T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, February 19, 2008, Vol. 12, No. 42 Headlines AAMES MORTGAGE: S&P Downgrades Ratings on Class B Certs. to 'B' ACXIOM CORP: Paying Six Cents Per Share Dividend on March 17 ACXIOM CORP: Increases Stock Repurchase Program by $25 Million AINSWORTH LUMBER: Commences Offer to Refinance Senior Notes AINSWORTH LUMBER: Incurs CDN$184.5MM Net Loss for 2007 Fourth Qtr. AINSWORTH LUMBER: S&P Slashes Ratings to 'CC' on Tight Liquidity AGILENT TECH: Earns $120 Million in Quarter Ended January 31 ALLIED WASTE: Reports $115.3 Mil. Earnings for 2007 Fourth Quarter AMAZON.COM INC: Moody's Raises Corporate Family Rating to 'Ba1' AMERIGROUP CORP: Earns $31.1 Million in 2007 Fourth Quarter ANDREW SCHOR: Voluntary Chapter 11 Case Summary ASSURED PHARMACY: Consolidates Ore. Pharmacy with Assureds' AVIS BUDGET: Incurs $916 Million Net Loss in Full Year 2007 AVIS BUDGET: Ernst & Young Settles Decade-Old Suit for $300 Mil. BARNERT HOSPITAL: Court Approves Garfunkel Wild as Special Counsel BEAZER HOMES: S&P Downgrades Corporate Rating to 'B' From 'B+' BELO CORP: Posts $333.4 Million Net Loss in 2007 Fourth Quarter BERRY PLASTICS: Inks $520 Mil. Sr. Secured Bridge Loan Agreement BERRY PLASTICS: Posts $31.3 Million Net Loss in Qtr. Ended Dec. 29 BIOENERGY OF AMERICA: Court Sets Dismissal Hearing on February 25 BLUE WATER: Hearing Today on Further Cash Collateral Access BLUE WATER: To Tap $25,000,000 DIP Financing From Citizens Bank BLUE WATER: U.S. Trustee Appoints 7-Member Creditors Committee BNC MORTGAGE: Fitch Junks Ratings on 17 Certificate Classes BOSTON SCIENTIFIC: Completes $425MM Asset Sale to Avista Capital BUFFETS HOLDINGS: Court Okays Young Conaway as Bankruptcy Counsel BUFFETS HOLDINGS: Court Okays Paul Weiss as Special Counsel BUFFETS HOLDINGS: Court Approves Kroll Zolfo as Financial Advisor CARINA CDO: Nine Classes of Notes Acquire Moody's Junk Ratings CBRE REALTY: Fitch Affirms 'BB-' Rating on $9.5MM Class L Notes CENTERSTAGING CORP: Inks Forbearance Agreement with Montage CENTEX CORP: Paying $0.04 per Share Regular Dividend on March 26 CENTEX CORP: Weak Profits Cue S&P's Corporate Rating Cut to 'BB+' CENTEX MORTGAGE: Fitch Junks Ratings on Seven Certificate Classes CENTRO NP: Moody's Holds 'B3' Debt Rating on Refinancing Extension CENTRO PROPERTIES: Discloses Extensions of Financing Arrangements CHARYS HOLDING: Taps Kurtzman Karson as Claims and Noticing Agent CITADEL BROADCASTING: Agrees in Principle to Settle Indenture Suit CITADEL BROADCASTING: S&P Ratings Unmoved by Litigation Settlement CITIGROUP MORTGAGE: Fitch Chips Ratings on 22 Certificate Classes CLEAR CHANNEL: Earns $938.5 Million in Year Ended Dec. 31, 2007 CLEAR CHANNEL: Extends Key Dates of Senior Notes Tender Offer CLEAR CHANNEL: Expects CC Media Merger to Close March 31 at Most CLEAR CHANNEL: Sues to Compel Providence Equity to Close TV Deal CLEAR CHANNEL: Required by DOJ to Shed Off Radio Stations CONTINENTAL GLOBAL: Joy Global Discloses Completion of Acquisition CONTINENTAL GLOBAL: Moody's Withdraws Ratings on Joy Global Merger CONTINENTAL GLOBAL: S&P Withdraws Ratings on Joy Global Merger CPI INTERNATIONAL: To Redeem $6 Mil. of Floating Rate Senior Notes CREDIT SUISSE: Fitch Downgrades Ratings on $3.2 Bil. Certificates CREDIT SUISSE: Liquidity Concerns Cue S&P's Four Rating Cuts CREDIT SUISSE: Fitch Holds 'B' Rating on $9.7MM Class L Certs. CROSS ATLANTIC: Case Summary & Largest Unsecured Creditor DEL LABS: Coty Acquisition Prompts Moody's to Withdraw B3 Rating DELTA AIR: CEO Willing to Waive Accelerated Compensation DELPHI CORP: Wants Bankruptcy Court to Keep Stay of ERISA Lawsuit DELTA AIR: Membership Agreement Reached Among Pilots DELTA AIR: JPMorgan Chase Holds 20.8% Stake in Reorganized Company DONNA ALBERT: Case Summary & 19 Largest Unsecured Creditors EMCOR GROUP: Moody's Puts 'Ba1' Rating on $375 Mil. Sr. Facility ENESCO GROUP: Plan Confirmation Hearing Moved to March 5 ERIC JOHNSON: Case Summary & 8 Largest Unsecured Creditors FESTIVAL FUN: Secures $141.5 Million Senior Credit Facility FOCUS ENHANCEMENTS: Closes $20.8 Million Private Debt Placement FREMONT HOME: Fitch Chips Ratings on $5 Billion Certificates FRIEDMAN'S INC: Gets Interim OK to Obtain $125MM DIP Financing FRIEDMAN'S INC: Wants to Employ Kurtzman Carson as Claims Agent FRIEDMAN'S INC: Wants to Hire Richards Layton as Co-Counsel GEN CON: Case Summary & 20 Largest Unsecured Creditors GE-WMC: Fitch Lowers Ratings on $565.4 Million Certificates GERDAU AMERISTEEL: Unit Buying Century Steel for $151.5 Million GERDAU AMERISTEEL: Earns $141.4 Million in 2007 Fourth Quarter GLACIER HORSE RANCH: Involuntary Chapter 11 Case Summary GLOBAL MOTORSPORT: Court OKs Bidding Procedure on Sale of Assets GOODYEAR TIRE: Earns $602 Million in Year Ended December 31, 2007 HALLMARK MEAT: USDA Orders Largest Beef Recall in History HARRAH'S ENT: Inks $950 Million Katrina Insurance Claim Settlement HASCO: Fitch Downgrades Ratings on $3.7 Billion Certificates HASCO: Fitch Downgrades Ratings on $3.7 Billion Certificates HAVEN HEALTHCARE: Wants to Buy Tail Insurance Policies from CNA HCA INC: Doing Well After Leveraged Buy-out, Fitch Says HOVNANIAN ENT: Weak Operating Trends Cue S&P's Rating Downgrades IMPART MEDIA GROUP: Involuntary Chapter 11 Case Summary INGRAM MICRO: Earns $114.1 Million in 2007 Fourth Quarter INTELSAT LTD: Fitch Slashes Issuer Default Rating to CCC from B INTELSAT LTD: S&P Chips Rating to 'B' on Highly Leveraged Profile INVERNESS MEDICAL: Completes Buyout of BBI Holdings for $123 Mil. IRONSTONE TRUST: DBRS Assigns BB(High) Rating on Class A-3 Notes ISTAR FINANCIAL: Fitch Affirms 'BB+' Rating on Preferred Stock IXIS MORTGAGE: Fitch Cuts Ratings on 37 Certificate Classes JA MINAHAN EXCAVATING: Voluntary Chapter 11 Case Summary JP MORGAN: Projected Losses Cue Fitch to Downgrade Ratings KLAVOHN'S NEW LEAF: Case Summary & 20 Largest Unsecured Creditors KNIGHT INC: Completes Sale of 80% Ownership of MidCon Subsidiary KNIGHT INC: DBRS Lifts Note Rating After Midcon Sale Completion KNIGHT INC: Fitch Lifts Ratings on MidCon Stake Sale KRIPY KREME: Standard Pacific Divests 6.1% Stake in Company LAW DEVELOPERS: Case Summary & 19 Largest Unsecured Creditors MANUFACTURERS & TRADERS: Fitch Holds BB Rating on Class B-4 Certs. MARIE ARZATE: Case Summary & 13 Largest Unsecured Creditors MARLON BOVELL: Case Summary & 7 Largest Unsecured Creditors MCCLATCHY CO: Fitch Cuts Issuer Default Rating to BB from BB+ MORGAN STANLEY: Fitch Downgrades Ratings on $11.3 Billion Certs. MOVIE GALLERY: Can Perform Under Plan Support Agreement MOVIE GALLERY: Wants Phase 2 Auction Process Approved MYSTIC POINT: Six Classes of Notes Obtain Moody's Junk Ratings NATIONAL RV: U.S. Trustee Balks Ad Hoc Committee's Plea NATIONAL RV: Court Approves Pachulski Stang as Committee's Counsel NELLSON NUTRACEUTICAL: Taps Cross & Simon as Litigation Counsel NOMURA MORTGAGE: Fitch Downgrades Ratings on $2.1B Certificates NORTHERN LIGHTS: Goes Bankrupt After Losing TicketMaster Suit NORTHWEST AIRLINES: CEO Willing to Waive Accelerated Compensation NORTHWEST AIRLINES: Membership Agreement Reached Among Pilots NORTHWEST AIRLINES: Wants Fuel Surcharge Class Actions Barred NORTHWEST AIRLINES: Wellington Discloses 11.47% Equity Stake NOVASTAR HOME: Court Orders Escrow of $48,800,000 Judgment Claim NOVASTAR: Fitch Chips Ratings on $1.4 Billion Certificates OYSTER BAY: Case Summary & 13 Largest Unsecured Creditors PETROLEUM DEVELOPMENT: Thomas Riley Resigns as President PRODUCTS INTERNATIONAL: Voluntary Chapter 11 Case Summary PROQUEST LLC: To Merge WebFeat Operations with Serials Solutions QUALITY TYMES: Case Summary & Six Largest Unsecured Creditors QUANG BUI: Voluntary Chapter 11 Case Summary QUEBECOR WORLD: U.S. Trustee Revises Creditors' Committee QUEBECOR WORLD: Wants to Pay Accrued Prepetition Commissions QUEBECOR WORLD: Creditors' Committee Selects Akin Gump as Counsel RACERS 2006: S&P Junks Ratings on Series 2006-18-C Certificates RAMP TRUST: Poor Performance Prompts S&P's Six Rating Downgrades REFCO INC: Former CEO Philip Bennett Pleads Guilty of Fraud RENAISSANCE MORTGAGE: Fitch Junks Ratings on 12 Cert. Classes REVELSTOKE CDO: DBRS Slashes Class A-3 Note Rating to BB(High) R&G FINANCIAL: SEC Approves Settlement on Financials Restatement ROBERT HOULE: Case Summary & Ten Largest Unsecured Creditors RPM INT'L: S&P Assigns 'BB' Preliminary Preferred Stock Ratings SAIL: Fitch Downgrades Ratings on $5.5B Certificates SALON MEDIA: Posts $562,000 Net Loss in 3rd Quarter Ended Dec. 31 SASCO: Fitch Downgrades Ratings on $6.2B Certificates SCOTTISH RE: Eroding Credit Quality Spurs Moody's Rating Reviews SECURITIZED ASSET: Fitch Downgrades Ratings on $62.B Certificates SHAW GROUP: Moody's Puts Ratings on Review for Possible Upgrade SIMPSON FARM: Case Summary & Four Largest Unsecured Creditors SITEL WORLDWIDE: Moody's Gives Negative Outlook; Holds 'B2' Rating SOCIETE GENERALE: Fitch Downgrades Ratings on $2.2BB Certificates SOUNDVIEW HOME: S&P Ratings on Class B-5 Certs. Tumble to 'D' SOUNDVIEW HOME: Price Weakness Cues Fitch to Cut Ratings on Certs. SOUNDVIEW HOME: Fitch Slashes Ratings on $1 Billion Certificates SPRINGFIELD INSURANCE: A.M. Best Lifts IC Rating to bb from bb- STANDARD PACIFIC: S&P Cuts Rating to B+, Retains Negative Outlook STRUCTURED ASSET: S&P Ratings on 10 Cert. Classes Tumble to 'D' SWEET TRADITIONS: Gets Go-Signal to Sell Stores to Allied Capital TALECRIS BIOTHERAPEUTICS: Moody's Junks Corporate Rating From 'B2' TECHNICAL SALES: Case Summary & 19 Largest Unsecured Creditors TEMBEC INC: Chooses Alternative Transaction Over Jolina's Proposal TERWIN MORTGAGE: Fitch Chips Ratings on $202 Million Certificates UAL CORP: Continental Air Merger Discussions in "Advanced" Stage UAL CORP: Court Approves Transfer of Escrow Funds to UMB Bank UBS MORTGAGE: Fitch Junks Ratings on 15 Certificate Classes VPG INVESTMENTS: Case Summary & Eight Largest Unsecured Creditors WASHINGTON MUTUAL: Fitch Holds 'B-' Rating on $1.4MM Class O Cert. WELLS FARGO: Fitch Downgrades Ratings on $228.3MM Certificates WESTLAND MEAT: USDA Orders Largest Beef Recall in History * S&P Ratings on Nine Cert. Classes From Eight RMBS Tumble to 'D' * Fitch Says Student Loan Asset-Backed Securities Face Challenges * Fitch Says UK Court Might Freeze $12 Bil. PDVSA Worldwide Assets * Fitch Says US CMBS Delinquencies Fall to 0.27% Low Last Month * Fitch Says Auto Loan Delinquencies Hit Highest in 10 Years * Fitch Sees Int'l Markets Becoming Crucial to Protein Processors * Large Companies with Insolvent Balance Sheets ********* AAMES MORTGAGE: S&P Downgrades Ratings on Class B Certs. to 'B' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B and M-2 mortgage pass-through certificates from Aames Mortgage Trust 2002-1. Concurrently, S&P affirmed its ratings on classes A-3, A-4, and M-1 from the same series. The downgrades reflect continuous adverse pool performance. As of the January 2008 remittance period, this transaction had experienced cumulative losses of $6.757 million, or 3.86% of the original pool balance. Losses have outpaced excess interest in nine of the past 12 months by 1.4x-5.2x. Current overcollateralization (O/C) is $987,773, which is $515,327 below its target. In addition, serious delinquencies (90-plus days, foreclosures, and REOs) currently total $3.62 million. This transaction has paid down to 13.63% of its original pool balance. The affirmed ratings reflect adequate actual and projected credit support percentages despite relatively high delinquencies and losses. O/C, excess spread, and subordination provide credit enhancement for the classes in this transaction, except for the most subordinate class, which has no subordination. The collateral for this series consists of 30-year, fixed- or adjustable-rate subprime mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered Aames Mortgage Trust 2002-1 Rating ------ Class To From ----- -- ---- M-2 BBB A B B BBB Ratings Affirmed Aames Mortgage Trust 2002-1 Class Rating ----- ------ A-3, A-4 AAA M-1 AA+ ACXIOM CORP: Paying Six Cents Per Share Dividend on March 17 ------------------------------------------------------------ Acxiom(R) Corporation's board of directors has declared a quarterly cash dividend of six cents per share payable on March 17 to shareholders of record as of the close of business on Feb. 25, 2008. While Acxiom intends to pay regular quarterly dividends for the foreseeable future, all subsequent dividends will be reviewed quarterly and declared by the board at its discretion. Headquartered in Little Rock, Arkansas, Acxiom Corporation, (Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's innovative solutions are Customer Data Integration (CDI) technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom has locations throughout the United States and Europe, and in Australia, China and Canada. * * * As reported in the Troubled Company Reporter on Dec. 17, 2007, Moody's Investors Service confirmed Acxiom's Ba2 corporate family rating and assigned a negative rating outlook, concluding a review for possible downgrade initiated on May 17, 2007, following the company's announcement that it had entered into a definitive agreement to be acquired by Silver Lake and ValueAct Capital for $3 billion. ACXIOM CORP: Increases Stock Repurchase Program by $25 Million -------------------------------------------------------------- Acxiom(R) Corporation's board of directors has authorized a $25 million increase in its stock repurchase program. On Oct. 26, 2007, the company disclosed a 12-month, $75 million program whereby the company would repurchase its common stock in open market or privately negotiated transactions, depending on prevailing market conditions and other factors. Since the inception of the program, the company has purchased approximately 4.175 million shares for a total purchase price of $50.6 million. At a meeting Feb. 13, 2008, the board voted to increase the authorization to $100 million. The repurchase program may be suspended or discontinued at any time. Headquartered in Little Rock, Arkansas, Acxiom Corporation, (Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's innovative solutions are Customer Data Integration (CDI) technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom has locations throughout the United States and Europe, and in Australia, China and Canada. * * * As reported in the Troubled Company Reporter on Dec. 17, 2007, Moody's Investors Service confirmed Acxiom's Ba2 corporate family rating and assigned a negative rating outlook, concluding a review for possible downgrade initiated on May 17, 2007, following the company's announcement that it had entered into a definitive agreement to be acquired by Silver Lake and ValueAct Capital for $3 billion. AINSWORTH LUMBER: Commences Offer to Refinance Senior Notes ----------------------------------------------------------- Ainsworth Lumber Co. Ltd. has commenced an exchange offer for any and all of its outstanding: * $153.5 million aggregate principal amount of senior unsecured floating rate notes due 2010, * $275 million aggregate principal amount of 7.25% senior unsecured notes due 2012, * $75 million aggregate principal amount of senior unsecured floating rate notes due 2013, * $210 million aggregate principal amount of 6.75% senior unsecured notes due 2014, and * $110 million aggregate principal amount of 6.75% senior unsecured notes due 2014. Pursuant to the exchange offer, holders of existing notes may exchange their existing notes for the company's 14% senior secured second lien notes due June 24, 2014, which will be issued in an aggregate principal amount of up to $596.0 million. When issued, the new notes will be the company's senior obligations and are intended to be secured by a second priority lien on real property, plant and equipment, other than certain excluded assets, and a third priority lien on the inventory and accounts receivable currently pledged under the company's existing term loan credit facility. The new notes will be unconditionally guaranteed by the company's material subsidiaries. In connection with the exchange offer, the company is also soliciting consents from holders of the existing notes to certain amendments to the respective indentures governing the existing notes, including the removal of substantially all of the restrictive covenants and certain events of default. The exchange offer is conditioned upon, among other things, the holders of at least 50.1% of the aggregate outstanding principal amount of existing notes tendering existing notes in the exchange offer and the holders of not less than a majority in the aggregate outstanding principal amount of each class of existing notes that vote together for purposes of effecting amendments delivering consents in the consent solicitation. Holders of approximately one third of the existing notes have agreed with the company to tender their existing notes in the exchange offer and deliver consents in the consent solicitation. The exchange offer and consent solicitation will expire at 12:00 a.m., New York City time, on March 14, 2008, unless extended or withdrawn. Holders must tender their existing notes prior to this date if they wish to participate in the exchange offer. Holders who tender and do not validly withdraw their existing notes prior to Feb. 29, 2008 will also be entitled to receive, as part of the total consideration, an early participation payment of $50 in aggregate principal amount of new notes for each $1,000 aggregate principal amount of existing notes that are tendered. Concurrent with the exchange offer and consent solicitation, the company is offering $50 million aggregate principal amount of its senior secured first lien notes due 2014 to "qualified institutional buyers" in the United States and "accredited investors" in Ontario, Canada. The net proceeds of the concurrent offering will be used for working capital and general corporate purposes. Certain holders of existing notes have agreed to backstop the concurrent offering. As consideration for their agreement to backstop the concurrent offering, the holders will receive warrants to purchase up to 7,887,998 of the company's common shares, representing approximately 35% of the company's currently outstanding common shares assuming full exercise of the warrants, at an exercise price of CDN$0.01 per share. The number of common shares into which the warrants may be exercised will be adjusted proportionately if the company issues common shares or securities convertible into common shares at less than 95% of the then fair market value of the common shares on the TSX. In addition, the company will not, without the prior consent of the holders of the warrants, issue any common shares from treasury if such issuance would result in the aggregate number of common shares into which the warrants may be exercised being less than 25% of the company's outstanding common shares after giving effect to the exercise of the warrants. The warrants will expire on June 24, 2014 and are exercisable during a period beginning on the earlier of: (i) the date that is three years and six months from the closing of the Concurrent Offering, and (ii) the date that is three business days following the first public announcement of the company's quarterly or annual results which report Adjusted EBITDA for the preceding 12 months in excess of CDN$200 million. The company has the right to redeem the warrants in full prior to the date that is five years following the date of issuance of the warrants at a price equal to the product of: (i) the average closing price of the company's common shares for the 90 days prior to the date of redemption, less the exercise price per share of the warrants, and (ii) the number of common shares into which the warrants are exercisable, subject to a redemption floor of CDN$3.93 per warrant, CDN$31 million if all of the warrants are redeemed, that increases 18% per year until the warrants are redeemed. The warrants are transferable in whole or in part, except to certain industry participants. Issuance of the warrants is conditioned upon the closing of the concurrent offering. Disinterested shareholders holding more than 50% of the company's voting securities have consented in writing to the issuance of the warrants. As a result, the company is exempt from the TSX requirement to hold a meeting of security holders to obtain approval of the issuance of the common shares underlying the warrants. Barclays Capital Inc. is acting as a financial advisor to the company in connection with the exchange offer and consent solicitation, and Global Bondholder Services Corporation is acting as exchange agent and information agent in connection with the exchange offer and consent solicitation. About Ainsworth Headquartered in Vancouver, British Columbia, Ainsworth Lumber Co. Ltd. (TSE:ANS) -- http://www.ainsworth.ca/-- manufactures structural-engineered wood products, including oriented strand board, and specialty overlaid plywood. The company owns and operates six OSB manufacturing facilities, three in Canada and three in northern Minnesota. It has a 50% ownership interest in an OSB facility, located in High Level, Alberta. Ainsworth is also a manufacturer of specialty overlaid concrete-form plywood products in North America. Ainsworth's business is focused on the structural wood panels sector. It offers value-added products, such as OSB webstock, rimboard, radiant barrier OSB panels, jumbo OSB panels, export-standard OSB and specialty overlaid plywood. * * * As reported in the Troubled Company Reporter on Nov. 15, 2007, Moody's Investors Service downgraded Ainsworth Lumber Co. Ltd.'s corporate family rating to Caa1 from B2. At the same time, the ratings on the senior unsecured notes were downgraded to Caa1 from B2 and the rating on the secured term loan was downgraded to B2 from Ba3. Standard & Poor's Ratings Services placed Ainsworth Lumber Co. Ltd.'s long-term foreign and local issuer credit ratings at 'CCC+' in March 2007. The outlook is negative. The ratings still hold to date. AINSWORTH LUMBER: Incurs CDN$184.5MM Net Loss for 2007 Fourth Qtr. ------------------------------------------------------------------ Ainsworth Lumber Co. Ltd. reported net loss of CDN$184.5 million on sales of CDN$100.8 million for the quarter and the year ended Dec. 31, 2007, compared to a net loss of CDN$78.1 million on sales of CDN$119.2 million in 2006 in its unaudited financial results. The reported results for the 2007 quarter included asset impairment charges of CDN$135.4 million, a CDN$44.4 million tax valuation allowance on current tax losses, and a CDN$1.3 million legal settlement provision. For the fiscal year ended Dec. 31, 2007, the net loss of CDN$216.5 million was CDN$108.5 million higher than the net loss in 2006. This increase in loss represents the decline in product margins as a result of decreasing OSB demand and sales prices, increases in asset write-downs and a reduced tax recovery due to a valuation allowance against certain future tax assets, partially offset by the foreign exchange gain on long-term debt. Due to the continued difficult market conditions, the company performed a review of the carrying value of its OSB facilities, intangible assets and goodwill as at Dec. 31, 2007. As of Dec. 31, 2007, the company's adjusted working capital was CDN$124.7 million, compared to CDN$186.6 million as at Dec. 31, 2006. The decrease in adjusted working capital was primarily due to operating losses in the poor OSB market conditions which resulted in a reduction in cash from operations. On an annual basis, cash from operations declined by CDN$135.3 million from 2006 to 2007. The decrease in cash generated by operations reflects the increase in operating losses combined with a decrease in cash generated by accounts receivable, consistent with reduced sales prices and the strong Canadian dollar. The company's balance sheet for Dec. 31, 2007, showed a total shareholder's equity of CDN$12.7 billion. About Ainsworth Headquartered in Vancouver, British Columbia, Ainsworth Lumber Co. Ltd. (TSE:ANS) -- http://www.ainsworth.ca/-- manufactures structural-engineered wood products, including oriented strand board, and specialty overlaid plywood. The company owns and operates six OSB manufacturing facilities, three in Canada and three in northern Minnesota. It has a 50% ownership interest in an OSB facility, located in High Level, Alberta. Ainsworth is also a manufacturer of specialty overlaid concrete-form plywood products in North America. Ainsworth's business is focused on the structural wood panels sector. It offers value-added products, such as OSB webstock, rimboard, radiant barrier OSB panels, jumbo OSB panels, export-standard OSB and specialty overlaid plywood. * * * As reported in the Troubled Company Reporter on Nov. 15, 2007, Moody's Investors Service downgraded Ainsworth Lumber Co. Ltd.'s corporate family rating to Caa1 from B2. At the same time, the ratings on the senior unsecured notes were downgraded to Caa1 from B2 and the rating on the secured term loan was downgraded to B2 from Ba3. Standard & Poor's Ratings Services placed Ainsworth Lumber Co. Ltd.'s long-term foreign and local issuer credit ratings at 'CCC+' in March 2007. The outlook is negative. The ratings still hold to date. AINSWORTH LUMBER: S&P Slashes Ratings to 'CC' on Tight Liquidity ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on Ainsworth Lumber Co. Ltd. by three notches to 'CC' from 'CCC+'. Both ratings remain on CreditWatch with negative implications, where they were placed Feb. 6, 2008. The 'B-' senior secured bank loan rating, with a recovery rating of '2', is unchanged. At the same time, S&P revised the CreditWatch implications on the senior secured bank loan to developing from negative. The '2' recovery rating indicates an expectation of substantial (70%-90%) recovery in the event of a payment default. The senior unsecured notes with a face value of $823.4 million will be exchanged for $596.0 million in senior notes secured by a second lien on certain assets and a third lien on inventory and receivables, at a 14% annual interest rate due June 24, 2014. S&P will lower the ratings to 'SD' upon completion of the exchange offer. "The ratings reflect an extremely tight liquidity situation at Ainsworth and our view that this is a coercive bid with a substantial discount over face value," said Standard & Poor's credit analyst Jatinder Mall. The developing CreditWatch placement on the senior secured debt is due to uncertainty on the outcome of the exchange offer. Ainsworth requires 50.1% of the aggregate principal amount outstanding on all existing notes and consent of the majority in each class of aggregate principal outstanding by March 14, 2008. The company has stated that it already has the support of one- third of its noteholders. If the exchange is successful, it will ease Ainsworth's debt burden and provide much needed liquidity, as the company has only CDN$69 million in liquidity as of Dec. 31, 2007, and has been burning about CDN$40 million in cash per quarter. Furthermore, Ainsworth will have additional liquidity provided by $50 million senior secured first-lien notes due 2014. AGILENT TECH: Earns $120 Million in Quarter Ended January 31 ------------------------------------------------------------ Agilent Technologies Inc. earned $120 million for the three months ended Jan. 31, 2008, compared to $150 million of net income for the same period in 2007. The company reported orders of $1.40 billion for the first fiscal quarter ended Jan. 31, 2008, 12% above one year ago. Revenues during the quarter were $1.39 billion, 9% above last year. Included in this quarter's GAAP income is $30 million of share- based compensation expense. Excluding this item and $10 million of other net adjustments, Agilent reported first quarter adjusted net income of $160 million. On a comparable basis, the company earned $162 million one year ago. "Agilent had a good fiscal first quarter, with performance that was very much in line with our expectations," Bill Sullivan, Agilent president and chief executive officer, said. "Revenues of $1.39 billion were up 9% from last year, near the high end of guidance." "Bio-Analytical markets showed sustained momentum, with segment orders up 20% and revenues up 15%, the seventh consecutive quarter of double-digit segment growth. Demand remains robust in both life sciences and chemical analysis markets, and across all geographies." "While Electronic Measurement markets remain mixed, we did see some overall improvement compared to prior quarters, with better balance between general purpose and communications markets, and across geographic regions. Segment orders were up 8% while revenues were 5% ahead of last year." "First quarter adjusted net income per share, at $0.42, was also near the top of our $0.38 - $0.43 guidance range." First quarter Return on Invested Capital was 23%, equal to last year's record first quarter, despite the addition of nearly $390 million of acquisitions. Inventory Days-On-Hand was improved by 3 days from one year ago. During the period, the company repurchased $237 million of its common stock. Looking ahead to the remainder of fiscal 2008, Sullivan said the company had anticipated some slowing, mainly in U.S. markets, and had planned the year conservatively as a result. Given current trends, Sullivan said the company was still comfortable with the range of analyst estimates for FY2008 revenues and adjusted net income per share. For the fiscal second quarter of 2008, revenues are expected to be in the range of $1.40 billion to $1.45 billion, up 6% to 10% from last year. Second quarter adjusted net income per share is expected to be in the range of $0.46 to $0.50 per share, 7% to 16% above last year's comparable earnings. About Agilent Tech Agilent Technologies Inc. (NYSE: A) -- http://www.agilent.com/ -- is the world's premier measurement company and a technology leader in communications, electronics, life sciences and chemical analysis. The company's 19,000 employees serve customers in more than 110 countries. The company has operations in India, Argentina, Puerto Rico, Bolivia, Paraguay, Venezuela, and Luxembourg, among others. * * * As reported in the Troubled Company Reporter-Europe on Oct. 29, 2007, Moody's Investors Service assigned a Ba1 rating to Agilent Technologies' proposed offering of USUS$500 million senior notes due 2017 and affirmed its existing ratings and stable outlook. ALLIED WASTE: Reports $115.3 Mil. Earnings for 2007 Fourth Quarter ------------------------------------------------------------------ Allied Waste Industries Inc. reported net income of $115.3 million for fourth quarter ended Dec. 31, 2007, compared to $9.8 million net income for the same period in 2006. For the 2007 fourth quarter, income from continuing operations was $117.6 million, in comparison with the results of the prior year's earnings from continuing operations of $8.2 million. Total revenue for the fourth quarter was $1.52 billion, an increase of $54.8 million, or 3.7%, over prior year revenue of $1.47 billion. Higher revenue for the quarter was driven by a 5.7% increase in average price as the company continued to benefit from ongoing implementation of its strategic pricing program. In addition, the company's fuel recovery fee increased 50 basis points in the fourth quarter compared with the prior year which reflects the impact of higher diesel fuel costs. Higher prices for the period were partially offset by a 3.8% decrease in volumes related primarily to the continued slowing of the economy. "This past year saw an acceleration in key business performance measures including earnings growth, margin expansion, cash flow generation and, in turn, debt reduction," John Zillmer, chairman and chief executive officer, said. "By strengthening our core capabilities, we have been able to deliver excellent financial results, while building an operating and financial platform that supports the future growth of Allied Waste." Gross profit for the quarter was $586.7 million, up $47.0 million, or 8.7%, over the comparable period last year. Gross profit as a percentage of revenue increased to 38.6%. Operating income for the quarter increased 17.6% to $294.6 million, compared with $250.5 million last year. Fourth quarter operating income as a percent of revenue was 19.4%, an increase of 230 basis points over the same period last year. Fourth quarter cash flow from operations was $324.3 million, compared with $289.8 million in the prior year, as the quarter benefited from higher operating income, partially offset by changes in working capital. Free cash flow for the quarter gained 14.0% to $164.2 million, as increased cash flow from operations was partially offset by higher capital expenditures. Free cash flow for the full year increased 92% to $479.0 million, compared with $250.1 million for the prior year, resulting primarily from the strong increase in operating income and favorable changes in working capital. For the year ended Dec. 31, 2007, Allied Waste's revenue was $6.07 billion, an increase of $160.2 million, or 2.7%, over prior year's revenue of $5.90 billion. Continued strong pricing for the year of 6.0% was partially offset by a 3.5% decline in annual volumes driven primarily by a slowdown in housing construction. Operating income for the year increased 10.6% to $1.06 billion. Income from continuing operations in 2007 doubled to $309.8 million, compared with 2006 income of $155.8 million. Allied Waste ended the year with debt, net of cash, of $6.4 billion, down $404.5 million from 2006, and a debt-to-total capital ratio of 63.0%. Subsequent to the close of the year, the company used accumulated cash to retire $161.2 million of outstanding senior notes, which matured on Jan. 15, 2008. As of Dec. 31, 2007, the company's balance sheet reflected total shareholder's equity of $3.9 billion. About Allied Waste Industries Inc. Based in Scottsdale, Arizona, Allied Waste Industries Inc. -- http://www.alliedwaste.com/and http://www.disposal.com/-- (NYSE: AW) provides waste collection, transfer, recycling, and disposal services for residential, commercial, and industrial customers in over 100 major markets spanning 37 states and Puerto Rico. The company has 24,000 employees. * * * Moody's Investor Services placed Allied Waste Industries Inc.'s long-term corporate family and probability of default ratings at 'B1' in February 2007. The ratings still hold to date with a positive outlook. AMAZON.COM INC: Moody's Raises Corporate Family Rating to 'Ba1' --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of Amazon.com, including the corporate family rating to Ba1 from Ba2 and its speculative grade liquidity rating to SGL-1 from SGL-2. The rating outlook is positive. The upgrade reflects the company's very strong fiscal year 2007 sales growth which resulted in a notable improvement in profitability, free cash flow, and further strengthening in the company's credit metrics. The upgrade also reflects Amazon.com's ability to generate solid sales growth during the holiday season despite an overall weak retail selling environment. The upgrade to an SGL-1 reflects the sizable increase in the company's cash balances which helps mitigate concerns over the company's lack of committed external financing. This rating action concludes the review for possible upgrade initiated on Nov. 19, 2007. These ratings are upgraded: -- Corporate family rating to Ba1 from Ba2; -- Probability of default rating to Ba1 from Ba2; -- Senior subordinated notes to Ba2 (LGD5, 88%) from Ba3 (LGD5, 82%); -- Senior subordinated shelf rating to (P)Ba2 from (P)Ba3,: -- Preferred stock shelf rating to (P)Ba2 from (P)B1; -- Speculative grade liquidity rating to SGL-1 from SGL-2. These rating is affirmed: -- Senior unsecured shelf rating at (P)Ba1. Amazon.com's Ba1 corporate family rating reflects the company's solid credit metrics, well recognized brand name, international diversification, and its dominant position in online retailing. The rating is also supported by the company's strong supply chain and fulfillment capabilities which are clearly a competitive advantage. While Amazon.com has a young corporate age, the company has achieved a level of scale and performance such that it has demonstrated that its business model has matured and that it clearly has staying power over the long term. Additionally, given its current capital structure, the company will likely maintain investment grade credit metrics over the foreseeable future barring a material change in financial policy. The rating is constrained by the company's relatively short history of profitability (five years), its rapid growth rate which can potentially strain its' internal resources, business procedures, and controls. Ratings are also constrained by its high seasonality, the product volatility associated with media products, and the company's unclear financial policies. The speculative grade liquidity rating of SGL-1 reflects very good liquidity, and is supported by the company's $3.1 billion in cash balances at Dec. 31, 2007, offsetting its lack of a committed bank credit facility. The SGL-1 also reflects Moody's expectation that the company will maintain ample cash balances, in excess of $2 billion, over the next twelve months. The rating outlook is positive. The positive outlook reflects the strength of Amazon's credit metrics for its rating category, Moody's expectation that Amazon will continue to perform solidly, and will likely reduce its current levels of outstanding debt. The positive outlook also reflects Moody's expectation that share repurchases will solely be financed from excess cash balances and free cash flow. Amazon.com, headquartered in Seattle, Washington, is the world's largest internet based retailer. Total revenues were approximately $14.8 billion for the fiscal year ended Dec. 31, 2007. AMERIGROUP CORP: Earns $31.1 Million in 2007 Fourth Quarter ----------------------------------------------------------- AMERIGROUP Corporation disclosed Wednesday that its net income for the fourth quarter of 2007 increased 3.9% to $31.1 million, versus net income of $29.9 million for the fourth quarter of 2006. This compares sequentially to net income of $31.2 million for the third quarter of 2007. For the year ended Dec. 31, 2007, net income was $116.5 million, versus net income of $107.1 million for full-year 2006. "Our strong fourth quarter results capped off an excellent year for AMERIGROUP. We have applied a disciplined approach to new markets and products and effectively managed our mature markets, all of which position us well to benefit from future growth," said James G. Carlson, AMERIGROUP's president and chief executive officer. "Fundamentally, we feel very good about our business and our outlook for 2008 remains positive." Total revenues for the fourth quarter of 2007 increased 33.0% to $1.1 billion compared with $809.7 million in the fourth quarter of 2006. Sequentially, total revenues increased $44.0 million, or 4.3%, compared with the third quarter of 2007. The sequential increase primarily reflects rate increases received in Texas and Florida in September. For the year ended Dec. 31, 2007, total revenues increased 39.2% to $3.9 billion from $2.8 billion for the year ended Dec. 31, 2006, reflecting 38.5% organic premium revenue growth. The retroactive rate increase in Georgia is not included in the 2007 results. Fourth quarter investment income and other revenue was $23.7 million compared with $11.9 million in the fourth quarter of 2006. Sequentially, investment income and other revenue increased $4.6 million, or 24.1%, from the third quarter of 2007. Investment income and other revenue increased in the fourth quarter primarily due to the inclusion of the newly acquired TLC Family Care Health Plan in West Tennessee with 170,000 members, which are serviced under an administrative services only agreement with the State of Tennessee. Health benefits as a percent of premium revenues were 82.9% for the fourth quarter of 2007 versus 80.4% in the fourth quarter of 2006, and were consistent with the third quarter of 2007. For the full-year 2007, the health benefits ratio was 83.1% compared with 81.1% for the full-year 2006. Selling, general and administrative expense was $141.5 million or 13.1% of total revenues for the fourth quarter of 2007 versus $114.8 million or 14.2% of total revenues in the fourth quarter of 2006, and compared with $129.9 million or 12.6% of total revenues in the third quarter of 2007. For the full-year 2007, the selling, general and administrative expense ratio was 12.6% compared with 13.0% for the full-year 2006. The sequential increase in selling, general and administrative expense is primarily due to an increase in experience rebate expense in Texas driven by two factors: an accrual of $7.4 million associated with the resolution of audit items on all open experience rebate reports for prior years', as previously disclosed in AMERIGROUP SEC filings; and, the experience rebate expense associated with the favorable reserve development in the State. The total favorable reserve development recorded for the company, in the quarter, was fully offset by the experience rebate expense items. Balance Sheet and Cash Flow Highlights Cash and investments at Dec. 31, 2007, totaled $1.5 billion. Unregulated cash and investments were $557.8 million of which $206.4 million was unrestricted. Cash flow provided by operations totaled $97.0 million for the three months ended Dec. 31, 2007, and $350.7 million for the full year, compared to $235.7 million in the prior year. Cash flow in the quarter was positively impacted by strong net income and growth in claims payable. Stock Repurchase Program The Board of Directors has approved a stock repurchase program, whereby the company may repurchase up to one million shares of its common stock. "Implementing a stock repurchase program reflects the strength of AMERIGROUP's cash flow and balance sheet," said James W. Truess, executive vice president and chief financial officer. "The primary purpose of this program will be to mitigate the dilution from option exercises and stock grants." At Dec. 31, 2007, the company's consolidated balance sheet showed $2.09 billion in total assets, $1.17 billion in total liabilities, amd $913.9 million in total stockholders' equity. About Amerigroup Corp. Headquartered in Virginia Beach, Virginia, Amerigroup Corporation (NYSE: AGP) -- http://www.amerigroup.com/-- improves healthcare access and quality for the financially vulnerable, seniors and people with disabilities by developing innovative managed health services for the public sector. Through its subsidiaries, AMERIGROUP Corporation serves more than 1.7 million people in the District of Columbia, Florida, Georgia, Maryland, New Jersey, New York, Ohio, South Carolina, Tennessee, Texas and Virginia. * * * Moody's Investors Service placed AMERIGROUP Corp.'s long-term corporate family rating at 'B1' and bank loan debt rating at 'Ba3' in March 2007. The ratings still hold to date with stable outlook. ANDREW SCHOR: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Andrew Winston Schor Lisa Cutt Schor 791 Crandon Boulevard, Apartment 307 Key Biscayne, FL 33149 Bankruptcy Case No.: 08-01858 Chapter 11 Petition Date: February 14, 2008 Court: Middle District of Florida (Tampa) Judge: Catherine Peek McEwen Debtor's Counsel: Buddy D. Ford, Esq. 115 North MacDill Avenue Tampa, FL 33609-1521 Tel: (813) 877-4669 Fax: (813) 877-5543 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100 Million to $500 Million The Debtor did not file a list of its largest unsecured creditors. ASSURED PHARMACY: Consolidates Ore. Pharmacy with Assureds' ----------------------------------------------------------- Assured Pharmacy Inc. has consolidated the operation of its pharmacy located at 3822 S.E. Powell Blvd. in Portland, Oregon. This pharmacy was opened under previous management, and is being consolidated into Assureds' 10196 SW Park Way pharmacy, which is also located in Portland. Consolidating the Powell Blvd. pharmacy allows Assured to further leverage its existing infrastructure and is expected to result in reduced costs. All remaining pharmacies, including the 3 inherited by current management, are well-situated, and on track to reach the annual revenue target of $5 million per pharmacy. The Powell Blvd. location, while cash flow positive on an operating basis, does not have the appropriate demographics to meet current management's annual revenue target. Assured's current management team seeks to locate pharmacies in areas where there are large numbers of targeted physicians in the vicinity of any prospective location. Assured is focused on obtaining its customers directly in a physician's office, creating a superior due diligence process, and affording Assured an important advantage in the marketplace for dispensing chronic pain medications. "Having inherited 2 of our 3 Oregon locations, closing the Powell Blvd. location appropriately restructures our presence in the Portland market," Robert DelVecchio, CEO of Assured Pharmacy, stated. "We are exploring other potential locations in the Oregon area, well as in other states. At this early stage in our growth, we believe we are able to cherry pick the best opportunities for our new pharmacy locations. The strength of our business model is in the financial metrics. We remain committed to growing and developing retail pharmacies in locations in which our careful due diligence indicates significant demand for our services." About Assured Pharmacy Based in Irvine, California, Assured Pharmacy Inc., fka eRXSYS Inc. (OTC BB: APHY.OB) -- http://www.assuredpharmacy.com/-- provides customized services for patients with and physicians treating chronic pain, including specialized expertise in dispensing pain medication, including Class II substances, streamlined prescription processes, digital prescribing technologies, and specialty drug compounding services. APHY also offers a complete line of durable medical equipment through its DME division. APHY currently operates retail sites in Portland, Oregon, Santa Ana and Riverside, California, and Kirkland, Washington. Going Concern Doubt Miller, Ellin & Company LLP expressed substantial doubt about Assured Pharmacy Inc.'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 negative cash flow from operations of about $3.7 million in 2006, accumulated deficit of about $19.7 million at Dec. 31, 2006, and recurring losses from operations. As of June 30, 2007, the company had an accumulated deficit of $21.2 million and negative cash flow from operating activities for the six month period ended June 30, 2007 of $954,141. AVIS BUDGET: Incurs $916 Million Net Loss in Full Year 2007 ----------------------------------------------------------- Avis Budget Group Inc. reported results for its fourth quarter and full year, which ended Dec. 31, 2007. Full-year revenue increased to a record $6.0 billion, and the company's pretax loss was $1.0 billion due to a non-cash goodwill impairment charge recorded in the fourth quarter. For the fourth quarter, revenue was $1.4 billion, an increase of 4% versus fourth quarter 2006, and the pretax loss was $1.2 billion. Excluding unusual items, full-year EBITDA was $409 million and pretax income was $198 million, and fourth-quarter EBITDA was $86 million and pretax income was $36 million. The company reported a net loss of $916 million for the full year 2007 and $1.0 billion for the fourth quarter 2007. It had a net income of $3 million for the full year 2006 and a net loss of $2 billion for the fourth quarter of 2006. "In a challenging competitive environment, our results are a testament to the company's employees and their commitment to being cost-efficient while still delivering world-class service to our loyal customers," said Avis Budget Group Chairman and Chief Executive Officer Ronald L. Nelson. "In the fourth quarter, although leisure pricing was below our expectations, we continued to execute on key strategic initiatives. the company's Performance Excellence process improvement initiative, growth in ancillary revenues, and expansion of our off-airport business all provide a strong base for growth in 2008 and beyond." As of Dec. 31, 2007, the company's balance sheet reflected $214 million cash and cash equivalents, $7.4 billion net worth of vehicles, $5.6 billion debt under vehicle program, $1.8 billion corporate debt, and $1.5 billion stockholders' equity. Fourth Quarter Results In the fourth quarter, the company's car rental revenues increased 6% year-over-year, driven primarily by a 3% increase in rental days and a 23% increase in ancillary revenues. Time and mileage revenue per day rates for the company's car rental operations were virtually unchanged versus fourth quarter 2006 as leisure pricing was challenged. Commercial time and mileage rates per day increased and the company continued to achieve modest price increases on the company's commercial contract renewals. The company's car fleet costs increased 9% due to a 3% increase in its fleet to support volume growth, a 4% increase in its per-unit fleet costs and a 2% increase due to foreign exchange movements. The company's disposition of risk cars progressed well, and its fleet costs benefited from longer hold periods. Other operating expenses, excluding fleet-related costs, declined 140 basis points to 50.5% of revenue, reflecting continued savings in maintenance and damage expenses and reduced self-insurance costs. Truck rental revenue and EBITDA declined as the 2% increase in rental days, lower fleet costs and increased utilization were offset by price declines versus the prior year. The increase in rental days was driven by increased commercial rentals as the company's growth initiatives began to take hold, while local consumer and one-way rental volumes continued to experience softness as the housing market remained weak. Pricing declined across all sectors of the company's business, and the reduction in one-way rentals, which typically have a higher daily rate, magnified the decline in average daily rate. In the fourth quarter, the company recorded a $1.2 billion non- cash goodwill impairment charge ($1.1 billion after-tax) primarily due to the decline in market value of the company's stock price at year-end compared with book value. The company's fourth quarter results also included $6 million of vehicle interest expenses related to the mark-to-market of derivatives which hedge its exposure to interest rates in 2008. Full-Year Results For the full year, the company's car rental revenues increased 8% versus the previous year, driven by a 4% increase in rental days and 17% growth in ancillary revenues. It achieved price increases in the company's commercial rentals while leisure pricing pressures were intense throughout much of the year. The company's rental days increased due to domestic enplanement growth, its off-airport expansion initiatives and solid growth in its international operations. The company's off-airport revenues increased 9%, to $820 million, and it opened 195 new locations during the year, bringing total off-airport locations to more than 1,500. Ancillary revenue growth was driven by Where2 GPS rentals, which contributed over $45 million in incremental revenue year- over-year, and increased customer recoveries of airport-mandated fees. The company's car fleet costs increased 11% year-over-year, reflecting industry-wide cost increases for model-year 2007 and 2008 cars, a 4% increase in its average fleet size to accommodate the company's rental day growth, a 6% increase in its per-unit fleet costs and a 1% increase due to foreign exchange movements. Other operating expenses, excluding fleet-related and separation- related costs, and selling, general and administrative costs declined to 50.5% and 10.5% of revenue, respectively, as it continues to focus on cost containment. Other Items Share Repurchase Program -- The company revealed on January 23 that its Board has authorized a share repurchase program of $50 million. To date, Avis repurchased 1.4 million shares at an average price of $11.88 per share. Domestic Vehicle Financing Facility -- The company has already received bank commitments totaling more than $800 million for a new 364-day vehicle-backed funding facility that will accommodate the company's peak 2008 funding needs. The facility is expected to close later this month and will carry borrowing spreads that are approximately one-half percentage point higher than the company's similar pre-existing facilities. Newark Budget Licensee Acquisition -- On Jan. 29, 2008, it completed the previously announced acquisition of the Budget licensee operating at Newark Liberty International Airport. Carey -- The company's fourth quarter results include the company's equity in the results of Carey International, the leading international provider of chauffeured ground transportation services. These results are included in the Corporate and Other segment and did not have a meaningful impact. Separation Expenses -- Avis incurred $2 million of expenses in fourth quarter 2007 for activities related to the company's 2006 separation into four independent companies, versus $38 million in fourth quarter 2006. Substantially all of these expenses were funded with cash left with Avis Budget Group at the time of the separation or cash received from Wyndham and Realogy for this purpose. It also recorded a $7 million separation-related credit for a reduction in tax refunds payable to Wyndham and Realogy. Excluding separation-related expenses and restructuring costs incurred in 2006, fourth quarter EBITDA was $86 million compared to pro forma EBITDA of $88 million in fourth quarter 2006. Annual Stockholders Meeting -- Avis had scheduled its 2008 Annual Meeting of Stockholders for June 5, 2008 in Tulsa, Oklahoma, which is the site of the company's largest contact center. Stockholders of record as of the close of business on April 10, 2008, will be entitled to vote at the annual meeting. Stockholder Rights Plan -- The company's Board of Directors has determined that it will not ask shareholders to approve the continuation of its existing stockholder rights plan at the 2008 Annual Meeting, and therefore the existing rights plan will expire on the day of the annual meeting. Discontinued Operations -- In its reported results, the company classifies as discontinued operations the results of its former Realogy, Travelport and Wyndham businesses for 2006. Outlook The company projects that domestic enplanements, which are a principal determinant of on-airport rental volumes, will increase modestly in 2008 compared to 2007 amid a relatively weak macroeconomic environment in first half 2008. In addition, the company expects that its domestic time and mileage revenue per rental day will increase and its domestic rental day volume will increase approximately 3% to 5% in 2008 compared to 2007. Avis expects incremental year-over-year revenue growth from Where2 GPS rentals and insurance replacement rentals. Domestic fleet costs are expected to increase approximately 4% to 6% per vehicle in 2008 compared to 2007. For the 2008 model year, the company expects the portion of its domestic fleet that is not subject to manufacturer repurchase agreements to increase to approximately 50%, from approximately 20% in model year 2007. In addition, the company has intensified its efforts to reduce costs and enhance productivity through its Performance Excellence and other initiatives and expects the impact of these initiatives to exceed $40 million over the course of 2008. Based on these expectations, the company projects that its revenue, EBITDA and pretax income for full year 2008 will increase, compared to 2007 revenue of $6.0 billion, EBITDA of $409 million and pretax income of $198 million, excluding unusual items. A full-text copy of Avis' fourth quarter and full year 2007 financial report is available for free at: http://ResearchArchives.com/t/s?2818 About Avis Budget Group Headquartered in Parsippany, N.J., Avis Budget Group Inc. formerly Cendant Corporation (NYSE: CAR) -- http://www.avisbudgetgroup.com/ -- provides vehicle rental services, with operations in more than 70 countries. Through its Avis and Budget brands, the company leases general-use vehicles in North America, Australia, New Zealand and certain other regions. Avis Budget Group has more than 30,000 employees. * * * As reported in the Troubled Company Reporter on Jan. 29, 2008, Standard & Poor's Ratings Services placed its ratings on Avis Budget Group Inc., including the 'BB+' corporate credit rating, on CreditWatch with negative implications. AVIS BUDGET: Ernst & Young Settles Decade-Old Suit for $300 Mil. ---------------------------------------------------------------- Ernst & Young LLP paid $300 million as settlement to a litigation filed by Avis Budget Group Inc. formerly Cendant Corporation, David Reilly and Nathan Koppel at The Wall Street Journal report. Claims for Accounting Irregularities As reported in the General Corporate Litigation Updates on Dec. 27, 2007, Avis Budget was still involved in litigation asserting claims associated with accounting irregularities discovered in 1998 at former CUC International business units outside of the principal common stockholder class action litigation. Cendant, a merger of CUC International Inc. and HFS Inc., lost about "$14 billion in value in one day" when it disclosed in April 1998 that officers at CUC International inflated earnings since 1986, and that the inflated amount from 1995 to 1997 had reached $500 million, WSJ recalls. Ex-chairman and CEO at CUC, Walter Forbes, was convicted and afforded more than 12 years in jail, WSJ adds. On Sept. 7, 2007, in an action arising out of Cendant's acquisition of the Credentials business in 1998, captioned CSI Investment et al. vs. Cendant et al., the federal court in the Southern District of New York granted summary judgment in the amount of $94 million plus attorneys' fees to the plaintiffs on their breach of contract claims. A motion for reconsideration was filed shortly after receipt of the adverse summary judgment decision. In October 2007, one of the two remaining cases related to In Re Cendant Corporation Litigation was settled in principle for an aggregate payment of $26 million to the plaintiffs in that action. Avis had an additional accrued liability of about $1 million recorded on its consolidated condensed balance sheet as of Sept. 30, 2007, for remaining claims based upon its best estimates. In connection with a spin-off in July 2006, Avis entered into the separation agreement, under which Realogy Corporation and Wyndham Worldwide Corporation have assumed all liabilities related to the litigation. Largest Settlement by an Auditor WSJ notes that in 2000, E&Y calmed down Cendant shareholders with $335 million. In turn, Cendant spent about $2.85 billion in efforts to resolve the shareholder case. E&Y told WSJ late last week that the Cendant lawsuit was "a collusive" fraud committed by Cendant's officers over a decade ago. E&Y added that while they "had a strong case" in which they could have won, the settlement permitted the Cendant lawsuit to become water under the bridge. Although, the large amount of pay out does not adversely affect E&Y, WSJ notes, that it is "one of the largest" settlements by an auditor. WSJ recalls that PricewaterhouseCoopers LLP paid $225 million in 2007 to settle suit filed by Tyco International Ltd. while Deloitte & Touche LLP paid $210 million to settle suit filed by Adelphia Communications Corp. About Avis Budget Group Headquartered in Parsippany, N.J., Avis Budget Group Inc. formerly Cendant Corporation (NYSE: CAR) -- http://www.avisbudgetgroup.com/ -- provides vehicle rental services, with operations in more than 70 countries. Through its Avis and Budget brands, the company leases general-use vehicles in North America, Australia, New Zealand and certain other regions. Avis Budget Group has more than 30,000 employees. On July 31, 2006, Avis Budget completed the spin-offs of Realogy Corporation and Wyndham Worldwide Corporation, and on Aug. 23, 2006, the company completed the sale of Travelport Inc. On Aug. 29, 2006, Cendant Corporation changed its name to Avis Budget Group Inc. In October 2007, the company acquired 45% interest in Carey International Inc. that provides chauffeured ground transportation services worldwide. It also obtained a one-year option to increase its ownership stake in Carey to about 80%. Avis Budget Car Rental LLC is Avis Budget Group Inc.'s car-rental operating subsidiary. * * * As reported in the Troubled Company Reporter on Jan. 29, 2008, Standard & Poor's Ratings Services placed its ratings on Avis Budget Group Inc., including the 'BB+' corporate credit rating, on CreditWatch with negative implications. BARNERT HOSPITAL: Court Approves Garfunkel Wild as Special Counsel ------------------------------------------------------------------ The Hon. Donald H. Steckroth of the United States Bankruptcy Court District of New Jersey authorized Nathan and Miriam Barnert Hospital Association to employ Garfunkel, Wild and Travis P.C. as its special counsel. As reported in the Troubled Company Reporter on Feb. 5, 2008, Garfunkel Wild is expected to assist the Debtor in litigation of a Horizon Suit for recovery of damages necessary for the operations of the Debtor and in the best interest of the Debtor's unsecured creditors. Horizon Healthcare Lawsuit The Debtor, together with other defendants, is facing a lawsuit filed by Horizon Healthcare Services Inc., together with other plaintiffs, with the Superior Court of New Jersey, Law Division, Bergen County. The plaintiffs assert claims for breach of contract, unjust enrichment, and quantum meruit. The plaintiffs seek compensatory damages of not less than $50,000,000 for all hospitals. As set forth in the Engagement Agreement, the Debtor will pay a 15% contingency fee of any payments, debits or other consideration received by the Debtor as a result of the Horizon action. The firm assured the Court that it is a disinterested person pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached at: Jeffrey S. Brown, Esq. Garfunkel, Wild & Travis PC 411 Hackensack Avenue Hackensack, NJ 07601 Tel: (201) 883-1030 Fax: (201) 883-1031 http://gwtlaw.com/ Nathan and Miriam Barnert Memorial Hospital Association, dba Barnert Hospital, -- http://www.barnerthospital.com/-- owns and operates a 256 bed general acute care community hospital located at 680 Broadway in Paterson, New Jersey. The company filed for chapter 11 protection on Aug. 15, 2007 (Bankr. D. N.J. Case No. 07-21631). David J. Adler, Esq., at McCarter & English, LLP, represents the Debtor in its restructuring efforts. Warren J. Martin Jr., Esq. and John S. Mairo, Esq., at Porzio Bromberg & Newman, P.C., represent the Official Committee of Unsecured Creditors in this case. Donlin Recano & Company Inc. is the Debtor's claims, noticing, and balloting agent. The Debtor's schedules reflect total assets of $46,600,967 and total liabilities of $61,303,505. The Court extended the Debtor's exclusive filing period to file a plan until April 11, 2008. BEAZER HOMES: S&P Downgrades Corporate Rating to 'B' From 'B+' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured note ratings on Beazer Homes USA Inc. to 'B' from 'B+'. The ratings remain on CreditWatch, where they were placed with negative implications on Aug. 14, 2007. The downgrade acknowledges the potential for further liquidity pressure on the company as the U.S. housing market downturn continues. Despite these challenges, Beazer currently maintains an adequate cash position, and management is focused on the company's balance sheet. S&P ratings on Beazer will remain on CreditWatch with negative implications until the company files all financial statements with the SEC. Beazer has received a waiver of events of default from its bondholders and bank lenders through May 15, 2008. Atlanta, Georgia-based Beazer markets its homes in more than 40 markets in the West, the Southeast, Florida, and the Mid-Atlantic states. Home sales in many of these markets remain depressed as weak consumer confidence, rising foreclosures, and tight credit standards exacerbate already high levels of competing inventory. Beazer has not filed financials with the SEC since the company's second quarter, ended March 31, 2007. Beazer did report minimal preliminary financial and operating data for fiscal first-quarter ended Dec. 31, 2007. These results showed some sequential improvement, particularly in the company's cancellation rate, which dropped to 46% from 68%. Despite this drop, a 46% cancellation rate is still high. Orders were off 29% to 1,260 homes, and closings declined 25% to 2,010 homes. Similar to peers, Beazer's margins remain pressured due to competitive pricing and incentives. As a result, Beazer noted that it expects its first-quarter results to include material noncash charges related to inventory, which would weaken tangible net worth. Tangible net worth was $1.3 billion at June 30, 2007, which compares with the $900 million minimum required by the credit facility. In addition, Beazer very recently decided to close its challenged mortgage operations and has entered into a marketing arrangement with Countrywide Financial Corp., whereby Countrywide will be Beazer's preferred mortgage provider. Beazer's liquidity is currently adequate to meet its capital needs, but is limited to cash on hand. Beazer had more than $325 million in cash as of Dec. 31, 2007; however, $92 million was restricted cash pledged to collateralize the company's letters of credit. The company amended its credit facility in October 2007, converting the $500 million revolving facility to a secured facility. Currently, no assets are pledged other than the cash that collateralizes the letters of credit. As a result, Beazer currently has no borrowing capacity. However, the company does expect to pledge some assets in the near term to obtain modest revolver availability, and Beazer has the capacity to pledge sufficient assets to gain full access. If Beazer trips a covenant in the near future, however, such as the one governing minimum tangible net worth, the company will need to go back for an amendment. If that happens, it remains unclear how accommodating the banks would be in this environment. Beazer did prudently suspend its common stock dividend, which saves the company roughly $16 million annually. Ratings Lowered and Remaining on CreditWatch Negative Rating ------ Beazer Homes USA Inc. To From --------------------- -- ---- Corporate credit B/Watch Neg/-- B+/Watch Neg/-- Senior unsecured B/Watch Neg B+/Watch Neg BELO CORP: Posts $333.4 Million Net Loss in 2007 Fourth Quarter --------------------------------------------------------------- Belo Corp. reported a net loss for the fourth quarter and full year 2007 of $333.4 million and $262.8 million, respectively, compared with net income of $51.3 million and $130.5 million, respectively, for the fourth quarter and full year 2006. The fourth quarter net loss includes a non-cash charge to goodwill of $367.0 million. Excluding the impairment charge, fourth quarter net earnings were $33.1 million, and full year net earnings were $103.7 million. Dunia A. Shive, Belo Corp.'s president and chief executive officer, said, "The Television Group achieved outstanding performance in 2007, reporting record revenue even though 2007 followed the strong political spending of 2006, and the Newspaper Group made significant progress in transforming its business to compete in an increasingly Internet-centric environment." Commenting on the recent spin-off of Belo's newspaper businesses and related assets into a separate publicly-traded company called A. H. Belo Corporation, Shive added, "Both Belo and A. H. Belo are well positioned to compete effectively in their respective industries. Each company has outstanding assets with balance sheets appropriate for their businesses and the capacity to support future growth and innovation." The fourth quarter 2007 loss includes a non-cash impairment charge of $367.0 million related to reductions to goodwill of $243.0 million at The Providence Journal, $102.0 million at The Press-Enterprise in Riverside, California and $22.0 million at WHAS-TV in Louisville. The fourth quarter and full year 2007 also include non-recurring expenses related to the company's spin-off of its newspaper businesses and related assets of $6.5 million and $9.3 million, respectively. Consolidated revenue for the fourth quarter of $407.0 million decreased 6.8% versus the fourth quarter of 2006, while full year 2007 revenue of $1.52 billion decreased 4.6% when compared to full year 2006. Belo's total operating costs and expenses for fourth quarter and full year 2007, excluding the impairment charge, decreased 1.1% and 2.4%, respectively, benefiting from head count reductions, lower pension expense related to the company's decision to freeze its pension plan effective March 31, 2007, lower newsprint expense resulting from decreases in both consumption and price, and lower distribution expense related primarily to the reduced circulation perimeter of The Dallas Morning News. Consolidated EBITDA decreased 19.0% percent in the fourth quarter of 2007 and 8.9% for full year 2007. Belo's total depreciation and amortization expense increased 7.5% in the fourth quarter of 2007 and increased 5.7% for the full year when compared to the prior year. The increase is primarily due to asset additions related to new facilities at The Press-Enterprise and The Dallas Morning News. Income tax expense decreased $7.4 million in the fourth quarter of 2007, or 26.0%, compared to the fourth quarter of 2006 and decreased $12.7 million for full year 2007, or 17.0%, compared to full year 2006 due primarily to lower pre-tax income. Total debt at Dec. 31, 2007, was $1.2 billion. The company did not repurchase shares in the fourth quarter but repurchased approximately 827,000 shares for the year at a total cost of $17.1 million. Belo invested $31.4 million in capital expenditures in the fourth quarter and $72.0 million for the full year. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $3.18 billion in total assets, $1.93 billion in total liabilities, and $1.25 billion in total shareholders' equity. About Belo Corp. Belo Corp. -- http://wwwbelo.com/-- owns and operates 20 television stations reaching more than 14.0% percent of U.S. television households, including ABC, CBS, NBC, FOX, CW and MyNetwork TV affiliates and their associated Web sites, in 15 markets across the United States. * * * As reported in the Troubled Company Reporter on Feb. 12, 2008, in conjunction with the expected spin-off of Belo Corporation's newspaper businesses and related assets, Fitch Ratings affirmed the company's IDR and senior unsecured debt ratings at 'BB+' and removed the ratings from Rating Watch Negative. The Outlook is Stable. BERRY PLASTICS: Inks $520 Mil. Sr. Secured Bridge Loan Agreement ---------------------------------------------------------------- Berry Plastics Corporation disclosed that it obtained a $520.0 million bridge loan facility, pursuant to a Senior Secured Bridge Loan Credit Agreement which it entered into on Feb. 5, 2008, with Bank of America N.A., as administrative agent and collateral agent, and various lenders, to finance its purchase from Captive Holdings LLC of 100% of the outstanding capital stock of Captive Holdings Inc., the parent company of Captive Plastics Inc. Berry Plastics' obligations under the bridge facility are guaranteed by each of Berry Plastics' existing and future direct or indirect domestic subsidiaries that is a restricted subsidiary, subject to certain exceptions, and are secured by pledges of certain of the assets of Berry Plastics and such subsidiaries. The bridge facility contains negative covenants substantially identical to those in the indenture relating to Berry Plastics' existing second-priority notes, and contains affirmative covenants, representations and warranties and events of default substantially identical to those in Berry Plastics' existing term loan facility. The bridge facility matures on the one-year anniversary of the closing date thereof. On that date, provided that an event of default is not continuing with respect to Berry Plastics' existing term loan facility, revolving facility or second priority notes, and provided that no bankruptcy event of default is continuing with respect to the bridge facility, any outstanding bridge loans will convert into senior secured term loans, and loans thereunder that mature on the seventh anniversary of the closing date of the bridge facility. A full-text copy of the Senior Secured Bridge Loan Credit Agreement dated as of Feb. 5, 2008, is available for free at: http://researcharchives.com/t/s?2806 About Berry Plastics Headquartered in Evansville, Nebraska, Berry Plastics Corporation -- http://www.berryplastics.com/ -- is a manufacturer and supplier of a diverse mix of rigid plastics packaging products focusing on the open top container, closure, aerosol overcap, drink cup and housewares markets. The company sells a broad product line to over 12,000 customers. Berry Plastics concentrates on manufacturing high quality, value-added products sold to marketers of institutional and consumer products. In 2004, the company created its international division as a separate operating and reporting division to increase sales and improve service to international customers utilizing existing resources. The international segment includes the company's foreign facilities and business from domestic facilities that is shipped or billed to foreign locations. * * * As reported in the Troubled Company Reporter on Feb. 14, 2008, Moody's Investors Service affirmed the B3 Corporate Family Rating of Berry Plastics Corporation and downgraded certain instrument ratings. The outlook is stable. BERRY PLASTICS: Posts $31.3 Million Net Loss in Qtr. Ended Dec. 29 ------------------------------------------------------------------ Berry Plastics Corp. reported a net loss of $31.3 million for the thirteen weeks ended Dec. 29, 2007, versus a net loss of $30.8 million in the comparable period of 2006. Net sales increased 8.0% to $762.7 million for the first quarter of fiscal 2008 from $703.6 million for the same quarter in fiscal 2007. This $59.1 million increase is primarily the result of strong base business organic volume growth of 4.0% and 2.0% acquisition volume growth. Gross profit increased $22.4 million to $108.8 million for the first quarter of fiscal 2008 from $86.4 million for the same quarter of fiscal 2007. Selling, general and administrative expenses increased $7.3 million to $81.8 million primarily as a result of a $4.2 million increase in stock compensation expense, a $4.1 million increase in amortization of intangible assets, and increased expenses as a result of the organic and acquisition volume growth partially offset by realization of synergies from the Berry Covalence Merger. Restructuring and impairment charges were $3.5 million in the first quarter of fiscal 2008 primarily as a result of costs incurred associated with the plant consolidations within the flexible films segment. Other expenses increased from $4.1 million in the first quarter of fiscal 2007 to $13.0 million in the first quarter of fiscal 2008 primarily as a result of expenses associated with the integration of Old Covalence and the corresponding achievement of synergies. Net interest expense increased $1.6 million to $61.5 million primarily as a result of increased borrowings to finance the Rollpak acquisition. The company recorded an income tax benefit of $19.7 million or an effective tax rate of 38.6%, which is a slight change from the income tax benefit of $19.5 million or an effective tax rate of 37.1% in the prior quarter. At Dec. 29, 2007, the company's cash balance was $21.8 million, and the company had unused borrowing capacity of $297.2 million under its revolving line of credit. Balance Sheet At Dec. 29, 2007, the company's consolidated balance sheet showed $3.90 billion in total assets, $3.48 billion in total liabilities, and $420.3 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the thirteen weeks ended Dec. 29, 2007, are available for free at http://researcharchives.com/t/s?2809 About Berry Plastics Headquartered in Evansville, Nebraska, Berry Plastics Corporation -- http://www.berryplastics.com/ -- is a manufacturer and supplier of a diverse mix of rigid plastics packaging products focusing on the open top container, closure, aerosol overcap, drink cup and housewares markets. The company sells a broad product line to over 12,000 customers. Berry Plastics concentrates on manufacturing high quality, value-added products sold to marketers of institutional and consumer products. In 2004, the company created its international division as a separate operating and reporting division to increase sales and improve service to international customers utilizing existing resources. The international segment includes the company's foreign facilities and business from domestic facilities that is shipped or billed to foreign locations. * * * As reported in the Troubled Company Reporter on Feb. 14, 2008, Moody's Investors Service affirmed the B3 Corporate Family Rating of Berry Plastics Corporation and downgraded certain instrument ratings. The outlook is stable. BIOENERGY OF AMERICA: Court Sets Dismissal Hearing on February 25 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey will convene a hearing on Feb. 25, 2008, to consider the request of BioEnergy of America Inc. to dismiss its Chapter 11 case because it lacks financing and is unable to pay wages to its employees, Bill Rochelle of Bloomberg News reports. Edison, New Jersey-based Bioenergy of America Inc. -- http://www.bioenergyofamerica.com/-- specializes in producing biofuel alternatives. The Debtor filed for chapter 11 petition on Jan. 3, 2008 (Bankr. D.N.J. Case No. 08-10087). Richard E. Weltman, Esq., at Weltman & Moskowitz LLP represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets between $1 million and $10 million and debts between $10 million and $50 million. The Debtor owes $7,600,000 and $2,301,581, respectively to unsecured creditors, Paragon Biofuels LLC and M.P.A. BLUE WATER: Hearing Today on Further Cash Collateral Access ----------------------------------------------------------- The Honorable Marci B. McIvor has authorized Blue Water Automotive Systems, Inc. to use, on an interim basis, not more than $4,500,000 of its operating cash through February 19, 2008. Judge McIvor said the amount, purposes and period may be extended by agreement between the Debtors, its prepetition lenders, General Motors Corporation, Chrysler LLC, and Ford Motor. The United States Bankruptcy Court for the Eastern District of Michigan will convene a hearing on February 19 to consider further extension of the Debtors' Cash Collateral use. Before the Petition Date, the Debtor entered into three credit agreements totaling about $55,000,000: Balance as of Lender Loan Type Loan Amount Petition Date ------ --------- ----------- ------------- CIT Group/Business Revolver Loan $35,000,000 $17,560,463 Credit Inc. CIT Capital USA, Mortgage Loan 15,300,000 14,500,000 Inc. KPS Special Term Loan 5,000,000 5,000,000 Situations Fund II, L.P. As of the Petition Date, the Debtors estimate that they also have about $35,000,000 in unsecured trade debt outstanding from their prepetition credit agreements. To address their liquidity issues, the Debtors, in December 2007, amended their contractual relationship with their largest customer, Ford Motor Company, for an accelerated progress payment of $7,700,000 for engineering, design and tooling services that they have performed. In addition, the Debtors anticipate receipts from sales of products. The $7,700,000 Payment and the sales proceeds constitute the Debtors' operating cash. Immediately after receiving the $7,700,000 payment from Ford, CIT notified the Debtors that it would be placing a $5,000,000 "reserve" on the Debtors' borrowing base under the Prepetition Revolver Loan. As a result of that "reserve," the Prepetition Lenders denied the Debtors use of $5,000,000 from the Revolver Loan, and relieved themselves of their obligation to disburse $5,000,000 of the agreed loan amount under the Revolver Loan, Judy A. O'Neill, Esq., at Foley & Lardner, LLP, in Detroit, Michigan, the Debtors' proposed counsel, says. The Prepetition Lenders also asserted that the Revolver Loan is secured by fully perfected, non-avoidable first priority security interests and liens in substantially all of the Debtors' assets and proceeds derived from the Prepetition Collateral, Ms. O'Neill adds. The reserve on the Debtors' borrowings clearly constituted an "unjust improvement" in the Lenders' positions to the prejudice of their unsecured creditors, Ms. O'Neill asserts. She adds that the creation of the reserve contributed to the liquidity crisis the Debtors' and their unsecured creditors currently face. Ms. O'Neill asserts that the Debtors are in dire need of the Operating Cash to fund necessary and critical expenses necessary to continuing production and pay employee salaries, payroll, taxes, and other general operating and working capital purposes in the ordinary course of their business. Accordingly, the Debtors seek the Court's authority to use the Operating Cash. Ms. O'Neill tells the Court that the Debtors have prepared and delivered to CIT and the Prepetition Lenders an initial five-day Budget, which provides for, among other things, projected weekly cash receipts for each week, and projected weekly cash disbursements for those period. That Budget, however, has not publicly disclosed. The Debtors and the Prepetition Lenders have engaged in negotiations for the consensual use of the Operating Cash. The parties, however, have not reached any agreement, Ms. O'Neill says. As adequate protection, the Debtors, to the extent the Prepetition Liens asserted by the Prepetition Lenders in the Operating Cash are valid, will grant a replacement lien in postpetition accounts receivable of the Debtors. CIT Objects CIT objected to the Debtors' request, arguing that Blue Water Automotive failed to meet the burden for the use of the cash collateral. The Debtors, according to CIT, have not provided enough facts or evidence to show that the interests of the Prepetition Lenders will be adequately protected. Shalom Kohn, Esq., at Sidley Austin, in Chicago, Illinois, relates that, pursuant to the five-day budget proposed by the Debtors, the Debtors intend to use $6,000,000, during the five- day period. CIT, however, points out that the Debtors are offering only $2,000,000 of postpetition receivables as adequate protection for the use of the $6,000,000 cash collateral. Mr. Kohn notes that the Prepetition Lenders have a security interest in substantially all of the Debtors' assets to secure the Prepetition Revolving Loan and a prepetition machinery and equipment lease. Thus, Mr. Kohn points out, there is no "spare" collateral, which can be used to provide Prepetition Lenders with adequate protection. Moreover, Mr. Kohn relates that before the Petition Date, Ford has advised the Lenders that it has set off $8,000,000 of alleged claims it has against the Debtors' receivables. CIT also points out that the Cash Collateral Motion omits any discussion of what the Debtors intend to propose for DIP Financing. Mr. Kohn further relates that Ford would not consent to the Prepetition Lenders' granting a DIP Loan to the Debtors. He says the Debtors are pursuing a customer-supported DIP Loan. If the Court authorizes the Debtors to use the cash collateral, CIT asks that: (a) the use of cash collateral be limited to the minimum necessary amount; (b) no cash collateral use should be permitted except to the extent there will be postpetition receivables generated during the five-day period in an amount equal to the amount by which the sales price exceeds any inventory collateral used for that sale; (c) any lien in postpetition receivables will be senior to any future DIP financing or other liens; and (d) to avoid the risk of setoff against postpetition receivables, no shipments should be made by the Debtors postpetition unless the customer waives setoff, recoupment and other rights as to the resulting receivables. * * * The Court will hold a hearing March 12 to consider final approval of the Cash Collateral request. Objections are due March 10. As adequate protection, the Prepetition Lenders are granted a replacement lien in the Debtors' assets in the same amount as the Operating Cash used by the Debtors in the Interim Period, Judge McIvor said. About Blue Water Automotive Blue Water Automotive Systems, Inc. designs and manufactures engineered thermoplastic components and assemblies for the automotive industry. The company's product categories include airflow management, full interior trim/sub-systems, functional plastic components, and value-added assemblies. They are supported by full-service design, program management, manufacturing and tooling capabilities. With more than 1,400 employees, Blue Water operates eight manufacturing and product development facilities and has annual revenues of approximately $200 million. The company's headquarters and technology center is located in Marysville, Mich. In 2005, KPS Special Situations Fund II, L.P., and KPS Special Situations Fund II(A), L.P., acquired Blue Water Automotive through a stock purchase transaction. In 2006, the company acquired the automotive assets and operations of Injectronics, Inc., a manufacturer of thermoplastic injection molded components and assemblies. KPS then set about reorganizing the company. The company implemented a program to improve operating performance and address its liquidity issues. During 2007, the company replaced senior management, closed two facilities, and reduced overhead spending by one third. Blue Water Automotive and four affiliates filed for chapter 11 bankruptcy protection February 12, 2008, before the United States Bankruptcy Court Eastern District of Michigan (Detroit) (Case No. 08-43196). Judy A. O'Neill, Esq., at Foley & Lardner, L.L.P., in Detroit, Michigan, serves as the Debtors' bankruptcy counsel. Administar Services Group LLC, acts as the Debtors' claims agent. Blue Water's bankruptcy petition lists assets and liabilities each in the range of $100 million to $500 million. (Blue Water Automotive Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). BLUE WATER: To Tap $25,000,000 DIP Financing From Citizens Bank --------------------------------------------------------------- Blue Water Automotive Systems, Inc. and its debtor-affiliates need immediate financing and credit to fund day-to-day operations and requirements necessary to maintain production of component automotive parts for their largest customer, Ford Motor Corporation, and their other customers, the Debtors' proposed counsel, Judy A. O'Neill, Esq., at Foley & Lardner LLP, in Detroit, Michigan, says. Against this backdrop, the Debtors made efforts to solicit offers for postpetition financing from a variety of sources. Only Citizens Bank, however, was willing to extend a postpetition loan on an unsecured basis and in accordance with terms and conditions favorable to the Debtors, Ms. O'Neill says. Accordingly, the Debtors seeks to enter into a DIP Financing Agreement with Citizens Bank. The salient terms of the DIP Agreement are: Borrower: Blue Water Automotive Systems, Inc. Guarantors: BWAS Holdings, Inc.; Blue Water Automotive Systems Properties, LLC; Blue Water Plastics Mexico, Ltd.; and BWAS Mexico, LLC DIP Lender: Citizens Bank Amount of Postpetition Loan: Up to $25,000,000. Loans made beyond a formula-calculated borrowing base are "Overformula Advances." Overformula Advances will only be made if they are fully guaranteed by Ford and other Accommodating Customers acceptable to Citizens Bank. Closing Fee: $250,000 Collateral Monitoring Fee: $5,000 per month Unused Line Fee: BWASI will pay Citizens Bank a fee of (i) 0.375% per annum for periods up to and including March 31, 2008, and (ii) 0.50% per annum for periods thereafter, multiplied by the average daily unused portion of the Credit Facility. The Unused Line Fee will not apply to any amount that is not available to be borrowed as a result of any applicable reserves. Interest Rate: All Postpetition Loans that are not Overformula Advances will bear interest at a rate equal to the Prime Rate plus 1.50% per annum on the outstanding day-to-day principal balance. Overformula Advances will bear interest at a rate equal to the Prime rate per annum plus 0.50% per annum on the outstanding day-to-day principal balance. Default Interest: Default interest of additional 2% Carve Out: The superpriority administrative claims and liens granted to Citizens Bank will be subject to a Carve Out, which refers to the payment of the fees and expenses of bankruptcy professionals hired by the Debtors and any official committees. The Carve Out will include a $100,000 retainer to each of Foley & Lardner LLP and Huron Consulting Group, plus an additional $1,000,000 after the occurrence of an event of default. Credit Enhancements: Ford has agreed to provide: * a guaranty of all Overformula Advances; * a limitation of setoffs against postpetition accounts; * an agreement to purchase inventory if certain events occur; * a change of payment terms to net 10 days or equivalent expedited basis; and * payment of $7,700,000, to certain tooling vendors with respect to prepetition tooling amounts offset by Ford. Loan Term: The Postpetition Loans are due on the earliest of: (i) September 30, 2008; (ii) the occurrence of an Event of Default; (iii) the closing of a sale of all or substantially all of any Debtor's assets; or (iv) the effective date of any confirmed plan of reorganization. Security and Priority: To secure the Debtors' DIP loan obligations, Citizens Bank will be granted a perfected lien on and security interest in all property of each &