tier gold producer with mining operations in Chile, development projects in Nevada and Chile, and exploration projects throughout the Americas. The company has been engaged in mining and the exploration of gold and other precious metals. During the year ended Dec. 31, 2006, Meridian's revenue producing properties were its El Penon mine and Minera Florida mine in Chile. The company has advanced stage exploration programs in Chile, Mexico and the United States. Early stage exploration programs are conducted primarily in Chile, Mexico, Nicaragua, Peru and the United States. MILACRON INC: Weak Credit Metric Cues Moody's to Cut Ratings ------------------------------------------------------------ Moody's Investors Service lowered the ratings of Milacron Inc. Corporate Family, to Caa2 from Caa1; Probability of Default, to Caa2 from Caa1; and senior secured notes, to Caa2 from Caa1. The lowered ratings reflect the company's weak credit metrics and ongoing cash flow pressures. Milacron continues to face cyclical pressures in its plastics machinery markets and ongoing required pension payments. Without additional actions by the company's management, Moody's views the company's liquidity over the next twelve months to be at risk of deterioration resulting from stagnant free cash flow prospects over the intermediate term, and required pension payments and interest costs. Milacron will continue to have required pension payments after 2008. The company's ongoing cash requirements combined with a continued liquidity pressures could limit the company's operating flexibility over the intermediate term. The negative outlook reflects the company's weak operating metrics and the expectation that absent new cash sources the company's liquidity profile will narrow following the scheduled pension payments due in 2008. Milacron's current liquidity is sufficient to make the required pension payments in 2008. In addition, the company has frozen its current U.S. defined pension plan. However, operating flexibility could be impaired if the company's liquidity profile deteriorates. As of Sept. 30, 2007, Debt/EBITDA was 10.6x, and EBIT/Interest Coverage of 0.7x. As of Sept. 30, 2007, Milacron maintained $37.5 million of cash on its balance sheet and approximately $42 million available under its asset based revolving credit facility. The asset based facility requires the company to maintain $10 million of excess availability, limits capital expenditures, and contains a springing minimum fixed charge coverage ratio in the event that excess availability is less than $5 million. There is moderate availability under the company's senior secured notes' debt incurrence test for Milacron to obtain additional financing. * The ratings lowered are: -- Corporate Family rating, to Caa2 from Caa1 -- Probability of Default, to Caa2 from Caa1 -- $225 million of 11.5% guaranteed senior secured notes due 2011, to Caa2 (LGD3 45%) from Caa1 (LD3 44%) -- Milacron maintains a $105 million asset based revolving credit facility which is not rated by Moody's. The prior press release was on Jan. 10, 2006 confirming Milacron's ratings and changing the outlook to negative. Factors that could contribute to a stabilization of the rating outlook include: substantial growth in new business priced at profitable margins; stabilized raw material costs resulting in improved margins; additional equity contributions; or actions taken to improve liquidity. Consideration for a stabilized rating outlook or upward rating migration would arise if any combination of these factors were to result in leverage approaching 6.0x, or result in EBIT/interest coverage approaching 1x. Factors that could result in ratings downgrades include: liquidity not being adequately maintained over the next twelve months; increases in raw material prices which are not passed on to customers; deterioration in the company's plastic machinery end markets; or the inability to security additional liquidity and or financing to mitigate the minimum pension funding requirements in 2008. Consideration for downward rating migration would arise if any combination of these factors were to result in deteriorating liquidity. Milacron, headquartered in Cincinnati, Ohio, is a leading global manufacturer and supplier of plastics-processing equipment and related supplies. Milacron is also one of the largest global manufacturers of synthetic water-based industrial fluids used in metalworking applications. The company has major manufacturing facilities in North America, Europe and Asia. Milacron's annual revenues approximated $789 million over the last twelve months. MIRANT CORP: Cash Flow Improvement Cues Moody's to Lift Ratings --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of Mirant Corporation (Mirant: Corporate Family Rating to B1 from B2) and its subsidiaries Mirant Mid-Atlantic, LLC (MIRMA: pass through trust certificates to Ba1 from Ba2), Mirant North America, LLC (MNA: senior unsecured to B1 from B2 and senior secured to Ba2 from Ba3) and Mirant Americas Generation, LLC (MAG: senior unsecured to B3 from Caa1). Additionally, Mirant's Speculative Grade Liquidity (SGL) rating was revised to SGL-1 from SGL-2. The rating outlook is stable for Mirant, MNA, MAG, and MIRMA. "The ratings upgrade reflects a significant improvement in Mirant's consolidated cash flow and financial metrics driven by declining reserve margins and an increase in the price paid for power and capacity in the markets that Mirant operates" said Moody's Vice President Scott Solomon. "These market conditions are expected to remain favorable for Mirant for at least the next several years". Specifically, the ratings upgrade reflects an expectation that Mirant's consolidated ratio of adjusted consolidated cash from operations (before changes in working capital) to adjusted consolidated debt to be at least 15% and CFO pre W/C to adjusted interest expense to be at least 3 times over the next several years under most reasonable scenarios. These ratios, as calculated by Moody's, are projected to be approximately 18% and 3 times at year-end. Mirant's sound financial metrics, however, are balanced by the merchant power generator's business risk profile, limited fuel and geographic diversification, a sizable near-term capital expenditure program and a financial policy that has been geared toward shareholder rewards. The revision of the Speculative Grade Liquidity rating to SGL-1 reflects Moody's expectation that Mirant will maintain a very good liquidity profile over the next 12-month period as a result of its generation of strong internal cash flows, maintenance of significant cash balances and access to substantial revolving credit availability. These ratings/LGD assessments were affected by this action: -- Mirant Corporation, Corporate Family Rating upgraded to B1 from B2; -- Mirant Corporation, Probability of default rating upgraded to B1 from B2; Mirant Mid-Atlantic, LLC -- Approximately $940 million pass through certificates upgraded to Ba1 (LGD 2, 15%) from Ba2 (LGD 2, 12%); Mirant North America, LLC -- $850 million 7.375% senior unsecured bonds due 2013 upgraded to B1 (LGD 4, 55%) from B2 (LGD 4, 52%); -- $800 million senior secured revolving credit facility due 2013 upgraded to Ba2 (LGD 2, 21%) from Ba3 (LGD 3, 32%); -- $556 million (originally $700 million) senior secured term loan due 2013 upgraded to Ba2 (LGD 2, 21%) from Ba3 (LGD 3, 32%); Mirant Americas Generation, LLC -- $850 million 8.3% senior unsecured notes due 2011 upgraded to B3 (LGD 5, 85%) from Caa1 (LGD 5, 85%); -- $450 million 8.5% senior unsecured notes due 2021 upgraded to B3 (LGD 5, 85%) from Caa1 (LGD 5, 85%); -- $400 million 9.125% senior unsecured notes due 2031 upgraded to B3 (LGD 5, 85%) from Caa1 (LGD 5, 85%). Mirant Corporation, headquartered in Atlanta, Georgia, is an independent power producer that owns or leases a portfolio of electricity generating facilities totaling 10,300 megawatts. MORGAN STANLEY: Moody's Downgrades Ratings on Two Certificates -------------------------------------------------------------- Moody's Investors Service downgraded two certificates issued by Morgan Stanley Mortgage Loan Trust in 2004. The action is based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. Losses have already begun to erode the overcollateralization while losing credit enhancement provided by subordination due to stepdown, leaving the rated bonds less protected. As of November 2007, the OC in the deal was below target. The transaction is backed by Alt-A, adjustable-rate mortgage loans. Complete rating actions are: - Issuer: Morgan Stanley Mortgage Loan Trust 2004-6AR -- Class 1-B-1, downgraded from Baa1 to Ba1; -- Class 1-B-2, downgraded from Baa2 to Ba3. MOUNTAINEER GAS: Fitch Rates $90 Million Notes at BB ---------------------------------------------------- Fitch has rated the $90 million of notes issued by Mountaineer Gas Company 'BB'. The notes were issued in two series: -- 7.58% $70 million note due 2017; -- $20 million floating-rate series priced at LIBOR + 2.625%. The notes are unsecured and rank equally with existing and future unsecured debt of MGC. The proceeds of the notes were used to refinance $87 million of long-term debt. MGC also amended its bank credit facility to reduce the amount to $125 million from $135 million and adjust the covenants. The refinancing eliminated relatively large principal payments of $18 million that were formerly scheduled for 2008. Completion of the refinancing improved MGC's short-term liquidity position by extending its long-term debt maturities and conforming covenants to current cash flow expectations. MGC's ratings are supported by regulated local gas distribution operations with a leading market share in West Virginia, and an adequate purchased gas adjustment mechanism and satisfactory liquidity following the close of the refinancing. Additionally, MGC benefits from a gas procurement plan approved by the West Virginia Public Service Commission and access to adequate supply and storage. MGC's relationship with the WVPSC is considered balanced, despite a historically challenging regulatory environment overall for regulated utilities in West Virginia. Rating concerns include the risks associated with rising operating costs during a period of frozen base rates that extends through to April 2010, above-average rates of demand destruction as a result of warmer than normal weather and conservation, and an economically disadvantaged service territory. Lower demand has led to lower than forecasted cash flows and credit metrics that are weak relative to 'BB' guidelines. MGC's EBITDA to interest was 2.14 times for the 12 months ending Sept. 30, 2007. MGC is a local gas distribution company that serves 223,500 customers in West Virginia. MGC was purchased by a private partnership between an affiliate of ArcLight Energy Partners Fund II and IGS Utilities LLC in 2005. MOVIE GALLERY: Files Joint Plan and Disclosure Statement -------------------------------------------------------- Movie Gallery Inc. and its debtor subsidiaries filed a Joint Plan of Reorganization and Disclosure Statement with the United States Bankruptcy Court for the Eastern District of Virginia, Richmond Division, on December 22, 2007. A hearing to consider approval of the Disclosure Statement has been scheduled for January 29, 2008. The Company said the Plan is supported by both Sopris Capital Advisors LLC, in its capacity as the largest holder of Movie Gallery's 11% Senior Notes and in its capacity as a substantial holder of claims under Movie Gallery's second lien credit agreement, as well as the steering committee for holders of claims under Movie Gallery's first lien credit agreement. Movie Gallery expects that it will ask the Bankruptcy Court to confirm the Plan early in the second quarter of 2008, and hopes to emerge from bankruptcy shortly thereafter. "The filing of our Plan is a significant step towards emerging from Chapter 11 as a stronger, more competitive company," said Joe Malugen, chairman, president and chief executive officer of Movie Gallery. "We have made substantial progress in addressing our operational and financial challenges and we are confident that the company will be well-positioned to operate profitably and create value for all of its stakeholders upon emergence." The Plan provides for: -- Conversion of the Company's $325 million 11% Senior Notes and other general unsecured claims into new equity of reorganized Movie Gallery; -- Conversion of approximately $72 million of the Company's $175 million second lien indebtedness, held by Sopris, into equity of reorganized Movie Gallery; -- The Company's first lien indebtedness would remain in place on restructured terms in accordance with that certain First Lien Term Sheet attached to the Plan; -- The Company's remaining second lien debt -- following conversion of the second lien debt held by Sopris -- would remain in place on restructured terms set forth in that certain Second Lien Term Sheet attached to the Plan; -- A commitment by Sopris to backstop a $50 million equity rights offering to be made available to eligible 11% Senior Noteholders; and -- Existing shares of the Company's common stock will be cancelled. Mr. Malugen added, "I want to thank all of our partners and associates, whose perseverance and commitment to Movie Gallery has played a significant role in helping us reach this significant milestone." The Disclosure Statement contains a historical profile of the company, a description of proposed distributions to creditors, as well as many of the technical matters required for the solicitation process, like descriptions of who will be eligible to vote on the Plan and the voting process itself. About Movie Gallery Inc. Headquartered in Dothan, Alabama, Movie Gallery Inc. -- http://www.moviegallery.com/-- is a home entertainment specialty retailer. The company owns and operates 4,600 retail stores that rent and sell DVDs, videocassettes and video games. It operates over 4,600 stores in the United States, Canada, and Mexico under the Movie Gallery, Hollywood Entertainment, Game Crazy, and VHQ banners. The company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853. Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors. Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak Rock LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. When the Debtors' filed for protection from their creditors, they listed total assets of US$891,993,000 and total liabilities of US$1,419,215,000. NORTH AMERICAN: Offering $15.5 Million of Common Stock & Warrants ----------------------------------------------------------------- North American Scientific Inc. entered into a Securities Purchase Agreement providing for the private placement of 63,008,140 shares of common stock of the company, par value $0.01 per share, and warrants to purchase 3,150,407 shares of common stock for a total purchase price of $15.5 million. The agreement was entered with Three Arch Partners IV L.P. and affiliated funds, SF Capital Partners Ltd. and CHL Medical Partners III L.P. and an affiliated fund. The purchase price is equal to $0.246 per Security, of which $0.01 is allocated to the warrants. The purchase price represents a 40% discount to the volume weighted average price of the common stock on the Nasdaq Global Market. The warrants have an exercise price of $0.246 per share, subject to certain adjustments. The warrants may be exercised no earlier than 180 days from the closing date of the transaction and will expire seven years from the date of issuance. In order to close the private placement, the company must obtain stockholder approval of the private placement and the amendment of its certificate of incorporation to increase the number of shares of common stock it is authorized to issue. The agreement requires that the company file a preliminary proxy statement, information statement or consent statement with the Securities and Exchange Commission to solicit stockholder approval. The company expects to close the Private Placement soon as practicable after it obtains stockholder approval. The investors have agreed to purchase these amounts of Securities in the offering: a) Investor: Three Arch Partners Shares: 40,650,420 Warrants (Shares issuable upon exercise): 2,032,521 b) Investor: SF Capital Shares: 10,162,600 Warrants (Shares issuable upon exercise): 508,130 c) Investor: CHL Shares: 12,195,120 Warrants (Shares issuable upon exercise): 609,756 Three Arch Partners currently owns 5,121,638 shares of common stock. If the transaction is consummated, Three Arch Partners' percentage ownership of the outstanding common stock will increase from approximately 17.3% to 49.4% and 43.9% of the common stock on a fully diluted basis. The net proceeds to the company of the private placement after payment of fees and expenses are expected to be approximately $14,115,000. The terms of the private placement were approved by a committee of the company's board of directors consisting only of disinterested directors. The company's directors and executive officers have executed lock- up agreements restricting their ability to sell shares of the common stock for 180 days after the closing of the transaction. The investors will be required to enter into such lock-up agreements prior to the closing of the transaction. CIBC World Markets Corp. is acting as sole placement agent in connection with the private placement. If the private placement is consummated as discussed herein, the placement agent will receive aggregate fees of approximately $1,085,000 plus reimbursement for reasonable out-of-pocket fees and expenses. Documents filed with the SEC by the company will be available free of charge from: North American Scientific Inc. Corporate Secretary 20200 Sunburst Street Chatsworth, CA 91311 Tel (818) 734-8600 About North American Headquartered in Chatsworth, California, North American Scientific Inc. (NasdaqGM: NASI) -- http:www.nasmedical.com/ -- provides radiation therapy products in the fight against cancer. Its products provide physicians with tools for the treatment of various types of cancers. They include Prospera(R) brachytherapy seeds and SurTRAK(TM) needles and strands used primarily in the treatment of prostate cancer. In addition the company plans to commercialize its ClearPath(TM) multi-channel catheter breast brachytherapy devices in 2007, which are the only devices approved for both high dose and continuous release, or low dose, radiation treatments. The devices are designed to provide flexible, precise dose conformance and an innovative delivery system that is intended to offer the more advanced form of brachytherapy for the treatment of breast cancer. Waiver and Consent On Sept. 14, 2007, NASI and its wholly-owned subsidiary, North American Scientific Inc. entered into a fourth amendment to loan and security agreement with Silicon Valley Bank. The amendment modified the Oct. 5, 2005, loan and security agreement. The fourth amendment included: (i) a forbearance by Silicon Valley from exercising its rights and remedies against the company, until such time as Silicon Valley determines in its discretion to cease such forbearance, due to the defaults on the tangible net worth covenant in the Loan Agreement as of July 31, 2007, and Aug. 31, 2007; and (ii) a consent to a subordinated debt facility of up to $750,000 with Agility Capital LLC. NORTH CAROLINA MEDICAL: S&P Revises Outlook to Positive from Neg. ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on North Carolina Medical Care Commission's Radian insured series 2003 bonds, issued for Maria Parham Medical Center, to positive from negative, reflecting MPMC's successful financial turnaround following three years of operating and net losses. At the same time, Standard & Poor's affirmed its 'BB' underlying rating on the commission's debt, issued for MPMC. "If Maria Parham Medical Center demonstrates that operating performance improvements are sustainable over the next one to two years, then a rating upgrade is possible," said Standard & Poor's credit analyst Mr. Karl Propst. More specifically the 'BB' rating reflects a moderate, but growing net patient revenue base driven by gains in inpatient and ancillary patient utilization; dramatic financial turnaround in fiscal 2007 driven by productivity and other operating initiatives, which culminated in operating and net excess of $2.4 million and $3.9 million, respectively, and compared with the previous three fiscal years; strong cash flow growth and coverage of maximum annual debt service; and MPMC's continued leading market share in its primary service area and sole community provider status in Vance County. Offsetting credit factors include moderately high leverage characterized by long-term debt-to-capitalization ratio of 54%, and light liquidity for the rating with a 35% cash to debt ratio, and 84 days cash on hand; a local economy characterized by high unemployment and low wealth levels resulting in a high mix of Medicaid and self-pay patients; and a corresponding and historically high bad debt percentage. The revised rating outlook affects about $48.84 million in rated debt. NORTH PARK: Files List of 20 Largest Unsecured Creditors -------------------------------------------------------- North Park Village LLC submitted to the U.S. Bankruptcy Court for the District of Arizona its list of 20 largest unsecured creditors, disclosing: Entity Nature of Claim Claim Amount ------ --------------- ------------ Chase Cardmember Service Trade Debt $46,656 P.O. Box 15298 Wilmington, DE 19850-5298 Arizona Republic Trade Debt $40,816 P.O. Box 200 Phoenix, AZ 85001-0200 TLC Roofing & Remodeling $35,407 32 South MacDonald Mesa, AZ 85210 Pro Ceilings Trade Debt $30,103 Showcase Components Trade Debt $15,204 Xeriscapes Trade Debt $12,359 Arizona Carpet Care Trade Debt $11,144 Pucketts Flooring Trade Debt $9,814 Urke & Stoller Acctng. Services $8,678 Redi Carpet Trade Debt $7,845 Allied Waste Services Trade Debt $7,378 Comptrol Technologies Trade Debt $5,089 Arizona Partsmaster Trade Debt $4,577 Apartment Home Solution Trade Debt $3,610 Mariscal Weeks Legal Services $3,436 Allstaff Services Trade Debt $3,000 Advanced Repair Technology Trade Debt $2,933 Design & Stone International Trade Debt $2,432 Spencer's TV & Appliance Mechanic's Lien $2,070 Advantage Plus Trade Debt $1,766 Based in Phoenix, Arizona, North Park Village LLC owns and manages apartments. The company filed for Chapter 11 protection on Dec. 7, 2007 (Bankr. D. Ariz. Case No. 07-06618). Mark W. Roth, Esq., at Hebert Schenk, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors it listed assets and liabilities of $10 million to $50 million. NORTH PARK: Files Schedules of Assets and Liabilities ----------------------------------------------------- North Park Village LLC filed with the U.S. Bankruptcy Court for the District of Arizona, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $47,846,500 B. Personal Property $3,705,257 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $29,042,203 E. Creditors Holding Unsecured Priority Claims $22,257 F. Creditors Holding Unsecured Non-priority Claims $274,441 ----------- ----------- TOTAL $51,551,757 $29,338,901 Based in Phoenix, Arizona, North Park Village LLC owns and manages apartments. The company filed for Chapter 11 protection on Dec. 7, 2007 (Bankr. D. Ariz. Case No. 07-06618). Mark W. Roth, Esq., at Hebert Schenk, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors it listed assets and liabilities of $10 million to $50 million. NORTH PARK: Wants to Hire Hebert Schenk as Bankruptcy Counsel ------------------------------------------------------------- North Park Village, LLC asks authority from the U.S. Bankruptcy Court for the District of Arizona to employ Hebert Schenk P.C. as its general bankruptcy counsel. Hebert Schenk will: a) prepare pleadings and applications, and conduct examinations incidental to administration; b) advise the Debtor of his rights, duties, and obligations; c) advise the Debtor in the formulation and presentation of a plan of reorganization and disclosure statement; and d) render to the Debtor any other advisory and legal services necessary. The Debtor says that the firm's professionals bill $110 to $400 per hour. The Debtor assures the Court that the firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. It emphasizes that the firm represents no adverse interest to its estates, but admits that one of the firm's counsel, Barbara Lee Caldwell, Esq., still continues to perform legal services to one of its creditors, Maricopa County, in a discrete but non- related proceeding. The firm confirms this and believes that this relationship does not present an actual conflict of interest. Based in Phoenix, Arizona, North Park Village LLC owns and manages apartments. The company filed for Chapter 11 protection on Dec. 7, 2007 (Bankr. D. Ariz. Case No. 07-06618). Mark W. Roth, Esq., at Hebert Schenk, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors it listed assets and liabilities of $10 million to $50 million. NOVELL INC: Posts $17.9 Mil. Net Loss in Quarter Ended October 31 ----------------------------------------------------------------- Novell Inc. disclosed financial results for its fourth fiscal quarter and full fiscal year ended Oct. 31, 2007. The company reported net loss of $17.9 million for the quarter ended Oct. 31, 2007, compared to a net income of $19.8 million for the same quarter last year. For the quarter, Novell reported net revenue of $245 million, which excludes $6 million of revenue from its Swiss-based business consulting unit, which Novell agreed to sell during the quarter. This compares to net revenue of $234 million for the fourth fiscal quarter 2006. The loss from operations for the fourth fiscal quarter 2007 was $13 million, compared to income from operations of $4 million for the fourth fiscal quarter 2006. The loss available to common stockholders from continuing operations in the fourth fiscal quarter 2007 was $9 million. This compares to income available to common stockholders from continuing operations of $21 million for the fourth fiscal quarter 2006. Foreign currency exchange rates favorably impacted total revenue by approximately $6 million and did not materially impact the loss from operations year-over-year. In the fourth fiscal quarter 2007, Novell entered into an agreement to sell its Swiss-based business consulting unit. Accordingly, all financial results for this unit were excluded from Novell's continuing operations for income statement reporting purposes and are reported as discontinued operations. For the full fiscal year 2007, Novell reported net revenue of $932 million and a loss available to common stockholders from continuing operations of $26 million. Comparatively, net revenue for the full fiscal year 2006 was $919 million and income available to common stockholders from continuing operations was $4 million. Foreign currency exchange rates favorably impacted total revenue by approximately $15 million and negatively impacted the loss from operations by $5 million year-over-year. "We are pleased with our overall results for 2007," Ron Hovsepian, president and CEO of Novell said. "While undergoing transformational change, we grew revenue and exceeded our operating targets. We are on the right path to long-term, sustainable profitability." Cash, cash equivalents and short-term investments were approximately $1.9 billion at Oct. 31, 2007, up from $1.5 billion last year. Days sales outstanding in accounts receivable was 77 days at the end of the fourth fiscal quarter 2007, down from 86 days at the end of the year-ago quarter. Total deferred revenue was $768 million at the end of the fourth fiscal quarter 2007, up $341 million, or 80%, from Oct. 31, 2006. Cash flow from operations was $77 million for the fourth fiscal quarter 2007, compared to $62 million in the fourth fiscal quarter 2006. At Oct. 31, 2007, the company's balance sheet total assets of $2.8 billion and total liabilities of $1.6 billion, resulting in total stockholders' equity of $1.1 billion. Financial Outlook Novell management issued this financial guidance for the full fiscal year 2008: * Net revenue is expected to be between $920 million and $945 million. About Novell Inc. Headquartered in Waltham, Massachusetts, Novell Inc. (Nasdaq: NOVL) -- http://www.novell.com/-- delivers infrastructure software for the Open Enterprise. Novell provides desktop to data center operating systems based on Linux and the software required to secure and manage mixed IT environments. * * * Novell Inc.'s subordinated debt carries Moody's Investors Service's B1 rating. OMNICARE INC: Senior Unsecured Ratings Downgraded by S&P to B+ -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Covington, Kentucky-based Omnicare Inc. The corporate credit rating was lowered to 'BB' from 'BB+'. The outlook is negative. The subordinated debt and senior unsecured ratings were lowered to 'B+' from 'BB-', and the preferred stock rating on the company's convertible debentures was lowered to 'B' from 'B+'. The senior unsecured and subordinated debt are rated the same (two notches below the corporate credit rating), given the relative weakness of the subsidiary guaranteeing the senior unsecured debt. "The downgrades reflect Omnicare's performance in 2006 and 2007," said Standard & Poor's credit analyst Jesse Juliano. The company has performed well below Standard and Poor's expectations at the time of its initial ratings in December 2005. Thus the new ratings more accurately reflect the company's current financial risk profile, rather than a forward-looking, improved financial risk profile that has been slow to materialize. The company's EBITDA and cash flow have been weak relative to expectations, and therefore debt reduction has been below what was anticipated. The downgrade also reflects Standard and Poor's belief that Omnicare will continue to operate with a relatively weak financial risk profile. The ratings on Omnicare Inc. continue to reflect the company's leading position as a provider of pharmacy services to nursing homes and other long-term care providers, its still-solid liquidity, and its ability to produce positive free cash flow despite numerous operating hurdles over the past two years. These benefits are partially offset by the company's narrow business focus, which exposes it to industry specific risks, such as the potential for future reimbursement pressure. In addition, Omnicare experienced a number of major setbacks since its acquisition of NeighborCare Inc. and the implementation of Medicare Part D, and its financial risk profile remains weak for the current rating. Omnicare achieved its leading market position through a long series of acquisitions, utilizing a mix of cash and stock. The company has leveraged its larger size to achieve economies of scale in its operations and improve its purchasing clout with pharmaceutical manufacturers. Given Omnicare's presence in its industry, it would be difficult for any national managed care company to serve its nursing home and long-term care members without operating through Omnicare. ORLANDO CITYPLACE: Judge Jennemann Consents to Two-Part Asset Sale ------------------------------------------------------------------ The Hon. Karen Jennemann of the U.S. Bankruptcy Court for the Middle District of Florida approved a two-part sale of The Lexington Hotel owned by Orlando CityPlace LLC and its debtor- affiliates, Jerry W. Jackson writes for the Orlando Sentinel. The Court initially awarded New York-based iStar Financial Inc. as highest bidder, which intends to reclaim the hotel for a $25 million first mortgage it holds against the Debtors, Sentinel relates. However the Court also gave VAF Sub-CDE III LLC, second mortgage holder, until Dec. 28, 2007, to pool a total of $2 million in order to become Lexington Hotel's manager and owner, Sentinel says. VAF has already given half of the $2 million as investment, which will be forfeited upon failure to raise the other half by the set deadline, Sentinel reveals. The Debtors' largest creditors backed up VAF's offer and were assured by VAF of a $150,000 settlement distribution for unsecured creditors, Sentinel relates. Both VAF and iStar have agreed to waive the Debtors' $17 million debt outstanding should VAF close the sale deal, Sentinel says. As reported in the Troubled Company Reporter on Dec. 6, 2007, the Debtors asked the Court for approval to sell their 228 unit condominium in Orlando, Florida. The Debtors previously set the minimum bid at $30 million, but finally settled for "firm" bids after no purchaser made a bid equal or more than the required amount. About Orlando CityPlace Based in Orlando, Florida, Orlando CityPlace LLC and its affiliates -- http://www.lexingtonorlando.com/-- develop real estate property. The Debtors own the Lexington Hotel and District Five Restaurant on Orlando. The company and its affiliates filed for Chapter 11 protection on July 23, 2007 (Bankr. M.D. Fla. Lead Case No. 07-03159). Jimmy D. Parrish, Esq., Mariane L. Dorris, Esq., and R. Scott Shuker, Esq., at Latham, Shuker, Eden & Beaudine, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, Orlando CityPlace, LLC listed total assets of $55,000,000, and total debts of $44,000,000, while O.C.P. Corner, LLC listed total assets of $2,000,000 and total debts of $1,700,000. Orlando CityPlace II, LLC listed total assets and debts of $1 million to $100 million. PANHANDLE (TX): Moody's Downgrades Revenue Bonds' Ratings --------------------------------------------------------- Moody's Investors Service has downgraded the ratings on the Panhandle (TX) Regional Housing Finance Corporation Multi-Family Housing Revenue Bonds (Canterbury/Three Fountains/River Falls/Puckett Place Apartments) to Caa3 from Caa2 (Senior Series 2000A), to C from Ca (Subordinate Series 2000C), and to C from Ca (Junior Subordinate Series 2000D) based on continued payment defaults and declining occupancy. The Senior Series 2000 B bonds have matured and the Subordinate E Series bonds are not rated. On Aug. 10, 2007, the trustee for the bonds issued a notice of default stating that the borrower, Amarillo Affordable Housing, LLC, failed to make deposits sufficient to make the basic loan payments and additional loan payments with respect to the Series A, C, D and E bonds. As previously reported, there have been payment defaults on the series C, D and E bonds on the Sept. 1, 2006 interest payment date. The failure to make timely payments continued, and an additional payment default occurred with respect to all outstanding series of bonds on March 1, 2007. In addition, management reports that another payment default occurred on the Sept. 1, 2007 interest payment date, when no principal or interest was paid. According to both the Aug. 10, 2007 notice to bondholders and a Feb. 22, 2007 notice, the trustee does not intend to make up any shortfalls in the Bond Funds by transferring amounts from the applicable Debt Service Reserve Funds. The trustee intends to reserve these resources and apply them in the pursuit of remedial actions to conserve the projects. Outlook The outlook for the bonds is negative based on the continued decline in project occupancy and Moody's expectation that payment defaults will continue. PERFORMANCE TRANS: Creditors Back Tight Budget on Professionals --------------------------------------------------------------- D.E. Shaw Laminar Portfolios L.L.C. and Quadrangle Debt Recovery Advisors LP, contend with the U.S. Bankruptcy Court for the Western District of New York, that the economics of the Performance Transportation Services Inc. and its debtor- affiliates' bankruptcy cases require a tight budget for all professionals, but particularly The Official Committee of Unsecured Creditors'. D.E. Shaw and Quadrangle, together, hold a majority of the second lien debt issued pursuant to the Debtors' Second Lien Credit and Guaranty Agreement dated Jan. 26, 2007. James C. Tecce Esq., at Quinn Emanuel Urquhart Oliver & Hedges, LLP, in New York, asserts that any fees and expenses paid to the Committee's professionals is the Second Lien Lenders' money. Accordingly, D.E. Shaw and Quadrangle propose to the Court that: -- the Second Lien Lenders, along with the First Lien Lenders and the Debtors, discuss and agree upon an appropriate amount of monthly fees and expenses to be included in the DIP budget to pay the proposed Committee professionals; and -- fees and expenses incurred in excess of the budgeted amounts be payable solely from unsecured creditors' recoveries and not be allowed administrative expense claims. Mr. Tecce contends that the Debtors' estates may be saddled with significant claims that will need to be paid pursuant to a Chapter 11 plan of reorganization -- even if the plan provides no recovery for unsecured creditors. Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The Court confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their retructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. (Performance Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PERFORMANCE TRANS: Can Hire FTI Consulting as Financial Advisors ---------------------------------------------------------------- Performance Transportation Services Inc. and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Western District of New York to employ FTI Consulting Inc. as their financial advisors. President and chief executive officer Jeffrey L. Cornish of Performance Logistics Group Inc., said that FTI possesses a longstanding relationship with the Debtors in that the firm rendered financial advisory services to the Debtors when the Debtors filed for bankruptcy in 2006. FTI is expected to: a. assist the Debtors with information and analyses required pursuant to the Debtors' debtor-in-possession financing; b. assist with the identification and implementation of cash management procedures; c. assist with the review and development of a long-range business plan and supporting analyses; d. assist with the identification of executory contracts and leases and performance of cost/benefit evaluations with respect to the affirmation or rejection of those contracts or leases; e. assist in the preparation of financial information for distribution to creditors and others, including, but not limited to, cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts and analysis of proposed transactions for which Court approval is sought; f. attend meetings and assist in discussions with potential investors, banks and other secured lenders, any official committee appointed in the Chapter 11 cases, the United States Trustee, other parties-in-interest and professionals hired by these parties, as requested; g. assist in the preparation of information and analyses necessary for the confirmation of a plan of reorganization in the Chapter 11 cases, including information contained in the disclosure statement; h. assist in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers; i. provide accounting and tax support; j. testify on case-related issues as required by the Debtors; and k. render other financial advisory services as the Debtors' management or counsel may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals in the Debtors' bankruptcy cases. The Debtors will pay FTI based on its professionals' hourly rates: Professional Rate ------------ ---- Senior Managing Directors $595 - $695 Directors/Managing Directors $435 - $590 Associates/Consultants $215 - $405 Administration/Paraprofessionals $95 - $175 The Debtors will also reimburse FTI for reasonable and necessary expenses incurred in connection with their Chapter 11 cases, including, but are not limited to, airfare, meals, hotel accommodations, telephone, industry research, duplicating and printing. David J. Beckman, a senior managing director with FTI Consulting Inc., relates that according to his firm's books and records, during the 90-day period before to the Debtors' Petition Date, FTI received $128,145.78 from the Debtors for professional services performed and expenses incurred. "FTI's current estimate is that it has received unapplied advance payments from the Debtors in excess of prepetition billings in the amount of $100,000," Mr. Beckman said. "The Debtors and FTI have agreed that the retainer will not be segregated by FTI in a separate account but will be held until the end of the Debtors' chapter 11 cases and applied to FTI's final approved fees." Mr. Cornish tells the Court that Mr. Beckman and the FTI employees will not be entitled to any salary from the Debtors. The FTI employees will draw their salary and receive health and other benefits from FTI. Mr. Beckman adds that, to the best of his knowledge, FTI is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The Court confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their retructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. (Performance Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PERFORMANCE TRANS: Can Employ Sitrick as Comms. Consultants ----------------------------------------------------------- Performance Transportation Services Inc. and its debtor-affiliates obtain permission from the U.S. Bankruptcy Court for the Western District of New York to employ Sitrick and Company Inc., as their corporate communications consultants. Jeffrey L. Cornish, president and chief executive officer of Performance Logistics Group Inc., related that Sitrick served as corporate communications consultants when the Debtors filed for bankruptcy in 2006. Before the Debtors' bankruptcy filing, Mr. Cornish said, Sitrick assisted in the development of a comprehensive communications strategy designed to facilitate the smooth transition of the Debtors' operations into Chapter 11. Among other things, Sitrick prepared public announcements of the commencement of the Debtors' Chapter 11 cases and prepared other communications to all relevant constituencies. Sitrick is expected to: a. develop and implement communications programs and related strategies and initiatives for communications with the Debtors' key constituencies, including customers, employees, vendors, shareholders, bondholders and the media, regarding the Debtors' operations and financial performance and the Debtors' progress through the Chapter 11 process; b. develop public relations initiatives for the Debtors to maintain public confidence and internal morale during the Chapter 11 cases; c. prepare press releases and other public statements for the Debtors, including statements relating to major Chapter 11 events; d. prepare other forms of communication to the Debtors' key constituencies and the media, potentially including materials to be posted on the Debtors' Web sites; and e. perform other communications consulting services as may be requested by the Debtors. Before bankruptcy filing, the Debtors provided Sitrick with a $25,000 retainer and a refundable expense advance of $10,000 for all reasonable and necessary out-of-pocket expenses incurred, including, but not limited to, transportation, lodging, food, production costs and copying services. As of the Petition Date, Mr. Cornish said, the Debtors did not owe Sitrick any amounts for prepetition services rendered. The Debtors tell the Court that Sitrick will charge for its professional services on an hourly basis -- its ordinary and customary hourly rates range from $165 to $850. The firm will also seek reimbursement of actual and necessary out-of-pocket expenses. Anita-Marie Laurie, an employee of Sitrick and Company Inc., assures the Court that Sitrick is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The Court confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their retructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims & balloting agent is Kutzman Carson Consultants LLC. (Performance Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PERKINS AND MARIE: Moody's Junks Corporate Family Rating -------------------------------------------------------- Moody's Investors Service downgraded Perkins & Marie Callender's Inc.'s corporate family rating to Caa1 from B3, its senior secured credit facilities rating to B1 from Ba3, and the senior unsecured notes rating to Caa2 from Caa1. Concurrently, the company's speculative grade liquidity rating was lowered to SGL-4 from SGL-3. The rating outlook was revised to negative. The rating action mainly reflects Moody's concern over PMC's deteriorating liquidity position, stemming from the company's potential difficulty in meeting its covenant requirements under its credit agreement. In particular, the maximum leverage ratio covenant remained very tight at the end of third quarter 2007(Oct. 7, 2007) and will step down to 5.00x from 5.25x in the first quarter 2008 and further tighten to 4.75x in the third quarter in 2008. PMC's cash balance will remain modest ($5.5 million as of the 3rd quarter) with break-even to negative free cash flow generation in the next twelve months per Moody's estimate. Therefore, Moody's expects that PMC will need to obtain covenant relief or a waiver from its creditors to avoid a breach in the next twelve months, absent a significant improvement in cash flow generation. Such improvement is less likely given the currently challenging operating environment for family dining restaurant operators, which Moody's views as persisting over the intermediate term. The Caa1 corporate family rating reflects the company's weak debt protection metrics and eroding liquidity, as represented by high leverage, weak cash flow generation, and tightening covenants. Credit metrics will remain weak for the next 12 to 18 months primarily due to languishing same store sales growth and margin pressures, largely offsetting the cost efficiency synergies realized from the merger of Perkins and Marie Callender's from May 2006. The ratings also incorporate the company's established concepts of Perkins and Marie Callender's, as well as by the company's decent scale and geographic diversification and complementary day-part segments. The negative outlook reflects the ongoing challenges management faces in the current operating environment that must be surmounted in order to dramatically and quickly turn around the operating performance to avoid potential covenant violations. Ratings could be further downgraded should the risk of a potential covenant violation come to fruition or should liquidity become constrained. These ratings were affected by the action: * Ratings downgraded: -- Corporate family rating to Caa1 from B3 -- Probability of default rating to Caa1 from B3 -- $40 million senior secured revolving credit facility due 2011 to B1 (LGD2, 15%) from Ba3 (LGD2, 15%) -- $100 million senior secured term loan due 2013 to B1 (LGD2, 15%) from Ba3 (LGD2, 15%) -- $190 million senior unsecured notes due 2013 to Caa2 (LGD5, 71%) from Caa1 (LGD5, 71%) -- Speculative grade liquidity rating to SGL-4 from SGL-3 * Rating Outlook: Negative Perkins & Marie Callender's, headquartered in Memphis, Tennessee, operated 159 restaurants and franchised 323 units under the "Perkins" brand name as of Oct. 7, 2007. The company also operated 90 restaurants and franchised 44 units under the "Marie Callender's" name. Revenues for the last twelve months were approximately $593 million. PIKE NURSERY: Can Hire Scroggins & Williamson as Bankr. Counsel --------------------------------------------------------------- Pike Nursery Holding LLC has obtained authority from the U.S. Bankruptcy Court for the Northern District of Georgia to employ Scroggins and Williamson as its counsel. The Debtor states that Scroggins and Williamson is well qualified to represent them as it is familiar with the Debtor's legal and operational problems having knowledge and experience in bankruptcy practice. Scroggins and Williamson is expected to: a) prepare pleadings and applications; b) conduct examinations; c) advise the Debtor of its rights, duties and obligations as debtor-in-possession; consult with the Debtor and represent the Debtor with respect to a Chapter 11 plan; perform legal services incidental and necessary to the day-to-day operation of the Debtor's business including institution and prosecution of legal proceedings, and general business and corporate legal advice and assistance; and d) take any action incidental to the proper preservation and administration of the Debtor's estate and business. The Debtor tells the Court that it will pay Scroggins and Williamson based on the firm's ordinary rates plus expenses incurred in relation to the case. J. Robert Williamson, a principal in the Scroggins and Williamson, relates that the professionals' rates are: Designation Hourly Rate ----------- ----------- Lawyers $235 - $335 Legal Assistants $75 Mr. Williamson states that the Debtor has paid the firm a $50,000 retainer fee for the representation services rendered. Mr. Williamson assures the Court that Scroggins and Williamson is "disinterested" as that term is defined in the Section 101(14) of the Bankruptcy Code. Mr. Williamson can be reached at: Scroggins and Williamson Suite 1500, The Candler Building 127 Peachtree Street, N.E. Atlanta, GA 30303 Tel 404-893-3880 Fax 404-893-3886 About Pike Nursery Based in Norcross, Georgia, Pike Nursery Holdings LLC operates plant nurseries in 22 locations at Georgia, North Carolina, and Alabama. Due to drought and further water supply restrictions, the Debtor filed for Chapter 11 protection on Nov. 14, 2007 (Bankr. N.D. Ga. Case No. 07-79129). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtor in its restructuring efforts. The Debtor chose BMC Group as its claims, noticing, and balloting agent. Jeffrey N. Pomerantz, Esq. and Jeffrey W. Dulberg, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $1 million to $100 million. PIKE NURSERY: Taps BMC Group as Claims and Noticing Agent --------------------------------------------------------- Pike Nursery Holding LLC seeks authority from the U.S. Bankruptcy Court for the Northern District of Georgia to employ The BMC Group Inc. as claims, noticing, and balloting agent. The Debtor states that is necessary and in the best interests of its creditors and estate to engage BMC to act as outside agent to the Clerk of Court. BMC will expedite the distribution of notices and relieve the Clerk's office of the administrative burden of processing such notices. BMC Group will: a) create and maintain a computer database of all creditors, claimants and parties-in-interest; b) prepare and serve required notices in this Chapter 11 case, which may include: i) notice of the commencement and the initial meeting of creditors; ii) notice of the claims bar date, if any; iii) notice of objections to claims; iv) notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; and v) other miscellaneous notice to any entities, as may be deemed necessary for the orderly administration of the case; c) after the mailing of a particular notice, prepare for filing with the Clerk's office a certificate or affidavit of service that references the document served and includes an alphabetical listing of the parties to whom the notice was mailed and the date and manner of mailing; d) receive and record proofs of claim and proofs of interest; e) create and maintain official claims registers, including these information for each proof of claim or proof of interest: i) the name of the Debtor; ii) the name and address of the claimant, and any agent thereof; iii) the date received; iv) the claim number assigned; and v) the asserted amount and classification of claim; f) implement necessary security measures to ensure the completeness and integrity of the claims registers; g) transmit to the Clerk's Office a copy of the claims registers upon request and at agreed upon intervals; h) act as balloting agent which will include the following services: i) print ballots; ii) coordinate mailing of ballots, disclosure statement, and plan of reorganization and other appropriate materials to all voting and non-voting parties, and provide affidavit of service; iii) prepare voting reports by plan class, creditor, or shareholder, and amount for review and approval by the Debtor and its counsel; iv) establish a toll-free number to receive questions regarding the voting on the plan; and v) receive and tabulate ballots, inspect ballots for conformity to voting procedures, date stamp and number ballots consecutively, provide computerized balloting database services and certify the tabulation results; i) maintain an up-to-date creditor matrix, which list shall be available upon request of a party-in-interest or the Clerk's office; j) record all transfers of claims pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and provide notice of such transfers as required thereunder; k) comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders, and other requirements; l) provide temporary employees to process claims, as necessary; m) promptly comply with such further conditions and requirements as the Clerk's office or the Court may at any time prescribe; n) perform such other administrative and support related noticing, claims, docketing, solicitation and distribution services as the Debtor or the Clerk's office may request; o) provide reconciliation and resolution of claims services to the Debtor; p) aid in the preparation of the schedules of assets and liabilities and the statement of financial affairs; and q) aid in the preparation, mailing, and tabulation of ballots for the purpose of accepting or rejecting any plans of reorganization proposed by the Debtor. The Debtor tells the Court that BMC will be compensated according to its usual fee arrangement, which combines an hourly fee rate with per-task charges for certain services, prepaid postage expenses, and reimbursement for reasonable out-of-pocket expenses. Tinamarie Feil, a principal/officer at BMC Group, relates that the firm's professionals' rates are: Designation Hourly Rate ----------- ----------- Seniors/Principals $205 - 295 Consultants $110 - 185 Case Admin Managers $95 Data Entry/Clerical $45 Ms. Feil assures the Court that the firm is "disinterested as that term is defined in the Section 101(14) of the Bankruptcy Code. Based in Norcross, Georgia, Pike Nursery Holdings LLC operates plant nurseries in 22 locations at Georgia, North Carolina, and Alabama. Due to drought and further water supply restrictions, the Debtor filed for Chapter 11 protection on Nov. 14, 2007 (Bankr. N.D. Ga. Case No. 07-79129). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtor in its restructuring efforts. The Debtor chose BMC Group as its claims, noticing, and balloting agent. Jeffrey N. Pomerantz, Esq. and Jeffrey W. Dulberg, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $1 million to $100 million. PLASTECH ENGINEERED: Moody's Places Ratings Under Review -------------------------------------------------------- Moody's Investors Service placed the ratings of Plastech Engineered Products, Inc., Corporate Family B3, under review for possible downgrade. The company's operations have been pressured by automotive OEM production declines by domestic automotive OEMs (its largest customers) and by challenges in the expansion of its long-term business relationship with Johnson Controls, Inc. Consequently, the company's earnings, cash generation and ability to meet covenant requirements under its borrowing agreements are being strained. Moody's review will consider Plastech's ability to negotiate additional covenant cushions under its bank credit facilities over the near term, and the company's ability to maintain adequate liquidity going forward. The review will also consider the company prospects for rebuilding profitability under the currently difficult automotive supplier industry operating environment. Industry pressures include: lower production pressure from the Big-3 OEMs in North America, increasing raw material cost, particularly resins, and the continuing need to find internal operational efficiencies in order mitigate negotiate price downs in existing customer contracts. These ratings are under review for downgrade: -- Corporate Family Rating, at B3 -- Probability of Default Rating, at B3 -- B1 (LGD2, 29%), rating for the $200 million asset based revolving credit facility, due 2011; -- B3 (LGD3, 45%) rating for the $265 million first lien term loan due 2012; -- Caa2 (LGD5, 81%) rating for the $100 million second lien term loan, due 2013 The last rating action for Plastech was on Jan. 30, 2007 at which time the ratings were affirmed. Plastech Engineered Products, headquartered in Dearborn, Michigan, is a leading designer and manufacturer of primarily plastic automotive components and systems for OEM and Tier I customers. These components and systems incorporate injection-molded plastic parts, blow-molded plastic parts, and a small percentage of stamped metal components. They are used for interior, exterior and under-the-hood applications. Annual revenues approximate $1.4 billion. PUERTO RICO INDUSTRIAL: S&P Affirms BB- Rating with Stable Outlook ------------------------------------------------------------------ Standard & Poor's Rating Services revised its rating outlook on Puerto Rico Industrial, Tourism, Medical and Environmental Control Facilities Finance Authority's series 1996A and 1997A bonds, issued for Mennonite General Hospital Inc., to stable from negative, and affirmed its 'BB-' rating on the bonds. The outlook revision reflects Mennonite's increasing utilization and sustained improvement in operations and cash flow, which is approaching a four-year positive trend. "The improved operating results have contributed to stable coverage of maximum annual debt service, and is beginning to positively affect Mennonite's liquidity position," said Standard & Poor's credit analyst Mr. Stephen Infranco. "However, Mennonite still suffers from very weak liquidity levels, which provide relatively little financial flexibility in the event of operational stress." The rating reflects the hospital's weak balance sheet characteristics, including very weak liquidity and high leverage; unfavorable payer mix, with a very high Medicaid population; strong market position, although Mennonite operates in a very limited economic service area with above-average levels of unemployment; improved operations over the past three fiscal years; and favorable patient volumes. Other credit factors include the potential to boost liquidity through a sale of property. Although the cash received from the sales would be considered a positive factor, at least in the near term, the underlying liquidity levels remain an ongoing rating concern. The revised rating outlook affects about $41.1 million in rated debt. PHARMED GROUP: Seeks Court OK on Bidding Procedure Sale of Assets ----------------------------------------------------------------- Pharmed Group Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of California to approve the bidding procedure for the sale of certain real property free and clear of liens and interest. On Dec. 14, 2007, the Debtor entered into a asset purchase agreement with Florida Power & Light Company for the sale of that property located at 3075 N.W. 107 Avenue in Miami, Florida, for $10,100,000. The property has served as the Debtors' corporate headquarters. The Debtors tells the Court that the assets are encumbered by a mortgage in favor of International Finance Bank of $4.7 million, and Comerica Bank of $1.34 million. In addition, according to the Debtors, the asset was pledged as collateral to Comerica Bank in connection with the Debtors' interim postpetition financing from Comerica. Sales Protocol Interested bidders must deliver an initial written purchase offer before Jan. 25, 2008, at 5:00 p.m. Each bidder must place an initial $500,000 deposit in escrow in the trust account of the Debtors' counsel. The initial qualified competing bid must exceed the purchase price by at least $100,000. The Debtors will conduct an auction on Jan. 28, 2007, at Berger Singerman P.A., 200 S. Biscayne Boulevard, Suite 1000. The Debtors also ask the Court to have a sale hearing immediately after the conclusion of the auction The Debtors agreed to pay a break-up fee of $75,000. A hearing has been set on Dec. 27, 2007, to consider the Debtors' request. About Pharmed Group Headquartered in Miami, Florida, Pharmed Group Holdings Inc. -- http://www.pharmed.com/-- and its affiliates sends drugs and medical supplies on Caribbean cruises. They distribute medical, rehabilitative, and surgical supplies throughout the southeastern U.S., as well as Caribbean, and Central and South American countries. They deliver products made by Dynatronics, Welch Allyn, and Smith & Nephew. In addition to their distribution businesses, they make and distribute vitamins, minerals, nutraceuticals, and dietary supplements. The company and four debtor-affiliates filed for chapter 11 protection on Oct. 26, 2007 (Bankr. S.D. Fl. Case Nos. 07-19187 through 07-19191). Paul Steven Singerman, Esq., and Brian Rich, Esq., at Berger Singerman PA, represent the Debtors. Trumbull Group LLC serves as the Debtors' claims and noticing agent. PORTOLA CLO: Moody's Puts Ba2 Rating to $16.5 Mil. Class E Notes ---------------------------------------------------------------- Moody's Investors Service announced that it has assigned these ratings to Notes issued by Portola CLO, Ltd. (the "Issuer"): (1)Aaa to the $360,000,000 Class A Floating Rate Notes Due November 2021; (2)Aa2 to the $44,500,000 Class B-1 Floating Rate Notes Due November 2021; (3)Aa2 to the $5,000,000 Class B-2 Fixed Rate Notes Due November 2021; (4)A2 to the $22,000,000 Class C Deferrable Floating Rate Notes Due November 2021; (5)Baa2 to the $17,500,000 Class D Deferrable Floating Rate Notes Due November 2021; and (6)Ba2 to the $16,500,000 Class E Deferrable Floating Rate Notes Due November 2021. The Moody's ratings of the Notes address the ultimate cash receipt of all required interest and principal payments, as provided by the Notes' governing documents, and are based on the expected loss posed to Noteholders, relative to the promise of receiving the present value of such payments. The ratings reflect the risks due to the diminishment of cash flow from the underlying portfolio consisting of commercial loans due to defaults, the transaction's legal structure and the characteristics of the underlying assets. Pacific Investment Management Company LLC will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. PREMIER WEALTH: Posts $368,899 Net Loss in Quarter Ended Sept. 30 ----------------------------------------------------------------- Premier Wealth Management Inc. reported a net loss of $368,899 on revenue of $825,318 for the third quarter ended Sept. 30, 2007, compared with a net loss of $64,334 on revenue of $286,139 for the same period last year. Commissions paid to advisors increased from $97,115 in 2006 to $374,128 in 2007. Administration expenses increased from $353,433 in 2006 to $1.5 million in 2007. These changes were mainly due to the additional revenue, cost of revenue and overhead from the subsidiaries acquired subsequent to the financial reporting for the second quarter of last year. The newly acquired subsidiaries were not fully functional during the initial months of the current year which resulted in an increase in overhead. Depreciation and amortization, which includes the amortization of intangible assets, increased to $407,480 in 2007 from $131,053 in 2006. At Sept. 30, 2007, the company's consolidated balance sheet showed $26.1 million in total assets, $14.4 million in total liabilities, and $11.7 million in total stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $864,740 in total current assets available to pay $14.4 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?2681 Going Concern Doubt Malone & Bailey PC, in Houston, expressed substantial doubt about Tally Ho Ventures Inc. nka. Premier Wealth Management Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's negotive working capital. The company has had limited operations and has recently lost a revenue generating division, Master Finance, in a foreclosure action, and is in default on its obligations to repay $3,000,0000 to a creditor with a senior lien on its remaining business. The company is currently in the process of negotiating terms with this creditor and its principals. About Premier Wealth Incorporated in the State of Delaware, and headquartered in Nicosia, Cyprus, Premier Wealth Management Inc. (OTC BB: PWMG) -- formerly known as Tally-Ho Ventures Inc., is currently executing a business strategy designed to position the company as a preferred provider of highly personalized private wealth advisory and investment management services to mid and high net worth individuals and families across Europe and the Far East. Since early 2006, Premier has completed the acquisition and integration of three financial services companies based in Europe, amassing financial assets of approximately 22,000 mid and high net worth investors in 50 countries. RADIO ONE: Moody's Cuts Ratings on $800 Mil. Credit Facility ------------------------------------------------------------ Moody's Investors Service downgraded Radio One, Inc.'s Corporate Family Rating to B1 from Ba3 and its $800 million secured credit facility ($500 million revolver, $300 million term loan) to Ba2 from Ba1. In addition, Moody's downgraded Radio One's 8 7/8% senior subordinated notes and 6 3/8% senior subordinated notes to B3 from B1. The ratings outlook is stable. This concludes the review for downgrade initiated in March 2007 following the delay in the filing of the company's Dec. 31, 2006 Form 10-K, and the subsequent covenant issues encountered by the company. The ratings downgrade reflects the company's continued weak operating performance, weaker than previously expected credit metrics and limited cushion under the company's financial covenants. Moody's has taken these ratings actions: Radio One, Inc. -- Corporate family rating -- downgraded to B1 from Ba3 -- Probability-of-default rating -- downgraded to B1 from Ba3 -- $500 million Secured revolver -- downgraded to Ba2 from Ba1 (to LGD 2, 24% from LGD 2, 25%) -- $300 million Secured term loan -- downgraded to Ba2 from Ba1 (to LGD 2, 24% from LGD 2, 25%) -- $200 million 6 3/8% senior subordinated notes -- downgraded to B3 from B1 (to LGD 5, 80% from LGD 5, 81%) -- $300 million 8 7/8% senior subordinated notes -- downgraded to B3 from B1 (to LGD 5, 80% from LGD 5, 81%) The outlook is stable. Radio One, Inc.'s B1 Corporate Family Rating reflects significant debt to EBITDA leverage, continued weakness at several of its stations and modest free cash flow to debt. In addition, Moody's expects the company to have limited cushion under its financial covenants in the senior secured credit agreement. The rating also incorporates the inherent cyclicality of the advertising market, Moody's belief that radio is a mature business with limited growth prospects and the increasing fragmentation of advertising dollars over a growing number of media. The rating is supported by the company's diverse geographic presence, its complementary properties targeting the African - American audience and substantial proportion of local advertising revenues. Radio One, Inc., headquartered in Lanham, Maryland is a radio broadcaster that owns and/or operates 54 radio stations located in 17 urban markets in the U.S. RELIANT PHARMACEUTICALS: All Ratings Withdrawn by S&P ----------------------------------------------------- Standard & Poor's Ratings Services withdrew all of its ratings on Reliant Pharmaceuticals Inc., following the completion of GlaxoSmithKline PLC's acquisition of the company for $1.65 billion cash. All debt under Reliant was repaid in full and its revolving credit facility terminated. Ratings List Ratings Withdrawn ----------------- To From -- ---- Reliant Pharmaceuticals Inc. Corporate credit rating NR B+/Stable/-- Senior secured NR B+ Recovery rating NR 3 RESOURCE REAL: Fitch Affirms Ratings From All Note Classes ---------------------------------------------------------- Fitch affirms all classes of Resource Real Estate Funding CDO 2006-1 notes as: -- $129,370,000 class A-1 floating-rate at 'AAA'; -- $5,000,000 class A-2 FX fixed-rate at 'AAA'; -- $17,420,000 class A-2 FL floating-rate at 'AAA'; -- $6,900,000 class B floating-rate at 'AA'; -- $20,700,000 class C floating-rate at 'A+'; -- $15,520,000 class D floating-rate at 'A-'; -- $20,700,000 class E floating-rate at 'BBB+'; -- $19,830,000 class F floating-rate at 'BBB'; -- $17,250,000 class G floating-rate at 'BBB-'; -- $12,930,000 class H floating-rate at 'BBB-'; -- $14,660,000 class J fixed-rate at 'BB'; -- $28,460,000 class K fixed-rate at 'B'. Deal Summary: RRE 2006-1 is a revolving commercial real estate cash flow collateralized debt obligation that closed on Aug. 10, 2006. It was incorporated to issue $345,000,000 of floating and fixed rate notes and preferred shares. As of the Nov. 19, 2007 trustee report and based on Fitch categorizations, the CDO is substantially invested as: commercial mortgage whole loans and A- notes (34.7%), B-notes (9.3%), commercial real estate mezzanine loans (48.2%), commercial mortgage-backed securities (7.5%), and cash (0.3%). The CDO is also permitted to invest in real estate related corporate and bank debt, credit tenant lease loans, and CRE CDO securities. The portfolio is selected and monitored by Resource Real Estate, Inc. RRE 2006-1 has a five-year reinvestment period during which, if all reinvestment criteria are satisfied, principal proceeds may be used to invest in substitute collateral. The reinvestment period ends in August 2011. Asset Manager: Resource Real Estate Inc. and affiliates, originates, acquires, invests in, and manages a diversified portfolio of commercial real estate loans and securities, including whole loans, B notes, mezzanine loans, and commercial mortgage-backed securities investments on behalf of Resource Capital Corp., an externally managed real estate investment trust. RRE has $1.5 billion of assets under management. RRE's business lines also include the resolution of a portfolio of one-off restructured commercial mortgages acquired between 1991 and 1998; the sponsorships of private equity funds that invest in stable multifamily properties on a nationwide basis; and the structuring and management of tenant-in-common investment interests in real property. RRE is a wholly owned subsidiary of Resource America, Inc. RAI is a publicly traded specialized asset management company managing $16.8 billion as of June 30, 2007; this includes 31 collateralized debt obligations within its core competency sectors -- financial institutions, real estate, asset-backed securities, syndicated loans, and leasing. Performance Summary: As of the November 2007 trustee report, the as-is poolwide expected loss has increased to 35.625% from 30.125% at last review (February 2007). The negative migration is attributed to the addition of hotels and highly leveraged mezzanine loans. However, the CDO maintains an above average amount of reinvestment flexibility with a 15.875% cushion. Since last review, eight loans (totaling $132.9 million) have been added to the pool while ten loans (totaling $166.8 million) have paid off. On average, the loans added to the pool have a higher expected loss then those that paid off. At close the PEL of 31.5% provided a significant amount of reinvestment cushion to account for the CDO's ability to add up to 20% condo conversion loans and 10% land loans. In general, condo conversion and land loans are more volatile than other property types. Currently, the CDO has no exposure to condo conversion or land loans; however, the CDO is still within its reinvestment period and could potentially migrate to include the maximum allowable percentage of each property type. Hotel and mezzanine loans have increased such that they are close to breaching their respective covenants. The Fitch stressed loan to value has increased to 121.4% from 98.6% and the Fitch stressed debt service coverage ratio, has decreased to 0.93x from 1.11x. The weighted average spread has declined to 2.93% from 3.00%, but remains above the covenant of 2.75%. The weighted average coupon has increased to 8.02% from 7.82% and remains above the 7.00% covenant. The weighted average life has remained at 2.2, which continues to imply that the loans will fully turnover during the reinvestment period. The overcollateralization and interest coverage ratios of all classes have remained above their covenants, as of the November 19, 2007 trustee report. Collateral Analysis: Since last review, the portfolio has migrated to a higher concentration of mezzanine loans (to 48.2% from 37.3%). Offsetting the increase in mezzanine loans is the decrease in B-notes to 9.3% from 32.7%. The newly added mezzanine loans, however, are more highly leveraged than the B-notes that have paid off. Uninvested proceeds (cash yet to be invested) comprise 0.3% of the collateral balance. The pool now includes 7.5% CMBS compared to 0% previously. The CMBS consists of four investment-grade securities from three different large loan floating rate CMBS deals. These bonds are all rated 'BBB-' and comprise 7.5% of the portfolio. Per the November 19, 2007 trustee report and based on Fitch categorization, the CDO is within all its property type covenants; hotels have the highest concentration at 33.2%. The hotel concentration has increased since last review and is near the covenanted maximum amount of 40%. It should be noted that the six loans secured by hotels include four portfolio loans backed by 23 separate hotels properties. Four of these loans portfolio loans, secured by a total of 23 full service hotel properties, represent 22% of the CDO further diversifying thereby mitigating the high concentration. The CDO is also within all its geographic covenants with the highest concentration in California at 20.6%. The Fitch Loan Diversity Index is 509, which represents a slightly more concentrated portfolio as compared to other CRE CDOs. The Fitch Loan Diversity Index covenant is a maximum of 588. However, the CDO includes 11 loans (55.6% of pool) which are secured by portfolios of properties which further diversifies the pool. Rating Definitions: The ratings of the class A and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class C, D, E, F, G, H, J and K notes address the likelihood that investors will receive ultimate interest and deferred interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. Upgrades during the reinvestment period are unlikely, given the pool could still migrate to the PEL covenant. The Fitch PEL is a measure of the hypothetical loss inherent in the pool at the 'AA' stress environment before taking into account the structural features of the CDO liabilities. Fitch PEL encompasses all loan, property, and poolwide characteristics modeled by Fitch. RURAL CELLULAR: Sept. 30 Balance Sheet Upside-Down by $792.1 Mil. ----------------------------------------------------------------- Rural Cellular Corp.'s consolidated balance sheet at Sept. 30, 2007, showed $1.33 billion in total assets, $1.92 billion in total liabilities, and $197.4 million in redeemable preferred stock, resulting in a $792.1 million total stockholders' deficit. The company reported net income of $6.2 million on total revenue of $171.9 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $15.5 million on total revenue of $148.8 million in the same period last year. Service revenue increased to $110.1 million from $96.0 million in the prior period quarter. The increase in service revenue for the three months ended Sept. 30, 2007, primarily reflects 67,981 additional postpaid customers as compared to Sept. 30, 2006. Roaming Revenue increased to $54.5 million from $46.9 million in the 2006 quarter. The 16.1% increase in roaming revenue during the three months ended Sept. 30, 2007, primarily reflects a 20.5% increase in outcollect minutes and an increase in data revenue. Equipment revenue for the three months ended Sept. 30, 2007, increased $1.4 million, or 24.4%, to approximately $7.3 million resulting from an increase in the average handset sales price. Operating income increased to $49.3 million from $29.7 million last year mainly as a result of the increase in total revenue, partly offset by a $3.5 million increase in total operating expenses. Interest expense for the three months ended Sept. 30, 2007, decreased $3.8 million, or 8.0%, primarily reflecting moderately lower debt levels and lower average rates, than a year ago. Nine Month Results Total operating revenue increased $47.7 million, or 11.3%, to $469.8 million for the first nine months ended Sept. 30, 2007, versus $422.1 million in the comparable period in 2006. Net loss of $18.5 million for the nine months ended Sept. 30, 2007, compared to a net loss of $62.4 million in the first nine months ended Sept. 30, 2006. Liquidity Primarily reflecting the cash payment of $41.7 million in dividends on the senior exchangeable preferred stock and the cash payment of $32.8 million in dividends on the junior exchangeable preferred stock, the company's cash and cash equivalents and short-term investments decreased to $89.3 million as compared to $183.2 million at Dec. 31, 2006. Cash interest payments during the nine months ended Sept. 30, 2007, were $203.9 million as compared to $127.3 million during the nine months ended Sept. 30, 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?268f About Rural Cellular Based in Alexandria, Minnesota, Rural Cellular Corporation (Nasdaq: RCCC) -- http://www.unicel.com/-- provides wireless communication services to Midwest, Northeast, South and Northwest markets located in 15 states. On Oct. 4, 2007, the company disclosed that its shareholders voted to approve the merger agreement providing for the acquisition of Rural Cellular Corporation by Verizon Wireless for approximately $2.67 billion in cash and assumed debt. The acquisition is subject to certain closing conditions, including governmental and regulatory approvals, and is expected to close in the first half of 2008. * * * As reported in the Troubled Company Reporter on Aug. 1, 2007, Fitch Ratings placed the ratings of Rural Cellular Corporation, including the company's 'CCC' Issuer default rating, on Rating Watch Positive subsequent to the announcement that Verizon Wireless will acquire the company for approximately $2.67 billion in cash and assumed debt. SANMINA SCI: Moody's Downgrades Senior Notes' Ratings to B1 ----------------------------------------------------------- Moody's Investors Service downgraded Sanmina SCI Corporation's corporate family rating and senior notes ratings to B1 from Ba3 and the senior subordinated notes to B3 from B2. This rating action concludes Moody's review for possible downgrade initiated on Aug. 20, 2007, which was triggered by the company's continued poor operating results, reflecting weak demand from original equipment manufacturers for its products and operational inefficiencies in the components business. The ratings outlook is stable. The downgrade to B1 reflects: (i) company's continued weak fundamentals, including declining revenues and low operating margins hampered by the components business (in particular, the enclosures and printed circuit board divisions) and the personal computing segment, which the company had expected to sell by the end of 2007; (ii) sub-par asset utilization and ongoing business restructurings, which have totaled roughly $264 million since the beginning of fiscal year 2005 with another $75 to 85 million expected over the next couple of quarters; (iii) heightened competition arising from industry consolidation (e.g., the recent Flextronics acquisition of Solectron) and the growth of Asian outsourcers; and (iv) high leverage of 6.1x (Moody's adjusted debt to EBITDA) as a result of low EBIT levels over the past year. Supporting Sanmina's B1 rating are solid working capital management and free cash flow generation ($407 million on a Moody's adjusted basis during fiscal year 2007), the company's tier one status in the EMS industry with a focus on non-consumer, high mix products and services, growing diversity in Sanmina's end markets served, and the company's strength in some of the newer industries such as medical and defense. The stable outlook reflects Moody's expectation of continuing free cash flow generation and debt reduction in 2008 and improvements in the business and financial profile arising from the planned exit of the low margin PC segment and restructuring of the components business. With significant restructuring actions completed during the latter half of 2007 including management changes and facility closures, Moody's expects gross margins in the components business to improve with the enclosures group reaching profitability in 2008. Sanmina has about $930 million in cash and equivalents as of Sept. 30, 2007, with full access to a revolving credit facility of $500 million. The company's total debt is currently $1.48 billion, including redemption of $120.0 million in aggregate principal amount of its Senior Floating Rate Notes due 2010 which was announced on Dec. 18, 2007. These ratings were downgraded: - Corporate family rating to B1 from Ba3 - Probability of default rating to B1 from Ba3 - $180 million senior floating rate notes due 2010 to B1 from Ba3 (LGD3, 47%) - $300 million senior floating rate notes due 2014 to B1 from Ba3 (LGD3, 47%) - $400 million senior subordinated notes due 2013 to B3 from B2 (LGD5, 85%) - $600 million senior subordinated notes due 2016 to B3 from B2 (LGD5, 85%) This rating was confirmed: - Speculative grade liquidity rating of SGL-2 Sanmina-SCI Corporation, headquartered in San Jose, California, is one of the largest electronics contract manufacturing services companies providing a full spectrum of integrated, value added solutions. SANMINA-SCI: Calls for Redemption of $120 Million Senior Notes -------------------------------------------------------------- Sanmina-SCI Corporation called for redemption $120 million in aggregate principal amount of its Senior Floating Rate Notes due 2010. The aggregate principal amount of the Notes outstanding is $300 million. The CUSIP numbers for the Notes being called for redemption are 800907 AL1and U80024 AC3. Upon redemption, holders of the Notes being redeemed will receive the principal amount of the Notes being redeemed, plus accrued and unpaid interest to but excluding the redemption date. Copies of the notice of redemption may be obtained from U.S. Bank National Association, the paying agent, by calling (800) 934-6802. About Sanmina-SCI Headquartered in San Jose, California, Sanmina-SCI Corporation (NasdaqGS: SANM) -- http://www.sanmina-sci.com/-- is an Electronics Manufacturing Services (EMS) provider focused on delivering complete end-to-end manufacturing solutions to technology companies around the world. Service offerings include product design and engineering, test solutions, manufacturing, logistics and post-manufacturing repair/warranty services. The company has locations in Brazil, China, Ireland, Finland, Malaysia, Mexico and Singapore, among others. * * * As reported in the Troubled Company Reporter on Sept. 27, 2007 Standard & Poor's Ratings Services revised its outlook on San Jose, California-based Sanmina-SCI Corp. to negative from stable, as a result of continued operating weakness and increasing leverage. The corporate credit and senior unsecured ratings are affirmed at 'B+', and the subordinated debt rating is affirmed at 'B-'. SENIOR HOUSING: S&P Affirms BB+ Ratings with Stable Outlook ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit and senior unsecured debt ratings assigned to Senior Housing Properties Trust. The affirmations affect $322.5 million of rated securities. The outlook is stable. "The ratings reflect the significant tenant concentration within the company's portfolio and SNH's external advisory structure," said credit analyst Mr. George Skoufis. "The company's very strong financial profile, stable portfolio performance, and moderate exposure to government reimbursement all support the current ratings." Predictable rental income and a solid balance sheet continue to support debt protection measures. Moreover, stable property-level operating performance, an above-average level of private-pay facilities, and negligible lease rollover support rental income. Positive ratings momentum would be driven by improved tenant diversity and maintenance of a sound financial profile. S&P would also need to see continued stability and profitability at Five Star, as well as a less-leveraged balance sheet. Ratings would be negatively affected if Five Star experiences operating/financial stress or if SNH aggressively pursues investments that negatively affect the overall credit profile. SOFA EXPRESS: Has Until January 17 to File Schedules as Statements ------------------------------------------------------------------ The United States Bankruptcy Court for the Middle District of Tennessee extended until Jan. 17, 2008, the period within which Sofa Express Inc. asks it can file its schedules of assets and liabilities and statement of financial affairs. As reported in the Troubled Company Reporter on Dec. 17, 2007, the Debtor told the Court that because of the complexity and diversity of its operations, it anticipates that it will be unable to file the required schedules with the deadline set under Bankruptcy Rule 1007(c), even as significant amount of employee time has been devoted to the task of securing the necessary information. Headquartered in Groveport, Ohio, Sofa Express Inc. is a furniture retailer. The company filed for Chapter 11 protection on Dec. 6, 2007 (Bankr. M.D. Tenn. Case No. 07-09024). William L. Nortor III, Esq., at Boult, Cummings, Conners & Berry PLC, represent the Debtor. When the Debtor filed for bankruptcy, it listed estimated assets of between $10 million to $50 million, and estimated debts of between $50 million and $100 million. SOUTHERN STAR MORTGAGE: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Southern Star Mortgage Corp. 90 Merrick Avenue, Suite 204 East Meadow, NY 11554 Tel: (516) 712-4400 Bankruptcy Case No.: 07-47023 Type of Business: The Debtor is a lender approved by the U.S. Department of Housing and Urban Development. See http://www.southernstarmortgage.com/ Chapter 11 Petition Date: December 21, 2007 Court: Eastern District of New York (Brooklyn) Judge: Dennis E. Milton Debtor's Counsel: Barton Nachamie, Esq. Jill L. Makower, Esq. Todtman, Nachamie, Spizz & Johns P.C. 425 Park Avenue New York, NY 10022 Tel: (212) 754-9400 Fax: (212) 754-6262 Estimated Assets: $10 Million to $50 Million Estimated Debts: $50 Million to $100 Million The Debtor did not file a list of its largest unsecured creditors. SPEEDWAY MOTORSPORTS: Moody's Lowers Sr. Credit Facility Rating --------------------------------------------------------------- Moody's Investor Services downgraded the rating on Speedway Motorsports, Inc's upsized $500 million senior secured revolving credit facility to Baa3 from Baa2. The downgrade reflects an increase in the revolver commitment to $500 million from $400 million and a projected $300 million increase in revolver borrowings to fund the previously announced $340 million acquisition of New Hampshire International Speedway. Moody's anticipates SMI will fund the balance of the NHIS purchase price with cash. As Moody's noted in its Nov. 6, 2007 press release, the increase in the commitment and planned revolver borrowings alters the mix of debt, leading to a one notch reduction in the revolver rating under Moody's loss-given default notching methodology. The change in the debt mix also alters the LGD assessment on the $330 million of senior subordinate notes to LGD5-82% from LGD5-75%. The rating action concludes the review for downgrade on the revolver initiated on November 6th and does not affect SMI's Ba1 Corporate Family rating, Ba1 Probability of Default Rating or Ba2 rating on the senior subordinate notes. The rating outlook is stable. Downgrades: - Issuer: Speedway Motorsports Inc. -- Senior Secured Bank Credit Facility, Downgraded to Baa3, LGD2-28% from Baa2, LGD2-20% - LGD Point Estimate Change -- Senior Subordinated Regular Bond/Debenture, to Ba2, LGD5- 82% from Ba2, LGD5-75% Outlook Actions: - Issuer: Speedway Motorsports Inc. -- Outlook, Changed To Stable From Rating Under Review The Ba1 CFR continues to reflect SMI's strong market position within the motor sports industry with high operating margins and relatively stable revenue supported by broadcast rights under Nascar's national TV contract that runs from 2007-2014, and entitlements to 10 Nascar Sprint Cup and numerous other motor sports events at SMI's motorsports facilities. Debt-to-EBITDA leverage is currently modest at 2.0x (LTM 9/30/07 incorporating Moody's standard adjustments), but the Ba1 CFR incorporates flexibility to increase debt-to-EBITDA up to 2.75x for track acquisitions and development projects. Moody's anticipates SMI will maintain leverage near this level upon completion of the NHIS acquisition and the purchase will significantly reduce SMI's flexibility within the Ba1 CFR level over the intermediate term for additional track acquisitions or development projects. Moody's believes the NHIS acquisition enhances SMI's long-term business prospects by increasing its major track portfolio (to seven from six facilities), the number of Sprint Cup allotments (to 12 from 10) and geographic diversity. Speedway Motorsports, Inc., headquartered in Concord, North Carolina, is the second largest promoter, marketer and sponsor of motor sports activities in the US primarily through its ownership of six major race tracks, with the track portfolio increasing to seven if the NHIS acquisition is completed. NASCAR-sanctioned events account for the majority of SMI's $570 million annual revenues. STANADYNE HOLDINGS: Moody's Lifts Senior Notes Ratings' to B3 ------------------------------------------------------------- Moody's Investors Service affirmed the Corporate Family Rating of Stanadyne Holdings, Inc. at B3. In a related action, Moody's raised the ratings on the senior subordinated notes of Stanadyne's wholly owned subsidiary, Stanadyne Corporation, to B3 from Caa1, affirmed the ratings of Stanadyne's senior discount notes at Caa2; and affirmed the ratings on Stanadyne Corporation's senior secured bank credit facilities at Ba3. The affirmation reflects the company's stabilized performance over the past year, modest interest coverage, and continuing high leverage through the senior discount notes. The raised rating on the senior subordinated notes of Stanadyne reflects its improved recovery expectation under Moody's Loss Given Default Methodology. This improvement in recovery results from earlier reductions in the company's senior secured debt and reductions in unfunded pension obligations. The outlook is stable. The stable outlook reflects the company's good liquidity profile and consistent free cash flow generation which are expected to continue over the near term. Softer revenues during the past year have been offset by savings from restructuring actions. As of Sept. 30, 2007 the company maintained approximately $21 million of cash on hand and $26 million of availability under its $35 million asset based revolving credit. Stanadyne's ability to use its revolving credit facility is currently subject only to a borrowing base restriction. There are no financial covenants except a capital expenditure limitation until such unexpected point that unused availability falls below $5 million for 10 consecutive days. The senior secured bank facility is secured by essentially all the assets of the company, limiting alternate forms of liquidity. Interest on the holding company's 12% senior discount notes begin accruing cash interest in August 2009. These ratings were raised: -- Stanadyne Corporation's $160 million of guaranteed senior subordinated notes due 2014, to B3 (LGD4 56%) from Caa1 (LGD4 61%); These ratings were affirmed: -- Corporate Family Rating, at B3; -- Probability of Default Rating, at B3 -- Ba3 (LGD1 3%) rating of Stanadyne Corporation's $35 million asset-based guaranteed senior secured revolving credit facility due 2009; -- Ba3 (LGD1 3%) rating of Stanadyne's Corporation's $65 million (approximately $21 million remaining) guaranteed senior secured term loan due 2010; -- Caa2 (LGD6 90%) rating of Stanadyne Holdings' $100 million (face amount) of 12% unguaranteed senior discount notes due 2015; -- SGL-2 speculative grade liquidity rating at Stanadyne Holdings The last rating action for Stanadyne was on Sept. 22, 2006 when Moody's Loss Given Default Methodology was applied. Future developments that could favorably impact the company's rating or rating outlook include profitable expansion of the aftermarket business; or greater diversification along product, geographic, and customer lines, so that Debt/EBITDA is sustained below 5x, and EBIT/Interest improves to above 1.5x. Potentially negative future rating or outlook events include evidence of market share losses; deterioration in end market demand; margin deterioration; increases in raw materials costs which cannot be passed on to customers; a material debt-financed acquisition or distribution to shareholders, declining liquidity, resulting in Debt/EBITDA approaching 7.0X, or deterioration in EBIT/Interest coverage. Stanadyne Corporation, headquartered in Windsor, Connecticut, is a leading designer and manufacturer of highly-engineered precision- manufactured engine components, including fuel injection equipment for diesel engines. Stanadyne sells engine components to original equipment manufacturers and the aftermarket in a variety of applications, including agricultural and construction vehicles and equipment, industrial products, automobiles, light duty trucks and marine equipment. Annual revenues are approximately $285 million. STRUCTURED ASSET: Fitch Junks Ratings on Two Cert. Classes ---------------------------------------------------------- Fitch Ratings has taken these rating actions on two Structured Asset Securities Corp. mortgage pass-through certificate. Affirmations total $133 million and downgrades total $31.1 million. In addition, $34.5 million is placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: SASCO 2005-S1 -- $3.3 million class M1 affirmed at 'AA+' (BL: 100, LCR: 3.95); -- $29.3 million class M2 affirmed at 'AA+' (BL: 89.26, LCR: 3.53); -- $14.3 million class M3 affirmed at 'AA' (BL: 75.90, LCR: 3.00); -- $28.7 million class M4 affirmed at 'A+' (BL: 49.01, LCR: 1.94); -- $6.3 million class M5 rated 'A' (BL: 41.99, LCR: 1.66) and placed on Rating Watch Negative; -- $5.2 million class M6 downgraded to 'BBB+' from 'A' (BL: 35.14, LCR: 1.39) and placed on Rating Watch Negative; -- $5 million class M7 downgraded to 'BBB-' from 'BBB' (BL: 28.39, LCR: 1.12) and placed on Rating Watch Negative; -- $3.5 million class M8 downgraded to 'B' from 'BBB' (BL: 23.51, LCR: 0.93) and placed on Rating Watch Negative; -- $5.3 million class B1 downgraded to 'C/DR6' from 'BB' (BL: 16.27, LCR: 0.64); -- $2.9 million class B2 downgraded to 'C/DR6' from 'B+' (BL: 12.35, LCR: 0.49); -- $3.8 million class B3 remains at 'C/DR6' (BL: 8.28, LCR: 0.33); -- $0.0 million class B4 remains at 'C/DR6'. Summary -- Originators: (34.32% Aurora, 29.82% Wells Fargo, 14.44% GMAC); -- 60+ day Delinquency: 12.36%; -- Realized Losses to date (% of Original Balance): 5.02%; -- Expected Remaining Losses (% of Current Balance): 25.32%; -- Cumulative Expected Losses (% of Original Balance): 9.78%. SASCO 2005-S2 -- $16.1 million class M1 affirmed at 'AA+' (BL: 90.62, LCR: 3.07); -- $10.7 million class M2 affirmed at 'AA' (BL: 78.68, LCR: 2.67); -- $8.7 million class M3 affirmed at 'AA-' (BL: 68.17, LCR: 2.31); -- $7.9 million class M4 affirmed at 'A+' (BL: 58.58, LCR: 1.99); -- $7.5 million class M5 affirmed at 'A' (BL: 49.44, LCR: 1.68); -- $5.9 million class M6 affirmed at 'A-' (BL: 42.06, LCR: 1.43); -- $5.3 million class M7 rated 'BBB' (BL: 35.23, LCR: 1.2), placed on Rating Watch Negative; -- $4.5 million class M8 downgraded to 'BB' from 'BBB-' (BL: 29.33, LCR: 1.00) and placed on Rating Watch Negative; -- $4.3 million class M9 downgraded to 'B' from 'BB' (BL: 23.42, LCR: 0.79) and placed on Rating Watch Negative; -- $7.3 million class M10 remains 'C/DR6' (BL: 13.86, LCR: 0.47); -- $5.5 million class B1 remains at 'C/DR6' (BL: 8.51, LCR: 0.29); -- $0.0 million class B2 remains at 'C/DR6'. Summary -- Originators: (40.30% Aurora, 22.60% Fieldstone, 14.43% Accredited); -- 60+ day Delinquency: 13.91%; -- Realized Losses to date (% of Original Balance): 6.66%; -- Expected Remaining Losses (% of Current Balance): 29.48%; -- Cumulative Expected Losses (% of Original Balance): 12.91%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. STRUCTURED ASSET: Fitch Lowers Ratings on Three Classes to B- ------------------------------------------------------------- Fitch Ratings has taken rating action on these Structured Asset Investment Loan 2003-BC 2 mortgage pass-through certificates: -- Class A affirmed at 'AAA'; -- Class M-1 downgraded to 'BBB-' from 'A', and placed on Rating Watch Negative; -- Class M-2 downgraded to 'B-/DR1' from 'BBB+'; -- Class M-3 downgraded to 'B-/DR1' from 'BBB+'; -- Class B downgraded to 'B-/DR2' from 'BBB-'. The affirmations reflect a stable relationship between credit enhancement and expected losses, and affect approximately $25.25 million in outstanding certificates. The downgrades reflect deterioration in the relationship between CE and expected losses, and affect approximately $71.97 million in outstanding certificates. In addition, approximately $67.65 million is placed on Rating Watch Negative. The pool factor is approximately 7%, and the transaction is 55 months seasoned. The amount of delinquencies in the 60+ buckets is approximately 30.24%, and cumulative losses are approximately 1.47% of the original balance. SUN-TIMES MEDIA: Sept. 30 Balance Sheet Upside-Down by $33.6 Mil. ----------------------------------------------------------------- Sun-Times Media Group Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $808.2 million in total assets and $841.8 million in total liabilities, resulting in a $33.6 million total stockholders' deficit. The company reported a net loss of $192.4 million on total operating revenue of $92.5 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $34.9 million on total operating revenue of $99.5 million in the same period last year. Loss from continuing operations in the third quarter ended Sept. 30, 2007,increased to $194.0 million, versus a loss of $34.9 million in the same period in 2006. The third quarter of 2007 loss from continuing operations includes a non-cash charge of $165.8 million to increase the valuation allowance in respect of deferred tax assets. The valuation allowance is based on accounting guidelines that provide that cumulative losses in recent years provide significant evidence that a company should not recognize tax benefits that depend on the generation of income from future operations. The establishment of a valuation allowance does not preclude the company from using the related deferred tax assets in the future. The company reported an operating loss of $23.2 million for the third quarter of 2007 versus an operating loss of $22.4 million for the third quarter of 2006. The third quarter 2007 numbers reflect a 6% decline in advertising revenue, a 7% decline in circulation revenue and $7.0 million in indemnification, investigation and litigation costs, net of recoveries, primarily related to the criminal proceedings against former Sun-Times Media Group executives. "The rate of decline in advertising revenue slowed a bit in the third quarter, and we have begun to perform better than some of our industry peers," said Cyrus F. Freidheim, Jr., Sun-Times Media Group chief executive officer. "We are a leaner and more nimble news organization. We have realigned operations, our management structure and our products. And we remain intensely focused on improving margins." "Still, we have many challenges before us, as the dynamics transforming the newspaper industry continue to impact advertising revenue in our company as well as many of our peers. Accordingly, we will continue to expand our presence where readers and advertisers increasingly are: online. In addition, we have substantially increased our focus on cost reductions through outsourcing and restructuring." As of Sept. 30, 2007, the company held $131.8 million in cash and cash equivalents, and an additional $48.2 million in face value of investments in Canadian asset-backed commercial paper. During the third quarter of 2007, the company recorded a charge of $4.8 million to reduce the net carrying value of these investments, in response to the liquidity concerns that have affected the Canadian commercial paper market. 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?2690 About Sun-Times Media Group Headquartered in Chicago, Sun-Times Media Group Inc. (NYSE: SVN) - - http://www.thesuntimesgroup.com/-- is dedicated to being the premier source of local news and information for the greater Chicago area. Its media properties include the Chicago Sun-Times and Suntimes.com as well as newspapers and Web sites serving more than 200 communities throughout the Chicago area. Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- which owns approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc., along with two affiliates, 4322525 Canada Inc. and Sugra Limited, filed separate Chapter 15 petitions on Aug. 1, 2007 (Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger also initiated Court-supervised restructuring under the Companies' Creditors Arrangement Act (Canada) on the same day. TAXABLE WORLD: Moody's Upgrades B3 Revenue Bond Rating to Baa3 -------------------------------------------------------------- Moody's Investors Service upgraded the rating of Taxable World Headquarters Revenues Bonds, Series 1995 (Owens-Corning Fiberglas Corporation Project) from B3 to Baa3 and placed the bonds on review for possible downgrade to align the bonds with the current rating of Owens Corning. Moody's placed OC on review for possible downgrade on Dec. 5, 2007. The bonds are secured by a mortgage on Owens Corning's world corporate headquarters, a 400,000 square foot corporate campus built to their specifications in 1995. Headquartered in Toledo, Ohio, Owens Corning is a manufacturer and distributor of building products as well as fiberglass composite materials. Revenues for the trailing twelve month period ended Sept. 30, 2007 were approximately $5.9 billion. TEEKAY CORP: Moody's Holds Ratings and Says Outlook is Stable ------------------------------------------------------------- Moody's Investors Service affirmed its debt ratings of Teekay Corporation -- Corporate Family of Ba2, senior unsecured of Ba3 and speculative grade liquidity rating of SGL-2. The rating outlook was changed to stable from negative. While certain financial metrics remain weak for the Ba2 rating category, the rating action considers the stability to operating performance achieved by the company's having about half of the fleet operating under long-term charters, the aggregate revenues of which cover the company's consolidated operating expenses with modest cushion. Moreover, a substantial level of operating cash flow, a large liquidity cushion and the retained value of the MLP subsidiaries also support the Ba2 rating. These factors balance the risk of having a portion of operating cash flow exposed to the highly-cyclical spot market and the elevated financial leverage resulting from acquisitions and ongoing investments to grow the business. The Ba2 rating indicates that Moody's believes the company's risk profile is stronger than that implied by estimated Debt to EBITDA of about 7.0 times and EBIT to Interest of about 1.6 times, each on a consolidated basis at Dec. 31, 2007. This is because of the fixed fleet's coverage of operating expenses, supportive long-term fundamentals of the marine transportation sectors that Teekay serves, Teekay's share of distributions by its MLP's and the contractually non-recourse terms of a substantial majority of the MLPs' debt obligations. The stable outlook reflects the expectation that Teekay's credit profile is nearing an inflection point and that Teekay will soon begin de-levering which should restore credit metrics to levels more supportive of the Ba2 rating category and more consistent with Teekay's strong competitive position. The period of simultaneous, large scale, primarily debt-financed, investments in newbuildings will continue in 2008. However, a number of these vessels will start long-term charters at accretive rates upon their deliveries. The current weak metrics result partly from the newbuilding programs, particularly the nine LNG newbuildings ordered by the three LNG joint ventures that cost an aggregate of $2.2 billion, of which five of the remaining six deliver during 2008. These vessels are on initial 20 or 25 year time charters that have been structured to provide a financial return to Teekay and its partners. The combination of proceeds of additional primary offerings of equity interests of Teekay's publicly-traded subsidiaries and lower capital outlays from 2009 should facilitate the anticipated debt reduction, particularly at the Teekay parent level where the rated notes are issued. The ratings may be downgraded if management does not demonstrate a commitment to de-levering, such as through returning proceeds of the anticipated additional primary offerings to Teekay shareholders rather than to paying down debt obligations of Teekay. A downgrade could also follow if Retained Cash Flow to Net Debt is not sustained above 10%, Debt to EBITDA was not to fall below 6.0 times or EBIT to Interest was to remain below 1.7 times. The outlook could be changed to positive if Retained Cash Flow to Net Debt is sustained above 15% or if Teekay sustains positive free cash flow and accelerates the de-levering of the capital structure. Debt to EBITDA sustained below 5.0 times or EBIT to Interest sustained above 3.0 times could also result in a positive outlook. Outlook Actions: - Issuer: Teekay Corporation -- Outlook, Changed To Stable From Negative Teekay Corporation, a Marshall Islands corporation headquartered in Nassau, Bahamas, having its main operating office in Vancouver, Canada, operates a fleet of 187 owned, chartered-in or managed crude, refined products, LNG, LPG and FPSO vessels, including 27 newbuildings on order. TEMBEC INC: S&P Downgrades Corporate Credit Rating to CC -------------------------------------------------------- Standard & Poor's Ratings Services lowered the ratings on Tembec Inc. and Tembec Industries Inc., including the long-term corporate credit ratings to 'CC' from 'CCC-'. At the same time, S&P placed the ratings on both companies on CreditWatch with negative implications. S&P also withdrew the 'C' short-term rating on Tembec Inc., due to lack of market need. "The downgrade reflects the proposed recapitalization transaction, which, if successful, would convert $1.2 billion of unsecured debt into equity worth less than CDN$20 million at [Wednes]day's market prices," said Standard & Poor's credit analyst Jatinder Mall. Furthermore, the company is uncertain that it will make the December 31 interest payment on its $350 million unsecured notes, and faces weak liquidity and ongoing poor performance because of weak market conditions and a strong Canadian dollar. The CreditWatch placement reflects the heightened risk of a payment default, as well as the potential for a bankruptcy filing. Should the company successfully complete its distressed exchange offer, S&P would lower the ratings on the affected debt issues to 'D', as the rated debt would be replaced by securities valued at substantially below par. The proposed recapitalization plan faces significant uncertainty, considering the two-thirds majority of noteholders and shareholders (independent of one another) required to approve the transaction. If the plan is approved, existing noteholders will have about a 95% equity interest under the recapitalized company, with the current shareholders controlling the remaining 5%. The recapitalization plan will significantly deleverage the company and reduce its interest burden. Post-transaction, the company's net debt will be about CDN$200 million down from the current CDN$1.43 billion, and annual interest payments will decline to CDN$37 million from CDN$100 million. The company's poor performance reflects weak market conditions in its core business segments and sensitivity to a strong Canadian dollar. Although S&P doesn't expect market conditions for forest products to improve in 2008 due to the weak U.S. housing construction market, a strong Canadian dollar (which averaged above parity in October and November) will lead to very weak results for Tembec's first-quarter ending Dec. 31, 2007. For fiscal year ended Sept. 30, 2007, the forest products segment generated EBITDA of negative CDN$68 million compared with CDN$37 million for same period the previous year. Nevertheless, cash flow protection levels, as measured by funds from operations to debt, were 12% for the fiscal year ended Sept. 30, 3007, and included recovery of lumber duties. As of Sept. 30, 2007, liquidity included CDN$14 million in cash and CDN$203 million of an unused operating line of credit. Although there is no major debt due in 2008, the company has CDN$140 million in obligations relating to debt, interest expense, and operating leases. Tembec has about CDN$368 million of debt maturing in 2009, and has hired financial advisors to review strategic alternatives to improve its capital structure and liquidity. TERWIN MORTGAGE: Moody's Junks Ratings on Two Certificates ---------------------------------------------------------- Moody's Investors Service has downgraded and maintained on review for further downgrade 2 certificates, placed on review for possible downgrade 1 class of certificates, and downgraded 2 certificates from Terwin Mortgage Trust 2007-1SL. The transaction is backed by closed-end second lien mortgage loans. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. The underlying pool of loans has seen a high rate of early default with continued growth in the delinquency pipeline despite the realization of losses. As of November 2007, the pool has $36,096,453 of loans that are 60 or more days delinquent, in bankruptcy, foreclosure or REO. The cumulative loss is 8.65% of original pool balance, which has already exceeded Moody's original expected loss by 18%. The complete rating actions are: Issuer: Terwin Mortgage Trust 2007-1SL Downgrade and Review for Possible Downgrade: -- Class M-1, Downgraded to Ba2 from Aa2 and on review for possible further downgrade; -- Class M-2, Downgraded to Ba3 from Aa3 and on review for possible further downgrade. Review for Possible Downgrade: -- Class G, current rating Aaa, on review for possible downgrade. Downgrade: -- Class M-3, Downgraded to C from Ba3; -- Class B-1, Downgraded to C from B3. THORNBURG MORTGAGE: S&P Affirms Low-B Ratings on 6 Class Certs. --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on four classes of mortgage loan pass-through certificates from Thornburg Mortgage Securities Trust's series 2003-2 and 2004-3. At the same time, S&P affirmed its ratings on various Thornburg Mortgage Securities Trust transactions, including series 2003-2 and 2004-3. The raised ratings reflect an increase in credit support due to the rapid paydown of principal, the shifting interest structure of the transaction, and minimal losses. Projected credit support percentages are at least 2.06x the loss coverage levels associated with the raised ratings. As of the November 2007 remittance period, total delinquencies among the upgraded deals ranged from 0.54% (series 2003-2) to 1.08% (series 2004-3) of the current pool balances, while 90-plus- day delinquencies (including REOs and foreclosures) ranged from 0.15% (2003-2) to 0.44% (2004-3). The affirmations reflect stable credit support percentages, zero losses, and low delinquencies. Subordination provides credit support for the all of the pools. In addition, series 2003-2, 2003-4, 2003-6, and 2004-1 also have excess spread and overcollateralization. The collateral for each pool consists primarily of prime hybrid adjustable-rate mortgage loans secured by first liens on owner- occupied one- to four-family residences. Ratings Raised Thornburg Mortgage Securities Trust Mortgage loan pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-2 M-1 AA+ AA 2004-3 B-1 AA+ AA 2004-3 B-2 A+ A 2004-3 B-3 BBB+ BBB Ratings Affirmed Thornburg Mortgage Securities Trust Mortgage loan pass-through certificates Series Class Rating ------ ----- ------ 2002-3 A-1,A-2,A-3,A-4 AAA 2002-3 B-1 AA+ 2002-3 B-2 AA- 2002-3 B-3 A- 2002-4 I-A,II-A,III-A,IV-A AAA 2002-4 B-1 AA+ 2002-4 B-2 A+ 2002-4 B-3 BBB+ 2003-2 A,R-1,R-2 AAA 2003-2 M-2 A 2003-4 A-1,A-2 AAA 2003-4 M-1 AA 2003-4 M-2 A 2003-5 I-A,II-A,III-A,IV-A AAA 2003-5 R-I,R-II AAA 2003-5 B-1 AA 2003-5 B-2 A 2003-5 B-3 BBB 2003-5 B-4 BB 2003-5 B-5 B 2003-6 A-1,A-2 AAA 2003-6 M AA 2004-1 I-1A,I-2A,II-1A,II-2A AAA 2004-1 II-3A,II-4A AAA 2004-1 I-M,II-M AA 2004-2 A-1,A-3,A-4,A-X,A-R AAA 2004-2 B-1 AA 2004-2 B-2 A 2004-2 B-3 BBB 2004-2 B-4 BB 2004-2 B-5 B 2004-3 A,A-X,A-R AAA 2004-3 B-4 BB 2004-3 B-5 B 2004-4 I-A,I-AX,II-A,II-AX AAA 2004-4 III-A,III-AX,IV-A,IV-AX AAA 2004-4 V-A,V-AX,R-I,R-II AAA TOPPS MEAT: Premio Foods Unit Wants to Buy Beef for $190,000 ------------------------------------------------------------ Premio Foods Inc.-affiliate, MSDT Acquisition Corp., told the United States Bankruptcy Court for the District of New Jersey that it intends to buy Topps Meat Company's assets for a total of $825,000, Heather Kays of Herald News reports. MSDT told the Court that it will buy the Debtor's equipment and trademark for $635,000 and some of its beef, likely to be contaminated with E. coli virus, for $190,000, Herald News relates. MSDT will make a $63,500 sale deposit for the acquisition, which is expected to close by Jan. 10, 2008, Herald News adds. About Premio Foods Hawthorne, New Jersey-based Premio Foods Inc. -- http://www.premiofoods.com/-- is a family-owned company that makes more than 20 varieties of Italian sausage. About Topps Meat Headquartered in Elizabeth, New Jersey, Topps Meat Company -- http://www.toppsmeat.com/-- manufactures and supplies branded frozen hamburgers and other portion controlled meat for supermarkets and merchandisers. Topps Meat filed for chapter 7 liquidation on Nov. 21, 2007, with the United States Bankruptcy Court for the District of New Jersey and listed assets and debts between $1 million and $100 million. Topps Meat was forced to close its Elizabeth plant and go out of business on Oct. 5, 2007, following a beef recall involving more than 21.7 million pounds of ground beef products, the second- largest beef recall in U.S. history. TRIBUNE CO: Closed Going Private Deal Cues Fitch to Cut Ratings --------------------------------------------------------------- Fitch Ratings has downgraded and removed from rating watch Tribune Co.'s ratings. The action is in conjunction with the announcement that the second step of TRB's going private transaction has closed. The ratings have been removed from Rating Watch Negative. The Rating Outlook is Negative. Fitch has downgraded these ratings: -- Issuer Default Rating to 'B-' from 'B+'; -- Senior secured revolving credit facility to 'B/RR3' from 'BB/RR2'. -- Senior unsecured notes to 'CCC/RR6' from 'B-/RR6'; -- Subordinated exchangeable debentures due 2029 to 'CCC-/RR6' from 'CCC+/RR6'. Fitch has also assigned this rating: -- Senior unsecured bridge loan 'CCC/RR6'. Fitch's ratings reflect the significant debt burden the transaction places on the company's balance sheet while its revenue and cash flow have been declining. Fitch believes newspapers and broadcast affiliates face meaningful secular headwinds that could lead to more cash flow volatility in the future. With fixed-charge coverage estimated to be below 1.3 times, there is very little room to endure a cyclical downturn. In addition, the rating continues to reflect volatile newsprint prices and the threat of emerging technologies on the economics of the pure-play broadcasting affiliate business. These concerns are balanced somewhat by the quality and geographic diversity of the company's assets as well as the success of several of the company's on-line investments. Also, the company's assets are separable from the company and provide some capacity to potentially postpone financial distress. Other than the $1.6 billion bridge loan, the borrower's obligations will be secured by the pledge of all of the capital stock of Tribune Finance LLC and Tribune Broadcasting Holdco LLC. The existing notes and debentures will be secured equally and ratably by the pledge of capital stock of Tribune Finance LLC and Tribune Broadcasting Holdco LLC as required by the indentures of the existing notes. However, the security does not provide a meaningful benefit to existing bondholders as they will be structurally subordinated. In the event of default, the bank facilities and the bridge facility will have priority ahead of the existing notes and debentures by virtue of having senior and senior subordinated guarantees. Tribune Broadcasting Holdco LLC and Tribune Finance LLC are the senior guarantors of the bank facility and incremental facility and the junior guarantors of the bridge facility. The existing notes, debentures and PHONES will not receive guarantees. Financial covenants in the credit facility include maximum guaranteed leverage of 9.0x, stepping down to 8.25x after 2010, and an interest coverage minimum of 1.1x. The rating action for the company's first-priority credit facilities (which include the incremental $2.105 billion term loan B), reflect Fitch's belief that 51%-70% recovery is reasonable in financial distress. While recognizing its higher level of priority due to its second-priority guarantee, Fitch assigns a recovery rating 'RR6' to the new $1.6 billion bridge loan. The existing senior unsecured and subordinated exchangeable debentures also have a recovery rating of 'RR6'. Given their subordination in the capital structure, the PHONES are rated three notches from the IDR, one notch lower than the bridge loan and senior unsecured notes. The 'RR6' recovery rating reflects Fitch's estimate that negligible recovery would be achievable due to Fitch's estimates of less than 100% recovery by the first-priority bank loans and the subordination in the capital structure. Per Fitch's hybrid criteria, pro forma leverage of approximately 10x is calculated assigning 50% equity credit to participating hybrid option notes exchangeable for stock subordinated debt. Fitch expects leverage to remain high over the rating horizon. Pro forma liquidity is supported by a $750 million revolving bank credit facility. Fitch notes that the terms of the Tranche X Facility heighten refinancing risk as there is a $750 million mandatory amortization by year-end 2008 with the remaining principal coming due mid-year 2009. Fitch expects these payments could be satisfied with asset sales, including the sale of Chicago Cubs and the company's 25% stake in Comcast SportsNet Chicago. The Negative Outlook reflects Fitch's belief that there are significant secular pressures facing newspapers and broadcast affiliate industries, as advertising dollars are being redirected toward the emerging mediums to the detriment of traditional media. Both businesses face the risk of margin compression as these revenue pressures are coupled with cost structures that are fixed or contain elements that are largely outside of management's control. There is a limited margin of safety around the bank facility covenant thresholds to endure these threats in a cyclical downturn. TRIBUNE CO: S&P Cuts Ratings from B+ to B with Negative Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Tribune Co. by one notch; the corporate credit rating was lowered to 'B' from 'B+'. In addition, the ratings were removed from CreditWatch with negative implications. The rating outlook is negative. The downgrade reflects the completion of the second step of the company's LBO, which included the closing of $3.7 billion in additional borrowings to partly fund the purchase of the remaining publicly held common stock at $34 per share in cash. This second-step common stock purchase totaled $4.2 billion, and was funded by a $2.1 billion previously rated and committed incremental senior secured term loan, a $1.6 billion unsecured bridge loan rated on Dec. 18, 2007, and about $500 million in cash on hand. The total value of the LBO was more than $14 billion, including the assumption and repayment of approximately $5.5 billion of debt (which includes the principal amount of the company's PHONES). The current 'B' corporate credit rating incorporates expected asset sale and other transaction proceeds (including the disposition of the Chicago Cubs, Wrigley Field, the company's 25% interest in Comcast SportsNet Chicago, ancillary real estate around Wrigley Field, other ancillary real estate assets, and raising incremental funds through potential asset-backed commercial paper programs) of approximately $1 billion or more over the near-to-intermediate term. This will allow Tribune to reduce its amortizing term loan X, which had $1.4 billion outstanding at September 2007. The term loan X requires mandatory principal payments of $650 million in December 2008 and $750 million in June 2009 (absent expected prepayments). S&P expects interest coverage upon the close of the LBO to be 1.3x, and leverage more than 9.5x (pro forma for new debt issued, net of expected asset sales and other proceeds). In addition, on Nov. 30, 2007, the FCC approved the transfer of Tribune's broadcasting licenses and the extension of its cross-ownership waivers in markets where the company owns both a television station and a newspaper. "We have factored into the current rating our expectation that newspaper advertising and circulation revenue at Tribune would decline in 2008, but at lower rates than expected for 2007," noted Standard & Poor's credit analyst Emile Courtney. "Partially offsetting this are our beliefs that Tribune will benefit from modestly improved performance in its broadcasting unit in 2008, and that cash operating expenses will decline due to lower labor costs. Given current trends, however, we expect that the company will be challenged to limit EBITDA declines to the low- to high- single-digit percentage area in 2008." TRICADIA CDO: Moody's Junks Ratings on Five Classes of Notes ------------------------------------------------------------ Moody's Investors Service has downgraded ratings of seven classes of notes issued by Tricadia CDO 2006-7, Ltd., and left on review for possible further downgrade ratings of three of these classes of notes. The notes affected by the rating action are: Class Description: $328,500,000 Class A-I Notes Due 2051 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $65,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $8,000,000 Class A-X Secured Notes Due 2051 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade Class Description: $43,000,000 Class B Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ca Class Description: $25,000,000 Class C Secured Floating Rate Deferrable Notes Due 2051 -- Prior Rating: B2, on review for possible downgrade -- Current Rating: Ca Class Description: $19,000,000 Class D Secured Floating Rate Deferrable Notes Due 2051 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: Ca Class Description: $7,200,000 Class E Secured Floating Rate Deferrable Notes Due 2051 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca The rating actions reflect severe deterioration in the credit quality of the underlying portfolio, as well as the occurrence, as reported by the Trustee on Nov. 20, 2007, of an event of default caused by a failure of the Net Outstanding Asset Balance divided by the sum of the Aggregate Principal Amount of the Class A Notes, other than the Class A-X Notes, and the Class B Notes to equal or exceed 100%, as required under Section 5.1(j) of the Indenture dated Jan. 23, 2007. Tricadia CDO 2006-7, Ltd. is a collateralized debt obligation backed primarily by a portfolio of CDO securities. Recent ratings downgrades on the underlying portfolio caused ratings-based haircuts to affect the calculation of overcollateralization. Thus, the Net Outstanding Asset Balance divided by the sum of the Aggregate Principal Amount of the Class A Notes, other than the Class A-X Notes, and the Class B Notes failed to meet the required level. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by certain Noteholders. Because of this uncertainty, the ratings assigned to Class A-I, Class A-2, and the Class A-X Notes remain on review for possible downgrade. UNITED RENTALS: Ends Merger Dispute With Cerberus ------------------------------------------------- United Rentals Inc. ended a merger dispute with Cerberus Capital Management LP after agreeing to accept a $100 million breakup fee from Cerberus, various sources say. The move followed a court ruling Friday stating that Cerberus is not obligated to complete its proposed buyout of United Rentals, Donna Kardos of The Wall Street Journal relates. As reported in the Troubled Company Reporter on July 24, 2007, United Rentals signed a definitive merger agreement to be acquired by affiliates of Cerberus in a transaction valued at approximately $6.6 billion, including the assumption of approximately $2.6 billion in debt obligations. Under the terms of the agreement, United Rentals stockholders will receive $34.50 in cash for each share of United Rentals common stock that they hold. The purchase price per share represents a 25% premium over United Rentals' closing share price of $27.55 prior to the company's announcement on April 10, 2007 that it had commenced a process to explore a broad range of strategic alternatives. As reported in the Troubled Company Reporter on Nov. 23, 2007, United Rentals filed a lawsuit against Cerberus after Cerberus informed United Rentals that it "did not want to force its financing sources to fulfill their commitments." Cerberus blamed its change of mind on turmoil in credit markets, WSJ says. The lawsuit, seeking to compel Cerberus to complete the agreed- upon transaction, contended that Cerberus directly violated the merger agreement and acted in bad faith, and do not have the right to pay a reverse break-up fee and simply walk away. Cerberus filed an action for a declaratory judgment against United Rentals in New York State Supreme Court. In taking the action, Cerberus sought to ensure that United Rentals honor the express contractual undertakings it made contemporaneous with the execution of the merger agreement. At a hearing held Dec. 21, WSJ notes, Delaware Court of Chancery Chancellor William B. Chandler III concluded that Cerberus was acting within it contractual rights when it pulled the plug on the deal shortly before the planned closing. United Rentals said it won't be appealing the court's opinion and is terminating its previously announced debt tender offers and consent solicitations, WSJ adds. The New York law firm of Orans, Elsen & Lupert LLP and the Wilmington, Delaware law firm of Rosenthal, Monhait & Goddess, P.A. represent United Rentals in this litigation. About United Rentals United Rentals Inc. -- http://www.unitedrentals.com/-- (NYSE: URI) is an equipment rental company with an integrated network of over 690 rental locations in 48 states, 10 Canadian provinces and one location in Mexico. The company's approximately 11,500 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent over 20,000 classes of rental equipment with a total original cost of $4.3 billion. * * * As reported in the Troubled Company Reporter on Nov. 19, 2007, Standard & Poor's Ratings Services said that its 'BB-' corporate credit ratings on United Rentals Inc. and its wholly owned subsidiary United Rentals Inc. remain on CreditWatch with negative implications. WACHOVIA CRE: Fitch Affirms 'B-' Rating on $6.5MM Class O Notes --------------------------------------------------------------- Fitch affirms all classes of Wachovia CRE CDO 2006-1 (Wachovia CRE CDO) floating-rate notes as: -- $616,500,000 class A-1A at 'AAA'; -- $68,500,000 class A-1B at 'AAA'; -- $145,000,000 class A-2A at 'AAA'; -- $145,000,000 class A-2B at 'AAA'; -- $53,300,000 class B at 'AA'; -- $39,000,000 class C at 'A+'; -- $12,350,000 class D at 'A'; -- $13,650,000 class E at 'A-'; -- $24,700,000 class F at 'BBB+'; -- $16,900,000 class G at 'BBB'; -- $35,100,000 class H at 'BBB-'; -- $13,000,000 class J at 'BB+'; -- $14,950,000 class K at 'BB'; -- $9,100,000 class L at 'BB-'; -- $34,450,000 class M at 'B+'; -- $16,250,000 class N at 'B'; -- $6,500,000 class O at 'B-'. Deal Summary: Wachovia CRE CDO is a revolving commercial real estate cash flow collateralized debt obligation, which closed on July 11, 2006. It was incorporated to issue $1,300,000,000 of floating-rate notes and preferred shares. Since the last review (June 18, 2007), 14 loans have been added to the pool while 13 loans have paid off, resulting in a net increase of $71.7 million or a 6.2% increase to the CDO par balance. Based on the Nov. 19, 2007 trustee report and Fitch categorizations, the CDO is substantially invested as: whole loans, and A-notes and A- note Pari Passu notes (84.1%), B-notes and Junior Participations (6%), mezzanine loans (2.6%), and cash (7.3%). The CDO is also permitted to invest in commercial mortgage backed securities, CRE CDOs, REIT debt, and synthetic assets. The collateral asset manager is Structured Asset Investors, LLC, a wholly owned subsidiary of Wachovia Corporation. An affiliate, Wachovia Bank N.A.'s Structured Finance Group, is serving as sub- advisor. SFG is responsible for selecting assets and monitoring the portfolio. Wachovia CRE CDO has a five year reinvestment period, during which, if all reinvestment criteria are satisfied, principal proceeds may be used to invest in substitute collateral. The reinvestment period ends in September 2011. Collateral Asset Manager: The Structured Finance Group is a commercial real estate loan portfolio management team located within Wachovia Bank. SFG focuses on providing nonrecourse, transitional, and high leverage capital to the bank's CRE customer base. SFG is rated 'CAM 2-' as a CRE collateralized debt obligation asset manager by Fitch. SFG is currently staffed by approximately 17 experienced CRE professionals. SFG benefits from the commercial bank's robust internal procedures and controls. Additionally, its lending activities are supported by the bank's commercial mortgage loan servicing unit Wachovia Securities, which is rated 'CPS2+', 'CMS2', and 'CSS2' by Fitch. Performance Summary: Since the last review, the CDO's reinvestment cushion has declined to 3.75% from 5.75% and is considered below average. The Fitch poolwide expected loss is 22.125% compared to the covenant of 25.875%. The 13 loans that have paid off since the effective date review had a lower than average weighted average expected loss of 21.44% due to the fact that the majority of the properties had executed their business plans and reached stabilization. The fact that the seasoned loans are paying off as they reach stabilization, as well as the addition of land and hotel loans, are the main drivers for the increased poolwide expected loss. Land and hotel loans generally carry higher expected losses than other property types. Although the cushion is below average relative to other CRE CDOs, the expectation is that the portfolio will continue to be well diversified, weighted predominantly in whole loans and A-notes, and secured by traditional property types. Wachovia's CREL origination platform is diverse and well established. As of the November Trustee report, the CDO is 92.6% invested in assets with an additional 8.9% of the par balance allocated to delayed funding obligations, up from last review. As of the last review, the CDO was 86% invested in assets, of which 10% of the par balance was allocated to delayed funding obligations. The percentage of subordinate debt has decreased to 8.6% from 11% at last review. The weighted average spread of outstanding loan balances decreased since the last review to 2.40% from 2.48%; however, it remains above the covenant of 1.50%. The weighted average coupon has remained at 7.5%. The percent of fixed rate loans is 1.7%. These loans are unhedged, within the maximum covenant of allowable unhedged assets at 2.75%. The weighted average life has decreased since last review to 1.51 years from 1.7 years. This continues to imply that the loans will fully turnover during the reinvestment period. The over-collateralization ratios of all classes have remained stable since the effective date review while the interest coverage ratios have increased over the same period. The increase in the IC ratios is attributed to the net increase of $71.7 million in CDO par as well as the spread widening on the newly purchased collateral. Both ratios are above their covenants as of the November 2007 trustee report. Collateral Analysis: As of the November 2007 trustee report and based on Fitch categorizations the CDO is within all its property type covenants. Office loans comprise the largest percentage of assets at 35.4%. Multifamily is the second largest percentage at 24.9%. The CDO is also within all its geographic location covenants with the highest percentage of assets located in California at 31.9%. The pool has above average loan diversity relative to other CRE CDOs. Based on Fitch categorizations the pool currently consists of 67 loans and the Fitch Loan Diversity score is 205, compared to the covenant of 244. Only one loan represents more than 5% of the ramped portfolio. For a summary of the Fitch Loans of Concern and the 10 largest loans, please refer to the 'Wachovia Real Estate CDO 2006-1 CREL Surveyor Snapshot' on the Fitch Research web site, which will be available beginning December 21, 2007. Rating Definitions: The ratings of the class A and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class C, D, E, F, G, H, J, K, L, M, N, and O notes address the likelihood that investors will receive ultimate interest and deferred interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. Upgrades during the reinvestment period are unlikely given the pool could still migrate to the PEL covenant. The Fitch PEL is a measure of the hypothetical loss inherent in the pool at the 'AA' stress environment before taking into account the structural features of the CDO liabilities. Fitch PEL encompasses all loan, property, and poolwide characteristics modeled by Fitch. Ongoing Surveillance: Fitch will continue to monitor and review this transaction for future rating adjustments. The surveillance team will conduct a review on a quarterly basis. WELLMAN INC: Posts $18 Million Net Loss in 3rd Qtr. Ended Sept. 30 ------------------------------------------------------------------ Wellman Inc. reported a net loss of $18.0 million on net sales of $270.8 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $35.6 million on net sales of $307.6 million in the same period last year. For the first nine months of 2007, Wellman reported a net loss of $53.7 million on net sales of $889.9 million, compared to a net loss of $63.3 million on net sales of $919.2 million for the same period in 2006. The company reported a gross loss of $400,000 in the 2007 period compared to gross profit of $10.0 million in the 2006 period. Selling, general and administrative expenses decreased $1.4 million to $10.9 million, or 4.0% of net sales, in the 2007 period compared to $12.3 million, or 4.0% of net sales, in the 2006 period. Other income of $1.6 million in the 2007 quarter compared to other expense of $35.2 million in the same period in 2006, which included $34.1 million of costs related to the company's Johnsonville fibers closure and $900,000 of cost related to hurricane Katrina. As a result of the foregoing, the company reported an operating loss of $9.9 million in the 2007 period compared to an operating loss of $37.5 million in the 2006 period. Interest expense, net was $16.0 million in the 2007 period compared to $15.7 million in the 2006 period. This increase was due to higher effective interest rates. Disposition of WIL Fibers Business On July 26, 2007, the company disposed of its European recycled- based fibers business ("WIL"). The company received net proceeds of approximately $38 million for the sale of WIL to an affiliate of AURELIUS AG. The company recognized a $2.6 million net gain on the sale, which was included in discontinued operations in the company's condensed consolidated statements of operations. The company reported net earnings from discontinued operations of $4.3 million for the three months ended Sept. 30, 2007, compared to a net loss from discontinued operations of $1.3 million for the three months ended Sept. 30, 2006. $225 Million U.S. Credit Facility At Sept. 30, 2007, the company has a $225 million U.S. Revolving Credit Facility that it uses to manage its daily cash flows. The company had an eligible borrowing base of $203.8 million under this facility and had aggregate borrowings of $129.4 million and outstanding letters of credit of $5.3 million, which resulted in aggregate availability of approximately $69.1 million. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $835.0 million in total assets, $712.6 million in total liabilities, and $122.4 million in total stockholders' 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?2691 About Wellman Inc. Headquartered in Fort Mill, South Carolina, Wellman Inc. -- http://www.wellmaninc.com/-- manufactures and markets high- quality polyester products, including PermaClear brand PET packaging resin and Fortrel brand polyester fiber. * * * Moody's Investors Service placed Wellman Inc.'s long term corporate family rating and probability of default ratings at 'Caa2' in Oct. 31, 2007. WELLS FARGO: Fitch Rates $722,000 Class B-5 Certificates at B ------------------------------------------------------------- Wells Fargo mortgage pass-through certificates, series 2007-17, are rated by Fitch Ratings as: -- $461,496,656 classes A-1, A-2, A-3, A-PO, and A-R 'AAA' (senior certificates); -- $9,620,000 class B-1 'AA'; -- $3,848,000 class B-2 'A'; -- $1,443,000 class B-3 'BBB'; -- $2,404,000 class B-4 'BB'; and -- $722,000 class B-5 'B'. The 'AAA' ratings on the senior certificates reflect the 4.05% subordination provided by the 2.00% class B-1, the 0.80% class B- 2, the 0.30% class B-3, the 0.50% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.30% privately offered class B-6. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. Class B- 6 is not rated by Fitch. This transaction contains certain classes designated as Exchangeable REMIC Certificates and Exchangeable Certificates. The Class A-1 Certificates are Exchangeable Certificates, and Classes A-2 and A-3 are the Exchangeable REMIC Certificates. All other classes are regular certificates. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures, and the primary servicing capabilities of Wells Fargo Bank, N.A. ([WFB]; rated 'RPS1' by Fitch). The transaction consists of 733 fixed interest rate, first lien mortgage loans, with an original weighted average term to maturity of approximately 30 years. The aggregate unpaid principal balance of the pool is $480,976,950 as of Dec. 1, 2007, and the average principal balance is $656,176. The weighted average original loan-to-value ratio of the loan pool is approximately 74.04%; 8.54% of the loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 6.803%, and the weighted average FICO score is 745. The states that represent the largest geographic concentration are California (32.04%), New York (10.55%), and Virginia (5.78%). All other states represent less than 5% of the outstanding balance of the pool. All of the mortgage loans were generally originated in conformity with underwriting standards of WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer and custodian, and HSBC Bank USA, National Association will act as trustee. Elections will be made to treat the trust as one real estate mortgage investment conduit for federal income tax purposes. WESTWAYS FUNDING: Moody's Junks Ratings on Four Note Classes ------------------------------------------------------------ Moody's Investors Service has taken action on four classes of notes issued by Westways Funding VI, Ltd., a Market Value CDO issuer: (1) $15,000,000 Class B Floating Rate Senior Subordinate Notes Due 2010 -- Prior rating: Aa2, on review for possible downgrade -- Current rating: A2, on review for possible downgrade (2) $15,000,000 Class C Floating Rate Subordinate Notes Due 2010 -- Prior rating: Ba2, on review for possible downgrade -- Current rating: Caa2, on review for possible downgrade (3) $15,000,000 Class D Floating Rate Junior Subordinate Notes Due 2010 -- Prior rating: Caa2, on review for possible downgrade -- Current rating: Ca (4) $10,000,000 Class L Junior Loan Interests Due 2010 -- Prior rating: Caa2, on review for possible downgrade -- Current rating: Ca On September 24, Moody's took rating actions on all seven classes of notes issued by Westways Funding VI. The current rating action reflects that a Termination Event was triggered on December 20th and the assets in the portfolio need to be liquidated to delever the transactions liabilities. Class A-1A Notes, Class A-1B Notes and Class A-2 Notes remain on review for possible downgrade. Moody's noted that the rating actions take into account the current stressful market conditions. While the underlying assets remain highly rated, the unprecedented illiquidity in the market for mortgage backed securities has created a high level of uncertainty around the valuation of the assets, which makes it difficult to assess the probability of the manager achieving certain prices. Westways Funding VI is a market value CDO backed by agency and non-agency Aaa-rated mortgage backed securities. WILSON JONES MEDICAL: Moody's Lifts $80 Mil. Debt's Rating to Ba3 ----------------------------------------------------------------- Moody's Investors Service has upgraded to Ba3 from B1 the rating assigned to Wilson N. Jones Memorial Hospital's $80 million of total debt outstanding and issued by the Metro Health Facilities Development Corporation. The outlook is revised to stable from negative at the higher rating level. The rating upgrade and outlook revision are primarily due to a return to operating profitability in fiscal year 2007 from a sizable operating loss in FY 2006, as well as stabilization of volume measures and liquidity. Management is budgeting for stable performance and balance sheet measures in FY 2008. Legal Security: The bonds are secured by a gross revenue pledge and a mortgage on the hospitals. Interest Rate Derivatives: None Strengths * Return to operating profitability in FY 2007 following a sizable operating loss in FY 2006, although a majority of the FY 2006 loss resulted from non-cash or one-time unusual items * Increase in liquidity in FY 2007 to generate a good 78 days cash on hand for a below investment grade rating * Adequate Moody's-adjusted maximum annual debt service coverage of 1.65 times on annualized FY 2007 ten-month results * Stabilization in volumes with active physician recruitment and return of general surgeon from Iraq Challenges * Expectations for increasingly competitive health care market with Universal Health's January 2007 acquisition of the only other local competitor, Texoma Medical Center, with Universal's promise to build a replacement hospital announced to open in late 2009 five miles from WNJ; construction has reportedly not begun * Low to modest capital spending over the last five years that has resulted in increasing and high average age of plant of about 18 years, potentially requiring sizable capital spending in the future and access to capital may be limited * Weak debt measures on annualized ten month FY 2007 operating performance, with cash-to-debt of 31% and debt- to-cash flow of 10.7 times Recent Developments/Results FY 2006 audited results are expected to be released by the end of the year. Internal twelve month statements for 2006 show a consolidated operating loss of $10.5 million (-8.1% margin) and only a half million in operating cash flow (0.4% margin). Several non-cash and unusual one-time items were recorded in FY 2006, including: (1) a $4.5 million non-cash hit to record additional bad debt expense resulting from a change in calculating the reserve for self-pay patients; (2) a $2 million non-cash accrual to reserve for potential litigation settlements that are under appeal; (3) a $1.2 million Medicare contractual correction (management has subsequently changes consultant). Consolidated operating income adjusted for the non-cash and one-time unusual items improves to a loss of $3.5 million (-2.6% margin) and operating cash flow grows to $7.5 million. While FY 2006 was a difficult year, operating performance improved nicely in FY 2007. For the first ten months, WNJ reported an operating profit of $1.3 million (1.2% margin) and operating cash flow of $10.4 million (9.1% margin). As a result, debt-to-cash flow improved in FY 2007 but remains high at 10.7 times against a relatively high debt load. Maximum annual debt service coverage remains adequate at 1.65 times on annualized FY 2007 results. Management projects to end FY 2007 with $1.5 million in operating profit, and FY 2008 is projected to produce similar results as FY 2007. Liquidity improved in FY 2007 to $27.7 million as of Oct. 31, 2007, for 78 days cash on hand, a good level for a below investment grade rating. This level is an improvement from 64 days at FYE 2006 and a system high since 83 days at FYE 1999. Cash-to-debt, however, remains very weak at 31%. Capital spending increased to $6.5 million in FY 2006 and $4.6 million for the first ten months of FY 2007 with the use of bond funds to support capital projects, including investment technology. Management is budgeting for FY 2008 capital to remain at these higher levels, supported in part from bond funds. No additional debt is anticipated at this time. WNJ's main competitor is local Texoma Medical Center located in Denison about ten miles away to the north. TMC is now owned by for-profit Universal Health, which has announced its plans to construct a replacement hospital to open in late 2009 and has purchased land about five miles from WNJ. Should Universal open this facility, Moody's believe competitive pressures would increase. WNJ management states that the medical staffs of the two facilities are largely separate, and WNJ has actively recruited new physicians to the medical staff. WNJ has issued an RFP for potential affiliation and has received responses that are currently being evaluated by the Board of Directors. Inpatient volumes, which declined steadily since FY 2003, leveled off in FY 2007 with management reporting 8,255 admissions for the first ten months compared to 8,246 admissions for the first ten months of the prior year. A new cardiologist, the return of a high volume general surgeon and an increase in the number of hospitalists have had a positive impact on volumes and revenues. Another cardiologist, two pulmonologists and another internist will be added in FY 2008. A reduction in personnel and change in purchasing vendors are two initiatives to control costs in FY 2008. Outlook The stable outlook reflects Moody's belief that the decline in volumes has abated and that operating performance and liquidity has stabilized. Moody's remain cautious, however, about future competitive pressures from TMC now owned by a larger for-profit parent and WNJ's ability to fund necessary capital needs over the longer term. What could change the rating--Up Improvement in volumes and stabilization in market share with consistency in stable to improving operating performance that strengthens balance sheet profile What could change the rating--Down Reversal in improvement in operating performance; further weakening of the balance sheet; increase in debt without commensurate increase in cash flow; inability to keep up with capital demands and remain competitive Key Indicators Assumptions & Adjustments: -- Based on financial statements for The Wilson N. Jones Memorial Hospital d/b/a Wilson N. Jones Medical Center and Affiliates -- First number reflects audit year ended Dec. 31, 2005 -- Second number reflects internal financial statements for year ended Dec. 31, 2006 -- Third number reflects internal ten month Oct. 31, 2007 financial statements annualized -- Investment returns normalized at 6% * Inpatient admissions: 11,041; 9,952; 8,255 (ten months only) * Total operating revenues: $147.7 million; $129.9 million; $136.6 million * Moody's-adjusted net revenue available for debt service: $18.3 million; $2.0 million; $13.6 million * Total debt outstanding: $86.5 million; $93.9 million; $89.1 million * Maximum annual debt service (MADS): $8.7 million; $10.1 million; $8.4 million * MADS Coverage with reported investment income: 2.04 times; 0.81 times; N/A * Moody's-adjusted MADS Coverage with normalized investment income: 2.11 times; 0.20 times; 1.65 times * Debt-to-cash flow: 6.85 times; (27.21) times; 10.72 times * Days cash on hand: 71 days; 64 days; 78 days * Cash-to-debt: 31%; 25%; 31% * Operating margin: 3.6%; -8.1%; 1.2% * Operating cash flow margin: 11.5%; 0.4%; 9.1% Rated Debt (debt outstanding as of Oct. 31, 2007) -- Series 1993 ($35.6 million outstanding) rated Ba3, insured by Connie Lee but insurance agreement not rated by Moody's -- Series 2001 Hospital Revenue Bonds ($44.5 million outstanding) rated Ba3 * 793 US Securities' Ratings Amounting to $22.92 Bil. Lowered ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 793 classes of U.S. residential mortgage-backed securities backed by U.S. closed-end second-lien mortgage collateral issued from the beginning of 2004 through the end of 2006. At the same time, S&P removed its ratings on 746 of the downgraded classes from CreditWatch negative, where they were placed on Nov. 16, 2007. The ratings on the remaining 47 classes were not on CreditWatch before they were lowered. The rating actions resolve 802 outstanding CreditWatch actions taken on Nov. 16, 2007, involving U.S. RMBS backed by closed-end second-lien collateral. S&P affirmed 53 of the ratings on these classes and removed them from CreditWatch negative. In addition, two classes with ratings that were on CreditWatch have paid off and the rating on one class was lowered and removed from CreditWatch negative on Nov. 19, 2007. This closed-end second-lien RMBS rating actions affect a total of 116 U.S. closed-end second-lien RMBS transactions. The 793 downgraded classes from the closed-end second-lien transactions had an original total principal balance of approximately $22.92 billion, which represents 31.78% of the approximately $72.12 billion in U.S. RMBS backed by closed-end second-lien mortgage loans rated by Standard & Poor's from the beginning of 2004 through the end of 2006. During this 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 $2.97 trillion. Standard & Poor's is taking these actions because it believes that losses on U.S. RMBS backed by closed-end second-lien collateral issued in the time period referenced above will significantly exceed historical precedent and because recent performance data indicates that performance is likely to be even worse than previously anticipated. S&P believes that this poor performance results from a combination of factors including, but not limited to, an environment of looser underwriting standards; pressure on home prices; speculative borrowing behavior; risk layering (the combination of several risk elements for one single borrower); very high combined loan-to-values; financial pressure on borrowers resulting from payment increases on first-lien mortgages; and questionable data quality. Furthermore, in the past, when borrowers had difficulty managing their mortgage payments, they were more readily able to refinance. As a result of tighter underwriting standards, an increase in interest rates, and home price erosion in various regions of the country, however, S&P believes it is now more difficult to refinance, which will result in further delinquencies and defaults. S&P's Surveillance Assumptions In light of worsening collateral performance, S&P has applied a more stressful cumulative loss curve from the high CLTV transactions issued in 1996 to project losses for the closed-end second-lien transactions covered in this review. S&P has also incorporated into its stress test the current charge- off rate and delinquency levels S&P has observed in recent performance data. As a result, the time period S&P used in its stress test now matches that of the U.S. subprime transaction reviews it conducted on July 12, 2007, and Oct. 19, 2007. For classes that fail the stress within the next 36 months, rating actions will typically be taken in accordance with these guidelines: -- To 'CCC' on any class that does not pass S&P's stress test scenario (a class is expected to experience a principal write-down or, with respect to the senior classes, a principal shortfall) within 12 months, regardless of its current rating; -- To 'B' on any class that does not pass S&P's stress test scenario within 13 to 24 months; -- To 'BB' on any class that does not pass S&P's stres test scenario within 25 to 36 months; In addition, with respect to ratings on more senior classes in a transaction in which subordinate classes have been downgraded and where the remaining credit loss protection on a more senior class was materially eroded by projected losses, ratings will be adjusted lower to reflect the reduced relative credit loss protection of that class. These rating actions are based on the most recent performance data, which reflects an increase in the level of delinquencies, and the resulting level of monthly charge-offs among the closed- end second-lien mortgage loans supporting these transactions. As of the November 2007 distribution, total delinquencies and severe delinquencies (90-plus days, foreclosures, and real estate owned for the transactions issued in 2004, 2005, and 2006 with ratings lowered were 11.61% and 6.48%, 15.25%, and 8.09%, and 16.92%, and 9.18%, respectively. The total delinquency percentages have increased from the July distribution to the November distribution by 14% for the 2004 issuance, 43% for the 2005 issuance, and 36% for the 2006 issuance. By the same measure, severe delinquency percentages increased from the July distribution to the November distribution by approximately 7.25% for 2004 issuance, approximately 45% for 2005 issuance, and approximately 37% for 2006 issuance. Furthermore, cumulative charge-offs have increased from 2.49% in July 2007 to 3.34% as of November 2007 for the transactions issued in 2004. As of November 2007, cumulative realized losses have increased from 4.48% in July to 7.57% for the transactions issued in 2005. As of November 2007, cumulative realized losses have increased from 3.84% July to 9.55% for the transactions issued in 2006. Impact On Current Ratings The lowered ratings on the 793 different classes were spread across the various ratings categories are: 59.38% were from the 'AAA' rating category, by original principal balance; 15.28% were from 'AA'; 11.04% were from 'A'; 7.03% were from 'BBB'; 2.90% were from 'BB'; 3.38% were from 'B'; and 0.99% were from 'CCC'. S&P affirmed its ratings on 53 classes of U.S. RMBS backed by closed-end second-lien collateral and removed them from CreditWatch. 'AAA' Rated Bonds Affected S&P lowered its ratings on 96 classes from 51 transactions that were originally rated 'AAA' to various rating levels; 58 classes were downgraded below investment-grade. The ratings on 18 classes were lowered to the 'BBB' rating category; 12 were lowered to the 'A' rating category; and eight were lowered to the 'AA' rating category. These classes had an original principal balance of approximately $13.61 billion out $58.13 billion in total issuance of that was originally rated 'AAA'. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Jan. 7, 2008 TURNAROUND MANAGEMENT ASSOCIATION Views from the Bench Omni Hotel, New Haven, Connecticut Contact: http://www.turnaround.org/ Jan. 10, 2008 TURNAROUND MANAGEMENT ASSOCIATION Distressed Debt Panel University Club, Jacksonville, Florida Contact: http://www.turnaround.org/ Jan. 10, 2008 TURNAROUND MANAGEMENT ASSOCIATION NJTMA Holiday Party Iberia Tavern & Restaurant, Newwark, New Jersey Contact: 908-575-7333 or www.turnaround.org Jan. 11, 2008 TURNAROUND MANAGEMENT ASSOCIATION Annual Lenders Panel Westin Buckhead, Atlanta, Georgia Contact: www.turnaround.org Jan. 14-15, 2008 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS VALCON: Liquidity, LBOs, Risk and Restructurings Marriott Harbor Beach Resort & Spa, Fort Lauderdale, Florida Contact: http://www.airacira.org/ Jan. 10, 2008 TURNAROUND MANAGEMENT ASSOCIATION Member Appreciation FREE Happy Hour Dave & Busters, Jacksonville, Florida Contact: 561-882-1331 or www.turnaround.org Jan. 16, 2008 TURNAROUND MANAGEMENT ASSOCIATION Current Outlook: Workouts, Lending and Turnarounds Marriott North, Fort Lauderdale, Florida Contact: www.turnaround.org Jan. 17, 2008 BEARD AUDIO CONFERENCES Corporate Bankruptcy Bootcamp: Fundamentals of BAPCPA Proceedings Contact: 240-629-3300; 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http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Carve-Out Agreements for Unsecured Creditors Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES China\u2019s New Enterprise Bankruptcy Law Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Clash of the Titans -- Bankruptcy vs. IP Rights Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Deepening Insolvency \u2013 Widening Controversy: Current Risks, Latest Decisions Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Diagnosing Problems in Troubled Companies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Claims Trading Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Market Opportunities Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Equitable Subordination and Recharacterization Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Handling Complex Chapter 11 Restructuring Issues Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Homestead Exemptions under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Hospitals in Crisis: The Insolvency Crisis Plaguing Hospitals Across the U.S. Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES IP Rights In Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES KERPs and Bonuses under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Non-Traditional Lenders and the Impact of Loan-to-Own Strategies on the Restructuring Process Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Partnerships in Bankruptcy: Unwinding The Deal Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Real Estate Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Reverse Mergers\u2014the New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Second Lien Financings and Intercreditor Agreements Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Surviving the Digital Deluge: Best Practices in E-Discovery and Records Management for Bankruptcy Practitioners and Litigators Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Technology as a Competitive Advantage For Today\u2019s Legal Processes Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Battle of Green & Red: Effect of Bankruptcy on Obligations to Clean Up Contaminated Property Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Subprime Sector Meltdown: Legal Developments and Latest Opportunities Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Twenty-Day Claims Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Using Virtual Data Rooms to Expedite M&A and Insolvency Proceedings Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES When Tenants File -- A Landlord's BAPCPA Survival Guide Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Jason A. Nieva, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez, Philline P. Reluya, 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 ***