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/raid1/www/Hosts/bankrupt/TCR_Public/080103.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, January 3, 2008, Vol. 12, No. 2 Headlines ADVANTA BANK: Fitch Maintains BB- Rating with Stable Outlook ADVANTA CORP: Fitch Affirms BB- Long-Term Issuer Default Rating ALLEGHENY ENERGY: Credit Improvement Cues Fitch to Lift Ratings AMERICAN HOME: Settles Servicing Rights Dispute With Countrywide AMERICAN HOME: Wants 1st Amended DIP Loan & Security Pact Okayed AMERICAN HOME: Wants to Set Servicing Biz. Sale Consummation ANGIOTECH PHARMACEUTICALS: S&P Holds B- Corporate Credit Rating ASCENDIA BRANDS: Senior Lenders Waive Default Until February 28 ASSET BACKED FUNDING: Fitch Junks Ratings on Two Certificates ATARI INC: Has Until March 20 to Comply with Nasdaq Listing Rules BALLY TECHNOLOGIES: Earns $21 Mil. in Quarter Ended September 30 BANK OF AMERICA: Fitch Puts Low-B Ratings on Six Certificates BEAR STEARNS: Fitch Assigns Low-B Ratings on Six Certificates BFA LIQUIDATION: To Sell Arizona Land at Absolute Public Auction BOISE PAPER: S&P Pairs BB- Corporate Rating With Stable Outlook CAM CBO: Review Cues Fitch to Change Rating to C/DR6 from C/DR4 NEW ORLEANS SEWERAGE: Moody's Maintains Ba2 Debt Rating CONSOLIDATED COMMS: Closes $362.6M North Pittsburgh Systems Buyout CONSULTING & SAFETY: Case Summary & 19 Largest Unsecured Creditors CWMBS INC: Fitch Rates $2,747,200 Class B-3 Certificates at BB DANA CORP: 24 Investor Groups to Buy $540 Million New Dana Shares DELPHI CORP: Court Approves Sale of Steering Biz for for $447 Mil. DELPHI CORP: Ct. Extends Exclusive Plan-Filing Period to March 31 DIXIE GROUP: Moody's Withdraws Ratings for Business Reasons DUKE ENERGY: Moody's Places Global Local Currency Rating at Ba2 DUNMORE HOMES: Gets Final OK to Borrow $1 Mil. from Sydney Dunmore DUNMORE HOMES: Can Use Dunmore's Cash Collateral on a Final Basis ECHOSTAR COMMS: Distributes Shares for Separation of Businesses FGX INT'L: Moody's Withdraws All Ratings After Debt Refinancing FIRST DARTMOUTH: Case Summary & 13 Largest Unsecured Creditors FIRST FRANKLIN: Weak Performance Cues S&P to Downgrade Ratings FIRSTLIGHT HYDRO: S&P Holds BB- Rating on $320MM Mortgage Bonds FIRSTLIGHT POWER: S&P Holds BB- Rating on $695MM Sr. Facilities GENTEK INC: Subsidiary Acquires Bay Chemical for $7 Million HARMAN INTERNATIONAL: Elects Gary Steel to Board of Directors JADE ART: Oct. 31 Balance Sheet Upside-Down by $9.77 Million KAUFMAN COUNTY: Case Summary & Four Largest Unsecured Creditors KINGSWAY FINANCIAL: Secures to CDN$70 Million Credit Facility LEAP WIRELESS: S&P Maintains B- Corporate Credit Rating MIDNIGHT HOLDINGS: Sept. 30 Balance Sheet Upside-Down by $36.5MM MORGAN STANLEY: Fitch Rates Three Certificate Classes at Low-B NASDAQ STOCK: Gets CFIUS Clearance on Borse Dubai Investment Deal NASDAQ STOCK: OMX AB Board Backs Borse Dubai's Public Offer NATIONAL LAMPOON: Oct. 31 Balance Sheet Upside-Down by $4.13 Mil. NAVIOS MARITIME: Shareholders OK Class B Directors Election NORTH STREET: Fitch Holds 'B' Rating on $31 Mil. Class C Notes NY RACING: Plan Confirmation Hearing Deferred to January 14 PACIFIC LUMBER: Loses Exclusive Right to File Reorganization Plan PACIFIC LUMBER: Scopac Can Use Funds in SAR Account for 2nd Budget PERFORMANCE TRANS: Gets Interim Nod to Use $6 Mil. DIP Funding PERFORMANCE TRANS: Lenders Want Yucaipa, et al. to Produce Docs PERFORMANCE TRANS: Committee Can Hire Blank Rome as its Counsel PHYTOMEDICAL TECH: Posts $353,094 Net Loss in Third Quarter POPE & TALBOT: Canada Court OKs Bid Procedures for Pulp Business POPE & TALBOT: Bid Protocol for Remaining Wood Business Approved POPE & TALBOT: Court Approves KPMG LLP as Independent Auditor POWERLINX INC: Sept. 30 Balance Sheet Upside-Down by $3.16 Million PUTNAM CBO: Fitch Retains 'CC' Rating on Second Priority Notes RCN CORP: Inks New 3-Year Pact w/ Peter Aquino as President & CEO SALTON INC: Closes APN Holding Buyout; Harbinger Holds 92% Stake SASCO MORTGAGE: Fitch Takes Rating Actions on Diverse Classes SECURITIZED ASSET: Fitch Chips Ratings on Four Certs. to Low-B SOLAR INVESTMENT: Fitch Retains 'CC' Ratings on Two Notes SUN COAST: Case Summary & 20 Largest Unsecured Creditors SUN COAST: Inks $19.7 Million Sale Pact With HCA West Florida TERWIN MORTGAGE: Fitch Junks Rating on Class M-5 Certs. from 'B' TRANSMETA CORP: Posts $9.1 Million Net Loss in Third Quarter UAP HOLDING: Agrium Inc. Withdraws Merger Notification WHEELING ISLAND GAMING: S&P Withdraws "B" Rating on Senior Notes WR GRACE: Charleston City Wants Stay Lifted to Seize Property WR GRACE: Wants to Settle Environmental Claims for $44 Million YRC WORLDWIDE: Earns $40.7 Million in Third Quarter YRC WORLDWIDE: Expects 4th Qtr. Impairment Chgs. of $700-$800 Mil. * Survey Says CMI Finishes 2007 With Another Slight Drop * Trade Credit Index Falls to Record Low Level Says Eueler Hermes * Chapter 11 Cases with Assets & Liabilities Below $1,000,00 ********* ADVANTA BANK: Fitch Maintains BB- Rating with Stable Outlook ------------------------------------------------------------ Fitch Ratings has affirmed the long-term Issuer Default Rating of Advanta Bank Corp. and Advanta Corp. at 'BB-'. The Rating Outlook was revised to Stable from Positive. Approximately $2.0 billion of debt and deposits is affected by the action. Fitch has affirmed these ratings with a Stable Outlook: Advanta Bank Corp. -- Long-term IDR at 'BB-'; -- Short-term IDR at 'B'; -- Long-term Deposits at 'BB' Advanta Corp: -- Long-term Issuer Default Rating (IDR) at 'BB-'; -- Short-term IDR at 'B'; -- Senior Unsecured at 'BB-' Advanta Capital Trust I -- Trust Preferred Stock at 'B'. The rating affirmation reflects the company's solid position in the small business credit card industry, improved asset quality relative to historical levels, consistent profitability metrics, and adequate risk-adjusted capitalization, offset by growing competition in the small business credit card sector, and the risks associated with a lack of revenue diversity and its mono- line business focus. The Outlook revision reflects the recent deterioration in portfolio credit quality, resulting from higher delinquency roll- rates following the 2005 change in bankruptcy legislation, and the uncertain capital markets environment, which could disrupt funding plans for Advanta, which is heavily reliant on the securitization market for funding. The Stable Outlook reflects the company's stable liquidity profile, adequate risk-adjusted capitalization, and the expectation that credit quality metrics will deteriorate from current levels over the near to intermediate-term. Material, persistent, declines in credit metrics and risk-adjusted revenue margins, a reduction in liquidity, and/or a decline in risk- adjusted capitalization could result in negative rating action. Conversely, stabilization of asset quality metrics, increased funding diversity, and higher risk-adjusted capitalization could provide rating momentum. ADVANTA CORP: Fitch Affirms BB- Long-Term Issuer Default Rating --------------------------------------------------------------- Fitch Ratings has affirmed the long-term Issuer Default Rating of Advanta Corp. and Advanta Bank Corp. at 'BB-'. The Rating Outlook was revised to Stable from Positive. Approximately $2.0 billion of debt and deposits is affected by the action. Fitch has affirmed these ratings with a Stable Outlook: Advanta Corp: -- Long-term Issuer Default Rating (IDR) at 'BB-'; -- Short-term IDR at 'B'; -- Senior Unsecured at 'BB-' Advanta Bank Corp. -- Long-term IDR at 'BB-'; -- Short-term IDR at 'B'; -- Long-term Deposits at 'BB' Advanta Capital Trust I -- Trust Preferred Stock at 'B'. The rating affirmation reflects the company's solid position in the small business credit card industry, improved asset quality relative to historical levels, consistent profitability metrics, and adequate risk-adjusted capitalization, offset by growing competition in the small business credit card sector, and the risks associated with a lack of revenue diversity and its mono- line business focus. The Outlook revision reflects the recent deterioration in portfolio credit quality, resulting from higher delinquency roll- rates following the 2005 change in bankruptcy legislation, and the uncertain capital markets environment, which could disrupt funding plans for Advanta, which is heavily reliant on the securitization market for funding. The Stable Outlook reflects the company's stable liquidity profile, adequate risk-adjusted capitalization, and the expectation that credit quality metrics will deteriorate from current levels over the near to intermediate-term. Material, persistent, declines in credit metrics and risk-adjusted revenue margins, a reduction in liquidity, and/or a decline in risk- adjusted capitalization could result in negative rating action. Conversely, stabilization of asset quality metrics, increased funding diversity, and higher risk-adjusted capitalization could provide rating momentum. ALLEGHENY ENERGY: Credit Improvement Cues Fitch to Lift Ratings --------------------------------------------------------------- Fitch Ratings upgraded these Issuer Default Ratings (IDR) and outstanding debt ratings of Allegheny Energy Inc. and subsidiaries: Allegheny Energy, Inc. (AYE) -- IDR to 'BBB-' from 'BB+'. Allegheny Energy Supply Company, LLC (Supply) -- IDR to 'BBB-' from 'BB+'. -- Senior secured to 'BBB' from 'BBB-'. -- Senior unsecured to 'BBB-' from 'BB+'. Allegheny Generating Co. -- IDR to 'BBB-' from 'BB+'. -- Senior unsecured to 'BBB-' from 'BB+'. The Rating Outlook is Stable. The ratings of AYE's three regulated utility subsidiaries: -- West Penn Power Company (West Penn; IDR rated 'BBB-', Outlook Stable); -- Monongahela Power Company (Mon Power; IDR rated 'BBB-', Outlook Stable); and -- Potomac Edison Company (Potomac Ed; IDR rated 'BB+', Outlook Negative) are unaffected by this rating actions. Fitch's rating upgrade of AYE and Supply to 'BBB-' reflects credit improvement resulting from increases in cash flow from higher realized prices on power sales, as well as lower debt balances and associated carrying costs. Consolidated debt has been reduced by approximately $2 billion over the past four years primarily with internal cash flow as well proceeds from asset sales. The ratios of (FFO + Interest)/Interest for AYE on a consolidated basis and for the Supply subsidiary were approximately 4.6 times and 4.4x for the twelve months ending Sept. 30, 2007, which are consistent with guidelines for the new ratings and the issuers' business and operating risk. The ratios of FFO to Debt exceeded 20% as of Sept. 30, 2007 for AYE and Supply. AYE's ratings are supported by these: -- Ownership of increasingly valuable coal-fired generation in PJM; -- Ample liquidity; -- Reasonable residential transition plans in PA and MD utility service territories; and -- Reinstatement of the energy adjustment clause in West Virginia. Supply provides approximately 50% of AYE's consolidated cash flow and its contribution is expected to increase as higher power sales prices are realized. For the next several years, AYE has limited long-term debt maturities. The parent company and Supply have access to two revolving credit facilities in the amounts of $400 million and $400 million, respectively, and also there is a system money pool. There was nearly $200 million of cash and equivalents as of Sept. 30, 2007 and cash balances were subsequently increased by West Penn's $275 million 5.95% first mortgage bond issuance in December 2007. Fitch's rating concerns for the AYE group include risks for these: -- Under-recovery or recovery lags in purchased power and other costs at the utilities; -- Adverse changes in retail market structure or regulation, increases in operating costs and capital spending; -- Stricter environmental regulations; and -- Prolonged outages of super-critical units. While Supply had formerly been the greater source of Fitch's credit concerns, Fitch's current view is that there is greater risk to creditors at the utilities as a result of regulatory uncertainties. AYE's Stable Outlook assumes that Maryland and Pennsylvania regulators permit full recovery of purchased power costs in tariffs following the expiry of the current rate settlements (Dec. 31, 2008 for MD residential load and Dec. 31, 2010 in PA). Approximately 25% of the Maryland residential customer power needs for the post-transition period was procured in an October 2007 auction and the second of four auctions is scheduled for January 2008. However, the Maryland Public Service Commission is considering changes to the market structure that could affect cash flows of AYE or its subsidiaries Supply or Potomac Ed. The continued tightening of PJM Interconnection capacity markets bodes well for Supply as an owner of efficient baseload coal-fired power generation assets. Challenges for Supply include stricter emission standards, successful completion of the scrubber construction program, and improving plant operation factors. The initiation of carbon limits could affect credit because approximately 95% of energy is generated with coal. Fitch anticipates some improvement in unit availability of the company's major coal plants as a result of completion of major maintenance projects in 2007. However, Fitch considers management's availability goal of 91% for 2008 to be aggressive given plant operating track records over the past five years, (reduced maintenance outages should lead to some improvement in 2008 from the 84% estimated 2007 availability). There has been steady progress on the Hatfield and Fort Martin scrubber projects and construction budgets are still on track for $550 million and $725 million, respectively and a significant majority of the remaining scrubber budgets are fixed. The upgrade of Allegheny Generating Co. results from the upgrade of its 59% owner, Supply. Allegheny Generating's single asset is an interest in the Bath County pumped storage unit. It has consistently strong stand-alone credit metrics with (FFO + Interest)/Interest of approximately 6x. AMERICAN HOME: Settles Servicing Rights Dispute With Countrywide ---------------------------------------------------------------- To resolve the objections of Countrywide Bank, N.A., regarding the proposed sale of its servicing rights related to certain loans, which American Home Mortgage Investment Corp. and its debtor-affiliates have been servicing, the parties negotiated, and agreed to a consensual resolution by entering into a purchase agreement approved by the Honorable Christopher S. Sontchi. Pursuant to Sections 105 and 363 of the Bankruptcy Code, the Court authorized the Debtors to enter into a purchase agreement, and to sell, transfer and convey Countrywide's servicing rights to AHM Acquisition Co. Inc., free and clear of all liens and interests, provided that the liens and security interests of the administrative agent will attach to the proceeds of the sale. Judge Sontchi ruled that all proceeds of the sale, including the proceeds from all outstanding documented advances, will be paid in accordance with the terms of his prior order authorizing the limited use of certain secured lenders' cash collateral. He noted that to the extent Countrywide intends to assert a general unsecured claim for service breach, it will be obligated to file a proof of claim on or before January 11, 2008. He added that the automatic stay is modified to the extent necessary to implement the terms and conditions of the Purchase agreement and the provisions of the Court order. Creditors Object to Cure Amounts Certain creditors submit objections to the initial cure amounts set by the Debtors. The Debtors have pegged the cure claim of the creditors at $0. The Creditors contend that the correct cure amounts are: Creditor Cure Claim -------- ---------- UBS Real Estate $2,588,839 Securities, Inc. U.S. Bank National Association 288,590 ZC Real Estate Tax 150,949 Solutions Limited American Security Entities 71,931 Citibank, N.A. 59,783 Wells Fargo Bank, 33,401 National Association CitiMortgage, Inc. 5,302 De Lage Landen Financial 4,431 Services, Inc. Included in the American Security Entities are American Security Insurance Company, Standard Guaranty Insurance Company, Voyager Indemnity Insurance Company, and Assurant Group. DB Structured Products, Inc., whose cure amount was also pegged at $0, objects to the Debtors' cure notice to the extent it would purport to sever cure obligations from the servicing portion of a certain master mortgage loan purchase and servicing agreement between DBSP and certain Debtors prior to the resolution of DBSP's appeal, and in contravention of the second amendment of the Debtors' asset purchase agreement with AH Mortgage Acquisition Co., Inc. The Bank of New York says it is not presently aware of any other defaults or other basis for cure claims, aside from what it previously filed, under its servicing agreements with the Debtors. BofNY tells the Court that its objection is not a waiver of any of its rights including, the right to trial by jury that it may have in any civil proceeding arising in or related to the bankruptcy cases. De Lage Landen reserves its rights to amend and supplement its objection to the extent that it becomes aware of additional information concerning any of the remaining leases the Debtors may seek to assume. 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 March 3, 2008. (American Home Bankruptcy News, Issue No. 21, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Wants 1st Amended DIP Loan & Security Pact Okayed ---------------------------------------------------------------- American Home Mortgage Investment Corp., American Home Mortgage Holdings Inc., American Home Mortgage Corp., American Home Mortgage Acceptance Inc., American Home Mortgage Ventures LLC, Homegate Settlement Services Inc., and Great Oak Abstract Corp. seek authority from the U.S. Bankruptcy Court for the District of Delaware to approve certain amendments to the previously approved Debtor-in-Possession Loan and Security Agreement, dated as of Aug. 6, 2007, between them and WLR Recovery Fund III, L.P. The DIP Facility provided for a $50,000,000 postpetition financing, however, it does not permit the Borrowers to utilize the borrowings to fund the operations or expenses associated with their mortgage loan servicing business. Subsequently, certain of the Debtors sought and obtained the Court's approval to obtain a limited recourse postpetition financing in the principal amount of $50,000,000. James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates that recent developments in the bankruptcy cases, including the sale of the Servicing Business and the initial closing, have resulted in the Borrowers' need to modify certain terms of the DIP Facility. As a result, the Borrowers, the Lenders and the administrative agent have agreed to amend the DIP Facility through the terms and conditions of the First DIP Facility Amendment. Among the key terms of the First DIP Facility Amendment are: -- The Total commitment under the DIP Facility is reduced from $50,000,000 to $35,000,000; -- The definition of "Maturity Date" in the DIP Facility is amended to include reference to the sale of all or substantially all of the equity interest of all of the assets of that certain specified banking subsidiary; -- A section of the DIP Facility is amended to provide for the reduction of the borrowing availability under the DIP Facility in the amount of the lender purchased mortgage insurance, the LPMI, reserve amount; -- A section of the DIP Facility is amended to permit the Borrowers to utilize borrowings to fund the making or purchasing of certain advances pursuant to the asset purchase agreement with AH Mortgage Acquisition Co., Inc., in connection with the sale of the Servicing Business; -- The Lenders permit the Borrowers to use the Borrowers' cash, on which the Lenders have a lien, to obtain the release of Bank of America, N.A.'s liens on the BofA construction loans; -- The Amendment will grant a first priority lien on the BofA Construction Loans upon the payment of certain advances. The lien will be released when the Borrowers have recovered an amount equal to the Construction Loan Advance through the collection, payoff, compromise, sale or other disposition of the BofA Construction Loans; -- The Amendment will provide for the Lenders consent to the Borrowers' collection, compromise, sale or other disposition of the BofA Construction Loans in any manner the Borrowers deem appropriate; -- The parties of the DIP Facility waive any default that may have occurred in connection with the Borrower's payment of certain LPMI advances from the Borrowers' cash; and -- The Borrowers agree to pay WLR Recovery $100,000 as an amendment fee. Mr. Patton contends that the reduction of the availability of borrowings under the DIP Facility will result, among other things, in a reduction of the interest escrow required under the DIP Facility by $1,200,000, and thus, interest payment savings to the Borrowers and the bankruptcy estates. He also says that the Amendment is necessary to ensure compliance with the APA and the uninterrupted servicing of the loans not purchased by AHM Acquisition. Additionally, Mr. Patton points out, among other reasons, that the Amendment is necessary because of certain advances made by the Borrowers from Borrowers' cash to fund premiums on LPMI, and to fund an escrow held by BofA pending resolution of disputes between the Debtors and BofA regarding responsibility for LPMI premium obligations. Pursuant to Rules 2002, 4001 and 9014 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to shorten the notice applicable to their request, reducing the time by which interested parties must respond to the request. They ask Judge Sontchi to commence a hearing on Friday, Jan. 4, 2008, at 11:00 a.m., to consider the request. 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 March 3, 2008. (American Home Bankruptcy News, Issue No. 21, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Wants to Set Servicing Biz. Sale Consummation ------------------------------------------------------------ American Home Mortgage Investment Corp. and its debtor- affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to undertake certain activities to prepare for the consummation of the previously-approved sale of their mortgage loan servicing business to AH Mortgage Acquisition Co. Inc. pursuant to the terms of an assset purchase agreement. Under the APA, the Sale will close in two steps, in which the initial "economic" close occurred on November 16, 2007. From the Initial Closing Date until the "legal" close on the final closing date, the Debtors will continue to operate the Servicing Business, subject to certain bankruptcy exceptions, for the economic benefit and risk of AHM Acquisition, James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates. Accordingly, the Debtors seek authority to: -- create one or more non-debtor business entities, which may include corporations, limited liability companies and transition entities, for entering into certain agreements relating to the transition of the purchased assets from the sellers to the purchaser, or relating to the continued operation of the Servicing Business; -- fund the Transition Entities with amounts sufficient to perform their respective obligations under the Transition Entities Agreements; -- enter into a fourth amendment to the APA, which provides, among other things, that the Debtors' interests in the Transition Entities will be deemed Purchased Assets under certain provisions of the APA; -- enter into a employment agreement, between American Home Mortgage Servicing, Inc., and David M. Friedman; -- file the Employment Agreement with the Court under seal, and direct that the Employment Agreement remain under seal, confidential and not be made available to anyone, except for the Court, the office of the U.S. Trustee, counsel to the Official Committee of Unsecured Creditors, counsel to Bank of America, N.A., AHM Acquisition, and counsel to the DIP Lenders; and -- limit service of the request to: * the U.S. Trustee; * counsel to the Creditors Committee; * counsel to BofA; * counsel to the Debtors' postpetition lender; * counsel to AHM Acquisition; and * all other parties entitled to notice under Rule 2002-1(b) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware. Mr. Patton asserts that the Transition Entities will assist the Debtors in transitioning the Purchased Assets to AHM Acquisition, and facilitate the continued operation of the Servicing Business. He notes that the creation of the Transition Entities would provide a smooth transition, which in turn benefits all parties- in-interest to the bankruptcy proceedings. He points out that the Debtors believe that their counterparties to certain contracts will more readily enter into contracts with the non- debtor Transition Entities than with the Debtors, because the Transition Entities are not debtors in the proceedings and will become subsidiaries of AHM Acquisition upon the Final Closing. Prior to the Final Closing, the Transition Entities will be funded by the Sellers to the extent necessary to meet any obligations incurred in connection with the Transition Entities Agreements, Mr. Patton tells Judge Sontchi. However, he assures the Court that the only sources of funding would be the revenues and working capital of the Servicing Business. Mr. Patton argues, among other things, that as provided in the APA, AHM Acquisition, and not the bankruptcy estates: -- bears all of the upside benefit and downside risk of the Servicing Business. -- is responsible for providing the necessary working capital to fund the Servicing Business; and -- is ultimately responsible for the operating expenses of the Servicing Business. In addition, the Debtors ask the Court to shorten the notice applicable to their request, reducing the time by which interested parties must respond to the request. They ask Judge Sontchi to commence a hearing on Friday, Jan. 4, 2008, at 11:00 a.m., to consider the request. 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 March 3, 2008. (American Home Bankruptcy News, Issue No. 21, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ANGIOTECH PHARMACEUTICALS: S&P Holds B- Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed the ratings, including the 'B-' long-term corporate credit rating, on Vancouver-based Angiotech Pharmaceuticals Inc. and removed them from CreditWatch with negative implications, where they were placed Oct. 22, 2007. The outlook is negative. "The affirmation reflects our expectation that the company has sufficient cash to support its operations in the medium term, even if revenue growth is stagnant," said Standard & Poor's credit analyst Maude Tremblay. The ratings on Angiotech reflect its continued high dependence on the challenged drug-eluting stent (DES) market for its operating performance, uncertainty regarding the timing and extent of revenue growth from new products, as well as expected negative free cash flow generation in the medium term. The company's leading position within the DES market, a pipeline of products that have the potential to improve and diversity the company's revenue stream, and sufficient liquidity to meet its obligations in the medium term partially offset these factors. Angiotech is a specialty pharmaceutical company whose core strength is adding pharmaceutical compounds to medical devices used by surgeons. A licensing agreement with Boston Scientific Corp. for the Taxus DES, from which Angiotech receives royalty revenues, is the company's most important revenue generator. Due to recent demand decline, Taxus royalties now represent about 40% of the company's last 12 months revenues (at Sept. 30, 2007). The medical products segment, resulting mostly from the American Medical Instruments Inc. acquisition in March 2006, manufactures and markets a wide range of single-use specialty medical products directly to end-users. The company is also investing to research and develop new products linked to surgical procedures; however, these have yet to provide material revenue contribution. Third-quarter royalty payments from BSX declined by 41% year-over- year to $24.9 million, and S&P expects them to contract by about 20% in fourth-quarter 2007 compared with the same period in 2006. Increased competition could cause a further decrease in Taxus royalties of double digits annually in the medium term. The medical products segment underperformed management's expectations during third-quarter 2007: products acquired from AMI generated stable revenues; however, new products have yet to make material contributions. As a result, lease-adjusted EBITDA declined to $63.3 million for the 12 months ended Sept. 30, 2007, compared with $99.0 million for the 12 months ended Dec. 31, 2006. The company's ability to generate free cash flow is under severe constraints, given the deterioration of the operating performance and interest expense of about $50 million annually. Funds from operations were only $3.1 million year-to-date at Sept. 30, 2007, which was sufficient to cover the company's limited investments in working capital and long-term assets in that period. However S&P expects free operating cash flow to become negative during fourth- quarter 2007. The negative outlook reflects S&P's expectation that Angiotech will remain free cash flow negative for several quarters. S&P could lower the rating if weakening market conditions for DES or setbacks in the product pipeline lead to a cash burn in excess of $25 million annually. Conversely, S&P could revise the outlook to stable if contribution from new products or divestment of assets leads to an improvement in free cash flow generation. ASCENDIA BRANDS: Senior Lenders Waive Default Until February 28 --------------------------------------------------------------- Ascendia Brands Inc. has reached agreement with its senior lenders to restructure its $160 million first and second lien debt facilities. Under the agreement, Ascendia's senior lenders will waive certain existing covenant defaults and adjust financial covenant levels from now through the end of Ascendia's fiscal year ending Feb. 28, 2009. As reported in the Troubled Company Reporter on Dec. 17, 2007, Ascendia Brands Inc. notified its senior lenders that it is in default of certain covenants contained in its first and second lien credit facilities and is unable to make certain representations and warranties deemed to be made when drawings are made under its revolving credit facility. On Dec. 12, 2007, the company received notice from the agent for the first lien lenders reserving such lenders' rights under the first lien facility generally, including the right to cease making advances under the revolving credit facility. In connection with the restructuring of Ascendia's senior debt, one or more affiliates of Prentice Capital Management LP will make an investment in convertible preferred equity securities of Ascendia. The aggregate investment of $26.5 million includes the conversion of a $2 million unsecured loan made by Prentice on Nov. 19, 2007. Closing of the debt re-structuring and equity funding is subject to the completion of definitive transaction documents and their approval by Ascendia's board of directors, provision of a fairness opinion and other customary closing conditions. The parties expect that the transaction will close, and funding will occur, on or around Jan. 14, 2008. However, closing of the transaction cannot be assured. "We are very pleased to have reached agreement in principle with our lenders on the restructuring of our debt," Steven R. Scheyer, president & chief executive officer of Ascendia, commented. "We now look forward to starting 2008 on a high note as we prepare to roll out our exciting new the healing garden(R: 47.01, -0.50, - 1.05%) product line." About Ascendia Brands Headquartered in Hamilton, New Jersey, Ascendia Brands Inc. -- http://www.ascendiabrands.com/-- (AMEX: ASB) fka Cenuco Inc. manufactures, markets and sells known branded products in the health and beauty care categories. The company's portfolio includes Baby Magic(R), Binaca(R), Mr. Bubble(R), Calgon(TM), the healing garden(R), Lander(R), Lander essentials(R), Ogilvie(R), Tek(R), Dorothy Gray(R) and Tussy(R). The company sells its products through a variety of channels, concentrating primarily on the mass merchandiser, drug, grocery and dollar store outlets. The company operates two manufacturing facilities, in Binghamton, New York, and Toronto, Canada. ASSET BACKED FUNDING: Fitch Junks Ratings on Two Certificates ------------------------------------------------------------- Fitch Ratings has taken these rating actions on these Asset Backed Funding Corp. mortgage pass-through certificates: Series 2004-FF1 -- Class M-1 affirmed at 'AA-'; -- Class M-2 affirmed at 'BBB+'; -- Class M-3 affirmed at 'BBB-'; -- Class M-4 downgraded to 'B' from 'BB+'; -- Class M-5 downgraded to 'CC/DR4' from 'BB'; -- Class M-6 downgraded to 'C/DR4' from 'BB-'. Series 2004-OPT1 -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class M-4 affirmed at 'A-'; -- Class M-5 affirmed at 'BBB+'; -- Class M-6 downgraded to 'B' from 'BBB'. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $128.06 million of outstanding certificates, as of the December 2007 distribution date. The negative rating actions total $11.49 million of outstanding certificates and reflect the deterioration of credit enhancement relative to future expected losses. The transactions are seasoned from a range of 40 months (series 2004-FF1) to 46 months (series 2004-OPT1). The pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from 12% (series 2004-FF1) to 14% (series 2004-OPT1). The cumulative losses to date, as a percentage of the pools' initial balances, range from 0.78% (series 2004-FF1) to 0.94% (series 2004-OPT1). For the transactions listed above, the underlying collateral consists of fixed-rate and adjustable-rate mortgage loans secured by first and second liens on residential mortgage properties extended to subprime borrowers. The mortgage loans were originated by First Franklin Financial Corporation (series 2004- FF1) and Option One Mortgage Corporation (series 2004-OPT1). The servicers for the loans in these transactions are Option One Mortgage Corporation (series 2004-OPT1) and Countrywide Home Loans, Inc. (series 2004-FF1). Option One is rated 'RPS2+', with a Negative Rating Watch by Fitch, and Countrywide Home Loans, Inc. is rated 'RPS1-', with an Evolving Rating Watch. For the 2004-FF1 transaction, the overcollateralization is below the stepped-down target of $3,615,935. The 60+ delinquencies are 14.70% of the current collateral balance, which includes real estate owned of 8.5%. For the 2004-OPT1 transaction the OC is $162,419, which is well below the target of $2,214,022. The 60+ delinquencies are 16.82% of current collateral balance. This includes foreclosures and REO of 7.1% and 3.5%, respectively. ATARI INC: Has Until March 20 to Comply with Nasdaq Listing Rules ----------------------------------------------------------------- Atari Inc. has received a notice from The Nasdaq Stock Market advising that in accordance with Nasdaq Marketplace Rule 4450(e)(1), Atari Inc. has 90 calendar days, or until March 20, 2008, to regain compliance with the minimum market value of Atari Inc.'s publicly held shares required for continued listing on the Nasdaq Global Market, as stated in Nasdaq Marketplace Rule 4450(b)(3). Atari Inc. received the notice because the market value of its publicly held shares, which is calculated by reference to Atari Inc.'s total shares outstanding, less any shares held by officers, directors or beneficial owners of 10% or more, was less than $15 million for 30 consecutive business days prior to Dec. 21, 2007. This notification has no effect on the listing of Atari Inc.'s common stock at this time. The notice letter also states that if, at any time before March 20, 2008, the market value of Atari Inc.'s publicly held shares is $15 million or more for a minimum of 10 consecutive trading days, the Nasdaq staff will provide Atari Inc. with written notification that it has achieved compliance with the minimum market value of publicly held shares rule. However, the notice states that if Atari Inc. cannot demonstrate compliance with such rule by March 20, 2008, the Nasdaq staff will provide Atari Inc. with written notification that its common stock will be delisted. In the event that Atari Inc. receives notice that its common stock will be delisted, Nasdaq rules permit Atari Inc. to appeal any delisting determination by the Nasdaq staff to a Nasdaq Listings Qualifications Panel. About Atari Inc. Headquartered in New York, Atari Incorporated, (NASDAQ: ATAR) -- http://www.atari.com/-- develops interactive games for all platforms and is a third-party publisher of interactive entertainment software in the U.S. Atari Inc. is a majority-owned subsidiary of France-based Infogrames Entertainment SA, an interactive games publisher in Europe. Going Concern Doubt New York-based Deloitte & Touche LLP expressed substantial doubt about Atari's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2007. The auditing firm pointed to the company's significant operating losses. BALLY TECHNOLOGIES: Earns $21 Mil. in Quarter Ended September 30 ---------------------------------------------------------------- Bally Technologies, Inc. financial results for the fiscal quarter ended Sept. 30, 2007. Net income increased to $21.2 million, or 11% of total revenue, compared with a net loss of $225,000 in the same period last year, as a result of improved margin and cost leverage. Total revenues increased 23% to $189.0 million as compared with $153.7 million for the same period last year. "We are very pleased with our continued improvement in both business momentum and margins in all the key parts of our business," Richard M. Haddrill, the Company's Chief Executive Officer, said. Cash and cash equivalents increased to approximately $51.6 million at Sept. 30, 2007 as compared with approximately $40.8 million at June 30, 2007. Selling, general and administrative expenses increased 6% to $52.3 million and declined to 28% of total revenue from 32 percent as compared with the same period last year. Adjusted EBITDA was $58.5 million, a 122% increase as compared with the same period last year. The company made an unscheduled $15.0 million payment on its term loan during the first quarter of fiscal 2008. "In addition to improving our margins, the quarterly results also reflect our improving operating leverage," Robert C. Caller, the Company's Chief Financial Officer, said. "Our SG&A and R&D expenses were favorably impacted by better control over costs and savings from our India Development Centers." At Sept. 30, 2007, the company's balance sheet showed total assets of $871.0 million and total liabilities of $647.2 million, resulting in $222.5 million stockholders' equity. Equity, at June 30, 2007, was $199.4 million. About Bally Technologies Inc. Headquartered in Las Vegas, Nevada, Bally Technologies Inc. (NYSE:BYI) - http://www.ballytech.com/-- is engaged in the design, manufacture, assembly and distribution of technology based products to commercial gaming markets. The company's business consists of two business units: the Bally Gaming and Systems business unit and the Rainbow Casino (Rainbow) business unit. The Bally Gaming and Systems unit consists of three primary sub- groups: Gaming Equipment, which includes the sale of gaming devices; Gaming Operations, which includes the rent and lease of gaming devices, and Systems, which includes the sale and support of gaming systems. It also owns and operates the Rainbow Casino in Vicksburg, Mississippi. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings upgraded Bally Technologies' Issuer Default Rating and senior secured bank debt ratings as: IDR to 'B' from 'B-' and Secured bank credit facilities to 'BB/RR1' from 'B/RR3'. BANK OF AMERICA: Fitch Puts Low-B Ratings on Six Certificates ------------------------------------------------------------- Bank of America Commercial Mortgage Inc., series 2007-5, commercial mortgage pass-through certificates are rated by Fitch Ratings: -- $25,000,000 class A-1 'AAA'; -- $77,000,000 Class A-2 'AAA'; -- $281,000,000 Class A-3 'AAA'; -- $48,322,000 Class A-SB 'AAA'; -- $612,000,000 Class A-4 'AAA'; -- $257,694,000 Class A-1A 'AAA'; -- $185,850,000 Class A-M 'AAA'; -- $139,405,000 Class A-J 'AAA'; -- $1,858,595,583 Class XW 'AAA'; -- $20,909,000 Class B 'AA+'; -- $13,939,000 Class C 'AA'; -- $20,909,000 Class D 'AA-'; -- $18,585,000 Class E 'A+'; -- $11,616,000 Class F 'A'; -- $18,585,000 Class G 'A-'; -- $20,909,000 Class H 'BBB+'; -- $16,262,000 Class J 'BBB'; -- $18,585,000 Class K 'BBB-'; -- $11,616,000 Class L 'BB+'; -- $6,969,000 Class M 'BB'; -- $4,646,000 Class N 'BB-'; -- $6,969,000 Class O 'B+'; -- $2,323,000 Class P 'B'; -- $4,646,000 Class Q 'B-'. Class XW is a notional amount and interest only. The $34,856,583 class S is not rated by Fitch. All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 100 fixed-rate loans having an aggregate principal balance of approximately $1,858,595,583, as of the cutoff date. BEAR STEARNS: Fitch Assigns Low-B Ratings on Six Certificates ------------------------------------------------------------- Fitch rates Bear Stearns Commercial Mortgage Securities Trust 2007-PWR18, commercial mortgage pass-through certificates: -- $74,891,059 class A-1 'AAA'; -- $291,900,000 class A-2 'AAA'; -- $269,700,000 class A-3 'AAA'; -- $131,900,000 class A-AB 'AAA'; -- $709,998,000 class A-4 'AAA'; -- $272,415,000 class A-1A 'AAA'; -- $211,557,000 class A-M 'AAA'; -- $38,916,000 class AM-A 'AAA'; -- $182,468,000 class A-J 'AAA'; -- $33,566,000 class AJ-A 'AAA'; -- *$2,502,224,530 class X-1 'AAA'. -- *$2,442,815,000 class X-2 'AAA'; -- $25,047,000 class B 'AA+'; -- $25,047,000 class C 'AA'; -- $18,786,000 class D 'AA-'; -- $25,047,000 class E 'A+'; -- $18,786,000 class F 'A'; -- $25,047,000 class G 'A-'; -- $21,916,000 class H 'BBB+'; -- $18,786,000 class J 'BBB'; -- $25,047,000 class K 'BBB-'; -- $9,393,000 class L 'BB+'; -- $9,393,000 class M 'BB'; -- $9,392,000 class N 'BB-'; -- $6,262,000 class O 'B+'; -- $3,131,000 class P 'B'; -- $3,131,000 class Q 'B-'; -- $40,702,471 class S 'NR'. *Notional amount and interest only Classes A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, AM-A, A-J and AJ-A are offered publicly while classes X-1, X-2, B, C, D, E, F, G, H, J, K, L, M, N, O, P, Q, and S are privately placed pursuant to Rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 185 fixed- or floating-rate loans having an aggregate principal balance of approximately $2,502,224,530, as of the cutoff date. BFA LIQUIDATION: To Sell Arizona Land at Absolute Public Auction ---------------------------------------------------------------- On Jan. 17, 2007, the BFA Liquidation Trust will sell its remaining real estate parcels located in the State of Arizona at absolute public auction -- to the highest and final bidders. Sale of the Trust's land will further assist in recovering debt from the bankrupt Baptist Foundation of Arizona. At one time, the Baptist Foundation of Arizona controlled a portfolio of over $500 million in holdings. In 1999, the Arizona Corporation Commission's Securities Division found evidence that the foundation's officers used fraudulent transactions in the last decade to conceal real estate losses. Also cited were poor investment decisions, deceptive accounting and a high overhead. That resulted in bad information about the condition of the BFA when talking to potential investors. As a part of the ensuing bankruptcy case, the BFA Liquidation Trust was created to convert the assets and allow for the settlement to the investors. Clifton R. Jessup, Jr. has been serving as the Liquidating Trustee working in conjunction with the Trust. Southwest Real Estate Auctioneers of Phoenix, AZ has been retained by the BFA Liquidation Trust to conduct the auction event at which their properties and a few other select parcels located throughout Maricopa County will be sold at the Phoenix Sheraton Crescent Hotel. For more information, contact Southwest Real Estate Auctioneers at 1-800-895-9064 or visit their website at www.swreauctioneers.com/ Headquartered in Phoenix, Arizona, BFA Liquidating Trust -- http://www.bfaz.org/-- is the successor to the Baptist Foundation of Arizona, a non-profit organization that sold real-estate investments to 13,000 mostly elderly Christians. BOISE PAPER: S&P Pairs BB- Corporate Rating With Stable Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating and stable outlook to Boise Paper Holdings LLC. At the same time, S&P assigned its bank loan and recovery ratings to Boise's proposed $975 million first-lien credit facilities and $200 million second-lien term loan. The first-lien facilities were assigned a 'BB+' senior secured bank loan rating, two notches above the corporate credit rating, and '1' recovery rating, indicating expectation of very high (90%- 100%) recovery in the event of a payment default. Concurrently, S&P assigned its 'B' senior secured bank loan rating, two notches below the corporate credit rating, and '6' recovery rating to the company's $200 million second-lien term loan. The recovery rating indicates that lenders can expect negligible (0%-10%) recovery in the event of a payment default. These ratings are based on preliminary terms and conditions. Proceeds from the proposed credit facilities, along with about $400 million of cash and $325 million of common shares, will be used by Aldabra 2 Acquisition Corp. to acquire the paper, packaging, and newsprint divisions of Boise Cascade LLC for about $1.6 billion. Boise Cascade will still own about 40% of Boise. The transaction is expected to close in February 2008. "The ratings on Boise reflect its participation in the cyclical paper and packaging markets, moderate size and lower profitability relative to other leading paper producers, customer concentration risk, and aggressive pro forma debt leverage," said Standard & Poor's credit analyst Pamela Rice. "The ratings also incorporate moderate product diversity, a growing value-added product mix, and prospects for good market conditions in the near term." Boise, Idaho-based Boise is the third-largest producer of uncoated free sheet in North America, with a market share of about 11%. It also manufactures containerboard, corrugated products, and newsprint. CAM CBO: Review Cues Fitch to Change Rating to C/DR6 from C/DR4 --------------------------------------------------------------- Fitch has revised the Distressed Recovery rating on one class of notes issued by CAM CBO I, Ltd. This revision is a result of Fitch's review process and is effective immediately: -- $39,676,494 class C notes to 'C/DR6' from 'C/DR4'. CAM CBO is a collateralized debt obligation managed by Conning Asset Management which closed Nov. 13, 1998. CAM CBO is composed of mainly high yield bonds. The class C notes have failed to receive full periodic interest and the interest shortfall has been capitalized and is expected to continue to do so. In addition, ultimate principal recovery of the class C notes will likely be nominal. The DR rating takes into account both expected future interest distributions as well as any principal recovery. The remaining portfolio includes approximately $12 million par amount of defaulted assets and various equity positions. To date, the class C notes have capitalized approximately $18 million missed interest payments on the original balance of $21 million. The ratings of the class C 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. NEW ORLEANS SEWERAGE: Moody's Maintains Ba2 Debt Rating ------------------------------------------------------- Moody's Investors Service affirmed the Ba2 rating and changed the outlook to positive from negative on the City of New Orleans Sewerage and Water Board's revenue debt. The Ba2 and positive outlook affect $206 million in sewer revenue debt and $44 million in water revenue debt outstanding. Debt is secured by net revenues of each respective system. The rating was lowered to Ba2 in November of 2005 following Hurricane Katrina. The change in the outlook to positive from negative reflects more favorable revenue results than anticipated and State and Federal funding which have bolstered financial operations following Hurricane Katrina. The outlook also reflects water rate increases that were recently adopted by the Sewerage and Water Board. The Ba2 rating continues to take into consideration a decreased customer base, which exists from the wholesale out-migration of population as a result of the hurricane, thereby resulting in decreased system revenues. Long Term Debt Issued Through Board of Liquidation All long term debt issued by the W&S Board has been issued through the Board of Liquidation and is insured. Moody's believes the Board of Liquidation provides additional bondholder protection given its authority to raise rates and its autonomy as an independent Board. The S&W Board is mandated by statute to increase rates necessary to produce 1.30 times debt service coverage from net revenues. Should the S&W Board not implement such rates, the Board of Liquidation has the authority to compel it to do so. The Board is currently working with outside consultants to determine what rate increases may be necessary. The Board of Liquidation maintains reserves able to meet an annual debt service requirement, on behalf of the sewerage and water board; however, the reserves have not been utilized, even after the storm, as service fees were sufficient to meet debt service needs. Actual Revenues Better than Budgeted The Ba2 reflects ongoing concerns regarding a projected slow revenue recovery. Water revenue collections in fiscal 2006 were 38% below 2004 (which represents the last "normal" fiscal year prior to Katrina) while sewer service charges in fiscal 2006 were 13% below 2004. After the devastation from Hurricane Katrina, management adopted a very conservative budget for fiscal 2006 assuming only 30% of prior year revenues would be collected. However, actual results were better than anticipated and the $33.8 million in water service charges exceeded the budget by 99%. Sewer revenues exceeded the budget by 112% with $62.6 million total collected. Management reports customer loss is approximately 26,000 but that water usage remains strong given ongoing rebuilding efforts. Additionally, residents who are rebuilding are adding additions such as bathrooms and/or pools which help to increase overall usage. The Board also received significant funding from State and Federal sources in fiscal years 2005, 2006 and 2007. FEMA will be reimbursing the Board for infrastructure improvements that are necessary as a result of storm damage. To-date, the Board has received approximately $113 million in reimbursements. The Board also received $61.9 million from the Federal Community Disaster Loan program and this entire amount has been drawn down since April of 2007. Moody's is waiting to see the results of proposed legislation which would allow the government to forgive this loan. Although the Board is prepared to repay the CDL loan, forgiveness of the loan would afford them some financial flexibility in the future. The State provided $73 million in Gulf Opportunity Zone funding to support debt service requirements for the water and sewer systems and the State has also established a $100 million revolving fund for the Board to access for cash needs. These combined external funding sources have allowed the Sewerage and Water Board to continue daily operations and have allowed the Board to meet debt service requirements with service charges. Strong Management Expected to Continue; Challenges Remain for the Long-Term The Ba2 rating and positive outlook also reflect the S&W Board's demonstrated ability to fund normal operations, at least for the immediate future with service charges that are being collected on a daily basis. Management at the utility is strong and has historically demonstrated prudent fiscal management. For example, interim financial statements and a three-month proforma are prepared and presented to the Board on a monthly basis. Moody's believes strong management will continue and will manage through the multiple challenges that they face; however, it will take time and could take years to recover and stabilize operations. Management indicates that they are in compliance with all existing EPA requirementes regarding the outstanding consent decree. In November of 2007, the Board adopted multiple year water rate increases: 17% effective July 1, 2008, 5% in 2009, 5% in 2010 and 4% in 2011. The rate increases are based on a rate study conducted by an outside consultant in 2005 but were adjusted in 2007 based on the new customer base. Moody's believes that actual results on the revenues of the water system will be positive and could result in upward pressure on the Ba2 rating. Outlook The positive outlook reflects better than anticipated financial results for the 2006 fiscal year end. The outlook also takes into consideration water rate increases which will support revenue growth and stability in the system. CONSOLIDATED COMMS: Closes $362.6M North Pittsburgh Systems Buyout ------------------------------------------------------------------ Consolidated Communications Holdings Inc. has completed its acquisition of North Pittsburgh Systems Inc. for approximately $362.6 million, based upon the closing price of Consolidated's common stock on Dec. 28, 2007. The acquired company will operate in Pennsylvania under the Consolidated Communications brand name. "We are excited to complete this transaction and are looking forward to the opportunities that lie ahead," Bob Currey, Consolidated's President and Chief Executive Officer, said. "We have said from the start that North Pittsburgh has a strong network that, when coupled with Consolidated's back office platforms and technical experience, can be leveraged to roll out enhanced broadband services. We plan to launch our IPTV product in the North Pittsburgh area in the first quarter of 2008 and expect to pass approximately 12,000 homes at that time. By the end of 2008, we anticipate passing a total of approximately 34,000 homes." The merger agreement provided that North Pittsburgh shareholders could elect to receive either $25.00 in cash, without interest, or 1.1061947 shares of Consolidated common stock for each share of North Pittsburgh common stock, subject to proration so that 80 percent of the North Pittsburgh shares are exchanged for cash and 20 percent are exchanged for stock. Consolidated also announced the preliminary results of elections made by North Pittsburgh shareholders and the preliminary effect of proration. Of the 15,005,000 shares of North Pittsburgh common stock outstanding immediately prior to closing the merger, approximately: -- 13,378,590 shares, or 89.2 percent, elected to receive cash; -- 1,361,806 shares, or 9.1 percent, elected to receive stock; -- 264,604 shares, or 1.8 percent, did not make an effective election. As a result, on a preliminary basis, North Pittsburgh shares as to which a stock election was made will receive Consolidated common stock; North Pittsburgh shares as to which a cash election was made will receive cash for approximately 89.73% of those shares and Consolidated common stock for the remainder; and shares with respect to which no effective election was made will receive Consolidated common stock. Consolidated will not issue any fractional shares of stock and, instead, each North Pittsburgh shareholder immediately prior to the merger who would otherwise be entitled to a fractional share of Consolidated common stock (based on the total stock consideration into which the holder's North Pittsburgh shares have been converted in the merger) will receive an amount in cash equal to $18.53 multiplied by the fractional share interest to which the shareholder would otherwise be entitled. About Consolidated Communications Based in Mattoon, Illinois, Consolidated Communications Holdings, Inc. -- http://www.consolidated.com/-- is a rural local exchange company providing voice, data and video services to residential and business customers in Illinois and Texas. Each of the operating companies has been operating in their local markets for over 100 years. With approximately 241,000 local access lines and over 43,000 digital subscriber lines, the Company offers a wide range of telecommunications services, including local and long distance service, custom calling features, private line services, dial-up and high-speed Internet access, digital TV, carrier access services, and directory publishing. Consolidated Communications is the 17th largest local telephone company in the United States. * * * As reported in the Troubled Company Reporter on Oct. 19, 2007, Moody's Investors Service affirmed the B1 corporate family rating for Consolidated Communications Holdings Inc. and assigned a B1 rating to the proposed $950 million senior secured credit facilities at the company's direct subsidiaries, Consolidated Communications Acquisition Texas Inc., Consolidated Communications Inc., and Fort Pitt Acquisition Sub Inc. Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Consolidated Communications Holdings Inc. and the 'BB' rating on the company's existing bank loan. The outlook is negative. CONSULTING & SAFETY: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------------ Lead Debtor: Consulting & Safety Specialists, Inc. 924 Lefort By-Pass Road Thibodaux, LA 70301 Bankruptcy Case No.: 07-12585 Debtor-affiliate filing separate Chapter 11 petitions: Entity Case No. ------ -------- Benoit Properties, L.L.C. 07-12586 Type of Business: The Debtor specializes in consulting and training services on safety. See http://www.safetytrainingacademy.com Chapter 11 Petition Date: December 28, 2007 Court: Eastern District of Louisiana (New Orleans) Judge: Elizabeth W. Magner Debtors' Counsel: Darryl T. Landwehr, Esq. 1010 Common Street, Suite 1710 New Orleans, LA 70112 Tel: (504) 561-8086 Fax: (504) 561-8089 Estimated Assets Estimated Debts ---------------- --------------- Consulting & Safety $1 Million to $100,000 to Specialists, Inc. $10 Million $500,000 Benoit Properties, L.L.C. $1 Million to $1 Million to $10 Million $10 Million A. Consulting & Safety Specialists, Inc's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dryades Savings Bank Bank loan $2,015,086 233 Carondelet Street New Orleans, LA 70130 Cash Flow Resources Bank loan $262,000 1604 Oretha C. Haley Boulevard New Orleans, LA 70130 Internal Revenue Service Trade debt $200,000 423 Lafayette Street, Suite 200 Tel: (985) 876-3140 Houma, LA 70360 Louisiana Department of Trade debt $42,000 Revenue Lexington Insurance Co. Trade debt $26,000 D.K.S. Law Firm Trade debt $15,000 Petroleum Education Council Trade debt $14,000 Shell Fleet Card Processing Trade debt $13,000 Cananwill Trade debt $13,000 United Healthcare Trade debt $11,000 State Farm Trade debt $10,000 International Association of Trade debt $8,000 Drilling Contractors U.S.I. Gulf Coast, Inc. Trade debt $8,000 Ramada Inn Trade debt $8,000 Lafourche Parish Tax Assessor Trade debt $7,500 Coastal Training Trade debt $7,000 Ford Motor Credit Bank loan; value of $11,000 collateral: $4,000 B. Benoit Properties, LLC's Two Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Lafourche Parish Sheriff's $14,527 Office P.O. Box 5608 Thibodaux, LA 70302-4431 Internal Revenue Service $500 423 Lafayette Street, Suite 200 Houma, LA 70360 CWMBS INC: Fitch Rates $2,747,200 Class B-3 Certificates at BB -------------------------------------------------------------- Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL mortgage pass-through trust 2007-21 are: -- $759,390,236 classes 1-A-1 through 1-A-3, 1-X, 1-PO, 2-A-1 through 2-A-3, 2-X, 2-PO and A-R certificates (senior certificates) 'AAA'; -- $12,951,000 class M certificates 'AA'; -- $3,924,500 class B-1 certificates 'A'; -- $1,962,300 class B-2 certificates 'BBB'; -- $2,747,200 non-offered class B-3 certificates 'BB'; -- $785,000 non-offered class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 3.25% subordination provided by the 1.65% class M, the 0.50% class B-1, the 0.25% class B-2, the 0.35% non-offered class B-3, the 0.10% non- offered class B-4 and the 0.40% non-offered class B-5. Classes M, B-1, B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB', 'BB', and 'B' based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults. In addition, the rating also reflects the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP, rated 'RMS2+' by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. This transaction contains certain senior classes designated as exchangeable certificates and others as depositable certificates. The classes 1-A-3 and 2-A-3 are exchangeable certificates. The remainder of the senior classes are depositable certificates. The exchangeable and depositable certificates may be exchanged in certain combinations per Annex I of the Prospectus Supplement. The mortgage pool consists of two separate loan groups. All loans are secured by first liens on one- to four-family residential properties. Group 1 consists of 966 primarily 30-year conventional, fixed-rate mortgage loans. As of the cut-off date, Dec. 1, 2007, the total mortgage pool balance is $556,925,334, the average mortgage pool balance is $576,527, with an approximate weighted-average original loan-to-value ratio of 72.24%. The weighted average FICO credit score is approximately 744. Cash-out refinance loans represent 17.76% of the mortgage pool and second homes 7.09%. The states that represent the largest portion of mortgage loans are California (43.11%), Florida (5.54%) and New York (5.01%). All other states represent less than 5% of the pool as of the cut-off date. Group 1 will have a prefunding amount equal to $146,974,666. Group 2 consists of 90 primarily 15-year conventional, fixed-rate mortgage loans. As of the cut-off date the total mortgage pool balance is $74,999,956, the average mortgage pool balance is $833,333, with an approximate OLTV of 65.63%. The weighted average FICO credit score is approximately 752. Cash-out refinance loans represent 22.86% of the mortgage pool and second homes 13.28%. The states that represent the largest portion of mortgage loans are California (43.87%), New York (7.30%), New Jersey (7.13%), Florida (6.17%), and Texas (6.02%). All other states represent less than 5% of the pool as of the cut-off date. Group 2 will have a prefunding amount equal to $6,000,004. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. DANA CORP: 24 Investor Groups to Buy $540 Million New Dana Shares ----------------------------------------------------------------- Dana Corp. and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to file an Allocation Report, indicating Participating Claims totaling more than $1.5 billion that were allocated 5.4 million shares of New Series B Preferred Stock on a pro rata basis, under seal. Dana entered into an Investment Agreement dated July 26, 2007, with Centerbridge Capital Partners, L.P.; Centerbridge Capital Partners Strategic, L.P., as successor by assignment from CBP Parts Acquisition Co. LLC; Centerbridge Capital Partners SBS, L.P., as successor by assignment from CBP Parts. The Investment Agreement allows for $790 million cash infusion in the Reorganized Debtors. Centerbridge will purchase $250 million in aggregate liquidation preference of New Series A Preferred Stock and qualified creditors of the Debtors who are Qualified Investors will have an opportunity to purchase an additional $540 million in aggregate liquidation preference of New Series B Preferred Stock on a pro rata basis. To be permitted to invest to purchase a pro rata share of the Series B Shares, the Investment Agreement required parties, among other things, be a "Qualified Investor" under the Investment Agreement and to deliver a duly executed Subscription Agreement prior to 5:00 p.m. EST on Dec. 5, 2007. To be a "Qualified Investor," a party was required, among other things, to (a) beneficially own "Qualified Bond Claims," "Acquired Bond Claims" or "Qualified Trade Claims" in excess of $25 million by certain dates and (b) timely execute and deliver a signature page to the Plan Support Agreement dated July 26, 2007, among Dana, United Steelworkers, International Union, UAW, Centerbridge Capital Partners, L.P. and certain Dana creditors. The BMC Group, Inc., as Subscription Agent for the Debtors, mailed subscription agreements and instructions for subscription on Nov. 2, 2007, to all parties that the Debtors reasonably believed might be entitled to participate in the subscription based upon information available at that time. Corinne Ball, Esq., at Jones Day in New York, reports that as of Dec. 26, 2007, BMC has received, excluding duplicates, 106 Subscription Agreements from 96 entities constituting 24 investors -- if affiliated entities are counted as one investor. BMC and the Debtors have since undertaken to reconcile the information that was submitted in the subscription agreements. The Debtors have reviewed the information received by BMC and other relevant information, which has been shared with counsel to the Ad Hoc Committee of Dana Noteholders and counsel to the Official Committee of Unsecured Creditors, Ms. Ball says. Based on the information and other numerous meetings at which they consulted with the Ad Hoc Committee and the Creditors' Committee, the Debtors have determined and have prepared a report setting forth: (a) which parties will purchase Series B Shares as part of the subscription process; and (b) the number of Series B Shares to be allocated to each Subscribing Investor for purchase. The Debtors believe that the allocation of New Series B Preferred Stock is commercially sensitive information to them. Publicly disclosing the holdings of preferred shareholders is confidential information that is not customarily disclosed unless and until Securities Exchange Act of 1934 rules require the shareholder to file with the Securities and Exchange Commission after crossing a specified threshold of ownership percentage (generally 5%). The Debtors believe that publicly publishing the individual allocations of New Series B Preferred Stock would only serve to potentially cause delays in the Debtors' ability to obtain the necessary funds. In addition, counsel to the Ad Hoc Committee has advised the Debtors that the Subscribing Investors prefer that their exact holdings in New Series B Preferred Stock not be publicly disclosed because such parties consider their individual allocated holdings to be confidential commercial information. A full-text copy of the redacted version of the Allocation Report identifying each of the Subscribing Investors without identifying the number of shares of New Series B Preferred Stock being allocated to each party, is available at no charge at: http://bankrupt.com/misc/DANA_Subscribing_Investors.pdf Ms. Ball relates the Debtors are providing individualized notices to each Subscribing Investor of, among other things: (a) the number of shares of New Series B Preferred Stock allocated to them; (b) instructions for submitting payment for the shares by Dec. 28, 2007; and (c) information regarding additional documentation that must be completed prior to a Subscribing Investor's receipt of its allocated New Series B Preferred Stock. About Dana Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Aug. 31, 2007, the Debtors listed $6,878,000,000 in total assets and $7,551,000,000 in total debts resulting in a total shareholders' deficit of $673,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. The Court has set Dec. 10, 2007, to consider confirmation of the Plan. (Dana Corporation Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELPHI CORP: Court Approves Sale of Steering Biz for for $447 Mil. ------------------------------------------------------------------ The Honorable Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has authorized Delphi Corp. and its debtor-affiliates to auction off their global steering and halfshaft businesses, in accordance with the proposed bidding procedures. Pursuant to a Master Sale And Purchase Agreement dated Dec. 10, 2007, the Debtors have agreed to sell their steering business to Steering Solutions Corp. for $447 million, subject to higher and better offers. Judge Drain agreed to to the Debtors' request to grant a break-up fee and an expense reimbursement for Steering Solutions, noting that the bidder was unwilling to commit to hold open its offer for the Steering Business absent bid protections. The Court, however, held that, pursuant to an agreement by the Official Committee of Unsecured Creditors, the Debtors, and Steering Solutions, (i) the break-up fee will be reduced from $6 million to $5.5 million and (ii) Steering Solutions retain the right to seek an expense reimbursement in an amount up to $6 million if a break-up fee is not paid. The Court denied Steering Holding, LLC's objection to the proposed bid procedures. Steering Holding had asked the Court not to approve the Debtors' selection of Steering Solutions as the stalking horse bidder on grounds that it intends to submit an alternative bid, which would raise the cash portion of the purchase price from $1 million to $10 million and would reduce the break-up fees and expense reimbursements by $4 million. The Court will convene a hearing on Feb. 21, 2008, at 10:00 a.m., Eastern time, to confirm the results of the auction, if any, and approve the sale. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on Dec. 31, 2007. On Sept. 6, 2007, the Debtors filed their Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan. (Delphi Bankruptcy News, Issue No. 104; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Ct. Extends Exclusive Plan-Filing Period to March 31 ----------------------------------------------------------------- The Honorable Robert Drain extends Delphi Corp. and its debtor- affiliates': (a) exclusive period for filing a plan of reorganization through and including March 31, 2008; and (b) exclusive period for soliciting acceptance of that plan through and including May 31, 2008. The Debtors' current Exclusive Plan Proposal Period expired on Dec. 31, 2007. As reported in the Troubled Company Reporter on Dec. 4, 2007, the Debtors' good-faith progress towards reorganization, according to John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, is most convincingly demonstrated by the filing of the Joint Plan of Reorganization and Disclosure Statement on Sept. 6, 2007. The Debtors sought an extension of the Exclusive Periods to give them sufficient time to complete the Plan solicitation and confirmation processes in a timeframe that will allow them to emerge from bankruptcy in the first quarter of 2008. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on Dec. 31, 2007. On Sept. 6, 2007, the Debtors filed their Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan. (Delphi Bankruptcy News, Issue No. 102; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DIXIE GROUP: Moody's Withdraws Ratings for Business Reasons ----------------------------------------------------------- Moody's Investors Service withdrew the ratings of The Dixie Group, Inc. for business reasons. These ratings have been withdrawn: -- Corporate Family Rating, rated B1; -- Probability of Default Rating, rated B1; -- $20 million 7% convertible subordinated debentures due 2012, rated B3 (LGD 6, 92%). Moody's last affirmed Dixie's ratings on Nov. 20, 2007. Headquartered in Chattanooga, Tennessee, The Dixie Group, Inc. is a leading manufacturer and marketer of carpets and rugs to higher-end residential and commercial customers through the Fabrica International, Masland Carpets and Dixie Home brands. Founded in 1920 as a textile manufacturer, Dixie has since exited the textiles business and is focused entirely on the floorcovering market, selling to a diverse customer base through retailers, designers, home builders and commercial end user channels. Revenues are derived from residential floorcovering products (66%), commercial floorcovering products (30%) and carpet yarn products (4%). Net revenues for the twelve months ended Sept. 29, 2007 were approximately $322 million. DUKE ENERGY: Moody's Places Global Local Currency Rating at Ba2 --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 Global Local Currency corporate family rating with a stable outlook to Duke Energy International, Geracao Paranapanema S.A. In addition, Moody's assigned an A1.br Brazil National Scale corporate family rating to Duke. This is the first time Moody's assigned a rating to Duke. The rating is not constrained by Brazil's foreign currency country ceiling. Moody's assigned these ratings: -- Corporate Family Rating: Ba2; -- Brazil National Scale Corporate Family Rating: A1.br Duke's rating reflects the company's solid capital structure characterized by its low level of indebtedness, healthy debt profile, steady cash generation and profitability. This largely stems from a 30-year concession contract granted in 1999, which allows the company to operate in a relatively secure regulated market with predictable profitability and cash flow. Duke intends to raise up to R$1 billion in debentures to redeem existing long- term debt with Eletrobras, which is expected to improve its debt profile and reduce the average cost of capital. Currently, the company relies on medium-term energy supply contracts equally divided between the regulated and unregulated markets. These contracts should generate predictable and stable cash flows for the next four to five years, given their relatively secure nature. Almost half of Duke's revenues are in the unregulated business segment, but the bulk of the company's client portfolio is made up of large consumers with a solid credit track record. As contracts expire in the future, Duke is expected to benefit from higher energy tariffs in light of current market expectations of a continued low reserve margin in Brazil. Expectations of higher energy tariffs are supported by recent auctions for new energy in which prices have dramatically exceeded prevailing market rates. Generally, Moody's prefers regulated business segment revenues, which generally are more predictable and allow for more stable operating margins and cash flow. Unregulated energy contracts expose Duke to potentially lower energy prices and revenues in a scenario where future tariffs decline, which Moody's considers unlikely. Moody's rating has also taken into consideration the company's outstanding commitment of increasing by 15% the installed generation capacity in the state of Sao Paulo by the end of 2007, as stated in its concession contract. Duke's fulfillment of this commitment has not yet been recognized by the regulator or the state of Sao Paulo. Duke has had difficulty in meeting this commitment because there are few sites for new hydroelectric facilities in Sao Paulo and natural gas shortages make new thermoelectric capacity a questionable investment. Duke has been discussing this situation with ANEEL and the Government of the State of Sao Paulo and is reportedly seeking to postpone the expansion obligation for another three years. The outcome and/or eventual penalties are difficult to predict at this stage of discussions, but Moody's does not believe that Duke's concession will be revoked since neither the current hydrology nor natural gas constraints are within its power. However, the rating is constrained by the potential increased capital expenditures related to the fulfillment of this commitment. Additional capital expenditures could reach as much as R$1 billion over a three to four year period without jeopardizing Duke's ability to service its debt. Moody's believes that Duke would most likely finance a part of these investments with additional debt, thus causing some deterioration in credit metrics, but Moody's expects that they would remain appropriate for the rating category, particularly if the current relatively high dividend payout ratio were adjusted downward somewhat. The rating incorporates Duke's current strong credit metrics, which are in line with its local peer group and strong for the rating category when compared with global peers, with FFO (Funds from Operations) / Adjusted gross debt of 20.7% in 2006 and 25.9% in the last twelve months ended Sept. 30, 2007 along with interest coverage of over 3.0x for the last three years. These two metrics were impacted by a reduction in operating margins in 2006, resulting from lower energy generation and increased taxes not passed on to tariffs. Moody's expects a sustainable improvement in these metrics in light of higher energy tariffs in 2007 resulting from higher auction prices and improved terms with unregulated customers. The rating is constrained by the low level of retained cash flow (Funds from Operations minus Dividends) to Adjusted gross debt of approximately 10% in the past four years, which is below peer group metrics. Low retained cash flow results from a high level of dividends paid to its parent company, which is expected to remain a limiting factor for the rating in the future. Duke's cash flow as measured by FFO is expected to improve somewhat from 2007 levels but remain stable thereafter up to 2010, when approximately 30% of existing energy contracts matures. This expected turnover of available energy contracts would, most likely, result in higher tariffs with a positive impact on cash flow. Duke's capital expenditures have been very limited when compared to its peers at approximately R$30 million per annum, which could eventually change should the company be obligated to expand capacity to meet concession contract requirements. The most important factor constraining the ratings is the Brazilian regulatory framework, which has undergone substantial change over the past several years and has a history of being unpredictable. The federal utility regulatory body in Brazil is part of the Brazilian government, which has a Ba1 foreign currency and local currency bond rating. Cost recovery and regulated tariffs are currently undergoing a period of significant uncertainty, due to ongoing reviews and revisions by the regulator of existing asset and cost bases. Potential future electricity shortages due to a tight reserve margin, limited independence of the regulator and minimal jurisprudence backing the new regulatory framework were also taken into consideration in Moody's evaluation of this factor. Duke has adequate liquidity, with short-term debt of R$143.6 million and cash and marketable securities of R$137 million, in addition to positive free cash flow. The bulk of short term debt is related to the current portion of the long term Eletrobras'debt with a final maturity on May 15, 2013. This debt is expected to be refinanced with a proposed issuance of R$1 billion in debentures maturing in 2014 and 2016. The stable outlook reflects Moody's expectation that Duke will maintain strong credit metrics, but low free cash flow, due to a high dividend pay-out ratio. An upgrade in the rating would require a resolution of the ongoing negotiation with regulators and the state government with regard to the mandatory capacity expansion clause in Duke's concession contract. In addition, an upgrade would require sustainable RCF/ Adjusted gross debt ratio above 15% and interest coverage ratio above 3.5x. An increased likelihood of a stable regulatory environment could also be positive for the ratings. Downward rating pressure could result from higher than expected capital expenditures and/or dividends or increased uncertainty with regard to margins, such that it became likely that RCF/Adjusted gross debt ratio would remain below 10%, and interest coverage would remain below 2.0x for an extended period of time. Duke Energy International, Geracao Paranapanema S.A is an electricity generation company controlled by Duke Energy Corporation, which indirectly holds 94.7% of its voting and total capital. The company has an installed capacity of 2,306 MW in eight hydroelectric power plants along the Paranapanema river, which represents approximately 2.3% of Brazil's total installed capacity. In the last twelve months ended Sept. 30, 2007, Duke reported net sales of R$627 million ($309 million) and net profit of R$83 million ($41 million). DUNMORE HOMES: Gets Final OK to Borrow $1 Mil. from Sydney Dunmore ------------------------------------------------------------------ The Hon. Martin Glenn of the United States Bankruptcy Court for the Southern District of New York has given its permission to Dunmore Homes Inc. to borrow, on a final basis, funds of no more than $1,000,000 from Sidney P. Dunmore pursuant to the terms and conditions of the DIP Facility. The Debtor is authorized to grant Mr. Dunmore the liens, mortgages and security interests provided for under the DIP Facility, the Court held. Pursuant to Sections 362, 363(e), 364(c) and 503 of the Bankruptcy Code, the Court ruled that the obligations under the DIP Facility, including those under the DIP Financing Agreement, are administrative expenses for which the Debtor is authorized to grant to Mr. Dunmore, a valid, binding, enforceable and perfected senior lien and security interest -- the DIP Lender's Lien -- subject to only to the Carve-out and to any valid lien existing as of the Petition Date in any asset owned by the Debtor. Each prepetition creditor holding a Prepetition Lien in assets owned by the Debtor as of the bankruptcy filing date is granted valid and binding Replacement Liens or security interests in the Debtor's Collateral, subject to the Carve-out and junior to the DIP Lender's Lien and the Prepetition Liens as adequate protection for the Debtor's use of cash collateral. Notwithstanding the liens, mortgages and security interest granted under the Final DIP Order, the Collateral may be used by the Debtor, if sufficient funds are not available from the Debtor's estate to pay (i) fees to the U.S. Trustee pursuant to Section 1930(a)(6) of the Judicial Procedures Code and fees payable to the Bankruptcy Court Clerk; and (ii) the expenses of Committee members and the reasonable fees and expenses of professionals retained or employed by the Debtor or the Committee in the Chapter 11 case. The fees and expenses must not exceed $100,000 in the aggregate. Fees and expenses incurred in connection with any challenge to the claims of or against the Lender will not be included in the fees and expenses of the Carve-Out and may not be paid from any funds borrowed under the DIP Facility, the Court clarified. Mr. Dunmore, the DIP Lender, has a certain debt to the Debtor under that certain Loan Agreement dated as of June 7, 2005 -- the Lender Receivable. The Court approved the modification of the maturity date of the Lender Receivable by 15 days, for the Lender's benefit, and reduction by 30 days of the time for the Lender to notify the Debtor of any setoff with respect to the Lender Receivable in connection with the release of escrowed funds, for the Debtor's benefit, as provided in the DIP Financing Agreement. Moreover, upon the Lender's request, if the Debtor and the Lender mutually agree that the Lender is entitled to an offset against the Lender Receivable, upon 20 days' notice and opportunity to object to the the 20 largest unsecured creditors, U.S. Trustee and any special notice parties, the Court will approve that determination. The DIP Facility will be in effect pursuant to the Final DIP Order until such time as all obligations to the Lender under the DIP Facility are paid in full. It is deemed an event of default if the Debtor fails to pay the Obligations under the DIP Financing Agreement by March 31, 2008. The Final DIP Order is without prejudice to and fully reserves all rights of Weyerhaeuser Realty Investors Inc., MW Housing Partners III L.P. and WRI Communities Fund I LLC to assert: -- that Debtor Dunmore Homes Inc. does not own an equity interest in Dunmore Croftwood LLC, Dunmore Diamond Ridge LLC, Dunmore Highlands LLC and Dunmore Viscaya LLC; -- that the Joint Entities had no authority to execute any agreements without the consent of Weyerhaeuser; -- that the Joint Entities cannot sell, convey or transfer or encumber their assets and properties without the consent of Weyerhaeuser; and -- all other rights and remedies of Weyerhaeuser. A full-text copy of the Dunmore Final DIP Order is available for free at http://researcharchives.com/t/s?26af As reported in the Troubled Company Reporter on Dec. 18, 2007, The Official Committee of Unsecured Creditors in Debtor's bankruptcy case asked the Bankruptcy Court to defer ruling on the DIP Financing Motion until it has ruled on the venue transfer request of Cal Sierra Construction Inc., et al. The Committee related that it has joined in Cal Sierra's request. Because the outcome of the Court's ruling on the Venue Transfer Motion may significantly impact the administration of Dunmore Homes Inc.'s case, and may result in the transfer of the Debtor's case to the Eastern District of California, it is premature for the Court to rule on the DIP Motion, the Committee asserted. About Dunmore Homes Headquartered in Granite Bay, California, Dunmore Homes Inc. is a privately-owned homebuilder. The company filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533). Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has selected Morrison & Foerster LLP as its counsel in this bankruptcy proceeding. When the Debtor filed for protection against its creditors, it listed assets and liabilities of more than $100 million. The Debtor's exclusive period to file a plan expires on March 7, 2008. (Dunmore Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DUNMORE HOMES: Can Use Dunmore's Cash Collateral on a Final Basis ----------------------------------------------------------------- The Hon. Martin Glenn of the United States Bankruptcy Court for the Southern District of New York authorized Dunmore Homes Inc., on a final basis, to use cash collateral for all purposes permitted by the DIP Facility up to the aggregate amount of disbursements and accruals in a prepared cash collateral budget. As reported in the Troubled Company Reporter on Nov. 27, 2007, Judge Glenn had authorized the Debtor, on an interim basis, to use cash collateral for all purposes permitted by the DIP facility pursuant to a cash collateral budget. Cash collateral for which the Debtor is granted use does not include cash collateral generated postpetition from the Montecito, Diamond Ridge, Stone Creek or Providence projects as to which RBC Centura Bank alleges to provide financing. As reported in the Troubled Company Reporter on Nov. 22, 2007, RBC Centura Bank told the Court that it objects to the use of cash collateral as it relates to the Montecito, Diamond Ridge, Stone Creek and Providence projects, on the basis that it has a security interest in those projects, and the adequate protection proposed by the Debtor is not sufficient. About Dunmore Homes Headquartered in Granite Bay, California, Dunmore Homes Inc. is a privately-owned homebuilder. The company filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533). Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has selected Morrison & Foerster LLP as its counsel in this bankruptcy proceeding. When the Debtor filed for protection against its creditors, it listed assets and liabilities of more than $100 million. The Debtor's exclusive period to file a plan expires on March 7, 2008. (Dunmore Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ECHOSTAR COMMS: Distributes Shares for Separation of Businesses --------------------------------------------------------------- EchoStar Communications Corporation distributed shares of common stock of EchoStar Holding Corporation at 12:01 a.m. MST (2:01 a.m. EST) on Jan. 1, 2008. EchoStar Communications Corporation will retain its pay-TV business, DISH Network and EchoStar Holding Corporation will hold the technology and certain infrastructure assets of EchoStar Communications Corporation, including its set- top box business and certain satellite assets. The record date for the distribution was the close of business (5:00 p.m. EST) on Dec. 27, 2007. EchoStar Communications Corporation plans to change its name to "DISH Network Corporation" following the completion of the separation. EchoStar Communications Corporation commenced mailing of the final information statement, which outlines the operations of EchoStar Holding Corporation and provides additional details regarding the separation on Dec. 31, 2007. A copy of the final information statement will be available on the Securities and Exchange Commission's Web site -- http://www.sec.gov/-- under the company name "EchoStar Holding Corporation." Each shareholder of EchoStar Communications Corporation will receive for each share of common stock held as of the record date, 0.20 of a share of the same class of common stock of EchoStar Holding Corporation. If a shareholder of EchoStar Communications Corporation sells shares of EchoStar Communications Corporation common stock between the record date for the distribution and the distribution date, the buyer of those shares and not the seller will become entitled to receive the shares of EchoStar Holding Corporation common stock distributed in respect of those shares. Shares of EchoStar Holding Corporation Class A common stock have been approved for listing on the Nasdaq Global Select Market under the symbol "SATS." Shares of Class A common stock of EchoStar Communications Corporation will continue to trade on the Nasdaq Global Select Market under the symbol "DISH." Regular-way trading in shares of EchoStar Holding Corporation Class A common stock commenced on Jan. 2, 2008. About EchoStar Communications Based in Englewood, Colorado, EchoStar Communications Corporation (Nasdaq: DISH) -- http://www.echostar.com/-- serves more than 13.6 million satellite TV customers through its DISH Network(TM), a pay-TV provider in the country since 2000. DISH Network's services include hundreds of video and audio channels, Interactive TV, HDTV, sports and international programming, together with professional installation and 24-hour customer service. EchoStar has been into satellite TV equipment sales and support for more than 27 years. * * * As reported in the Troubled Company Reporter on Sept. 28, 2007, Standard & Poor's Ratings Services placed its ratings on EchoStar Communications Corp., including the 'BB-' corporate credit rating, on CreditWatch with developing implications. This affects about $5.5 billion of rated debt. FGX INT'L: Moody's Withdraws All Ratings After Debt Refinancing --------------------------------------------------------------- Moody's Investors Service has withdrawn all ratings on FGX International Limited for business reasons. Moody's added that the ratings were withdrawn because the company had no rated debt outstanding following the completion of its IPO and debt refinancing. These ratings were withdrawn: * Issuer: FGX International Limited -- Corporate Family Rating, Withdrawn, previously rated B2 -- Probability of Default Rating, Withdrawn, previously rated B2 -- Senior Secured Bank Credit Facility Due 2010, Withdrawn, previously rated B1 (LGD 3, 35%) -- Senior Secured Bank Credit Facility Due 2012, Withdrawn, previously rated B1 (LGD 3, 35%) -- Senior Secured Bank Credit Facility Due 2013, Withdrawn, previously rated Caa1 (LGD 5, 84%) -- Outlook, Changed To Rating Withdrawn From Stable FGX International Limited, based in Smithfield, Rhode Island, is a leading marketer and distributor of branded and private-label eyewear and costume jewelry, particularly in the mass retail channels and primarily under the FosterGrant and Magnivision brands. Net sales for the twelve-month period ending Sept. 30, 2007 were approximately $248 million. FIRST DARTMOUTH: Case Summary & 13 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: First Dartmouth Homes 724-A 2nd Avenue South St. Petersburg, FL 33701 Tel: (727) 541-1100 Bankruptcy Case No.: 07-12927 Type of Business: The Debtor is focused on developing luxury residential and mixed-use communities and yacht clubs. See http://www.firstdartmouth.com/ Chapter 11 Petition Date: December 28, 2007 Court: Middle District of Florida (Tampa) Judge: K. Rodney May Debtor's Counsel: John D. Emmanuel, Esq. Fowler, White, Boggs, Banker, P.A. P.O. Box 1438 Tampa, FL 33601 Tel: (813) 228-7411 Fax: (813) 229-8313 Estimated Assets: $1 Million to $10 Million Estimated Debts: $50 Million to $100 Million Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ BankAtlantic guaranty $30,057,522 2100 West Cypress Creek Road Fort Lauderdale, FL 33309 Colonial Bank guaranty; Aquaplex $11,500,000 5858 Central Avenue Ventures II, L.L.C. St. Petersburg, FL 33707 loan Regions Bank guaranty, Urban Edge, $6,902,628 13535 Feather Sound Drive L.L.C. loan Building 1, Suite 610 Clearwater, FL 33762 guaranty, Tamarind $4,3878,751 Ventures, L.L.C. loan Hendricks Brown judgment $678,409 Kathleen Cerevenka c/o Guy P. Coburn, Esq. 150 Second Avenue North 1700 St. Petersburg, FL 33701 Thomas Calhoun arbitration award $400,000 c/o Nicholas Karatinos, Esq. Seeley & Karatinos, P.A. 3924 Central Avenue St. Petersburg, FL 33711 Elite Weiler Pools, Inc. trade debt $35,776 Wilson Miller, Inc. land planners- $16,807 services for Riviera Southshore Ventures Cox Lumber Co. trade debt $11,628 Pinellas County Tax Collector property taxes $17,995 Frank and Nancy Maggio enterprise zone tax $2,339 refunds issued by the Department of Revenue, State of Florida Pinellas County assessment $810 Bayou Club Comm. Association, home owners $3,123 Inc. association fees Frank Maggio unknown FIRST FRANKLIN: Weak Performance Cues S&P to Downgrade Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 32 classes of asset-backed certificates issued by five First Franklin Mortgage Loan Trust transactions. S&P removed 12 of the 32 lowered ratings from CreditWatch with negative implications. Lastly, S&P affirmed its ratings on the remaining classes from these series. The downgrades reflect continued poor collateral performance, allowing credit enhancement to decline to a point at which it is insufficient to maintain the previous ratings. Over the past six months, monthly losses have generally exceeded monthly excess interest cash flow, causing the complete erosion of overcollateralization for all five transactions. This trend has resulted in principal write-downs to 11 classes from these series. As of the November 2007 remittance report, cumulative realized losses were (series: percent of original pool balance, amount): -- 2003-FFH1: 3.81%, $22,218,280; -- 2003-FFH2: 3.25%, $34,082,669; -- 2004-FFH1: 3.30%, $26,182,878; -- 2004-FFH2: 2.94%, $35,227,076; and -- 2004-FFH3: 2.72%, $40,853,803. In addition, all five series with lowered ratings have sizable loan amounts that are severely delinquent (90-plus days, foreclosures, and REOs), which strongly suggests that the unfavorable performance trends are likely to continue and further compromise available credit support. The severe delinquencies are (series: percent of current pool balance, amount): -- 2003-FFH1: 29.62%; $15,403,545; -- 2003-FFH2: 27.36%; $26,012,582; -- 2004-FFH1: 32.32%; $24,219,736; -- 2004-FFH2: 28.89%; $53,477,402; and -- 2004-FFH3: 25.55%; $77,079,666. Standard & Poor's removed 12 ratings from CreditWatch negative because S&P lowered them to 'CCC' or 'D', or because S&P does not anticipate further rating actions within the next three months based on its loss forecasts for these transactions. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings, despite the performance trend. The underlying first-lien high loan-to-value (LTV) collateral consists of fixed- and adjustable-rate, fully amortizing and balloon payment mortgage loans secured by first liens by one- to four-family residential properties. The weighted average LTV ratio of the mortgage loans in these transactions is generally greater than 90%. First Franklin Financial Corp. originated or purchased these mortgages in accordance with guidelines that target borrowers with less-than-perfect credit histories. The guidelines are intended to assess both the borrower's ability to repay the loan and the adequacy of the value of the property securing the mortgage. Ratings Lowered First Franklin Mortgage Loan Trust Asset-backed certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-FFH1 M-1 BBB AA 2003-FFH1 M-5 D CCC 2003-FFH2 M-1A BBB AA 2003-FFH2 M-1B BBB AA 2003-FFH2 M-2 B A 2004-FFH1 M-2 BBB AA 2004-FFH1 M-3 BB AA- 2004-FFH1 M-4 B A+ 2004-FFH2 M-4 BBB A+ 2004-FFH2 M-5 BB A 2004-FFH2 M-6 B+ A- 2004-FFH2 M-7 B BBB+ 2004-FFH2 M-8 CCC BBB 2004-FFH2 M-9 CCC BBB- 2004-FFH2 B-2 D CCC 2004-FFH3 M-6 BBB+ A- 2004-FFH3 M-7 BB BBB+ 2004-FFH3 M-8 B BBB 2004-FFH3 M-9 B- BBB- 2004-FFH3 B-1 CCC BB+ Ratings Lowered and Removed from CreditWatch Negative First Franklin Mortgage Loan Trust Asset-backed certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-FFH1 M-2 B BBB/Watch Neg 2003-FFH1 M-3 CCC BB/Watch Neg 2003-FFH1 M-4 CCC B/Watch Neg 2003-FFH2 M-3 CCC BBB/Watch Neg 2003-FFH2 M-4 CCC BB-/Watch Neg 2003-FFH2 M-5 D B/Watch Neg 2004-FFH1 M-5 B- BBB/Watch Neg 2004-FFH1 M-6 CCC BBB-/Watch Neg 2004-FFH1 M-7 CCC BB/Watch Neg 2004-FFH1 M-8 D B/Watch Neg 2004-FFH2 B-1 CCC BB+/Watch Neg 2004-FFH3 B-2 D B/Watch Neg Ratings Affirmed First Franklin Mortgage Loan Trust Asset-backed certificates Series Class Rating ------ ----- ------ 2004-FFH1 M-1 AA+ 2004-FFH2 A-1 AAA 2004-FFH2 M-1 AA+ 2004-FFH2 M-2 AA 2004-FFH2 M-3 AA- 2004-FFH3 I-A1 AAA 2004-FFH3 I-A2 AAA 2004-FFH3 II-A3 AAA 2004-FFH3 II-A4 AAA 2004-FFH3 M-1 AA+ 2004-FFH3 M-2 AA 2004-FFH3 M-3 AA- 2004-FFH3 M-4 A+ 2004-FFH3 M-5 A FIRSTLIGHT HYDRO: S&P Holds BB- Rating on $320MM Mortgage Bonds --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' rating on FirstLight Hydro Generating Co.'s $320 million first mortgage bonds maturing 2026. At the same time, S&P revised the outlook to negative from stable. The recovery rating remains unchanged, at '1'. The outlook revision reflects a financial performance in the first three quarters of 2007 that was significantly below pro forma expectations (EBITDA of $95 million compared with expected EBITDA of $124 million) due to low regulation revenues and unfavorable weather conditions affecting run-of-river hydro facilities and energy spreads for the Northfield Mountain pumped storage facility. In addition, Northfield Mountain had significant merchant exposure from October 2006 to May 2007, before executing hedges for about 75% of its capacity (three of four turbines). This exposure coincided with a mild winter that resulted in low power prices and reduced spreads between peak and off-peak periods, which is one of the key variables that determine the facility's gross margin. FirstLight is facing several challenges over the next year that could affect the rating on its facilities. Standard & Poor's believes FirstLight will contract, in some form, energy margins for 2012-2013 within the next 18 months. "Failure to do so could adversely affect the rating due to the dependence on these years for significant amounts of cash for first-lien sweeping," said Standard & Poor's credit analyst Justin Martin. "Should FCM prices prove less robust than anticipated, the rating could also come under downward pressure," Mr. Martin said. FIRSTLIGHT POWER: S&P Holds BB- Rating on $695MM Sr. Facilities --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' rating on FirstLight Power Resources Inc.'s $695 million senior secured facilities consisting of a $550 million first-lien term loan, a $70 million revolving credit facility, and a $65 million letter of credit facility. S&P also affirmed the 'B-' rating on the $170 million second-lien term loan. At the same time, Standard & Poor's revised the outlook on all facilities to negative from stable. The recovery ratings for both ratings remain unchanged, at '1' and '5', respectively. The outlook revision reflects a financial performance in the first three quarters 2007 that was significantly below pro forma expectations (EBITDA of $95 million compared with expected EBITDA of $124 million) due to low regulation revenues and unfavorable weather conditions affecting run-of-river hydro facilities and energy spreads for the Northfield Mountain pumped storage facility. In addition, Northfield Mountain had significant merchant exposure from October 2006 to May 2007, before executing hedges for about 75% of its capacity (three of four turbines). This exposure coincided with a mild winter that resulted in low power prices and reduced spreads between peak and off-peak periods, which is one of the key variables that determine the facility's gross margin. FirstLight faces several challenges over the next year that could affect the rating on its facilities. If the Mt. Tom emissions- control project experiences problems in construction cost, scheduling, or efficiency, the project could face lower margins in efforts to correct the problem. In addition, S&P believes FirstLight will contract, in some form, energy margins for 2012- 2013 within the next 18 months. "Failure to do so could adversely affect the rating due to the dependence on these years for significant amounts of cash for first-lien sweeping. Should forward capacity market prices prove less robust than anticipated, the rating could also come under downward pressure," said Standard & Poor's credit analyst Justin Martin. GENTEK INC: Subsidiary Acquires Bay Chemical for $7 Million ----------------------------------------------------------- GenTek Inc.'s wholly owned subsidiary, General Chemical LLC, has acquired Bay Chemical and Supply Company, a producer of water treatment chemicals in Odem, Texas. The purchase price of the transaction is $7 million before any working capital adjustments. "This transaction expands our customer base in the Texas market, adds new products to our portfolio of water treatment chemicals and allows us to drive incremental savings through our raw material sourcing arrangements," Vincent J. Opalewski, Vice President and General Manager of General Chemical LLC, noted. "This acquisition fits well with our stated objective to invest in the company's core assets, chemical and auto/truck valve train systems, to accelerate GenTek shareholder value creation," William E. Redmond, Jr., GenTek's President and Chief Executive Officer, added. GenTek Inc. (NasdaqGS: GETI) -- http://www.gentek-global.com/-- provides specialty inorganic chemical products and services for treating water and wastewater, petroleum refining, and the manufacture of personal-care products, valve-train systems and components for automotive engines and wire harnesses for large home appliance and automotive suppliers. * * * As reported in the Troubled Company Reporter on April 19, 2007, Moody's Investors Service upgraded GenTek Inc.'s corporate family rating to B1 from B2, the company's $269 million first lien term loan to Ba3 from B1, the company's $60 million first lien revolving credit facility to Ba3 from B1, and GenTek's speculative grade liquidity rating to SGL-2 from SGL-3. These actions conclude the review commenced on Feb. 15, 2007. The ratings outlook is positive. HARMAN INTERNATIONAL: Elects Gary Steel to Board of Directors ------------------------------------------------------------- Harman International Industries Incorporated has appointed Gary Steel to serve as a member of the company's board of directors. The board was also expanded from seven to eight members. Mr. Steel will serve under this appointment until November 2009, subject to reelection by the board. Mr. Steel, a Scottish citizen, served as executive committee member responsible for Human Resources at ABB Ltd, a series of senior management positions for the Shell group of energy and petrochemical companies. His professional background includes extensive experience in human resource development, restructuring, and corporate governance. "We are delighted to welcome a global executive of Gary Steel's competence to our board of directors," Dr. Sidney Harman, chairman and Dinesh Paliwal, chief executive officer, said. "Gary's deep expertise in human resource development, strategic initiatives and governance will serve as a valuable asset as we carefully match our company's strategy to evolving global markets and resources." About Harman International Based in Washington, D.C., Harman International Industries Inc. (NYSE: HAR) -- http://www.harman.com/-- manufactures, designs and markets a range of audio and infotainment products for the automotive, consumer and professional markets. The company maintains a presence in the Americas, Europe and Asia and employs more than 10,500 people worldwide. The Harman International family of brands spans some 15 leading names including AKG, Audioaccess, Becker, BSS, Crown, dbx, DigiTech, DOD, Harman Kardon, Infinity, JBL, Lexicon, Mark Levinson, Revel, QNX, Soundcraft and Studer. * * * As reported in the Troubled Company Reporter on Oct. 24, 2007, Standard & Poor's Ratings Services revised its CreditWatch implications for the 'BB-' corporate credit rating on Harman International Industries Inc. to positive from developing. JADE ART: Oct. 31 Balance Sheet Upside-Down by $9.77 Million ------------------------------------------------------------ Jade Art Group Inc.'s consolidated balance sheet at Oct. 31, 2007, showed $5.87 million in total assets and $15.64 million in total liabilities, resulting in a $9.77 million total stockholders' deficit. At Oct. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $5.65 million in total current assets available to pay $15.64 million in total current liabilities. The company reported net income of $1.55 million on sales of $7.16 million for the first quarter ended Oct. 31, 2007, compared with net income of $2.25 million on sales of $6.27 million in the same period last year. Income from operations was $3.09 million, an increase of $420,470 from income from operations of $2.67 million in the first quarter ended Oct. 31, 2006. The increase in income from operations resulted primarily from the increase in revenues. The decrease in net income resulted primarily from the increase in income tax expense mainly resulting from the increased tax rate. As of Oct. 31, 2007, the company had cash and cash equivalents of $49,599 as compared to $539,926 as of Oct. 31, 2006. Full-text copies of the company's consolidated financial statements for the quarter Oct. 31, 2007, are available for free at http://researcharchives.com/t/s?26ab About Jade Art Group Incorporated in Nevada, Jade Art Group Inc. formerly Vella Productions Inc. (OTC BB: JADG) through its subsidiaries, engages in wood carving business in China. The company manufactures wood products, including both traditional hand-carved and machine- carved pieces, specializing in mantels, panels, furniture, ornamental bands, religious decorations, and architectural accents. It also manufactures Buddhist Shrines. The company was founded in 1973 and is based in Yujiang County, China. KAUFMAN COUNTY: Case Summary & Four Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Kaufman County Land Trust fdba Whitney Herigage III, L.L.C. 153 Whispering Winds Gunter, TX 75058 Bankruptcy Case No.: 07-43081 Type of Business: The Debtor owns and manages real estate. Chapter 11 Petition Date: December 31, 2007 Court: Eastern District of Texas (Sherman) Debtor's Counsel: Eric A. Liepins, Esq. 12770 Coit Road, Suite 1100 Dallas, TX 75251 Tel: (972) 991-5591 Total Assets: $30,000,000 Total Debts: $11,906,985 Debtor's Four Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Eric L. Davis Engineering $27,000 425 Pinson Road Forney, TX 75126 Jack Hatchell & Associates $10,000 P.O. Box 260119 Plano, TX 75026 Kaufman County-Tax Assesor $8,000 P.O. Box 339 100 West Mulberry Kaufman, TX 75142-0339 Chandler Commercial Mowing $3,000 KINGSWAY FINANCIAL: Secures to CDN$70 Million Credit Facility ------------------------------------------------------------- Kingsway Financial Services Inc. entered into a 365-day CDN$70 million credit facility agreement with a syndicate of banks. The credit facility is supplemental to the existing $175 million credit facility that matures in June 2009. "We are pleased that our relationships with our banking partners have enabled us to obtain this additional flexibility particularly at this time when credit conditions in the markets are challenging", Shaun Jackson, executive vice president and CFO of Kingsway Financial, said. "We have undrawn amounts under our current facility but will utilize these new funds to repay our maturing 8.25% CDN$78 million debentures on Dec. 31, 2007 at a lower financing cost." Headquartered in Ontario, Canada, Kingsway Financial Services Inc. (TSX:KFS, NYSE:KFS) - http://www.kingsway-financial.com/ -- is a holding company that operates through its wholly owned subsidiaries in the property and casualty insurance business. The company's principal lines of business are trucking and non- standard automobile insurance. KFSI also writes motorcycle insurance in Canada and writes taxi cab insurance in Chicago, Illinois and Las Vegas, Nevada. * * * As reported in the Troubled Company Reporter on Dec. 21, 2007, Standard & Poor's Ratings Services lowered its senior unsecured and long-term counterparty credit ratings on Kingsway Financial Services Inc. to 'BB+' from 'BBB-'. S&P also lowered the debt ratings on Kingsway's subsidiaries to 'BB+' from 'BBB-'. The outlook is negative. LEAP WIRELESS: S&P Maintains B- Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on San Diego, California-based Leap Wireless International Inc., including the 'B-' corporate credit rating, and removed them from CreditWatch. The outlook is stable. The ratings affirmation follows the release of Leap's second- quarter 2007 10-Q, which brings the company into compliance with reporting requirements under its credit facility. Leap, a wireless carrier, had received a waiver from the secured lenders on November 20, subject to filing of the restated financial statements by Dec. 31, 2007. "Although our immediate liquidity concerns have been partially mitigated, we have determined that the reinstatement of a positive outlook will hinge on the company's ability to limit further accounting issues, which would require a minimum of two quarters of timely and accurate financial reporting," said Standard & Poor's credit analyst Catherine Cosentino. In addition, Leap will need to demonstrate improved financial and operating results, which were weaker than S&P's expectations over the past two quarters. The ratings were placed on CreditWatch with negative implications on Nov. 7, 2007, due to the potential for covenant violations under a $1.1 billion senior secured credit facility and senior unsecured notes following the company's announcement that it planned to restate its audited financial statements for fiscal years 2004, 2005, and 2006 and for the first and second quarters of 2007 to correct errors in previously reported service revenues, equipment revenues, and operating expenses. MIDNIGHT HOLDINGS: Sept. 30 Balance Sheet Upside-Down by $36.5MM ---------------------------------------------------------------- Midnight Holdings Group Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $1.9 million in total assets and $38.4 million in total liabilities, resulting in a $36.5 million total stockholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $368,158 in total current assets available to pay $37.6 million in total current liabilities. The company reported a net loss of $1.7 million on total revenues of $1.4 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $5.2 million on total revenues of $620,711 in the same period last year. During the quarter ended Sept. 30, 2007, gross profit increased by $243,975 to $287,696 compared to the gross profit for the quarter ended Sept. 30, 2006. For the three months ended Sept. 30, 2007, the derivative instrument expense totaled $624,036, compared to an expense of $4.0 million for the three 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?26ac About Midnight Holdings Based in Clinton Twp., Mich., Midnight Holdings Group Inc. (MHGI.PK) -- http://www.midnightholdings.com/-- offers a large array of automotive products and services that target retail consumers and fleet service operators through its wholly owned subsidiaries All Night Auto(R) and All Night Lube Express(TM). MORGAN STANLEY: Fitch Rates Three Certificate Classes at Low-B -------------------------------------------------------------- Morgan Stanley Capital I Trust 2007-HQ13, commercial mortgage pass-through certificates are rated by Fitch Ratings: -- $146,100,000 class A-1 'AAA'; -- $179,353,000 Class A-1A 'AAA'; -- $67,700,000 class A-2 'AAA'; -- $334,490,000 class A-3 'AAA'; -- $103,949,000 class A-M 'AAA'; -- $72,765,000 class A-J 'AAA'; -- $18,191,000 class B 'AA'; -- $11,694,000 class C 'AA-'; -- $16,892,000 class D 'A'; -- $12,993,000 class E 'A-'; -- $11,695,000 class F 'BBB+'; -- $11,694,000 class G 'BBB'; -- $12,994,000 Class H 'BBB-'; -- $3,898,000 class J 'BB+'; -- $3,898,000 class K 'BB'; -- $3,898,000 class L 'BB-'; -- $1,039,491,008 (Notational amount and interest only) class X 'AAA'. The $10,395,000 class M, $2,599,000 class N, $3,898,000 class O, and $10,395,008 class P are not rated by Fitch. All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 82 fixed-rate loans having an aggregate principal balance of approximately $1,039,491,008, as of the cutoff date. NASDAQ STOCK: Gets CFIUS Clearance on Borse Dubai Investment Deal ----------------------------------------------------------------- The Nasdaq Stock Market Inc. has obtained clearance from The Committee on Foreign Investment in the United States concerning Borse Dubai's investment in NASDAQ, which will allow NASDAQ to proceed with its plans to combine with Stockholm-based OMX AB (publ). NASDAQ and Borse Dubai Limited had previously voluntarily submitted their agreement to CFIUS for review. As a result of CFIUS approval, NASDAQ said that as part of its transaction with Borse Dubai, disclosed on Sept. 20, 2007, it has formally withdrawn its offer for OMX and supports Borse Dubai's all cash offer of SEK265 per share to acquire OMX. All other previously agreed conditions for Borse Dubai to open its offer have now been fulfilled or waived in accordance with the agreements between Borse Dubai and NASDAQ. Provided Borse Dubai owns in total at least 67% of the shares of OMX and the conditions for closing the transaction under the agreement with NASDAQ have been satisfied or waived, Borse Dubai will sell all OMX shares it owns to NASDAQ for consideration in NASDAQ shares and cash, as previously announced. At the same time, NASDAQ will make an investment in Dubai International Financial Exchange. As reported in the Troubled Company Reporter on Dec. 6, 2007, NASDAQ and Borse Dubai joined efforts to provide a compelling, long-term enhancement and growth strategy for OMX and the Nordic and Baltic region. Borse Dubai and NASDAQ had secured irrevocable undertakings from Investor AB (publ), Nordea Bank AB (publ), Olof Stenhammar, Didner & Gerge Fonder AB, Nykredit Realkredit A/S and Magnus Bocker, who in aggregate hold approximately 18.5% of the total number of votes and shares in OMX, at the increased price of Borse Dubai's cash offer. NASDAQ's now-withdrawn stand-alone offer for OMX was conditional upon being accepted to such an extent that NASDAQ becomes the owner of shares representing more than 90% of the outstanding shares in OMX on a fully diluted basis. Borse Dubai will open its offer for OMX for acceptances when the offer document has been approved by relevant authorities. Taking into account that Borse Dubai, before the opening of its offer, controls shares, options and irrevocable undertakings which will result in Borse Dubai holding approximately 48.3% of OMX's issued share capital and votes when the options and irrevocable undertakings are exercised in accordance with what has previously been announced, it is clear that the 90% acceptance condition in NASDAQ's stand-alone offer cannot be fulfilled. NASDAQ, therefore, withdraws its stand-alone offer for OMX, in accordance with the agreements with Borse Dubai and as presented in statement from the Swedish Securities Council. About Nasdaq Headquartered in New York City, The Nasdaq Stock Market Inc. (Nasdaq: NDAQ) -- http://www.nasdaq.com/-- is an electronic equity securities market in the United States with about 3,200 companies. * * * As reported in the Troubled Company Reporter on Sept. 24, 2007, Moody's Investors Service placed the Ba3 corporate family rating of Nasdaq Stock Market Inc. on review for upgrade. On Sept. 20, 2007, Standard & Poor's Rating Services assigned BB long-term foreign and local issuer credit ratings to Nasdaq Stock Market Inc. NASDAQ STOCK: OMX AB Board Backs Borse Dubai's Public Offer ----------------------------------------------------------- The board of directors of OMX AB (publ) unanimously recommends the public offer from Borse Dubai Limited taking into account the acquisition of OMX shares by The NASDAQ Stock Market Inc. "The combination of OMX and NASDAQ will create a new leader in the exchange industry, establish a strong platform for future growth and reinforce the Nordic and Baltic region as a financial centre," Urban Backstrom, chairman of OMX. "Linking trading centres in the US, Europe and the Middle East will provide members, issuers and all other market participants with considerable opportunity in the changing global capiSiemens Divisiontal markets. The Borse Dubai offer and the agreed, subsequent acquisition of OMX shares by NASDAQ, is also attractive to our shareholders." Background On May 25, 2007, NASDAQ and OMX had entered into an agreement to combine the two companies to form a new group, The NASDAQ OMX Group Inc. The combination was to be effected through a cash and stock tender offer by NASDAQ for all outstanding shares in OMX. The board of OMX unanimously recommended to the OMX shareholders that they accept this tender offer by NASDAQ. On Aug. 9, 2007, Borse Dubai was in the process of purchasing OMX shares at a price of SEK230 and entering into options for OMX shares at an exercise price of SEK230 by way of a book building process with selected investors. Later that day, Borse Dubai also had purchased OMX shares representing 4.9% of the share capital in OMX at a price of SEK230 and entered into option agreements to purchase another 22.5% of OMX shares at an exercise price of SEK230, Borse Dubai subsequently entered into additional option agreements to purchase a total of another 24.2% of OMX shares at the greater of SEK230 per share and the offer price at the end of the acceptance period. On Aug. 17, 2007, Borse Dubai disclosed an all-cash offer for all outstanding shares in OMX at a price of SEK230 per OMX share. On Sept. 20, 2007, NASDAQ and Borse Dubai had entered into agreements pursuant to which Borse Dubai's Offer of SEK230 in cash per OMX share was to continue, but that a series of transactions was to be subsequently effected that would involve, amongst other things, NASDAQ purchasing all of Borse Dubai's shares in OMX for a combination of cash and new NASDAQ shares. As a result of these transactions, Borse Dubai would retain NASDAQ OMX shares representing approximately 19.99% of the combined NASDAQ OMX share capital, restricted to 5% of voting rights, with its remaining NASDAQ OMX shares -- representing approximately 8.4% of the combined NASDAQ OMX share capital -- being held in trust with an affiliate of Borse Dubai as beneficiary and managed by an independent trustee. Later on September 20, Qatar Investment Authority has purchased OMX shares representing 9.98% of the share capital in OMX. On Sept. 26, 2007, NASDAQ and Borse Dubai had raised its Offer to SEK265 in cash per each OMX share. It was also disclosed that irrevocable undertakings had been secured, subject to certain conditions, from Investor AB, Nordea Bank AB, Olof Stenhammar, Didner & Gerge, Nykredit and Magnus Bocker to tender no less than 22.4 million OMX shares, equivalent to 18.5% of all the outstanding shares and votes in OMX, into the Offer and that these undertakings were binding unless a third party offered greater than SEK303 per OMX share and Borse Dubai did not match in a certain period -- Borse Dubai subsequently secured additional irrevocable undertakings, subject to certain conditions, from Investor AB, Nordea Bank AB, Olof Stenhammar, Didner & Gerge, Nykredit, Magnus Bocker and certain other shareholders to tender no less than a total of 23.3 million OMX shares, equivalent to 19.3% of all the outstanding shares and votes in OMX, into the Offer and that these undertakings were binding unless a third party offered greater than SEK303 per OMX share and Borse Dubai did not match in a certain period. The agreements were conditional upon customary regulatory and shareholder approvals in both Sweden and other Nordic and Baltic jurisdictions well as in the United States and approval by shareholders of NASDAQ, all of which have been obtained or waived. Consequently, NASDAQ has withdrawn its offer for OMX, and Borse Dubai is expected to open its Offer for acceptances on Jan. 7, 2008. The board relates that the combination of OMX and NASDAQ will have a number of important benefits for OMX and its stakeholders. The conditions to Borse Dubai's Offer include acceptance of the Offer by holders of a majority of OMX's shares. Shareholders are advised to note that completion of the agreed, subsequent acquisition by NASDAQ of Borse Dubai's shares in OMX is subject to certain conditions, including that Borse Dubai hold more than 67% of the shares in OMX following completion of the Offer. As a result, holders of OMX shares should be aware that there is a possibility that, if such conditions are not satisfied or waived, the Borse Dubai Offer could be completed but the subsequent acquisition by NASDAQ of OMX shares from Borse Dubai would not proceed and thus those benefits would not be obtained. When issuing this recommendation, the board took into account this possibility, together with its view that, if the Borse Dubai Offer is consummated, there is a high likelihood that these conditions will be satisfied and that the combination of OMX and NASDAQ will be completed. Nasdaq Notice The board has received a letter from NASDAQ, dated Dec. 14, 2007, regarding the interpretation of the original transaction agreement between NASDAQ and OMX of May 25, 2007. In the letter, NASDAQ clarifies and confirms its understanding that, upon NASDAQ's subsequent acquisition of Borse Dubai's shares in OMX, NASDAQ's and OMX's agreements regarding, among other things, board composition, corporate name, senior management and OMX Nordic Exchange secondary listing of the combined NASDAQ OMX Group shall apply, with certain modifications, as if NASDAQ's original offer of May 25, 2007, had been consummated. The Offer values OMX at SEK265 per share, equivalent to SEK32 billion, and represents a premium of 52% to the closing price of SEK174.5 per OMX share on May 23, 2007, the last trading day prior to the statement of the OMX and Nasdaq combination on May 25, 2007, and a premium of 59% to the volume weighted average price of SEK166.3 per OMX share over the 20 trading days up to and including May 23, 2007. The board of OMX came to the conclusion that the proposed combination with NASDAQ was the best available option. Notwithstanding that NASDAQ's original offer has been withdrawn, the board notes that the agreed transactions between NASDAQ and Borse Dubai post consummation of the Offer will cause NASDAQ and OMX to combine in a manner similar to that originally envisaged as of May 25, 2007. Accordingly, the board states that the Offer will provide OMX, its customers and its other stakeholders with the same benefits as the original combination with NASDAQ. Merger Benefits The board states that the agreed transactions between NASDAQ and Borse Dubai post consummation of the Offer will result in additional benefits such as the partnership with the Dubai International Financial Exchange which will provide further exposure to attractive emerging growth markets and additional opportunities. Cooperation with Borse Dubai will strengthen NASDAQ OMX by, among others things, facilitating access to a pool of untapped capital and the growth opportunities in a region of approximately 40 countries spanning North and Eastern Africa, the Middle East, the Caspian region and South-Central Asia, and giving issuers access to a pool of untapped capital with the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait. Furthermore, Borse Dubai would provide international, including Nordic, investors with direct access to new financial products such as sukuk (short and long term asset backed loans similar to bonds), structured products, funds and indices from one of the growing regions in the world. Unlike NASDAQ's original offer, the Offer by Borse Dubai to the OMX shareholders is an all-cash offer and as such will not give OMX shareholders the opportunity to share in the substantial value the OMX and NASDAQ combination should generate from the anticipated revenue and cost synergies. However, the board relates that the increase in the price offered for each OMX share from SEK208.1 as of May 25, 2007, as per the tender offer from NASDAQ to SEK 265 as per the Offer compensates the OMX shareholders appropriately. The combined group, to be called The NASDAQ OMX Group, will combine two complementary businesses, uniting NASDAQ's brand and efficient electronic trading platform with OMX's global technology services platform and customer base, efficient Nordic Exchange and derivatives capabilities. The combined group will be a financial marketplace with a footprint spanning the U.S., Europe, the Middle East and strategic emerging markets. The combination will provide significant benefits for customers, shareholders and other stakeholders in both companies. The combined group's strategy will be to grow volume and broaden its customer base, combining the strengths of both companies. In this context, the proposed transaction will create enhanced career opportunities for employees of the combined group. The board of directors does not foresee any significant staff reductions as a consequence of the combination. The NASDAQ OMX Group will be a network of exchanges and exchange customers linked by technology. It will be positioned to drive organic growth and to continue to take a proactive role in sector consolidation. The combined group will have pro forma 2006 revenues of SEK8.3 billion or 1.2 billion and around 2,500 employees in 22 countries. It will in addition own a one-third interest in Borse Dubai's subsidiary DIFX. NASDAQ has expressed commitment to the Nordic and Baltic region, including the Nordic and Baltic regulatory and operational frameworks and procedures. NASDAQ recognizes that the Nordic and Baltic financial sector is one of the most important drivers of the Nordic and Baltic economies. The strategy of the new company will be to build on the existing businesses, market models and stakeholder influence of OMX in this region. NASDAQ has committed to support investments in ongoing research and development in Stockholm and will promote Stockholm as a financial technology and know-how centre of excellence. NASDAQ OMX will provide the Nordic and Baltic region with the resources and infrastructure necessary to grow the business, which is likely to increase employment opportunities in the region, and will seek to ensure that the region's capitals are acknowledged as leading financial centres in Europe by 2010. In order to strengthen the competitive position of the region's financial centres, NASDAQ fully supports the ongoing development of areas such as: a) Regulation and supervision: NASDAQ OMX will be committed to the existing Nordic and Baltic regulatory and operational frameworks, procedures and efficient supervisory authority. NASDAQ will continue its active engagement with the U.S. Securities and Exchange Commission, Treasury Department and Congress to ensure that there is no U.S. regulatory spillover directly or indirectly as a result of this transaction. The financial supervisory authorities in all the seven jurisdictions concerned have received written assurances to this effect from the SEC; b) Competition: NASDAQ OMX will safeguard the Nordic and Baltic region's competitive position in the MiFID environment by enhanced efficiencies and innovative approaches to trading and pan-European market structure; c) Efficiency and transparency: NASDAQ OMX will continue to focus on low costs, transparency and market efficiency to the benefit of the Nordic and Baltic capital markets; d) Education and research: NASDAQ OMX will stimulate education and research through, among others, seminars and academic committees within the concept of Finansplats Stockholm. Furthermore, NASDAQ has confirmed its commitment to: -- the European headquarters of NASDAQ OMX being located in Stockholm; -- the world technology business headquarters of NASDAQ OMX being located in Stockholm; -- key senior positions remaining in Stockholm, Helsinki and Copenhagen; -- four OMX directors being recommended to be on the NASDAQ OMX Board, including the Deputy Chairman; and -- the OMX Nordic Exchange Board remaining as is, with its current Nordic composition. NASDAQ is confident that it can provide OMX with growth opportunities within the developed, European financial markets with Stockholm as the operational base for pan-European efforts, well as in the emerging markets using its Stockholm-based technology business and know-how to help develop capital markets in high growth regions worldwide. The board's recommendation is based on factors that the board considers relevant for the Offer, including but not limited to the evaluation of OMX's and NASDAQ's current and estimated future development of business operations and financial results, estimated synergies, OMX's market position in the rapidly changing and consolidating exchange industry, and other strategic alternatives available to OMX. Advisors OMX's board has been advised by financial and other advisers in connection with the Offer and the board's assessment thereof. The board' financial advisers are Morgan Stanley & Co. Limited, Credit Suisse Securities (Europe) Ltd. and Lenner & Partners Corporate Finance AB. The board's legal advisers are Advokatfirman Vinge KB, Cleary Gottlieb Steen & Hamilton LLP and Gernandt & Danielsson Advokatbyra KB. Morgan Stanley and Credit Suisse have rendered fairness opinions to the board of OMX to the effect that as of the date thereof and based upon and subject to the qualifications and assumptions therein and other factors deemed relevant, the Offer consideration is fair from a financial point of view to the shareholders of OMX, other than Borse Dubai and its affiliates. About OMX AB (publ) OMX AB (publ) -- http://www.omxgroup.com/-- is an exchange industry. The OMX Nordic Exchange comprises over 800 companies including its alternative market First North. OMX provides technology to over 60 exchanges, clearing organizations and central securities depositories in over 50 countries. The Nordic Exchange is not a legal entity but describes the common offering from OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. OMX is a Nordic Large Cap company in the Financials sector on the OMX Nordic Exchange. Headquartered in New York City, The Nasdaq Stock Market Inc. (Nasdaq: NDAQ) -- http://www.nasdaq.com/-- is an electronic equity securities market in the United States with about 3,200 companies. * * * As reported in the Troubled Company Reporter on Sept. 24, 2007, Moody's Investors Service placed the Ba3 corporate family rating of Nasdaq Stock Market Inc. on review for upgrade. On Sept. 20, 2007, Standard & Poor's Rating Services assigned BB long-term foreign and local issuer credit ratings to Nasdaq Stock Market Inc. NATIONAL LAMPOON: Oct. 31 Balance Sheet Upside-Down by $4.13 Mil. ----------------------------------------------------------------- National Lampoon Inc.'s consolidated balance sheet at Oct. 31, 2007, showed $8.08 million in total assets, $8.48 million in total liabilities, and $3.73 million in accrued dividends payable in common stock, resulting in a $4.13 million total shareholders' deficit. At Oct. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $477,355 in total current assets available to pay $8.48 million in total current liabilities. The company reported a net loss of $1.17 million on total revenues of $807,626 for the three months ended Oct. 31, 2007, compared with net income of $1.73 million on total revenues of $4.13 million in the same period ended Oct. 31, 2006. Licensing and publishing revenues for the three months ended Oct. 31, 2007, were $357,993 compared to $3.25 million for the three months ended Oct. 31, 2006, representing a decrease of $2.89 million or approximately 88%. During the three months ended Oct. 31, 2006, the company received a one-time payment of approximately $2.9 million in settlement of a royalty dispute. No such payment occurred during the three months ended Oct. 31, 2007. During the three months ended Oct. 31, 2007, advertising and promotion revenues were $449,633 compared to $842,730 for the three months ended Oct. 31, 2006. This represents a decrease of $393,097 or 46%. The decrease was the result of a decrease of $399,662 in promotion revenues mainly due to a reduction in the number of field promotion events the company produced. For the three months ended Oct. 31, 2007, there were no production revenues as compared to $39,000 for the three months ended Oct. 31, 2006. The reveral to a net loss for the three months ended Oct. 31, 2007, resulted primarily from the significant increase in revenue during the three months ended Oct. 31, 2006, which was associated with the settlement of disputed license fees. Liquidity and Capital Resources With the exception of the first quarter of the fiscal year ended July 31, 2007, the company has not generated positive cash flows from operations over the past few years. The company's principal sources of working capital during the three months ended Oct. 31, 2007, consisted of loans from its officers and directors and production loans from Red Rock Pictures Holdings Inc. Full-text copies of the company's consolidated financial statements for the quarter ended Oct. 31, 2007, are available for free at http://researcharchives.com/t/s?26ae Going Concern Doubt Weinberg & Company P.A., in Los Angeles, epxressed substantial doubt about National Lampoon Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended July 31, 2007. The auditing frim pointed to the company's working capital deficiency of $7,196,255 and accumulated deficit of $41,257,284 as of July 31, 2007, and a net loss of $2,504,170 for the year ended July 31, 2007. About National Lampoon Based in West Hollywood, Calif. National Lampoon Inc. (AMEX: NLN) -- http://www.nationallampoon.com/-- is currently active in a broad array of media and entertainment segments. These include feature films, television programming, online and interactive entertainment, home video, audio, and book publishing. The company also owns interests in all major National Lampoon properties, including National Lampoon's Animal House, the National Lampoon Vacation series and National Lampoon's Van Wilder. The company has three core operating divisions: National Lampoon Films, College Marketing Division, and National Lampoon Networks. NAVIOS MARITIME: Shareholders OK Class B Directors Election ----------------------------------------------------------- At an annual meeting, Navios Maritime Holdings Inc.'s stockholders approved the election of two Class B directors, whose term will expire in 2010: 1. Ted C. Petrone; and 2. Spyridon Magoulas. In addition, the stockholders approved the ratification of the appointment of PricewaterhouseCoopers as Navios' independent public accountants for the fiscal year ending Dec. 31, 2007. 64% of Navios' common stock, which was represented in person or by proxy, approved the requisite number of votes to approve all matters. Based in Norwalk, Connecticut, Navios Maritime Holdings Inc. (NYSE: NM and NM WS) -- http://www.navios.com/-- is an integrated seaborne shipping company, specializing in the carriage, trading, storing, and other related logistics of international dry bulk cargo transportation. The company also owns and operates a port/storage facility in Uruguay and has in- house technical ship management expertise. It has offices in Piraeus, Greece, South Norwalk, Connecticut and Montevideo, Uruguay and Antwerp, Belgium. For over 50 years, Navios has worked with raw materials producers, agricultural traders and exporters, industrial end-users, ship owners, and charterers. Navios also owns and operates a port/storage facility in Uruguay and has in-house technical ship management expertise. Navios Maritime Partners L.P. is a Marshall Islands limited partnership formed by Navios to be an international owner and operator of drybulk vessels. * * * Navios Maritime carries to date Moody's Investors Service's 'B1' probability of default rating and 'B3' senior unsecured debt rating, which were placed in March 2007. NORTH STREET: Fitch Holds 'B' Rating on $31 Mil. Class C Notes -------------------------------------------------------------- Fitch affirms six classes of notes issued by North Street Referenced Linked Notes 2000-1, Ltd. and two classes of notes issued by North Street Referenced Linked Notes 2002-1A, Ltd. These rating actions are effective immediately: North Street 2000-1 -- $36,000,000 class A floating-rate notes affirmed at 'AA-'; -- $40,000,000 class B floating-rate notes affirmed at 'BBB-'; -- $31,000,000 class C floating-rate notes affirmed at 'B', 'DR1'; -- $14,000,000 class D-1 floating-rate notes remain at 'CC/DR5' -- $20,000,000 class D-2 fixed-rate notes remain at 'CC/DR5'; -- Fixed Rate Income Notes remain at 'C/DR6'. North Street 2002-1A -- $50,000,000 class A floating-rate notes affirmed at 'AAA'; -- $100,000,000 class B floating-rate notes affirmed at 'AAA'. North Street 2000-1, North Street 2002-1A and North Street 2000-1 senior credit linked notes are partially funded synthetic collateralized debt obligations created to enter into credit default swaps with UBS Investment Bank referencing the same portfolio. The reference portfolio consists of corporate bonds, asset backed securities, and real estate investment trust securities. The affirmations are the result of the stable performance of the reference portfolio. Since Fitch's latest rating action on Nov. 8, 2006, there have been no additional credit events in the reference portfolio. Currently there are no defaulted assets in the portfolio. Fitch Weighted Average Rating Factor has remained stable since last review. The ratings of all classes of 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 rating of the Income Notes addresses the likelihood that investors will receive full and timely payments of interest, at the rated coupon of 8%, as well as the stated balance of principal by the legal final maturity date. NY RACING: Plan Confirmation Hearing Deferred to January 14 ----------------------------------------------------------- A hearing to consider confirmation of New York Racing Association Inc.'s Third Amended Chapter 11 Plan of Reorganization has been moved from from Dec. 27, 2007 to Jan. 14, 2008, Bill Rochelle of Bloomberg News reports. As reported in the Troubled Company Reporter on Dec. 3, 2007, the Honorable James M. Peck the United States Bankruptcy Court for the Southern District of New York approved the Debtor's Third Amended Disclosure Statement describing its Plan of dated Nov. 29, 2007. Under the Third Amended Plan, Class 2 Secured Claim holders will receive 100% of their allowed claim amount through any of these distributions: a) payment of allowed secured claim in full, in cash; b) sale or disposition proceeds of the property securing any allowed secured claim to the extent of the value of their respective interests in the property; or c) surrender to the holder or holders of any allowed aecured claim of the property securing the claim. Commencing on the effective date of the Plan, Unsecured Claims will receive payments in full and in cash. Holders of Insured Litigation Claims are entitled to: -- proceed with the liquidation of their claims, including any litigation pending as of the Debtor's bankruptcy filing; and -- seek recovery from applicable insurance carrier. Pursuant to the terms of a settlement agreement, all State Claims will be deemed allowed and each State Claims holder, other than the holder of the New York State Tax Claim, will not be entitled to, and will not receive or retain, any property or interest in property on account of such Allowed State Claims under the Plan. On or prior to the effective date of the Plan, the Debtor or the Reorganized Debtor will make these payments to its benefit plans: 1) funding deficiencies for the years ended on or prior to Dec. 31, 2006; and 2) normal costs for the year ended Dec. 31, 2007. By those payments, the Debtor's benefit plans will be deemed cured and the Pension Benefit Guaranty Corporation's claims will be deemed satisfied in full. The Internal Revenue Service will receive a promissory note in the amount of its allowed claim, which will bear interest at the rate of 8% per annum, payable in 15 equal quarterly installments commencing on March 31, 2008. Each holder of an Allowed Penalty Claim will be entitled to receive a pro rata share of cash available for distribution after all allowed unsecured claims have been paid in full. Equity Interests in the Debtor will be cancelled and holders of such interests will not receive any distribution under the Plan. About New York Racing Based in Jamaica, New York, The New York Racing Association Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in Aqueduct, Belmont Park and Saratoga. The company filed for chapter 11 protection on Nov. 2, 2006 (Bankr. S.D.N.Y. Case No. 06-12618). Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, Henry C. Collins, Esq., at Cooper, Erving & Savage LLP, and Irena M. Goldstein, Esq., at Dewey Ballantine LLP represent the Debtor in its restructuring efforts. Jeffrey S. Stein of The Garden City Group Inc. serves as the Debtor's claims and noticing agent. Edward M. Fox, Esq., Eric T. Moser, Esq., and Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Preston Gates Ellis LLP, represent the Official Committee of Unsecured Creditors. When the Debtor sought protection from its creditors, it listed more than $100 million in total assets and total debts. PACIFIC LUMBER: Loses Exclusive Right to File Reorganization Plan ----------------------------------------------------------------- The Honorable Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas has terminated Pacific Lumber Company and its debtor affiliates' exclusive period to file a plan of reorganization, according to Patrick Fitzgerald of the Associated Press. By virtue of the Court's Order, the Debtors have lost the exclusive right to file a plan of reorganization last Dec. 21,2007, and the Debtors' creditors are now permitted to file competing plans. "One way or another this case is going to be resolved around the first of April," AP quotes Judge Schmidt. Any competing plans must be filed by Jan. 31, 2007, the Court ordered. A confirmation hearing is tentatively scheduled to begin on April 1, 2007. The Bank of New York Trust Company, N.A., as indenture trustee for the Timber Noteholders; Marathon Structured Finance L.P, the Debtors' DIP Lender; and the Official Committee of Unsecured Creditors have all expressed their intention to file competing plans. The Indenture Trustee previously submitted a proposed plan, which contemplates a sale of the Debtors' assets. Marathon has recently informed the Court that it has solicited the support of Mendocino Redwood Co. LLC for a possible infusion of about $200 million of new cash equity to support a reorganization plan for the Debtors. In a separate report, the Eureka Reporter relates that PALCO expected the Court's ruling. According to the company's vice president, Frank Bacik, "our only stipulation was that [any competing plan] be filed in [a] timely manner.". Nevertheless, Mr. Bacik reiterates that PALCO's plan is the only plan that provides for the full payment of its creditors. The Eureka Reporter added that Judge Schmidt has directed all parties to come up with a joint disclosure statement by Feb. 28, whereby they must all agree on how PALCO, its creditors and other key parties will vote to confirm one of any competing plan filed. Judge Schmidt considered the Debtors' exclusivity at a hearing on Dec. 21, 2007, as per the Indenture Trustee's request. The Indenture Trustee reasoned that since the parties have twice fully presented their evidence on the Exclusivity Motion, and since the Court-ordered mediation has been concluded, the Exclusivity Motion was ripe for determination and should be decided one way or the other. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. John F. Higgins, Esq., and James Matthew Vaughn, Esq., at Porter & Hedges LLP, is Scotia Pacific's co- counsel. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007. The Debtors' exclusive period to file a chapter 11 plan expired on the same date. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 39, http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Scopac Can Use Funds in SAR Account for 2nd Budget ------------------------------------------------------------------ The Honorable Richard Schmidt approved Pacific Lumber Company subsidiary Scotia Pacific Company's request to use cash collateral funds from the Scheduled Amortization Reserve Account in accordance with a Second Additional Budget. The Court also authorized and directed The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes, to grant Scopac access to the SAR account for that purpose. The Court finds that good cause exists for the approval of the Second Additional Budget for Scopac's cash collateral use. BONY Objects to Cash Collateral Use Bony reiterated that Scopac's request for further cash collateral use compromises the adequate protection of its collateral. Scopac's recent Second Additional Budget shows a negative ending book cash necessitating the company to draw from its Scheduled Amortization Reserve Account, Zack A. Clement, Esq., at Fulbright & Jaworski L.L.P, in Houston, Texas, contended. "The SAR Account from which Scopac now proposes to withdraw funds is not a savings account for [Scopac] to freely draw upon to sustain its operations," he emphasizes. The SAR account was established as a credit enhancement for the Timber Notes to reserve $169,000,000 of the proceeds of the sale of the Indenture Trustee's collateral under the Headwaters Agreement, Mr. Clement clarifies. It was established, he pointed out, for the sole purpose of ensuring that Scopac paid the scheduled amortization of principal on the Timber Notes on each Note Payment Date; the funds in the account were only to be used to the extent that Scopac did not have sufficient funds to satisfy the amortization payments. However, as of the week following the hearing on the Cash Collateral Motion, Scopac's ending cash balance will continue to plummet. By the last week of December 2007, Scopac proposes to begin to draw on the SAR Account, draining away millions of dollars of the cash collateral securing the Indenture Trustee's claim, Mr. Clement told the Court. Certain factors lead Scopac to propose to use the SAR Account, Mr. Clement noted: * There is a continuous decline of timber market price. In percentage terms, the actual market prices for timber are 18% lower than the assumptions on which the Amended Second Additional Budget is based. * Scopac's ties with the Pacific Lumber Company also affects its Second Additional Budget since PALCO is in danger of becoming administratively insolvent. PALCO is running out of money to buy Scopac's logs and faces a bad market for the sale of timber and lumber. PALCO's recent budget indicates that at the end of December, it will have only $1,000 in availability. PALCO is relying on log sales to third parties for almost 38% of its gross revenue during the first six months of 2008. PALCO's ability to meet those projections is further imperiled because Scopac has apparently harvested logs at a much lower rate than it had projected. * A significant reason for Scopac's cash drain is its extraordinary high professional fees in the case. Scopac's most recent Monthly Operating Report shows that it has spent $15,228,000 for professional fees. It is more than 45% of its gross revenue and more than 78% of EBITDAR for professional fees. In addition, the Debtors have recently sought Court approval of trial for the valuation of the Timber Noteholders' claim. Implied in the Debtors' request for sequential valuation trials is the assumption that exclusivity would continue during the long and expensive valuation process, Mr. Clement noted. By the end of the proposed valuation hearings, in the likely event that the evidence shows that the Indenture Trustee is undersecured, its cash collateral will have been wasted and Scopac will be out of cash, threatening the ability to sell the company as a going concern, Mr. Clement argued. Even in the unlikely event that Scopac is able to convince the Court that the Indenture Trustee is theoretically oversecured, Scopac would still have to expend additional time and cash collateral attempting to obtain approval of a disclosure statement and confirmation of a plan, while responding to the Indenture Trustee's expedited appeal of the valuation finding, Mr. Clement asserted. The Indenture Trustee maintained that a better way to yield results on the Debtors' cases is to establish actual values of the Debtors' assets by pursuing parallel sales of the assets of Scopac and PALCO as going concerns. "A robust sales process could be conducted at greatly reduced expense in the same amount of time as would be necessary to try all of the valuation issues as the Debtors attempt to confirm their patently unconfirmable plan," Mr. Clement contended. If the Court orders a sale process to go forward that will conclude in the next few months, it will provide the Indenture Trustee the indubitable equivalence of its claim as adequate protection for the use of its cash collateral during the Chapter 11 case, Mr. Clement pointed out. Accordingly, the Indenture Trustee did not consent to Scopac's further use of cash collateral as proposed in the Amended Second Additional Budget. However, if the Court authorizes Scopac to use cash collateral, the Indenture Trustee had asked Judge Schmidt to prohibit or condition its use and provide adequate protection by: (a) requiring Scopac to file an amended budget and a new long-term business plan showing a reasonable strategy to eliminate its ongoing losses; (b) prohibiting the use of cash collateral by Scopac to fund valuation trials or oppose the Creditor Plans and instead requiring the beneficiary, MAXXAM, to pay the professional fees associated with the proposed trials; (c) terminating exclusivity to permit the Indenture Trustee and the Official Committee of Unsecured Creditors Committee to propose parallel plans for Scopac and PALCO; and (d) ordering as adequate protection that a sale process begin immediately for Scopac and PALCO so that the assets of these two companies can be sold promptly while they are both still going concerns. BoNY Seeks to Strike Certain Expert Reports The Indenture Trustee had also asked the Court to strike the expert reports of Dr. Kim Iles and Dr. Don Reimer and exclude the testimony of James Yerges. Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure provides that a party must disclose to the other parties the identity of any witness it may use at trial to present evidence. Civil Rule 37 states that if a party fails to provide information or identify a witness as required by Rule 26(a) or (e), that party is not allowed to use that information or witness to supply evidence on a motion at a hearing, Mr. Clement noted. Mr. Clement recounted that the Debtors informed the Indenture Trustee on Dec. 18, 2007, that it will submit to the Court the testimony of Mr. Yerges, Jeffrey Barrett, and Gary Clark in anticipation of the December 21 Cash Collateral Hearing. Subsequently, the Debtors tendered, on December 20, separate expert reports of Drs. Iles and Reimer along with Mr. Yerges' written report. Mr. Clement argued that the participation of Drs. Iles and Reimer in giving an expert testimony was not properly disclosed by the Debtors. Furthermore, Mr. Yerges testified on December 20 that he relied on the conclusions of Drs. Iles and Reimer in order to derive his opinion about the level of harvest that could be expected from Scopac's timberlands, and likewise his opinion about the value of the Timberlands. Mr. Yerges' written report concluded that the value of the Timberlands cost $950,000,000. However, $33,000,000 of the value opinion given by Mr. Yerges is based on his reliance on Dr. Reimer's opinion, Mr. Clement pointed out. The Debtors' failure to both designate Drs. Iles and Reimer as witnesses for the December 21 hearing, and to offer those experts for depositions contravenes the Civil Rules and is prejudicial to the Indenture Trustee, Mr. Clement contended. "Allowing their findings into evidence through the testimony of another witness would improperly circumvent the procedural protections embodied in the Federal Rules," he maintained. A full-text copy of the Scopac's Weekly Cash Flow Budget through the week ending March 21, 2008 is available for free at: http://bankrupt.com/misc/SCOPACWeeklyBudgetthruMar21-08.pdf About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. John F. Higgins, Esq., and James Matthew Vaughn, Esq., at Porter & Hedges LLP, is Scotia Pacific's co- counsel. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007. The Debtors' exclusive period to file a chapter 11 plan expired on the same date. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 39, http://bankrupt.com/newsstand/or 215/945-7000). PERFORMANCE TRANS: Gets Interim Nod to Use $6 Mil. DIP Funding -------------------------------------------------------------- Performance Transportation Services Inc. and its debtor- affiliates obtained interim authority from the U.S. Bankruptcy Court for the Western District of New York to borrow $6 million in debtor-in-possession financing from Black Diamond Commercial Finance LLC. Previously, the Debtors requested to secure $15 million in DIP facility. The Debtors will use the loan proceeds for working capital and other general corporate purposes. The Court authorized the Debtors to incur overdrafts and related liabilities arising from treasury, depository and cash management services; provided, however, that nothing will require Black Diamond or any other party to incur overdrafts or to provide any services or functions to the Debtors. The Debtors are also authorized to pay all fees that may be necessary for the Debtors' performance of their obligations under the DIP Facility. All of the DIP Obligations will constitute allowed claims against the Debtors with priority over any and all administrative expenses, diminution claims and all other claims against the Debtors, Judge Lewis Kaplan said. The DIP Lenders will have a first lien on the Debtors' cash balances and unencumbered property, excluding the Debtors' avoidance actions and related proceeds. The DIP Liens are subject to he payment of a carve-out for fees payable to the Clerk of the Bankruptcy Court, the Office of the United States Trustee, and the bankruptcy professional retained in the Debtors' cases; and any liens permitted pursuant to the DIP Loan Documents. As adequate protection of the prior to bankruptcy filing secured lenders' interest, Judge Kaplan granted the agents and the secured lenders prior to bankruptcy filing, subject to the payment of the Carve-Out, a superpriority claim, immediately junior to the claims held by the DIP agent and the DIP lenders. However, the agents and the secured lenders will not receive or retain any payments, property or other amounts unless and until the DIP Obligations have indefeasibly been paid in cash in full. The administrative agent under the Debtors' first lien credit and guaranty agreement will receive from the Debtors immediate cash payment of all interest accrued and unpaid as of the bankruptcy filing on the unpaid principal balance of the loans outstanding under the first lien facility and letter of credit fees at the default rate provided for under the first lien credit agreement and all other accrued and unpaid fees and disbursements owing to the first lien agent and incurred prior to bankruptcy filing. The administrative agent under the Debtors' second lien credit and guaranty agreement will accrue in respect of interest payments due under the Second lien facility, an amount equal to the alternate base rate plus the default rate, which will be added to the principal balance of the obligations due under the second lien facility. The accrual of interest in respect of loans under the second lien facility will be provisional and conditioned on the first lien secured lenders being paid in full. The Debtors will pay for the pre-bankruptcy filing secured lenders' legal costs and expenses. Any committee of unsecured creditors will have 60 days from the bankruptcy filing to file objections or complaints respecting the validity, extent, priority, avoidability or enforceability of the debt prior to bankruptcy filing. The Court will convene a final hearing regarding the Debtors' request on Jan. 18, 2008, at 10:00 a.m. About PTS 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. 35; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/ or 215/945-7000). PERFORMANCE TRANS: Lenders Want Yucaipa, et al. to Produce Docs --------------------------------------------------------------- D.E. Shaw Laminar Portfolios L.L.C. and Quadrangle Debt Recovery Advisors LP, lenders of Performance Transportation Services Inc. and its debtor-affiliates, asks the U.S. Bankruptcy Court for the Western District of New York, to serve document requests on and to take certain specified depositions from: 1. the members of the Debtors' board of directors who also serve as directors at Yucaipa -- Derex Walker; Ira Tochner; Jos Opdeweegh; and Jeff Pelletier; 2. Yucaipa; 3. Allied; and 4. Goldman Sachs. Yucaipa American Alliance Fund I, LP and Yucaipa American Alliance (Parallel) Fund I, LP are the Debtors' controlling shareholders. Goldman Sachs Credit Partners, L.P. is the Debtors' lead arranger and initial agent of their secured debt. D.E. Shaw and Quadrangle are majority lenders under the Debtors' Second Lien Credit and Guaranty Agreement dated January 26, 2007. D.E. Shaw and Quadrangle are owed roughly $35,000,000 under the Second Lien Facility. D.E. Shaw and Quadrangle Debt want to obtain information concerning the property of the Debtors; the assets, liabilities and financial condition of the Debtors; matters that may affect administration of the Debtors' cases; and certain claims that may be asserted against third parties by a representative of the Debtors' estates. Daniel Brockett, Esq., at Quinn Emanuel Urquhart Oliver & Hedges LLP, in New York, tells the Court that: 1. the Debtors' Chapter 11 cases are replete with conflicts of interests; 2. the Debtors' Chapter 11 cases were commenced to realize Yucaipa's merger goals; 3. Yucaipa has possibly usurped the Debtors' corporate opportunities; and 4. the reasonableness and good faith of the projections in Goldman Sachs' Exit Financing Confidential Information Memorandum in the Debtors' Chapter 11 cases is questionable. Mr. Brockett notes that the Debtors and Allied Systems Holdings Inc., have interlocking directors, reflecting Yucaipa's control of both entities. Four of the five members of Allied's board are Yucaipa designees and all five directors on the Debtors' board are Yucaipa designees. Three members of the Debtors' board also sit on Allied's board and a fourth member is a principal of Yucaipa. The Second Lien Lenders want to determine: 1. conflicts of interests arising from Yucaipa's ownership and control of both Allied and the Debtors, and the extent to which the conflicts have affected and may affect the ability of the Debtors' board of directors to execute their fiduciary duties for the benefit of creditors of the Debtors; 2. the role that certain third parties, including Yucaipa, may have played in driving the Debtors back into bankruptcy on the heels of their recent reemergence and the extent to which Yucaipa misused the bankruptcy process for the purpose of furthering its goal of merging the Debtors and Allied; 3. Yucaipa's dealings and relationship with the International Brotherhood of Teamsters and whether certain of the Debtors' directors, who are also affiliated with Yucaipa, may have diverted and usurped corporate opportunities, namely, the opportunity to negotiate for wage concessions with the IBT, that should have been brought to and pursued by the Debtors prior to the filing of the Chapter 11 cases; 4. financial information included in the Confidential Information Memorandum, entities who may have had a role in the preparation of the CIM, and the extent to which the information was unreasonable or lacked good faith; and 5. the identification of potential claims against third parties for the benefit of the Debtors' estates. The CIM, which Goldman Sachs disseminated to prospective lenders, contained detailed projections, forecast assumptions, and other financial information about PTS, and conveyed the impression that PTS was well positioned to emerge from Chapter 11 as a profitable entity. Since emerging from bankruptcy on Jan. 26, 2007, however, the Debtors have missed every financial projection contained in the CIM, raising fair questions about the reasonableness and good faith of those projections and the entities that may have been involved in preparing them, the Second Lien Lenders point out. Given Goldman Sachs' role as Sole Lead Arranger, it is in possession of information that may provide answers to those questions, the Second Lien Lenders say. About PTS 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. 35; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/ or 215/945-7000). PERFORMANCE TRANS: Committee Can Hire Blank Rome as its Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors in Performance Transportation Services Inc. and its debtor-affiliates' Chapter 11 cases obtained authority from the U.S. Bankruptcy Court for the Western District of New York to retain Blank Rome LLP as its counsel, nunc pro tunc to Nov. 29, 2007. Blank Rome is expected to perform legal services for the Committee that are necessary or appropriate in connection with the Debtors' chapter 11 cases. The Committee tells the Court that Blank Rome will be paid on an hourly basis in accordance with the firm's ordinary and customary hourly rates: Professional Rate ------------ ---- Marc E. Richards, Esq. $650 Paul A. Friedman, Esq. $625 Raymond M. Patella, Esq. $405 Melissa S. Vongtama, Esq. $345 Partners and Counsel $380 - $745 Associates $105 - $280 Marc E. Richards, Esq., a partner at Blank Rome LLP, in New York, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code and as required by Section 327(a) 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. 35; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/ or 215/945-7000). PHYTOMEDICAL TECH: Posts $353,094 Net Loss in Third Quarter ----------------------------------------------------------- Phytomedical Technologies Inc. reported a net loss of $353,094 for the third quarter ended Sept. 30, 2007, compared with a net loss of $993,923 in the same period last year. The company has yet to establish any history of profitable operations. The company had no revenues during the last three fiscal years and it does do not expect to generate revenues from operations for the foreseeable future. At Sept. 30, 2007, the company's consolidated balance sheet showed $3.14 million in total assets, $1.66 million in total liabilities, and $1.48 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?26b1 Going Concern Doubt Peterson Sullivan PLLC, in Seattle, expressed substantial doubt about PhytoMedical Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations since inception and substantial accumulated deficit. About PhytoMedical Technologies Headquartered in Princeton, N.J., PhytoMedical Technologies Inc. - - http://www.PhytoMedical.com/-- (OTCBB: PYTO; Frankfurt Stock Exchange: ET6) together with its wholly owned subsidiaries, is a pharmaceutical company focused on research, development and commercialization of pharmaceutical products. POPE & TALBOT: Canada Court OKs Bid Procedures for Pulp Business ---------------------------------------------------------------- The British Columbia Supreme Court has approved Pope & Talbot Inc. and its debtor-affiliates' proposed bidding procedures for their pulp business assets, and authorized the Debtors to schedule an auction, if necessary. The Canadian Court held that the Bidding Procedures will govern the Auction, which is intended to solicit bids for the Debtors' Pulp Business. As reported in the Troubled Company Reporter on Dec. 14, 2007, the Hon. Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware had earlier approved in all respects the Debtors' bidding and sale procedures with respect to the sale of their pulp business assets, including: (1) the submission, consideration, qualification and acceptance of Qualified Overbids submitted to the Debtors; (2) the Auction; and (3) the identification and determination of the Successful Bid and the Back-Up Bid. About Pope & Talbot Headquartered in Portland, Oregon, Pope & Talbot Inc. (Other OTC: PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products business. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the company's products include the US, Europe, Canada, South America and the Pacific Rim. The company and its U.S. and Canadian subsidiaries applied for protection under the Companies' Creditors Arrangement Act of Canada on Oct. 28, 2007. The Debtors' CCAA Stay expires on Jan. 16, 2008. The company and fourteen of its debtor-affiliates filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl & Jones L.L.P. represents the Debtors as bankruptcy co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $681,960,000 and total debts of $601,090,000. The Debtors' exclusive period to file a plan expires on March 18, 2008. Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21, 2007, filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants Pope & Talbot Europe's application, it is expected it will be liquidated through the bankruptcy proceeding. (Pope & Talbot Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). POPE & TALBOT: Bid Protocol for Remaining Wood Business Approved ---------------------------------------------------------------- The British Columbia Supreme Court has approved Pope & Talbot Inc. and its debtor-affiliates' proposed bidding procedures for the sale of their remaining wood products business. The Canadian Court likewise authorized the Debtors to schedule an auction, if necessary, to solicit bids for their Remaining Wood Products Business. As reported in the Troubled Company Reporter on Dec. 14, 2007, the United States Bankruptcy Court for the District of Delaware had earlier approved in all respects the Debtor's bidding and sale procedures with respect to the sale of certain wood products assets not contemplated to be sold to International Forest Products and the assumption of related liabilities, including: (1) the submission, consideration, qualification and acceptance of Qualified Overbids submitted to the Debtors; (2) the Auction; and (3) the identification and determination of the Successful Bid and the Back-Up Bid. About Pope & Talbot Headquartered in Portland, Oregon, Pope & Talbot Inc. (Other OTC: PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products business. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the company's products include the US, Europe, Canada, South America and the Pacific Rim. The company and its U.S. and Canadian subsidiaries applied for protection under the Companies' Creditors Arrangement Act of Canada on Oct. 28, 2007. The Debtors' CCAA Stay expires on Jan. 16, 2008. The company and fourteen of its debtor-affiliates filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl & Jones L.L.P. represents the Debtors as bankruptcy co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $681,960,000 and total debts of $601,090,000. The Debtors' exclusive period to file a plan expires on March 18, 2008. Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21, 2007, filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants Pope & Talbot Europe's application, it is expected it will be liquidated through the bankruptcy proceeding. (Pope & Talbot Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). POPE & TALBOT: Court Approves KPMG LLP as Independent Auditor ------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware has granted Pope & Talbot Inc. and its debtor-affiliates permission to employ KPMG LLP as their independent auditor, effective as of Nov. 19, 2007. The Hon. Christopher S. Sontchi held that KPMG will not retain any third parties, including affiliates, without approval of the Court. As reported in the Troubled Company Reporter on Dec. 5, 2007, the Debtors told the Court that that KPMG's diverse experience and extensive knowledge in the field of accounting will be of much help to their restructuring plans. As the Debtors' financial advisors, KPMG will: -- audit the Debtors' consolidated financial statements and internal control over financial reporting; -- review the Debtors' condensed consolidated balance sheets and related condensed consolidated statements of operations and cash flows as well as selected quarterly financial data; -- perform procedures required by the standards of the Public Company Accounting Oversight Board (United States), including reading information incorporated by reference in the Debtors' previously filed registration statements and performing subsequent event procedures; -- audit the Debtors' Pension Plan and Tax Deferred Savings Plan; and -- perform additional audit services that may be requested by the Debtors from time to time during the pendency of their Chapter 11 cases. The Debtors will pay for KPMG's general auditing services according to the firm's customary hourly rates: Professional Hourly Rate ------------ ----------- Partners $360 Managers $270 Senior Associates $200 Staff $120 Assistant $100 KPMG will be paid these amounts with respect to auditing services related to the Debtors' pension and tax deferred savings plans: Professional Hourly Rate ------------ ----------- Partners $300 Managers $200 Senior Associates $150 Staff/Assistant $110 Timothy McCann, a certified public accountant at KPMG, assured the Court that his firm is a "disinterested person," as the term is defined in Section 101(14) of the Bankruptcy Code. About Pope & Talbot Headquartered in Portland, Oregon, Pope & Talbot Inc. (Other OTC: PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products business. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the company's products include the US, Europe, Canada, South America and the Pacific Rim. The company and its U.S. and Canadian subsidiaries applied for protection under the Companies' Creditors Arrangement Act of Canada on Oct. 28, 2007. The Debtors' CCAA Stay expires on Jan. 16, 2008. The company and fourteen of its debtor-affiliates filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl & Jones L.L.P. represents the Debtors as bankruptcy co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $681,960,000 and total debts of $601,090,000. The Debtors' exclusive period to file a plan expires on March 18, 2008. Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21, 2007, filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants Pope & Talbot Europe's application, it is expected it will be liquidated through the bankruptcy proceeding. (Pope & Talbot Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). POWERLINX INC: Sept. 30 Balance Sheet Upside-Down by $3.16 Million ------------------------------------------------------------------ Powerlinx Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $1.65 million in total assets and $4.81 million in total liabilities, resulting in a $3.16 million total stockholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $1.26 million in total current assets available to pay $4.81 million in total current liabilities. The company reported a net loss of $901,006 on net revenue of $573,086 for the third quarter ended Sept. 30, 2007, compared with a net loss of $584,781 on net revenue of $1.00 million in the same period last year. Operating expenses of $988,751 for the three months ended Sept. 30, 2007, increased 24% compared to operating expenses for the same period ended Sept. 30, 2006. Loss from operations of $721,474 for the three months ended Sept. 30, 2007, increased 37% compared to the same period ended Sept. 30, 2006. The primary reason for the decrease in net revenues was due to a one time significant sale to a large retailer in the previous comparative period. The increase in operating expenses and net loss from operations was due primarily from stock based compensation to consultants for services provided in conjunction with the launch of the company's new product line and promotion of the company within the consumer electronics industry. 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?26ad Going Concern Doubt As reported in the Troubled Company Reporter on May 10, 2007, Aidman, Piser & Company PA, in Tampa, Florida, expressed substantial doubt about Powerlinx Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. The auditor pointed to the company's recurring losses, strained liquidity, and stockholders' deficit. About Powerlinx Headquartered in St. Petersburg, Florida, PowerLinx Inc. (OTC BB: PWLX) -- http://www.power-linx.com/-- develops, manufactures and markets products and applications that transmit voice, video, audio and data either individually or in any and all combinations over power lines, twisted-pair wires and coax in AC and DC power environments, on any and all power grids. The company has also developed, manufactured, and marketed different kinds of underwater video cameras, lights and accessories for the marine, commercial and consumer retail markets as well as accident avoidance systems for small and large vehicles. PUTNAM CBO: Fitch Retains 'CC' Rating on Second Priority Notes -------------------------------------------------------------- These rating action is a result of Fitch's review process and is effective immediately, Putnam CBO II, Limited: -- $58,131,390 second priority senior notes remain at 'CC/DR4'. Putnam CBO II is a collateralized debt obligation which closed in November 1997 and is managed by Putnam Advisory Company LLC. Putnam CBO II is backed by a portfolio comprised primarily of high yield corporate bonds and emerging market sovereign debt. The transaction exited its reinvestment period in November 2002 and is currently amortizing. The rating action is a result of continued deleveraging of the structure and the full redemption of the senior notes, which paid in full on the Aug. 8, 2007 payment date. The second priority senior notes have capitalized over $15 million of interest payments in the past, though they are receiving currently receiving full interest payments due a structural feature which allows for principal proceeds to be used to cover interest shortfalls to these notes. As Nov. 1, 2007, the second priority interest coverage ratio was at 34.46% versus a minimum trigger of 112.78%, and is not expected to be cured. Principal proceeds will continue to be diverted to pay second priority interest, diminishing the ultimate principal recovery on these notes. The second priority principal par value ratio was at 40.48% versus a minimum trigger of 106.5%. The rating of the senior notes addresses 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 maturity date. The rating of the second priority senior notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. RCN CORP: Inks New 3-Year Pact w/ Peter Aquino as President & CEO ----------------------------------------------------------------- RCN Corporation renewed Peter D. Aquino as president and chief executive officer pursuant to the terms of a new, three-year agreement. James F. Mooney, who has served as executive chairman of RCN since 2005, completed his service under the terms of his employment contract, and decided to retire from the board. Michael E. Katzenstein, an independent member of the board of directors, was named non-executive chairman of the board. "With the completion of RCN's financial turnaround, and the demonstrated effectiveness of Pete Aquino and the rest of the RCN management team, the time is right for me to step away from RCN to focus on my other business endeavors," Mr. Mooney stated. "I am very proud that I leave RCN as a far stronger business than when I arrived, and I have the greatest confidence that the management team will continue to deliver growth and value to shareholders under Pete Aquino's leadership." "I would like to thank Jim for his guidance and leadership as executive chairman," Mr. Aquino stated. "RCN is well-positioned to continue its record of sound performance as we execute our strategy of continuously upgrading our customer's service quality and experience, maintaining industry-leading video and broadband products, and capturing the residential, commercial, carrier, and small business opportunities available to us as a result of our investments in network growth and the acquisition of synergistic businesses. With continued effective execution, RCN will become an increasingly competitive total telecommunications provider in the population-dense, highly profitable region between Boston, Chicago, Eastern Pennsylvania, New York, and Washington, D.C." The company's board of directors has elected Michael E. Katzenstein, an independent director serving on the board, to serve as non-executive chairman. "The board of directors joins me in extending its sincerest appreciation to Jim Mooney for his service," Mr. Katzenstein stated. "Jim joined RCN to lead its new management team three years ago when the company emerged from bankruptcy, and has built a solid record of consistent execution and performance, highlighted by the company's sale of its significant holding in Megacable, its 2007 recapitalization and return of capital, and its diversification into the commercial/carrier business through the acquisitions of ConEd Communications and NEON, making it a significant Northeast corridor telecommunications player." "Following its financial turnaround, the company has reached the next evolution in the structure of its board of directors and senior executive team," Mr. Katzenstein continued. "We have the utmost confidence in Pete Aquino's executive leadership, and I look forward to continuing to contribute my perspective in the coming years as chairman." The board of directors, through its nominating/corporate governance committee, is considering possible candidates to assume the vacant board seat. About RCN Corporation RCN Corporation (NASDAQ: RCNI) -- http://www.rcn.com/-- is a provider of bundled cable, high-speed internet and phone services delivered over its own fiber-optic local network to residential, small business and commercial customers in the U.S. The company provides service in the Boston, Chicago, Eastern Pennsylvania, New York, and Washington, D.C. metropolitan markets. One of its divisions, RCN Business Services, provides bulk video, high- capacity data and voice services to small and medium business customers. RCN's other commercial division, RCN Business Solutions, is dedicated to meeting the fiber-based network requirements of enterprise, wholesale telecom and government accounts. * * * As reported in the Troubled Company Reporter on Nov 12, 2007, Moody's Investors Service has taken these ratings action: on RCN Corp.: (i) corporate family rating -- affirmed B1; (ii) probability of default rating -- affirmed B2; (iii) $75 million revolving credit facility due 2013 -- affirmed B1, LGD3 - 33%; (iv) $520 million senior secured Term Loan B due 2014 -- affirmed B1, LGD3 - 33%; (v) $200 million new senior secured Term Loan -- assigned B1, LGD3 - 33%; and speculative grade liquidity is affirmed SGL-2. The outlook is stable. SALTON INC: Closes APN Holding Buyout; Harbinger Holds 92% Stake ---------------------------------------------------------------- Salton Inc. has completed its acquisition of APN Holding Company Inc., the parent of Applica Incorporated, which was accomplished through a merger of a wholly owned subsidiary of Salton with and into APN. Completion of the transaction follows approval by Salton stockholders of all matters necessary for the acquisition by Salton of APN. As a result, Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P., which were the sole stockholders of APN, became the controlling stockholders of Salton, owning approximately 92% of the outstanding shares of Salton's common stock. Holders of Salton's Series A Voting Convertible Preferred Stock (excluding Harbinger Capital Partners), Series C Nonconvertible (Non Voting) Preferred Stock (excluding Harbinger Capital Partners) and common stock (excluding Harbinger Capital Partners) outstanding immediately prior to the merger own approximately 3%, 3% and 2%, respectively, of the outstanding common stock of Salton immediately following the merger and related transactions. In addition to the merger, these transactions occurred in connection with the closing of the merger: (1) the automatic conversion of all outstanding shares of Salton's Series A Voting Convertible Preferred Stock, including those held by Harbinger Capital Partners, into shares of Salton's common stock; (2) the automatic conversion of all outstanding shares of Salton's Series C Nonconvertible (Non Voting) Preferred Stock, including those held by Harbinger Capital Partners, into shares of Salton's common stock; and (3) the exchange by Harbinger Capital Partners of approximately $90 million principal amount of Saltons' second lien notes and approximately $15 million principal amount of Salton's 2008 senior subordinated notes, for shares of a new series of non-convertible (non voting) preferred stock of Salton, bearing a 16% cumulative preferred dividend. The combination of Salton and Applica creates one of the largest U.S. public companies focused on the small household appliance and pet supply products industries, with the scale and customer relationships to provide category leadership and efficiencies. The combined company has a broad portfolio of well recognized brand names such as Black & Decker(R), George Foreman(R), Russell Hobbs(R), Toastmaster(R), LitterMaid(R), and Farberware(R). Salton and its subsidiaries after the merger will continue to design, service, market and distribute a wide range of products under these brand names, including small kitchen and home appliances, pet and pest products, and personal care and wellness products. The combination of Salton and Applica is expected to provide enhanced scale which should enable the combined company to reduce costs; attract new and expand existing customer relationships; capitalize on organic and external growth opportunities more effectively than either company could have on a stand alone basis; improve cost of goods through larger volume purchasing; and benefit from improved capital structure flexibility. In addition, Salton and Applica have complementary geographic strengths that can be utilized to enhance the distribution of each company's products outside the United States. In particular, Salton's business is well established in Europe, Australia and Brazil (with additional distribution in Southeast Asia, Middle East and South Africa), while Applica's business is well established in Mexico, South America and Canada. In connection with the closing of the Merger, each member of Salton's board of directors resigned effective upon the closing and Harbinger Capital Partners' designees -- Lawrence M. Clark Jr., Eugene I. Davis, Jeffrey T. Kirshner, and David M. Maura -- were elected in their place. The new Salton Board of Directors then elected Terry L. Polistina to serve as Chief Executive Officer of Salton and Ivan R. Habibe to serve as Vice President and Chief Financial Officer of Salton. Prior to the closing, Mr. Polistina was Applica's Chief Operating Officer, having held that title since May 2006, and was also Applica's Chief Financial Officer, having served in that capacity since January 2001. Mr. Habibe was previously Applica's Chief Accounting Officer, having held that title since May 2006 and prior thereto held senior finance positions with Applica. "I have worked closely with Terry Polistina and Ivan Habibe since January 2007 when Harbinger acquired Applica," David Maura, a newly elected director of Salton, and a Vice President and Director of Investments of Harbinger Capital Partners, said. "In partnership with Applica's senior management, we have reduced Applica's debt by over $110 million since December 2006, while significantly growing Applica's earnings for calendar year 2007 compared to calendar year 2006. It is our intention to build on our success with Applica and carry that success over to the combined Salton-Applica. We believe the combined company has the potential to become a preeminent global supplier of small household appliances and pet supply products bringing new, exciting and innovative products to retailers and customers around the globe in 2008 and beyond. We believe that Terry and his team are ideally suited to lead the company going forward." "I am excited about the opportunity to lead a dynamic organization with a greater breadth of products, a strengthened international presence and an expanded retailer network," Mr. Polistina responded. "The new Salton will remain committed to delivering quality, innovative products across the Black & Decker(R), George Foreman(R), Russell Hobbs(R), Litter Maid(R), Toastmaster(R) and Farberware(R) brands. In addition, our relationship with Harbinger will provide an opportunity to seek synergistic acquisitions to create value for shareholders, while bolstering the combined company's geographical reach and product offerings." Houlihan Lokey Howard & Zukin acted as financial advisor and Sonnenschein Nath & Rosenthal LLP acted as legal advisor to Salton. Lazard Freres & Co., LLC acted as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to Harbinger Capital Partners and APN. About Applica Inc. Applica Inc. (NYSE: APN) -- http://www.applicainc.com/-- is a marketer and distributor of a range of branded small household appliances in five categories: kitchen products, home products, pest control products, pet care products and personal care products. About Salton Inc. Headquartered in Lake Forest, Illinois, Salton Inc. (NYSE:SFP) -- http://www.saltoninc.com/-- designs, markets and distributes branded, high-quality small appliances, home decor and personal care products. Its product mix includes a range of small kitchen and home appliances, electronics for the home, time products, lighting products, picture frames and personal care and wellness products. * * * Moody's Investors Service assigned its Ca rating to Salton Inc.'s 12-1/4% senior subordinated notes due April 15, 2008. SASCO MORTGAGE: Fitch Takes Rating Actions on Diverse Classes ------------------------------------------------------------- Fitch Ratings has taken these rating actions on SASCO mortgage pass-through certificates. Affirmations total $598 million and downgrades total $337.8 million. In addition, $747 million is placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class is included with these rating actions: Series 2007-BC3 -- $184.7 million class 1-A1 affirmed at 'AAA' (BL: 63.46, LCR: 4.60); -- $35.9 million class 1-A2 affirmed at 'AAA' (BL: 55.47, LCR: 4.02); -- $76.8 million class 1-A3 affirmed at 'AAA' (BL: 38.79, LCR: 2.81); -- $29.1 million class 1-A4 affirmed at 'AAA' (BL: 32.13, LCR: 2.33); -- $152.9 million class 2-A1 affirmed at 'AAA' (BL: 63.62, LCR: 4.61); -- $30 million class 2-A2 affirmed at 'AAA' (BL: 55.61, LCR: 4.03); -- $64.2 million class 2-A3 affirmed at 'AAA' (BL: 38.87, LCR: 2.82); -- $24.4 million class 2-A4 affirmed at 'AAA' (BL: 32.13, LCR: 2.33); -- $21.9 million class 1-M1 downgraded to 'AA-' from 'AA+' (BL: 26.92, LCR: 1.95); -- $18.3 million class 2-M1 downgraded to 'AA-' from 'AA+' (BL: 26.92, LCR: 1.95); -- $14.3 million class 1-M2 downgraded to 'A+' from 'AA' (BL: 23.47, LCR: 1.70); -- $12 million class 2-M2 downgraded to 'A+' from 'AA' (BL: 23.47, LCR: 1.70); -- $8 million class 1-M3 downgraded to 'A' from 'AA-' (BL: 21.50, LCR: 1.56); -- $6.7 million class 2-M3 downgraded to 'A' from 'AA-' (BL: 21.50, LCR: 1.56); -- $7.6 million class 1-M4 downgraded to 'A-' from 'A+' (BL: 19.59, LCR: 1.42); -- $6.3 million class 2-M4 downgraded to 'A-' from 'A+' (BL: 19.59, LCR: 1.42); -- $7.3 million class 1-M5 downgraded to 'BBB' from 'A' (BL: 17.68, LCR: 1.28); -- $6.1 million class 2-M5 downgraded to 'BBB' from 'A' (BL: 17.68, LCR: 1.28); -- $6.9 million class M6 downgraded to 'BBB' from 'A-' (BL: 16.59, LCR: 1.20); -- $9.4 million class M7 downgraded to 'BB' from 'BBB+' (BL: 15.02, LCR: 1.09); -- $6.5 million class M8 downgraded to 'BB' from 'BBB' (BL: 13.85, LCR: 1.00); -- $9.4 million class M9 downgraded to 'B' from 'BBB-' (BL: 12.19, LCR: 0.88); -- $11.5 million class B1 downgraded to 'CCC' from 'BB+'; and -- $8.6 million class B2 downgraded to 'CCC' from 'BB'. Deal Summary -- Originators: BNC (60.95%), People's Choice (16.60%), National City (8.12%) and Fieldstone (6.78%); -- 60+ day Delinquency: 7.07%; -- Realized Losses to date (% of Original Balance): 0.01%; -- Expected Remaining Losses (% of Current Balance): 13.8%; -- Cumulative Expected Losses (% of Original Balance): 13%. Series 2007-OS1 -- $274.6 million class A1 rated 'AAA', placed on Rating Watch Negative (BL: 39.83, LCR: 1.78); -- $175.4 million class A2 rated 'AAA', placed on Rating Watch Negative (BL: 66.51, LCR: 2.97); -- $35.5 million class A3 rated 'AAA', placed on Rating Watch Negative (BL: 58.46, LCR: 2.61); -- $60.1 million class A4 rated 'AAA', placed on Rating Watch Negative (BL: 44.36, LCR: 1.98); -- $24.4 million class A5 rated 'AAA', placed on Rating Watch Negative (BL: 39.67, LCR: 1.77); -- $44.8 million class M1 downgraded to 'A' from 'AA+', and placed on Rating Watch Negative (BL: 33.97, LCR: 1.52); -- $40.2 million class M2 downgraded to 'BBB' from 'AA', and placed on Rating Watch Negative (BL: 28.79, LCR: 1.29); -- $12.2 million class M3 downgraded to 'BBB' from 'AA-', and placed on Rating Watch Negative (BL: 27.18, LCR: 1.21); -- $15.2 million class M4 downgraded to 'BBB-' from 'A+', and placed on Rating Watch Negative (BL: 25.10, LCR: 1.12); -- $13.5 million class M5 downgraded to 'BB' from 'A', and placed on Rating Watch Negative (BL: 23.14, LCR: 1.03); -- $5.9 million class M6 downgraded to 'BB' from 'A', and placed on Rating Watch Negative (BL: 22.23, LCR: 0.99); -- $12.2 million class M7 downgraded to 'B' from 'A-', and placed on Rating Watch Negative (BL: 20.25, LCR: 0.90); -- $8.8 million class M8 downgraded to 'B' from 'BBB+', and placed on Rating Watch Negative (BL: 18.74, LCR: 0.84); -- $13.1 million class M9 downgraded to 'CCC' from 'BBB' ; -- $14.8 million class M10 downgraded to 'CCC' from 'BBB-' ; and -- $8.4 million class B downgraded to 'CCC' from 'BB+'. Deal Summary -- Originators: (BNC (62.12%) Resmae (18.11%), Lehman Brother Bank (through Aurora) (12.88%), and Mortgage Lenders Network (6.89%); -- 60+ day Delinquency: 14.37%; -- Realized Losses to date (% of Original Balance): 0.00%; -- Expected Remaining Losses (% of Current Balance): 22.39%; -- Cumulative Expected Losses (% of Original Balance): 20.96%. SECURITIZED ASSET: Fitch Chips Ratings on Four Certs. to Low-B -------------------------------------------------------------- Fitch Ratings downgraded these Securitized Asset Backed Receivables mortgage pass-through certificate. Downgrades total $973.9 million. In addition, $973.9 million is placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with these rating actions: Series 2007-BR2 -- $234.5 million class A-1 downgraded to 'AA-' from 'AAA', placed on Rating Watch Negative (BL: 39.99, LCR: 1.86); -- $516.9 million class A-2 downgraded to 'AA-' from 'AAA', placed on Rating Watch Negative (BL: 39.98, LCR: 1.86); -- $46 million class M-1 downgraded to 'A+' from 'AA+', placed on Rating Watch Negative (BL: 35.60, LCR: 1.65); -- $39.4 million class M-2 downgraded to 'A-' from 'AA+', placed on Rating Watch Negative (BL: 31.77, LCR: 1.47); -- $25.2 million class M-3 downgraded to 'BBB+' from 'AA', placed on Rating Watch Negative (BL: 29.26, LCR: 1.36); -- $21.3 million class M-4 downgraded to 'BBB' from 'AA-', placed on Rating Watch Negative (BL: 27.04, LCR: 1.25); -- $20.2 million class M-5 downgraded to 'BBB-' from 'A+', placed on Rating Watch Negative (BL: 24.92, LCR: 1.16); -- $18 million class M-6 downgraded to 'BB' from 'A', placed on Rating Watch Negative (BL: 22.92, LCR: 1.06); -- $18.6 million class B-1 downgraded to 'BB' from 'A-', placed on Rating Watch Negative (BL: 20.84, LCR: 0.97); -- $16.9 million class B-2 downgraded to 'B' from 'BBB+', placed on Rating Watch Negative (BL: 19.04, LCR: 0.88); -- $16.4 million class B-3 downgraded to 'B' from 'BBB', placed on Rating Watch Negative (BL: 17.68, LCR: 0.82). Deal Summary -- Originators: WMC Mortgage Corp. (61.5%), NC Capital Corporation (38.5%); -- 60+ day Delinquency: 18.05%; -- Realized Losses to date (% of Original Balance): 0.23%; -- Expected Remaining Losses (% of Current Balance): 21.55%; -- Cumulative Expected Losses (% of Original Balance): 20.53%. SOLAR INVESTMENT: Fitch Retains 'CC' Ratings on Two Notes --------------------------------------------------------- Fitch affirms 4 classes of notes issued by Solar Investment Grade CBO I, Ltd. These rating actions are the result of Fitch's review process and are effective immediately: -- $205,769,985 Class I-A Notes affirmed at 'AAA'; -- $15,494,728 Class I-B Notes affirmed at 'AAA'; -- $25,000,000 Class II-A Notes affirmed at 'A'; -- $22,000,000 Class II-B Notes affirmed at 'A'; -- $28,250,000 Class III-A Notes remain at 'CC/DR3'; -- $10,000,000 Class III-B Notes remain at 'CC/DR3.' Solar I is a collateralized debt obligation that closed Aug. 31, 2000 and is managed by Sun Capital Advisers, Inc. Solar I has a portfolio composed primarily of corporate bonds, and is currently in its amortization period. Amortizations have caused credit enhancement levels on Class I and II tranches to increase. Principal proceeds continue to be diverted to pay class III interest since last rating actions were announced in June 23, 2006. The credit quality of the portfolio has experienced slight deterioration, with an increase in the weighted average rating factor since last review in May 2006. In addition, the class III overcollateralization ratio is currently failing at 100.93% versus a minimum trigger of 103.2%, but has increased compared to a level of 99.59% in May 2006 report. The class III interest coverage ratio has further deteriorated to 97.40% from 99.80% versus a minimum trigger of 100% during the same time frame. Further, Solar I does not contain any defaulted securities since last review in May 2006. Fitch Ratings conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. Solar I's portfolio is not generating sufficient interest revenue to cover the interest obligations for the class III liabilities. The structure of the deal calls for principal proceeds to be diverted in order to make up for these shortfalls; to date, over $1.88 million in principal has been diverted for this purpose. Fitch projects that the deal will continue to divert significant amounts of principal cash to cover the interest obligations, and this may impair the ultimate principal recovery prospects for the class III notes. The ratings of the class I-A, class I-B, class II-A, class II-B, class III-A, and class III-B 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. SUN COAST: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Lead Debtor: Sun Coast Hospital, Inc. 2025 Indian Rocks Road South Largo, FL 33774 Bankruptcy Case No.: 07-12926 Debtor-affiliate filing separate Chapter 11 petitions: Entity Case No. ------ -------- Sun Coast Imaging Center, L.L.C. 07-12928 Type of Business: The Debtor provides screening and diagnostic care through treatment, therapy, rehabilitation and home care, among others. Its 200-bed inpatient facility is staffed with nearly 350 physicians. While its physicians include DOs and MDs in more than 44 specialties and subspecialties, it also provides osteopathic teaching programs. See http://www.suncoasthospital.net/ Chapter 11 Petition Date: December 28, 2007 Court: Middle District of Florida (Tampa) Judge: Michael G. Williamson Debtors' Counsel: Charles A. Postler, Esq. Stichter, Riedel, Blain & Prosser, P.A. 110 East Madison Street, Suite 200 Tampa, FL 33602-4700 Tel: (813) 229-0144 Estimated Assets Estimated Debts ---------------- --------------- Sun Coast Hospital, Inc. $1 Million to $10 Million to $10 Million $50 Million Sun Coast Imaging Center, Less than Less than L.L.C. $50,000 $50,000 A. Sun Coast Hospital, Inc's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Progress Energy Florida, Inc. $642,881 P.O. Box 33199 St. Petersburg, FL 33733-8199 University Community Hospital, $472,588 Inc. Attention: Norm Stein, President 3100 East Fletcher Avenue Tampa, FL 33613 Cymetrix Corp. $318,477 5 Corporate Park, Suite 280 Irvine, CA 92606 Sodexho, Inc. & Affliates $283,929 9801 Washington Boulevard Gaithersburg, MD 20878 Cardinal Health $212,592 Depuy Orthopaedics, Inc. $204,375 Guidant/C.P.I. $177,355 Morrison Management Specialist $137,113 Lanx, L.L.C. $132,357 Humana $129,156 Verizon Florida, L.L.C. $120,840 Cardinal Health/Pyxis Products $109,176 Stryker Medical $107,865 Florida Blood Services $104,170 Mayo Collaborative Services $94,131 Morton Plant Mease $71,883 Diversified Clinical Services $70,384 G.E. Medical Systems $67,974 Advanced Neuromodulation $67,130 Systems Advanced Bionics $58,144 SUN COAST: Inks $19.7 Million Sale Pact With HCA West Florida ------------------------------------------------------------- Largo Medical Center Inc. aka HCA West Florida, an affiliate of HCA Inc., and Sun Coast Hospital have signed a sale agreement. Under the agreement, Largo Medical will acquire Sun Coast Hospital for $19.7 million less employee benefits, according to David Simanoff of The Tampa Tribune. Largo Medical said on its Web site that the closing of the transaction and transfer of ownership is expected to take place in the first quarter 2008, following the customary regulatory review and approval of the U.S. Bankruptcy Court for the Middle District of Florida. "Operating independently in the competitive Pinellas County health care market has been challenging for Sun Coast Hospital," said Darrell Lentz, CEO, Sun Coast Hospital. "While we have many strong programs, we knew that the most responsible resolution for long-term success was to align the hospital with another established and secure organization." The pending transaction will have no effect on scheduled patient appointments or surgeries, or community health events and classes. Patients with questions may call Sun Coast at (727) 581-9474. "Sun Coast Hospital services and physicians complement our existing network, particularly their highly acclaimed teaching programs and affiliations," said Daniel Miller, president of HCA West Florida. "As we make plans to bring Sun Coast Hospital resources into the HCA West Florida Family of Hospitals, we will look closely at how we can provide complementary services in this expanded network, while continuing to serve the Pinellas County community. We intend to employ substantially all of Sun Coast's current employees." About HCA West Florida Palm Harbor-based Largo Medical Center Inc. aka HCA West Florida - - http://www.hcawestflorida.com/-- is a division of HCA Inc. aka Hospital Corporation of America, -- http://www.hcahealthcare.com/ -- a healthcare provider and runs a network of hospitals, outpatient surgery and diagnostic imaging facilities. It offers specialized health programs and services throughout Central and West Florida. The network includes more than 12,000 employees, 4,200 physicians, 15 acute care hospitals, 17 outpatient surgery centers, 11 diagnostic imaging facilities, nine occupational health sites, and integrated regional lab, and a consolidated service center. The hospitals of HCA West Florida are nationally recognized for providing exceptional healthcar. The affiliates of HCA West Florida and their employees provided both financial and volunteer support to service clubs, schools, colleges, city projects and nonprofit and charitable organizations in their communities. In 2006, HCA West Florida facilities saw approximately 480,000 people in their emergency rooms, admitted 149,000 patients, provided $427,337,000 in charity and uncompensated care and reinvested approximately $133,858,000 in capital improvements. About Sun Coast Hospital Largo, Florida-headquartered Sun Coast Hospital -- http://www.suncoasthospital.net/-- was Initially established in 1957 by Dr. Alan J. Snider as an 18-bed acute care hospital. It has grown to a 200-bed acute care hospital with a 10,000 square foot emergency room. It is one of the largest osteopathic post- doctoral clinical teaching program in the Southeastern United States, with 50 postdoctoral physicians serving internships and residencies. At present, nearly 350 physicians practice more than 44 medical specialties providing a broad range of services at Sun Coast, including acute care in-patient rehabilitation, general surgery, imaging services and behavioral medicine. TERWIN MORTGAGE: Fitch Junks Rating on Class M-5 Certs. from 'B' ---------------------------------------------------------------- Fitch has taken rating actions on these Terwin Mortgage Trust asset-backed certificates: Terwin 2003-6HE -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'BBB+'; -- Class M-3 downgraded to 'BB' from 'BBB-'; -- Class M-4 downgraded to 'B' from 'BB'; -- Class M-5 downgraded to 'C/DR5' from 'B'; The affirmations affect approximately $26.4 million in outstanding certificates and reflect adequate relationships of credit enhancement to future loss expectations. The downgrades reflect the deterioration in the relationship of credit enhancement to future loss expectations and affect $2.9 million in outstanding certificates. The mortgage loans for the above transaction consists of fixed and adjustable-rate mortgage loans secured by first and second liens on residential properties. As of the November 2007 distribution date, delinquencies (loans delinquent more than 60 days, inclusive of loans in foreclosure, bankruptcy, and real estate owned (REO)) are approximately 21.31%. The cumulative loss to date is 1.72%. The transaction is seasoned 48 months with a pool factor (current mortgage loans outstanding as a percentage of the initial pool) of 15%. TRANSMETA CORP: Posts $9.1 Million Net Loss in Third Quarter ------------------------------------------------------------ Transmeta Corporation reported a net loss of $9.1 million for the third quarter ended Sept. 30, 2007, compared with net income of $2.5 million in the same period last year. The third quarter of 2007 results included restructuring charges totaling $109,000 and non-cash charges of $1.7 million for amortization of intangible assets. Revenue for the third quarter of 2007 was $44,000, which included $43,000 of services revenue and $1,000 of license revenue for royalty payments. This compared with revenue of $17.3 million in the same period last year, which included $6.8 million of service revenue, $10.0 million of license revenue, and $507,000 of product revenue. The $10.0 million license revenue revenue recorded in the third quarter of 2006 represents a LongRun2 license sold to Toshiba. The 2007 decrease in services revenue was partly attributable to the lack of any Sony Group revenue for engineering support under its time-and-materials-based design services contract after $1.8 million for the first quarter of 2007. The company's cash, cash equivalents and short term investments at Sept. 30, 2007, totaled $28.6 million, including the approximate $7.0 million in net proceeds that Transmeta received from AMD's investment in the company in July 2007, and the approximate $11.6 million in net proceeds that the company received from its securities offering in September 2007. The company said it continues to be debt free. In October, Transmeta entered into an agreement with Intel Corporation providing for a settlement of all claims between the two companies and for the licensing of the Transmeta patent portfolio to Intel for use in current and future Intel products. The agreement will grant Intel a perpetual non-exclusive license to all Transmeta patents and patent applications, including any patent rights later acquired by Transmeta, now existing or as may be filed during the next ten years. Under the agreement, Transmeta will grant to Intel a non-exclusive paid-up license and transfer technology related to its LongRun and LongRun2 technologies and future improvements. Under the agreement, Intel will covenant not to sue Transmeta for the development and licensing to third parties of Transmeta's LongRun and LongRun2 technologies. The agreement provides for Intel to make an initial $150 million payment to Transmeta as well as to pay Transmeta an annual license fee of $20 million for each of the next five years. "During the third quarter, we reinforced our relationship with AMD through the strategic investment that AMD made in Transmeta in July 2007. In addition, we raised about $11.6 million in net proceeds from our securities offering in September 2007 and completed the restructuring program that we started earlier this year," said Les Crudele, president and chief executive officer. "In October, we resolved our patent litigation with Intel, pursuant to an agreement that provides for Transmeta to receive an initial payment of $150 million and future payments of $20 million per year for each of the next five years. We believe these funds will give us the financial flexibility to execute on our strategy of developing and licensing our intellectual property. Having completed our restructuring, resolved our patent litigation, and taken steps to significantly strengthen our balance sheet, we can now concentrate our attention on developing our technology, building our licensing business, putting the building blocks in place to expand our customer base and creating long-term shareholder value." Liquidity and Capital Resources For the three and nine months ended Sept. 30, 2007, and the fiscal year ended Dec. 31, 2006, the company had negative cash flows from operations. Except for the second, third, and fourth quarters of fiscal 2005, the company has historically reported negative cash flows from operations, because the gross profit, if any, generated from operations has not been sufficient to cover the company's operating cash requirements. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $36.5 million in total assets, $11.6 million in total liabilities, and $24.9 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?26b0 Going Concern Doubt As reported in the Troubled Company Reporter on April 12, 2007 Burr, Pilger & Mayer LLP expressed substantial doubt about Transmeta Corporation's ability to continue as a going concern after auditing the company's financial statements as of the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses and negative cash flow from operations. About Transmeta Corp. Headquartered in Santa Clara, Calif., Transmeta Corporation (NasdaqGM: TMTA) -- http://www.transmeta.com/-- develops and licenses innovative computing, microprocessor and semiconductor technologies and related intellectual property. Founded in 1995, the company first became known for designing, developing and selling its x86-compatible software-based microprocessors. The company is presently focused on developing and licensing its advanced power management technologies for controlling leakage and increasing power efficiency in semiconductor and computing devices, and in licensing its computing and microprocessor technologies to other companies. UAP HOLDING: Agrium Inc. Withdraws Merger Notification ------------------------------------------------------ Agrium Inc. has withdrawn its notification and report form submitted to the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission under the Hart-Scott- Rodino Antitrust Improvements Act in connection with the acquisition of all of the outstanding common stock of UAP Holding Corp., by a subsidiary of Agrium. Agrium originally filed its notification and report form under the HSR Act on Dec. 10, 2007. By re-filing its notification and report form with the DOJ and the FTC, Agrium will have a full 15- day period after the re-filing to discuss the transaction, and answer any questions raised by the DOJ or the FTC. As reported in the Troubled Company Reporter on Dec. 5, 2007, UAP Holding Corp. and Agrium Inc. have entered into a definitive agreement for Agrium to acquire UAP. Under the terms of the agreement, a subsidiary of Agrium will commence a tender offer to purchase all of the outstanding common stock of UAP for $39 per share in cash for an aggregate transaction value of approximately $2.65-billion, including an estimated $487-million of assumed debt. The boards of directors of both companies have unanimously approved the agreement, and the UAP board of directors has unanimously recommended that the UAP shareholders accept the tender offer. The waiting period under the HSR Act will expire at 11:59 pm New York City time on Jan. 14, 2008, unless this period is earlier terminated or extended. About Agrium Inc. Headquartered in Calgary, Alberta, Agrium Inc. (TSX: AGU) (NYSE: AGU) -- http://www.agrium.com/-- is a retail supplier of agricultural products and services in both North and South America and a producer and marketer of agricultural nutrients and industrial products. Agrium produces and markets three primary groups of nutrients: nitrogen, phosphate and potash well as controlled release fertilizers and micronutrients. Agrium's strategy is to grow through incremental expansion of its existing operations and acquisitions as well as the development, commercialization and marketing of new products and international opportunities. About UAP Holding Corp. Headquartered in Greeley, Colorado, UAP Holdings Corp. (NASDAQ:UAPH) -- http://www.uap.com/-- is the holding company of United Agri Products Inc., an independent distributor of agricultural and non-crop products in the United States and Canada. United Agri Products Inc. markets products, including chemicals, fertilizer, and seed to farmers, commercial growers, and regional dealers. United Agri Products also provides an array of value-added services, including crop management, biotechnology advisory services, custom fertilizer blending, seed treatment, inventory management, and custom applications of crop inputs. United Agri Products maintains a network of approximately 370 distribution and storage facilities and three formulation plants, located in crop-producing areas throughout the United States and Canada. * * * As reported in the Troubled Company Reporter on Sept. 10, 2007, Standard & Poor's Ratings Services raised its corporate credit rating UAP Holding Corp. to 'BB-' from 'B+'. The outlook is stable. WHEELING ISLAND GAMING: S&P Withdraws "B" Rating on Senior Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' corporate credit and senior unsecured notes ratings on Wheeling, West Virginia-based Wheeling Island Gaming Inc. The withdrawal follows the redemption of the company's outstanding $125 million senior notes. WR GRACE: Charleston City Wants Stay Lifted to Seize Property ------------------------------------------------------------- The city of Charleston, South Carolina, asks the U.S. Bankruptcy Court for the District of Delaware to lift the automatic stay to allow it to exercise its power of eminent domain and seize 16.464 acres of real property owned by W.R. Grace & Co. and its debtor- affiliates located in the City. The Property, which was once a fertilizer manufacturing and pesticide formulation facility, will be used by the City as a relocation site of its public works and fire training facility, Christina M. Thompson, Esq., at Connolly Bove Lodge & Hutz, LLP, in Wilmington, Delaware, tells the Court. The City has passed a resolution that authorized its counsel to attempt to acquire the Property either by negotiated purchase or by eminent domain. However, discussions regarding the sale of the Property through negotiated purchase have not progressed, Ms. Thompson tells the Court. Thus, in the absence of a negotiated agreement with the Debtors to purchase the Property, the City wants to exercise its powers of eminent domain against the Property and acquire it for public use. Ms. Thompson says relocation of the city's public works and fire training facility to the Debtors' Property is part of a series of economic development plans, which aim to enhance the City residents' health, safety, and welfare. The Property is estimated to be worth $1,185,000 in December 2005, Ms. Thompson says. Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, Pennsylvania. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Martin W. Dies, III, Esq., at Dies & Hile L.L.P., and C. Alan Runyan, Esq., at Speights & Runyan,to represent it. Lexecon, LLC, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities will commence on Jan. 14, 2008. (W.R. Grace Bankruptcy News, Issue No. 146; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WR GRACE: Wants to Settle Environmental Claims for $44 Million -------------------------------------------------------------- W.R. Grace & Co., together with its debtor-affiliates, and the United States Government, on behalf of certain federal agencies including the Environmental Protection Agency and the Department of Agriculture Forest Services, have agreed to a settlement to avoid protracted claims litigation and resolve their liabilities in connection with environmentally damage sites owned by the Debtors. The Debtors agree that the Government is entitled to a $2,294,279 allowed administrative claim and a $34,065,813 allowed general unsecured claim. The Debtors agree that the PRPs are entitled to allowed general unsecured claims aggregating $7,707,336. The Government, had filed Claim Nos. 9634 and 9635 against the Debtors seeking recovery of past and future environmental response costs incurred by the federal agencies in the course of responding to releases of hazardous substances in 32 Debtor-owned and operated sites around the United States. The Government also sought recovery for natural resource damages. In addition, certain potentially responsible parties had filed claims against the Debtors for environmental response contribution claims. The allowed general unsecured claims are: Allowed General Claimant Unsecured Claim -------- --------------- U.S. Government $34,065,813 Burlington Northern and Santa Fe Railway 2,952,761 American Premier Underwriters, Inc. 1,763,492 National Railroad Passenger Corporation 1,528,550 Los Angeles County Metropolitan Authority 893,781 Green River Site PRP Group Claimants 419,452 Harrington Tools, Inc. 112,547 Central Chemical Site Participation Group 36,750 In addition, the Government will have a $622,860 allowed general unsecured claim in settlement for the costs incurred by the Agency for Toxic Substances and Disease Registry in investigating the asbestos contamination at the Debtors' facilities that processed vermiculite. The BNSF will also a $1,918,355 allowed general unsecured claim in settlement of its claim relating to the Debtors' Libby, Montana, vermiculite mine. The settlement provides that the Debtors will pay $672,574 of the Administrative Claims immediately after the Court's approval of the settlement. The remaining Allowed Administrative Claims and all of the Allowed General Unsecured Claims will be paid pursuant to a confirmed plan of reorganization. Allowed General Unsecured Claims will be entitled to interest only if permitted under a confirmed reorganization plan. The settlement also provides that the settling federal agencies will not file a civil action or take any administrative action against the Debtors pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act with respect to each of the sites covered by the settlement agreement. The Sites covered by the settlement are: * Acton Plant Site, Massachusetts, * Amber Oil (Eco-Tech) Site, Wisconsin, * Aqua Tech Site, South Carolina, * Cambridge Plant Site, Massachusetts, * Casmalia Resources Site, California, * Central Chemical Site, Maryland, * Galaxy/Spectron Site, Maryland, * Green River Site, Kentucky, * Harrington Tools Site, California, * Intermountain Insulation Site, Utah, * IWI Site, Illinois, * Li Tungsten Site, New York, * Malone Services Co. Site, Texas, * N-Forcer Site, Michigan, * Operating Industries Site, California, * R&H Oil/Tropicana Site, Texas, * RAMP Industries Site, Colorado, * Reclamation Oil Site, Michigan, * Robinson Insulation Site, North Dakota, * Solvents Recovery Service Site, Connecticut, * Salt Lake Vermiculite Intermountain Site, Utah, * Spokane Vermiculite Northwest Site, Washington, * Wauconda Sand and Gravel Superfund Site, Illinois, * Watson Johnson Landfill Site, Pennsylvania, * Wells G&H Site, Massachusetts, * Western Minerals Processing Site, Colorado, * Western Minerals Products Site, Minnesota, * Ellwood Zonolite Site, Pennsylvania, * New Castle Zonolite Site, Pennsylvania, * Hamilton Zonolite Site, New Jersey, * Prince George Zonolite Site, Maryland, and * Wilder Zonolite Site, Kentucky. A full-text copy of the Settlement is available for free at: http://bankrupt.com/misc/grace_EPASettlement.pdf The Debtors' counsel, David M. Bernick, P.C., Esq. at Kirkland & Ellis, LLP, in Chicago, Illinois, says the Government's claim relating to the Debtors' site in Curtis Bay, Baltimore, Maryland, will be resolved in accordance with a separate settlement agreement still to be filed with the Court. Government's Statement "This settlement will make money available to substantially help the cleanup of many Superfund sites around the country," Ronald J. Tenpas, Assistant Attorney General for the DOJ's Environment and Natural Resources Division, said in a public statement. "This settlement is a good outcome for both the taxpayers and the environment." "Bankruptcy is not a safe haven to avoid environmental responsibilities," Catherine McCabe, principal deputy assistant administrator for EPA's Office of Enforcement and Compliance Assurance, further said in a press release. "EPA will keep pursuing companies who pollute the environment." The Government said it will use the settlement to reimburse EPA for past costs and to pay for future costs associated with cleaning up at hazardous waste sites in 18 states. Superfund is the federal program that investigates and cleans up the most complex uncontrolled or abandoned hazardous waste sites in the country. The settlement agreement will be subject to court approval after a 30-day public comment period. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, Pennsylvania. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Martin W. Dies, III, Esq., at Dies & Hile L.L.P., and C. Alan Runyan, Esq., at Speights & Runyan,to represent it. Lexecon, LLC, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expired on July 23, 2007. Estimation of W.R. Grace's asbestos personal injury liabilities will commence on Jan. 14, 2008. (W.R. Grace Bankruptcy News, Issue No. 146; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). YRC WORLDWIDE: Earns $40.7 Million in Third Quarter --------------------------------------------------- YRC Worldwide Inc. reported net income of $40.7 million on operating revenue of $2.46 billion for the third quarter ended Sept. 30, 2007, compared with net income of $95.8 million on operating revenue of $2.57 million in the correponding period a year ago. Consolidated operating revenue decreased versus 2006 primarily due to continued weak economic conditions in the United States transportation industries and the resulting intense competitive pricing environment. Consolidated operating income decreased significantly to $87.7 million as compared to $177.6 million in 2006 and is reflective of decreased operating revenue and weak yield growth at all of the company's operating companies. Despite a relatively consistent decline in revenue between the company's national and regional providers, the Regional Transportation segment experienced a much greater decline in operating income as the weak economy in the Upper Midwest impacted this segment more severely. Additionally, the company was less effective in reducing its variable costs in the regional market in response to the decline in revenue than in the national market. This is partly attributable to continued challenges associated with the USF Reddaway and USF Bestway February 2007 consolidation. Corporate net operating expenses during the three months ended Sept. 30, 2007, increased $5.7 million versus the comparable prior year period primarily related to increased incentive compensation expense of $5.0 million and $1.2 million of unallocated corporate expenses offset by reduced legal and other expense of aproximately $500,000 million. Consolidated operating income for the three months ended Sept. 30, 2007, includes restructuring charges of $1.3 million related to lease termination costs resulting from continued consolidation of USF Reddaway and USF Bestway terminals primarily in the California market and a $1.5 million gain on settlement of certain USF Red Star multi-employer pension withdrawal obligations. During the three months ended Sept. 30, 2006, the company incurred a $2.8 million loss on sale of the YRC Logistics China (excluding Hong Kong) freight forwarding operations and $2.3 million of reorganization charges related to the relocation of a portion of Logistics' operations from Greenwood, Indiana to Overland Park, Kansas. During the three months ended Sept. 30, 2007, and 2006, the company recognized losses on disposals of $1.4 million and $2.4 million, respectively. Interest expense decreased $310,000 to $22.7 million due to decreased borrowings for the three months ended Sept. 30, 2007, versus 2006. The company's effective tax rate for the three months ended Sept. 30, 2007, was 36.3% compared to 38.3% for the three months ended Sept. 30, 2006. The 2007 rate reflects an estimated annual benefit of $7.4 million for a propane fuel tax credit in 2007. Nine Months Results Consolidated operating revenue decreased by $238.4 million during the nine months ended Sept. 30, 2007, as compared to the year ago period. Consolidated operating income decreased by $221.2 million or 50.5% during the nine months ended Sept. 30, 2007, as compared to the year ago period. The decrease in consolidated operating income was a result of reduced operating revenue, weak yield growth and challenging economic conditions. Net income of $97.4 million in the nine months ended Sept. 30, 2007, compared with net income of $230.2 million in the comparable period last year. Liquidity The company maintains capacity under a $1.1 billion unsecured credit agreement, which includes a fully drawn $150.0 million term loan, and a $700.0 million asset-backed securitization facility involving the accounts receivable of Yellow Transportation, Roadway, USF Holland and USF Reddaway. Available unused capacity as of Sept. 30, 2007, was $668.0 million. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $6.20 billion in total assets, $3.91 billion in total liabilities, and $2.29 billion in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?26b3 About YRC Worldwide YRC Worldwide Inc. -- http://www.yrcw.com/-- (NASDAQ: YRCW) provides transportation service and is the holding company for a portfolio of brands including Yellow Transportation, Roadway, Reimer Express, YRC Logistics, New Penn, USF Holland, USF Reddaway, and USF Glen Moore. The enterprise provides global transportation services, transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial, commercial and retail goods domestically and internationally. Headquartered in Overland Park, Kansas, YRC Worldwide employs approximately 60,000 people. * * * As reported in the Troubled Company Reporter on Dec. 17, 2007, Standard & Poor's Ratings Services lowered its corporate credit ratings on YRC Worldwide Inc. to 'BB+' from 'BBB-'. S&P removed the ratings from CreditWatch, where they were placed with negative implications on Oct. 29, 2007. The outlook is negative. YRC WORLDWIDE: Expects 4th Qtr. Impairment Chgs. of $700-$800 Mil. ------------------------------------------------------------------ YRC Worldwide Inc. disclosed Wednesday that it expects to incur non-cash impairment charges during the fourth quarter of 2007 relating to prior acquisitions in the pre-tax range of $700 to $800 million, or $650 to $750 million after taxes. The company has nearly completed its annual impairment review of goodwill and certain other intangible assets arising from acquisitions. Given applicable accounting standards, which strongly consider current market conditions, these impairment charges will primarily relate to a decline in the estimated point- in-time fair value of the acquired former USF Corporation companies. These companies generally now comprise the company's YRC Regional Transportation business unit. The remainder of the anticipated charges is due to a reduction in the calculated fair values of USF and Roadway trade names. The company does not expect the impairment charges to have any impact on the company's cash flow or availability of financing under existing debt facilities. "While we are clearly disappointed with this development, it does not change our belief in the future outlook for any of our companies, particularly YRC Regional Transportation," stated Bill Zollars, chairman, president and chief executive officer of YRC Worldwide. The company said that its new YRC Regional Transportation management team is making progress in implementing operational changes designed to improve financial performance as part of its previously disclosed $100 million performance improvement initiative. In addition, actions have already taken place to reduce corporate overhead, close redundant offices and eliminate unnecessary activities. "Cost reduction actions and operational improvements across the company set the stage for improved performance in 2008," stated Zollars. "We continue to move forward on key strategic initiatives, including the recent announcement of a tentative five-year agreement with the International Brotherhood of Teamsters and a definitive purchase agreement for our China ground transportation acquisition." About YRC Worldwide YRC Worldwide Inc. -- http://www.yrcw.com/-- (NASDAQ: YRCW) provides transportation service and is the holding company for a portfolio of brands including Yellow Transportation, Roadway, Reimer Express, YRC Logistics, New Penn, USF Holland, USF Reddaway, and USF Glen Moore. The enterprise provides global transportation services, transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial, commercial and retail goods domestically and internationally. Headquartered in Overland Park, Kansas, YRC Worldwide employs approximately 60,000 people. * * * As reported in the Troubled Company Reporter on Dec. 17, 2007, Standard & Poor's Ratings Services lowered its corporate credit ratings on YRC Worldwide Inc. to 'BB+' from 'BBB-'. S&P removed the ratings from CreditWatch, where they were placed with negative implications on Oct. 29, 2007. The outlook is negative. * Survey Says CMI Finishes 2007 With Another Slight Drop -------------------------------------------------------- The seasonally adjusted Credit Manager's Index fell for the fourth consecutive month in December. The index lost 0.7%, and dropped to a record low of 52.4%. Six of the 10 components fell, including a 4% drop in dollar collections. Daniel North, chief economist with credit insurer Euler Hermes ACI, said, "While the manufacturing index actually gained 0.8%, it was overshadowed by a loss of 2.3% in the service index. The deterioration in the combined index matches that of other major indicators in the macroeconomy, including disappointing holiday sales, a weakening employment market, accelerating declines in housing prices, downgrades of banks and insurers, plummeting consumer confidence, and a rapid increase in delinquencies and defaults on many types of credit. It would appear that trade credit managers are now encountering the same difficulty found in other credit markets, that is, the inability of debtors to pay bills due to insufficient cash flow." For the first time in four months, the manufacturing sector actually gained ground, rising 0.8% to 53.5%. "Most of the increase came from significant improvements in disputes and the dollar amount of customer deductions," North said. "The data suggest that at least for the month of December, manufacturers' customers are being less aggressive about holding on to their cash," he concluded. The service sector index fell 2.3% in December on a seasonally adjusted basis, led by sharp downturns in sales and dollar collections. It was the seventh decline in sales in the past eight months. North said, "The data suggest that businesses are experiencing an unpleasant combination of slower cash flow and expectations of slower consumer demand. Once again, the housing market continues to wreak havoc in the service sector." North noted that of the survey responses, one participant described a "Residential housing crisis ... and ... continuing problem of buyer walk-offs." Another reported that "Past dues are higher and customers that were robbing Peter to pay Paul are feeling the unavailability of cash." Finally, there was the almost plaintive comment from a construction material supplier that "It's been a tough year." The combined Credit Manager's Index fell 2.4% over the past 12 months as eight of the 10 components fell. "The filings for bankruptcies component fared the worst, falling 7.4%," North said. The service sector fell 1.6%, also led by the bankruptcy component which declined 8.8%. In the manufacturing sector, eight of the 10 components fell resulting in an overall drop in the index of 3.1%. "Along with a drop in bankruptcies, declines of 7.6% in sales and 7.5% in accounts placed for collections weighed the index down," he said. "The data suggest that indeed more business than usual are having a tough time surviving in this environment as sales and cash flow dry up." What is CMI? The CMI, a monthly survey of the business economy from the standpoint of commercial credit and collections, was launched in January 2003 to provide financial analysts with another strong economic indicator. The CMI survey asks credit managers to rate favorable and unfavorable factors in their monthly business cycle. Favorable factors include sales, new credit applications, dollar collections and amount of credit extended. Unfavorable factors include rejections of credit applications, accounts placed for collections, dollar amounts of receivables beyond terms and filings for bankruptcies. A complete index including results from the manufacturing and service sectors, along with the methodology is available for free at: http://ResearchArchives.com/t/s?25fa About NACM Headquartered in Columbia, Maryland, The National Association of Credit Management (NACM) -- http://www.nacm.org-- supports more than 22,000 business credit and financial professionals worldwide with premier industry services, tools and information. NACM and its network of Affiliated Associations are the resource for credit and financial management information and education, delivering products and services which improve the management of business credit and accounts receivable. * Trade Credit Index Falls to Record Low Level Says Eueler Hermes ----------------------------------------------------------------- A major credit index dropped to its lowest point in its more than five year history, as growth in the nation's manufacturing sector was trumped by a sharp contraction in the service sector. According to analysis from leading trade credit insurer Euler Hermes ACI, the trade credit markets are now facing the same problems as the rest of the country's credit markets as more companies find it difficult to pay their bills due to insufficient cash flow. In his monthly commentary regarding a national survey of credit managers in the manufacturing and service sectors, Euler Hermes ACI Chief Economist Daniel C. North said the survey data showed a decline for the fourth consecutive month in December and dropped to a record low. Six of the 10 survey components fell, including a 4% drop in dollar collections. "While the manufacturing index actually gained slightly, it was overshadowed by a sharp loss in the service index," he explained. "The deterioration in the combined index matches that of other major indicators in the macroeconomy, including disappointing holiday sales, a weakening employment market, accelerating declines in housing prices, downgrades of banks and insurers, plummeting consumer confidence, and a rapid increase in delinquencies and defaults on many types of credit." For the first time in four months, the manufacturing sector actually gained ground, rising 0.8%. Most of the increase came from significant improvements in disputes and the dollar amount of customer deductions. North said the data suggests that "at least for the month of December, manufacturers' customers are being less aggressive about holding on to their cash." Meanwhile, the service sector index fell 2.3% in December on a seasonally adjusted basis, led by sharp downturns in sales and dollar collections. It was the seventh decline in sales in the past eight months. North said the data suggests that businesses are experiencing an unpleasant combination of slower cash flow, and expectations of slower consumer demand. "Once again the housing market continues to wreak havoc in the service sector," he explained. "One survey participant described a 'residential housing crisis' and 'a continuing problem of buyer walk-offs.' And another reported that 'past dues are higher and customers that were robbing Peter to pay Paul are feeling the unavailability of cash.' And finally, there was the almost plaintive comment from a construction material supplier that 'it's been a tough year.'" North said survey respondents confirmed that business bankruptcies across the country are continuing to rise, and that increase -- coupled with declining sales and increased dollar amounts placed for collection -- show that the nation's business conditions are indeed worsening. "It would appear that trade credit managers are now encountering the same difficulty found in other credit markets -- the inability of debtors to pay their bills due to insufficient cash flow. The survey data suggests that indeed more business than usual are having a tough time surviving in this environment as sales and cash flow dry up," he concluded. About Euler Hermes Headquartered in Owings Mills, Maryland, Euler Hermes ACI -- http://www.eulerhermes.com/usa-- is the U.S. subsidiary of the Euler Hermes Group. In addition Euler Hermes ACI is North America's oldest and largest provider of trade credit insurance and accounts receivable management solutions. Euler Hermes ACI provides receivables management services that includes commercial third party collections, receivables management outsourcing, and international collections. With 5,800 employees in 49 countries, Euler Hermes offers services for the management of B-to-B trade receivables and posted a consolidated turnover of EUR2.01 billion in 2006. Euler Hermes, subsidiary of AGF and a member of the Allianz group, is listed on Euronext Paris. The group and its principal credit insurance subsidiaries are rated AA- by Standard & Poor's. * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent Chapter 11 cases filed with assets and liabilities below $1,000,000: In Re Art Xpectations, L.L.C. Bankr. N.D. Tex. Case No. 07-36285 Chapter 11 Petition filed December 21, 2007 See http://bankrupt.com/misc/txnb07-36285.pdf In Re Sandy Bottom Properties, L.L.C. Bankr. D. R.I. Case No. 07-12699 Chapter 11 Petition filed December 24, 2007 See http://bankrupt.com/misc/rib07-12699.pdf In Re Meridian Hills, L.L.C. Bankr. D. Ariz. Case No. 07-07097 Chapter 11 Petition filed December 26, 2007 See http://bankrupt.com/misc/azb07-07097.pdf In Re 21st Century Investments, L.L.C. Bankr. C.D. Calif. Case No. 07-14469 Chapter 11 Petition filed December 26, 2007 See http://bankrupt.com/misc/cacb07-14469.pdf In Re Church of God Valley of Blessing of Central Florida, Inc. Bankr. M.D. Fla. Case No. 07-06756 Chapter 11 Petition filed December 26, 2007 See http://bankrupt.com/misc/flmb07-06756.pdf In Re Jean Brown Dorothy Bankr. E.D. Calif. Case No. 07-31285 Chapter 11 Petition filed December 26, 2007 Filed as Pro Se In Re Kimberly Ann Brockington Bankr. N.D. Calif. Case No. 07-54355 Chapter 11 Petition filed December 26, 2007 Filed as Pro Se In Re Angela M. Moses Bankr. C.D. Calif. Case No. 07-22124 Chapter 11 Petition filed December 26, 2007 Filed as Pro Se In Re Robert Woolson Todd, Jr. Bankr. C.D. Calif. Case No. 07-12032 Chapter 11 Petition filed December 26, 2007 Filed as Pro Se In Re Montie Odell Robinson Bankr. W.D. Tenn. Case No. 07-14190 Chapter 11 Petition filed December 26, 2007 See http://bankrupt.com/misc/tnwb07-14190.pdf In Re Atlanta Marketing Solutions Bankr. N.D. Ga. Case No. 07-81720 Chapter 11 Petition filed December 27, 2007 See http://bankrupt.com/misc/ganb07-81720.pdf In Re 3719 Cleveland Avenue, L.L.C. Bankr. S.D. Ohio Case No. 07-60410 Chapter 11 Petition filed December 27, 2007 See http://bankrupt.com/misc/ohsb07-60410.pdf In Re Gregory Britton Bostick Bankr. S.D. Calif. Case No. 07-07523 Chapter 11 Petition filed December 27, 2007 Filed as Pro Se In Re George Holland, Jr. Bankr. N.D. Calif. Case No. 07-44503 Chapter 11 Petition filed December 27, 2007 Filed as Pro Se In Re Jerusalem Charitable Trust Bankr. E.D. Tex. Case No. 07-61067 Chapter 11 Petition filed December 27, 2007 Filed as Pro Se In Re Village Green, Inc. Bankr. C.D. Calif. Case No. 07-22174 Chapter 11 Petition filed December 27, 2007 Filed as Pro Se In Re Diana Kay Lurey Bankr. W.D. Va. Case No. 07-50953 Chapter 11 Petition filed December 27, 2007 Filed as Pro Se In Re Joseph F. Heath Bankr. E.D. Va. Case No. 07-14107 Chapter 11 Petition filed December 27, 2007 See http://bankrupt.com/misc/vaeb07-14107.pdf In Re Figueiredos Importing & Exporting, L.L.C. Bankr. D. Conn. Case No. 07-50791 Chapter 11 Petition filed December 28, 2007 See http://bankrupt.com/misc/ctb07-50791.pdf In Re S.G.A. Architecture, Inc. Bankr. S.D. Fla. Case No. 07-21623 Chapter 11 Petition filed December 28, 2007 See http://bankrupt.com/misc/flsb07-21623.pdf In Re Advanced Process Technologies, L.L.C. Bankr. N.D. Ind. Case No. 07-13647 Chapter 11 Petition filed December 28, 2007 See http://bankrupt.com/misc/innb07-13647.pdf In Re Fortune Empire (J. D. Levy), Inc. Bankr. E.D. N.Y. Case No. 07-47134 Chapter 11 Petition filed December 28, 2007 See http://bankrupt.com/misc/nyeb07-47134.pdf In Re Fernando A. Vazquez Lago Bankr. D. P.R. Case No. 07-07643 Chapter 11 Petition filed December 28, 2007 See http://bankrupt.com/misc/prb07-07643.pdf In Re Lectrics Electrical Contractors, Inc. Bankr. S.D. Tex. Case No. 07-20678 Chapter 11 Petition filed December 28, 2007 Filed as Pro Se In Re Alazan Waco Corp. Bankr. N.D. Tex. Case No. 07-36329 Chapter 11 Petition filed December 28, 2007 See http://bankrupt.com/misc/txnb07-36329.pdf In Re L.R.I. IV, Ltd. Bankr. N.D. Tex. Case No. 07-36358 Chapter 11 Petition filed December 28, 2007 See http://bankrupt.com/misc/txnb07-36358.pdf In Re Douglas J. Borgman Bankr. W.D. Tex. Case No. 07-12415 Chapter 11 Petition filed December 28, 2007 See http://bankrupt.com/misc/txwb07-12415.pdf In Re A.F.G. Partners, L.L.C. Bankr. S.D. N.Y. Case No. 07-14108 Chapter 11 Petition filed December 31, 2007 See http://bankrupt.com/misc/nysb07-14108.pdf In Re Helen E. Carithers Bankr. E.D. Penn. Case No. 07-17587 Chapter 11 Petition filed December 31, 2007 See http://bankrupt.com/misc/paeb07-17587.pdf In Re Albert S. Farkas Bankr. W.D. Penn. Case No. 07-28199 Chapter 11 Petition filed December 31, 2007 See http://bankrupt.com/misc/pawb07-28199.pdf In Re The Johnickie Group Bankr. N.D. Ga. Case No. 07-81927 Chapter 11 Petition filed December 31, 2007 Filed as Pro Se In Re Gods Fountain of Love, Inc. Bankr. N.D. Ga. Case No. 07-81909 Chapter 11 Petition filed December 31, 2007 Filed as Pro Se In Re L.&R. Properties, L.L.C. Bankr. M.D. Ga. Case No. 07-71407 Chapter 11 Petition filed December 31, 2007 Filed as Pro Se In Re Performance Steel, Inc. Bankr. N.D. Tex. Case No. 07-36418 Chapter 11 Petition filed December 31, 2007 See http://bankrupt.com/misc/txnb07-36418.pdf In Re Sultan Abdullah Bankr. S.D. Tex. Case No. 07-38889 Chapter 11 Petition filed December 31, 2007 See http://bankrupt.com/misc/txsb07-38889.pdf In Re M.&D. Project Management, Inc. Bankr. D. Wyo. Case No. 07-20771 Chapter 11 Petition filed December 31, 2007 See http://bankrupt.com/misc/wyb07-20771.pdf ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Jason A. Nieva, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, John Paul C. Canonigo, Joseph Medel C. Martirez, Philline P. Reluya, and Peter A. Chapman, Editors. Copyright 2008. 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 ***