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 26, 2008, Vol. 12, No. 48 Headlines 45 HOLDINGS: Case Summary & Five Largest Unsecured Creditors AMDL INC: Posts $2.67 Mil. Net Loss in Nine Months Ended Sept 30 AMERICAN AXLE: Declares 1st Qtr. 2008 Dividend Payable on March 28 AMERICAN LAFRANCE: Wants Permission to Solicit Plan Votes AMERICAN LAFRANCE: Panel & INCAT Balk at Terms of Asset Sale AMERICAN LAFRANCE: Committee Wants Interim DIP Order Vacated AMERICAN LAFRANCE: CEO Upbeat on Company's Survival Chances ASBURY AUTOMOTIVE: Reports $12.7MM Adjusted Income for Fourth Qtr. ASSET BACKED: Realized Losses Cues S&P to Junk Rating on Class M4 ASSET BACKED: Fitch Downgrades Ratings on $2.8 Bil. Certificates ASSET BACKED: Fitch Junks Ratings on 30 Certificate Classes AVNET INC: Moody's Upgrades CFR on Improving Operating Efficiency AXCAN INTERMEDIATE: Moody's Holds B1 Ratings on Capital Changes BASIC MORTGAGE: Fitch Chips Ratings on Seven Certificate Classes BEST BRANDS: Covenant Violations Won't Affect S&P's Junk Rating BRANDYWINE REALTY: Earns $31.5 Mil. in Quarter Ended December 31 BROWN SHOE: Richard Schumacher to Retire Effective March 31 BUCYRUS INTERNATIONAL: Amends RAG Coal Share Purchase Deal BUFFETS HOLDINGS: Receives Final Approval for DIP Financing CAPITALSOURCE INC: Reports $15MM Net Loss for 2007 Fourth Quarter CELL THERAPEUTICS: Exchanges $8.943MM of 5.75% Senior Sub. Notes CENTENARY COLLEGE: Operating Deficits Cue Moody's Debt Rating Cut CENTRO NP: Fitch Maintains 'CCC' Issuer Default Rating CHARLES RIVER: S&P Lifts Rating on $350 Mil. Senior Notes to 'BB+' CLAYTON HOLDINGS: Reports $13.5MM Earnings for 2007 Fourth Quarter COMM COMMERCIAL: Fitch Holds Ratings on Upcoming Certs. Maturity COMMERCIAL VEHICLE: S&P Cuts Rating to 'B+' on Weak 2008 Prospects CONGOLEUM CORP: Bankruptcy Court Approves Put/Call Agreement CONMED CORP: S&P Lifts Ratings After 2007 Senior Debt Reduction COUNTRYWIDE FINANCIAL: Puts Sambol In-Charge of New Mortgage Biz COUNTRYWIDE FINANCIAL: Waves Off Business Partners' Resort Meeting DANA CORP: Reorganized Company Names Directors and Officers DB ZWIRN: To Liquidate $4 Billion in Assets from 2 Funds DELPHI CORP: Must Pay Professionals $49 Million in Fees & Expenses DRYDEN HIGH: S&P Withdraws Ratings on Two BB-Rated Notes DURA AUTOMOTIVE: Court OKs Amendments to Revolving DIP Debt Pact DURA AUTOMOTIVE: Must Appear at Final Hearing to OK Bonus Plan DURHAM FURNITURE: To Refocus on Key Canadian, U.S. Markets EMAGIN CORP: Expects 81% Revenues Increase in 2007 Fourth Qtr. ENCORE ACQUISITION: Earns $19.4 Mil. in Fourth Quarter of 2007 EPICOR SOFTWARE: Borrows $160 Million to Finance NSB Acquisition ERIK AIRAPETIAN: Voluntary Chapter 11 Case Summary EXTENDICARE REAL: Dec. 31 Balance Sheet Upside Down by $20M FAIRFAX FINANCIAL: Earns $600M for 2007 Fourth Quarter FIELDSTONE MORTGAGE: Five Note Classes Get S&P's Rating Downgrades FIRST MAGNUS: Court Gives Thumbs Up to Liquidation Plan FISHER COMMS: S&P Upgrades Corporate Credit Rating to 'B' From B- FOAMEX INTERNATIONAL: Expects Unit to Comply with Credit Covenants FOOT LOCKER: Allowable Dividend Payments Increased to $95 Million FORD MOTOR: Announcement of Tata Motors Deal Seen on March 6 or 7 GENERAL MOTORS: Inks Settlement Pact with UAW and Union Retirees GLADUE ISTRE: Case Summary & 19 Largest Unsecured Creditors GLIMCHER REALTY: Net Loss Down to $21MM in Quarter Ended Dec. 31 GLOBAL PAYMENT: Posts $944T Net Loss in 1st Qtr. Ended Dec. 31 GREGORY CRISCUOLO: Case Summary & 10 Largest Unsecured Creditors HEINZ GROHS: Case Summary & 12 Largest Unsecured Creditors HORNBECK OFFSHORE: Earns $25.8 Million for 2007 Fourth Quarter HOST HOTELS: Fitch to Monitor Impact of $500MM Stock Repurchase IMPLANT SCIENCES: Selling 2M Shares to Buy Ion Metrics' Assets INDYMAC ABS: Fitch Slashes Ratings on Six Certificate Classes INDYMAC ABS: Fitch Chips Ratings on $2.6 Billion Certificates INTERLINE BRANDS: Earns $13.5 Mil. for Three Months Ended Dec. 28 JAMES PATTON: Case Summary & 9 Largest Unsecured Creditors JP MORGAN: Fitch Junks Rating on $2.9 Million Certificates JRH HOLDINGS: Selling Historic Properties for $3.75 Million KLAVOHN'S NEW LEAF: Will Likely Stop Operations, Counsel Says MARCAL PAPER: Court Moves Disclosure Statement Hearing to March 14 MARKWEST ENERGY: EquityHolders Approve Redemption and Merger Plan MARKWEST ENERGY: S&P Ratings Unaffected by Approved Planned Merger MAXJET AIRWAYS: Bid Deadline Extended Until February 27 MAXJET AIRWAYS: Court OKs Morten Beyer as Valuation Consultants MBIA INC: Eliminates Quarterly Dividend to Preserve $174 Mil. MCCALL CITY: Decision to File for Bankruptcy Expected Today MEDQUEST INC: Debt Repayment Cues Moody's to Withdraw All Ratings MERITAGE HOMES: Market Pressure Prompts S&P's Rating Downgrades MERITAGE MORTGAGE: Seven Note Classes Obtain S&P's Rating Cuts METRO ONE: Gary Henry Resigns as Director and President MICHAEL VALDEZ: Case Summary & 7 Largest Unsecured Creditors MNJ USED CARS: Owner Nazer Haidar Found Guilty of Bankruptcy Fraud MOBILE MINI: Earns $12.4 Million in Quarter Ended December 31 MQ ASSOCIATES: Moody's Withdraws All Ratings After Debt Repayment NETBANK INC: Asks to Further Move Plan-Filing Deadline to March 10 NEUMANN HOMES: $2.5 Million PFS-Montgomery Asset Sale Approved NEW 118TH: Court OKs Chapter 11 Trustee's Proposed Sale Procedure NEW 118TH: Wants Schedules Filing Deadline Extended to March 31 NEWPARK RESOURCES: Earns $6.75 Mil. in Quarter Ended December 31 NORTH AMERICAN TECH: Dec. 30 Balance Sheet Upside-Down by $6.2 M. PACIFIC RIM: Case Summary & Six Largest Unsecured Creditors PAWNSHOP: To File for Bankruptcy; Closing to Include Artworks Sale PERFORMANCE TRANS: Presents New Sale Protocol; Allied Out PERFORMANCE TRANS: Workers Balk at Allied Participation in Sale PERFORMANCE TRANS: Teamsters Wants Incentive Program Scrapped PRC LLC: Creditors Panel Wants More Time to Review DIP Financing PRC LLC: Inks Pact Recognizing Law Debenture as Collateral Agent PRC LLC: Court Okays Services Agreement With Advanced Contact QUEBECOR WORLD: Final Auction Prices of Bonds Reach 41.25% QUEBECOR WORLD: Court Approves Payment of Prepetition Commissions QUEBECOR WORLD: Court Approves Payment of Prepetition Commissions QUEBECOR WORLD: Various Entities Disclose Stake in Company REFCO INC: SEC Sues Ex-CEO Bennett for Orchestrating Fraud REFCO INC: Ex-Finance Chief Robert Trosten Admits Fraud Charges RELIANT ENERGY: Selling Channelview Cogeneration Plant for $468MM RHODES COS: Projected Weak Cash Flow Cues S&P to Junk Corp. Rating ROCK-TENN CO: Discloses $200 Mil. Sr. Notes Unregistered Offering ROCK-TENN: $200 Mil. Loan Increase Won't Affect S&P's BB+ Rating ROLAND CARTER: Case Summary & 12 Largest Unsecured Creditors SCOTTISH RE: Board Alters Strategies, May Sell Non-Core Assets SCOTTISH RE: S&P's 'B' Rating Unaffected by New Strategic Focus SCOTTISH RE: Change in Strategic Focus Cues Fitch to Cut Ratings SHARPER IMAGE: Common Stock Delisted From the NASDAQ Stock Market SHARPER IMAGE: Asks Court to Obtain $60MM of DIP Financing SHARPER IMAGE: Court Authorizes Firm to Use Cash Collateral SHARPER IMAGE: Allowed to Continue Workers' Compensation Program SHARPER IMAGE: Section 341 Meeting of Creditors Set for March 19 SHILOH INDUSTRIES: Earns $1.6MM for 2008 First Qtr. Ended Jan. 31 SIRVA INC: U.S. Trustee Appoints Committee of Unsecured Creditors SIRVA INC: Proposed Conflicts Firm Rebuts U.S. Trustee's Objection SIRVA INC: 360networks Committee Wants Claims Order Vacated SMART MODULAR: To Purchase Adtron Corporation for $20 Million Cash SOLOMON TECH: Inks Amendment and Waiver Agreement on Debentures SOLUTIA INC: Gets Exit Financing from Lenders; To Emerge Thursday SPACEHAB INC: Stock Purchase Deal with Lanphier, Bruce Fund Ends SPECIALIZED QUALITY: Case Summary & 76 Largest Unsecured Creditors SPEEDEMISSIONS INC: To Restate Financial Statements Due to Errors SYNTAX-BRILLIAN: Enters Into Forbearance Agreement With Lenders TRIPLE CROWN: Liquidity Concerns Cue S&P to Junk Corporate Rating TEMBEC INC: Lenders, Shareholders OK Recapitalization Transaction TEXHOMA ENERGY: Dec. 31 Balance Sheet Upside-Down by $4M TRIAXX FUNDING: Fitch Junks Ratings on Two Classes of Notes UNITED HERITAGE: Posts $1.7M Net Loss in Qtr. Ended Dec. 31 VALENCE TECHNOLOGY: Names Galen H. Fischer as Chief Finc'l Officer VIET-THAI INC: Case Summary & 17 Largest Unsecured Creditors WACHOVIA COMMERCIAL: Fitch Holds 'B-' Rating on $9.5 Mil. Trusts WELLMAN INC: Wants Court Approval on $225 Million DIP Financing WELLMAN INC: Wants Access to Deutsche Bank's Cash Collateral WEST CORP: Plans to Purchase Genesys for $269 Million WHERIFY WIRELESS: Dec. 31 Balance Sheet Upside-Down by $16.5M WILLIAM THOMAS: Case Summary & 17 Largest Unsecured Creditors WILLIAMS PARTNERS: Earns $44.8 Mil. for Fourth Quarter of 2007 WINDSWEPT ENVIRONMENTAL: Dec. 31 Bal. Sheet Upside-Down by $3.7M * Fitch Says Auto Finance Business Will Face Significant Road Work * Moody's Says U.S. Credit Card Performance Continues to Weaken * S&P Downgrades 114 Tranches' Ratings From 17 Cash Flows and CDOs * 2008 Economic Stimulus Act Provides Tax Benefits to Businesses * Lending Firms Oppose Legislation Aimed at Helping Homeowners * Congress Reviewing New Rescue Proposals for the Housing Market * U.S. Bankruptcy Court Clerk Neil Bason Joins Howard Rice * Two Restructuring and Bankruptcy Lawyers Join Chicago DLA Piper * Gersten Savage Advises More than $900 Mil. Transactions in 2007 * Large Companies with Insolvent Balance Sheets ********* 45 HOLDINGS: Case Summary & Five Largest Unsecured Creditors ------------------------------------------------------------ Debtor: 45 Holdings, L.L.C. 45 South Broadway Yonkers, NY 10701 Bankruptcy Case No.: 08-22244 Chapter 11 Petition Date: February 22, 2008 Court: Southern District of New York (White Plains) Judge: Adlai S. Hardin Jr. Debtor's Counsel: Kevin J. Nash, Esq. (FinkGold@aol.com) Finkel, Goldstein, Rosenbloom & Nash, L.L.P. 26 Broadway, Suite 711 New York, NY 10004 Tel: (212) 344-2929 Fax: (212) 422-6836 Total Assets: $5,529,000 Total Debts: $4,264,009 Debtor's Five Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Pipeworks Piping Corp. $135,000 55 Main Street, 2nd Floor Yonkers, NY 10701 Ike Electrical Corp. $96,000 601 West 26th Street, Suite 2M New York, NY 10001 Con Edison $41,413 Legal Department 4 Irving Place New York, NY 10004 Alan Eisenberg $35,489 Domino Transport Services, $7,500 Inc. AMDL INC: Posts $2.67 Mil. Net Loss in Nine Months Ended Sept 30 ---------------------------------------------------------------- AMDL Inc. reported net income of $631,026, which includes $247,918 of gain on foreign currency translation, for the third quarter ended Sept. 30, 2007, compared with a net loss of $962,337 for the same period in 2006. The company generated sales of approximately $5.81 million for the third quarter of 2007 compared to $21,005 for the third quarter of 2006. During the nine months ended Sept. 30, 2007, the company generated aggregate net revenues of $9.65 million, compared to $54,105 in the same period in 2006. The company's net loss was $2.67 million, which includes a foreign currency translation gain of $591,254, as compared to a net loss of $2.57 million for the third quarter ended Sept. 30, 2006. The increase in net loss for the nine month period ended Sept. 30, 2007, is primarily due to an increase in selling, general and administrative expenses. Outstanding Debt Total outstanding indebtedness increased to $8.67 million at Sept. 30, 2007, as compared to $6.58 million at Dec. 31, 2006. The primary reason for the increase is due to the increase in accounts payable, value added and other taxes payable and loan amounts. The change in loan amounts is primarily due to the fluctuation of the RMB. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $26.2 million in total assets, $8.7 million in total liabilities, and $17.5 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?286c Going Concern Doubt Corbin & Company LLP, in Irvine, Calif., expressed substantial doubt about AMDL Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's significant operating losses and negative cash flows from operations through Dec. 31, 2006, and accumulated deficit at Dec. 31, 2006. About AMDL Inc. Based in Tustin, California, AMDL Inc. (AMEX: ADL) -- http://www.amdl.com/-- together with Jade Pharmaceutical Inc., engages in the development, manufacture and marketing of proprietary pharmaceutical and diagnostic products. Through its Jade subsidiaries, AMDL Inc. currently holds licenses for 133 products that are manufactured as large volume injection fluids, tablets and other related products. It currently manufactures over 20 key generic, over the counter and supplemental pharmaceutical products under certified Chinese Good Manufacturing Practice (CGMP) standards. The company's near and long-term operating strategies focus on (i) obtaining Food and Drug Administration and China's State Food and Drug Administration approval for its proprietary diagnostic tumor- marker test kit DR-70(R), (ii) seeking a large pharmaceutical partner for its combination immunogene therapy technology, (iii) increasing sales of JPI's existing products and expanding JPI's distribution networks, (iv) funding the research and development, licensing and/or purchase of new products, and (v) wholesale distribution to retail stores known as "Jade Healthy Supermarkets." AMERICAN AXLE: Declares 1st Qtr. 2008 Dividend Payable on March 28 ------------------------------------------------------------------ American Axle & Manufacturing Holdings, Inc. declared a cash dividend of $0.15 per share payable on March 28, 2008 to stockholders of record on all of the company's issued and outstanding common stock as of March 7, 2008. Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. * * * As reported in the Troubled Company Reporter on Nov. 27, 2007, Moody's Investors Service affirmed American Axle & Manufacturing Holdings, Inc.'s Corporate Family rating of Ba3 as well its senior unsecured rating of Ba3 to American Axle & Manufacturing Inc.'s notes and term loan. At the same time, the rating agency revised the rating outlook to stable from negative and renewed the Speculative Grade Liquidity rating of SGL-1. AMERICAN LAFRANCE: Wants Permission to Solicit Plan Votes --------------------------------------------------------- American LaFrance, LLC, will appear before the U.S. Bankruptcy Court for the District of Delaware March 3, 2008, at 10:00 a.m., Eastern Time, to seek approval of a disclosure statement explaining its chapter 11 bankruptcy plan. The Debtor filed its Plan and Disclosure Statement February 3, 2008. The Debtor will demonstrate at the hearing that the Disclosure Statement contains "adequate information" as the term is defined in Section 1125(a)(1) of the Bankruptcy Code. The Debtor asserts that the Disclosure Statement provides information that is "reasonably practicable" to permit an "informed judgment" by creditors and interest holders entitled to vote on the Plan. The Debtor maintains that the Disclosure Statement contains ample information as required by the Bankruptcy Code, like claims estimates, risk factors affecting the Plan, financial information and liquidation analysis, among other things. The Debtor will also seek approval of uniform procedures for the solicitation and tabulation of votes to accept or reject the Plan. The Debtor intends to mail these solicitation materials to known holders of claims and interests who are entitled to vote, as of the Record Holder Date: -- Notice of the Plan's confirmation hearing, which is currently set on April 9, 2008, at 10:00 a.m., Eastern Time -- A copy of the Disclosure Statement -- A copy of the Plan -- A copy of the Ballot and the voting instructions In lieu of the Solicitation Materials, holders of unimpaired claims, which are presumed to have accepted the Plan, will be sent a notice, which will, among other things, include a summary of the treatment provided under the Plan to each of the unimpaired class, and the date of the Confirmation Hearing. Record Holder Date Pursuant to Rules 3017 and 3018 of the Federal Rules of Bankruptcy Procedures, the Debtor asks the Court to set March 3, 2008, as the record date by within which the holders of claims may accept or reject the Plan. Form of Ballot The Debtor has prepared Ballots for all of the voting classes of claims under the Plan. Pursuant to Bankruptcy Rule 3018(c), the Debtor proposes to distribute Ballots, with accompanying instructions for both holders of claims and nominees, if applicable, to comply with in completing the Ballots. The Debtor's balloting agent, Kurtzman Carson Consultants, LLC, will customize each Ballot to include the creditor's name, address, and claim information, if available. The Debtor asks Judge Shannon to approve the proposed form of Ballots. The Debtor also asks the Court to authorize the Balloting Agent to inspect, monitor, and supervise the solicitation process, to serve as the tabulator of the Ballots, and to certify to the Court the results of the balloting. Voting Deadline All Ballots must be received by the Balloting Agent on or before March 28, 2008, by 4:30 p.m., Pacific Time. Voting Procedures For voting purposes only, each holder of a Voting Claim will have an allowed claim, in an amount equal to either (i) the amount of the claim as set forth in the Debtor's schedules of liabilities, or (ii) if timely filed, the amount of the claim as set forth in the proof of claim. Assignee of a transferred and assigned claim will be permitted to vote for the claim only if the transfer and assignment has been reflected on the Court's docket as of the Record Date. If a claim is not listed in the Debtor's schedules, but is the subject of a timely filed proof of claim, the claim will be allowed for voting purposes only. If a Voting Claim is listed in the Debtor's schedules as contingent, unliquidated, or disputed and a proof of that claim was not timely filed, the claim will have no voting rights. If an objection is filed and served to a Voting Claim at least five days prior to the Voting Deadline, the claim will be disallowed for voting purposes only, provided that any undisputed portions of the claim will be allowed for voting purposes. Tabulation Procedures The Debtor proposes that each holder of a Voting Claim will be deemed to have voted the full amount of its claim. Holders of Voting Claims will not split their vote within a claim, but will vote their entire claim within a particular class either to accept or reject the Plan. Only original returned Ballots bearing original signatures will be counted. These Ballots will not be counted: -- Unsigned Ballots -- Ballots that are illegible or contain insufficient information -- Ballots that do not indicate an acceptance or rejection of the Plan -- Ballots that indicate both acceptance and rejection of the Plan Whenever a holder of a Voting Claim returns more than one Ballot voting the same claim prior to the Voting Deadline, only the last Ballot that is timely returned will be counted. Confirmation Hearing The Court has scheduled the Confirmation Hearing for April 9, 2008, at 10:00 a.m., prevailing Eastern Time. To permit adequate time in responding to objections prior to the Confirmation Hearing, the Debtor asks Judge Shannon to set March 28, 2008, as the last date for filing and serving written objections to the confirmation of the Plan. The Debtor intend to publish the Confirmation Hearing Notice once in the national edition of The Wall Street Journal, The New York Times, or The USA Today. Distribution Record Date The Debtor also asks the Court to set March 28 as the record date for disbursement purposes pursuant to the Plan. Without a Distribution Record Date, the Debtor notes that it could face potential liability for remitting disbursements on claims that have been or may in the future be transferred by the claimant to other entities. The Debtor further asks Judge Shannon to rule that it is not required to make any disbursements to claimants, whose claims were acquired subsequent to the Distribution Record Date, or from another claimant prior to the Distribution Record Date, but which transfer was not properly filed with the Court prior to Distribution Record Date. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. Thee company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. (American LaFrance Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Panel & INCAT Balk at Terms of Asset Sale ------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in American LaFrance LLC's case, and INCAT Systems, Inc., object to the proposed sale of the Debtor's assets. As reported in the Troubled Company Reporter on Feb. 6, the Debtor inked an asset purchase agreement for the sale of substantially all of its assets to Patriarch Partners Agency Services LLC, for $150,000,000, subject to higher and better bids. The company will pursue an asset sale if its plan of reorganization filed Feb. 4 is not accepted by creditors and confirmed by the U.S. Bankruptcy Court for the District of Delaware. Patriarch currently has arranged $50,000,000 in postpetition financing to the Debtor. Patriarch has agreed to fund the Debtor's day-to-day obligations from the bankruptcy filing until the close of the proposed sale. The DIP Loan is expected to mature May 1, 2008, or the effective date of a plan of reorganization in the Debtor's case. A. Creditors Committee The Official Committee of Unsecured Creditors argues that American LaFrance may have commenced its Chapter 11 case not for the purpose of reorganizing, but to transfer all of its assets to Patriarch Partners Agency Services, LLC, which incidentally is managed by Lynn Tilton, the sole manager of American LaFrance. "The Debtor does not seek through this process to benefit its estate or its creditors. Rather, the Debtor's only objective is to benefit the proposed asset buyer, the insider," James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, asserts. "Thus, dooming the unsecured creditors to a zero recovery." Mr. Carignan contends that Patriarch Partners Agency, the proposed stalking horse purchaser of the Debtor's assets, completely controls the Debtor and its decisions because it is: -- affiliated with managers of the funds that own all equity in the Debtor, which funds are themselves managed by Ms. Tilton; -- the agent for the Debtor's prepetition secured lenders, which lenders are also the equity holders that are managed by entities managed by Ms. Tilton; -- the agent for the lenders under the proposed DIP financing facility; and -- an affiliate of Partriarch Partners Management Group, the entity that employs nearly all of the Debtor's acting executives. Accordingly, the Creditors Committee asks the Court to deny the Debtor's request to sell substantially all of its assets to Patriarch Partners. In the event the Court determines that a sale must proceed at this early stage in the Debtor's Chapter 11 proceedings, the Creditors Committee maintains that the Debtor's proposed bidding, auction and sale procedures must be modified. The Creditors Committee proposes that any sale of the Debtor's assets and the related sale procedures must include these terms: * The proposed Procedures must expressly state, and any order approving the procedures must explicitly provide, that nothing in the Order or Procedures will permit Patriarch to 'credit bid' for the assets unless the Creditors Committee and the Debtor agree, or unless it is adjudicated by the Bankruptcy Court, that Patriarch has an allowed claim in the amount of its credit bid, secured by a valid, proper, perfected lien in those Assets for which Patriarch is submitting its credit bid. "Nothing in the Procedures nor any Order approving them will be deemed to affect the Creditors Committee's ability to challenge the amount of Patriarch's claim in the Debtor's case and the validity or perfected status of any lien Patriarch asserts," Mr. Carignan maintains. * If Patriarch Partners Agency is permitted to remain the stalking horse bidder, the Reorganization Plan should serve as its stalking horse bid. * The bid deadline should be no earlier than at least 90 days after the date notice of the sale is published. * The Sale Procedures must clearly state that bids will be entertained for any or all of the Assets, and the Debtor's discrete business segments should be separately exposed to the market so as to maximize value. * A data room must be open and accessible to prospective buyers prior to the date notice of the sale is published to permit competing bidders to conduct adequate due diligence. * The Lenders, Patriarch, and Ms. Tilton must be walled off from the seller's side of the transaction. * All decisions with respect to whether bids constitute qualifying bids, winning bids, and backup bids must be made jointly with the Creditors Committee. The Committee must be given regular updates and have access to the data room, management presentations, bids and must be fully immersed in the sale process and evaluation of bids. * Any Order approving the proposed Procedures should provide that: (i) in evaluating competing bids, no presumption of validity will be afforded to the Debtor's business judgment; and (ii) at all points during the marketing and auction process, the parties will have full recourse to seek the Bankruptcy Court's involvement to resolve any problems, issues or perceived deviations from the Sale Procedures. * Minimum overbids should only be required to be $100,000 and assumed liabilities should be accounted for in evaluating overbids. The Committee also urges the Debtor to make good faith efforts at marketing the Assets, including hiring a qualified investment banker experienced in the Debtor's industry to solicit interest and assist bidders through the process of valuation, information gathering and otherwise. The Committee further states that if the Court approves the sale procedures, the Debtor should not be permitted to change the rules of the bidding or auction procedures absent the consent of the Creditors Committee. B. INCAT Systems INCAT Systems, Inc., contends the sale, transfer, or assumption and assignment of its software by the Debtor as well as the procedures proposed by the Debtor on the assumption and assignment of contracts that are included in its Motion to Sell. INCAT Systems, Inc., along with the Dassault Systems Americas Corp., entered into an end user License Agreement with the Debtor, whereby it granted the Debtor a non-exclusive license for the use of a software on its engineering processes as well as upgrades and support services. The Debtor has sought Court approval to sell all of its assets, and assume and assign certain contracts, to Patriarch Partners Agency. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, in Wilmington, Delaware asserts that the Debtor is not allowed to sell or transfer its license of INCAT's software for these reasons: 1. The Debtor is not entitled to assume an intellectual property license, and sell and assign that to third party over INCAT's objection. 2. The Debtor cannot circumvent the protections provided to INCAT by an accomplished transfer of the License through any type of negative notice that involves cure amounts or otherwise. 3. Any order approving the sale process or a sale should provide that the License cannot be sold or assumed and assigned without first obtaining INCAT's affirmative consent. Debtor Talks Back Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Wilmington, Delaware, argues that the Committee has failed to cite a single example of an action that the Debtor has taken to the detriment of its creditors in support of its contention that the proposed sale process is a bad faith "farce" designed to confer inappropriate benefits on non-debtor parties. The Debtor asserts that any delay in the sale process could prove fatal to its business operations, as: -- its bonding companies might refuse to supply the $9,000,000 that it projects will be necessary to secure new orders; -- its customers might attempt to cancel a significant number of the nearly 100 truck orders that are four months or more past due on delivery; -- its employees might resign at levels that will hinder or prevent its ability to produce trucks in the backlog; -- it will accrue liabilities of over $50,000 per week in penalties for past-due trucks; and -- its potential customers might remain reluctant or unwilling to place orders without a firm exit date from Chapter 11. Mr. Ward adds that the 90-day delay proposed by the Committee is simply unworkable, as the Lenders have made it clear they are unwilling to advance new funds after April 2008 and the Debtor has been unable to obtain alternate financing. Moreover, the Debtor relates that it has taken immediate action to ensure meaningful review and participation by the Committee in the sales process and to canvass the market to locate all potential bidders for its assets. Mr. Wards maintains the other objections of the Committee are without merit. He points out that the Committee has not cited any authority restricting the Lenders' ability to credit bid for the assets. Based on the Committee's requests, the Debtor agrees to these modifications of the bidding procedures: * The Committee will be granted full access to the data room available to potential bidders. * The Debtor will consult with the Committee regarding the selection of qualified bidders. * The Debtor will notify potential bidders that the Committee may challenge the validity and extent of certain of the Lenders' liens and as a result, the amount of the stalking horse bid may be reduced. * Bid increments will be $100,000. * The Debtor agrees that any material change in bidding procedures will require either the consent of the Committee, or further Court order. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. Thee company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. (American LaFrance Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Committee Wants Interim DIP Order Vacated ------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in American LaFrance LLC's chapter 11 case asks the U.S. Bankruptcy Court for the District of Delaware to reconsider its ruling granting the Debtor authority, on an interim basis, to borrow up to $10,000,000 in accordance with a debtor-in-possession financing agreement with ZOHAR CDO 2003-1 Limited, ZOHAR II 2005- 1, Limited, and ZOHAR III, Limited, and Patriarch Partners Agency Services LLC, as agent for the Lenders. As reported in the Troubled Company Reporter on Feb. 5, the Hon. Brendan Linehan Shannon authorized American LaFrance, LLC, to borrow up to $10,000,000 of DIP Financing, on an interim basis, and granted broad liens and superpriority claims to secure the interim financing and the Debtor's use of cash collateral. The Creditors Committee tells the Court that it has begun investigating (i) the Debtor's assets, liabilities and operations, (ii) the Debtor's cash needs and the existence of any need for postpetition financing, and (iii) the lenders' prepetition security interests in and liens upon the Debtor's assets. The Committee notes that funds managed by Patriarch Partners Agency Services own 100% of the membership interests in the Debtor. Patriarch Partners Agency also heads a group of prepetition and postpetition lenders. In addition, Patriarch Partners Management Group, LLC, employs the Debtor's chief executive officer and supplies his services, together with the services of several other executives, to the Debtor under a staffing agreement. James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, the Creditors Committee's proposed counsel, says that Patriarch's "pervasive control" over the Debtor serves to heighten the Creditors Committee's concerns regarding good faith findings made by the Court on an interim basis in the Interim DIP Order. The Creditors Committee also asks the Court to compel the disgorgement of certain payments made to the Lenders on account of prepetition claims. To the extent that evidence adduced at the final hearing renders any finding in the Interim DIP Order erroneous or any ruling improvident, whether with respect to any "good faith" finding, any right or protection granted to the Lenders, or otherwise, the Creditors Committee urges the Court to alter or amend the Interim DIP Order accordingly. In a separate filing with the Court, the Committee asserts that the Debtor's Chapter 11 case is "most unusual, and disturbing." "The Debtor commenced this Chapter 11 case not for the purpose of reorganizing, but instead with the goal of transferring all of their going concern value to the Debtor's own members (who are also the secured lenders, and affiliates of the Debtor's manager and executives) in a calculated play by the insider to force the assets to be sold (or transferred through a plan) immediately, so that the insider can buy them cheap, flush the trade debt, then realize the future profits of the business for its own benefit alone," Mr. Carignan contends. If the Debtor, controlled by its lenders, has its way, unsecured creditors will receive no benefit from the bankruptcy proceeding, Mr. Carignan tells Judge Brendan Linehan Shannon. Mr. Carignan says that a critical step towards the Debtor's improper goal is the entry of the proposed DIP financing order. He argues that if the DIP Order is entered, it will: -- neuter the Creditors Committee; -- eliminate or drastically reduce the protections provided by the Bankruptcy Code for all parties-in-interest, other than the lenders; and -- mandate the lenders' desired outcome by encumbering all of the bankruptcy estate's assets, even those presently unencumbered, for the payment of all of the lenders' prepetition and postpetition claims. Consequently, Mr. Carignan states, the lenders will force the case to be resolved within less than three months, and will threaten immediate and automatic foreclosure if any party takes action to enforce its rights in a manner that is unacceptable to them. The DIP Loan Agreement is not the result of good faith, arm's- length negotiations, Mr. Carignan argues. Rather, he says, the terms of the DIP loan were dictated to the Debtor by its insider lenders; and reflects (i) the Debtor's abandonment of its business judgment, and (ii) the lenders' blatant attempt to control the Debtor's case to their sole advantage. If the lenders wish to obtain the benefits of Chapter 11, they must also be willing to pay the price of admission and abide by the provisions and policies of the Bankruptcy Code, the Committee maintains. Thus, the Committee asks the Court to deny the Debtor's request for a DIP financing. Debtor Talks Back The Committee's objections to the DIP Motion all stem from the faulty premise that the Lenders' involvement in multiple roles should deprive them of typical protections provided to DIP lenders, Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Wilmington, Delaware, contends. Mr. Ward informs the Court that if the Lenders refuse to fund operations, the Debtor's operations will come to a grinding halt. Moreover, he avers, the Lenders are the only parties that, to date, are willing to provide financing necessary for the Debtor's operations. "No provision of the Bankruptcy Code, or any other applicable law, precludes the Lenders from serving in the roles of prepetition secured lenders, DIP lenders and stalking horse bidders," Mr. Ward emphasizes. Similarly, it is common for a secured lender to dictate the timing of a debtor's exit from Chapter 11 as a condition to financing, Mr. Ward continues. "If the Lenders were truly dictating a result designed solely to benefit themselves, they would not be supporting a plan of reorganization that will result in a significant distribution to unsecured creditors and the assumption of millions of dollars of [the Debtor's] liabilities." The Debtor insists that the DIP Motion provides the financing necessary for it to maintain its business as a going concern while it attempts to confirm the Plan. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. Thee company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. (American LaFrance Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: CEO Upbeat on Company's Survival Chances ----------------------------------------------------------- Four weeks into its bankruptcy proceeding, American LaFrance LLC Chief Executive Officer William Hinz assures creditors in a statement posted on the Company's Web site, that the company will not only survive, but will prosper in the near future. "We have the systemic changes in place from material procurement to financial management to ensure we are poised for not only sustainable market presence but to quickly take THE leadership position in both the fire and vocational market," Mr. Hinz said. Mr. Hinz went on to note that in the very new future, the Company will be able to process and build fire apparatus consistently in the 180 day range from order receipt to delivery. Innovative product designs that will truly differentiate the Company's products from all others are expected. Mr. Hinz also reported three major improvements: -- The Company's Material Requirements Planning (MRP) system is now up and running. "This gives our purchasing team material requirement visibility along with lead times to procure materials as needed for production in a timely manner. This accurate picture of the requirements prevents either a shortage situation which causes production delays or also an overage situation which results in excess inventory and cash that is tied up. Successfully implementing the MRP system will dramatically improve our cycle time and speed us on our way to our 180 day build commitment," Mr. Hinz stated. -- The Company's accounts payable system is successfully implemented to ensure that the Company has visibility to invoices. "This allows us to efficiently process our payables to keep the free flow of parts to the shop floor," according to Mr. Hinz. -- The Company is retraining its workforce instilling the principles of Lean Manufacturing. "This understanding of Lean process will also contribute to our improved throughput and reduced cycle time as well as reduce both material and labor waste," Mr. Hinz noted. "On a more immediate issue," Mr. Hinz averred, "we will be releasing the delivery schedule by the end of the week of February 25th. I know everyone is very anxious to have this information and we have missed our self imposed two week commitment we had promised. We are working through terms and lead times very successfully with all of our vendors and once that portion is confirmed we can plug in those dates to our MRP system and generate the schedule. It is imperative that we have this information before we publish to ensure we provide a schedule that is accurate and sustainable." As reported in the Troubled Company Reporter on Feb. 4, 2008, American LaFrance LLC filed a plan of reorganization and supporting disclosure statement on February 3, 2008. The U.S. Bankruptcy Court for the District of Delaware has set March 3, 2008 to approve the Disclosure Statement and April 9, 2008, to consider confirmation of the Plan. The Plan contemplates satisfaction in full of all senior secured debt, administrative claims, and priority claims. To address the $84 million of contingent and non-contingent general unsecured debt, the Plan provides for the assumption by the reorganized company of approximately $27 million of such claims and establishing a fund of assets including $5 million of cash and litigation assets with an estimated value of $17 million for the remainder of the claimants to share pro-rata. Unsecured creditors with balances $2,500 or below (or those willing to reduce the claim to $2,500) will be paid in full without interest. The Company filed a motion to sell the assets of the Company if the Plan is not approved by creditors and confirmed by the Bankruptcy Court. The Company's related motion to establish bidding procedures is set for hearing on February 21, 2008. The Company has secured an agreement with Patriarch Partners Agency Services to serve as the stalking horse bidder for the asset sale. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. Thee company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. (American LaFrance Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASBURY AUTOMOTIVE: Reports $12.7MM Adjusted Income for Fourth Qtr. ------------------------------------------------------------------ Asbury Automotive Group Inc. reported adjusted income from continuing operations for the fourth quarter ended Dec. 31, 2007 of $12.7 million compared to $14.6 million in the fourth quarter of last year. For the 2007 fourth quarter, the company generated revenues of $1.3 billion compared to $1.4 billion revenues generated for the same period of the previous year. "Asbury faced a very challenging environment for vehicle sales, both new and used, in the fourth quarter, with notable softness in our key Florida markets," Charles R. Oglesby, president and chief executive officer, said. "Our service businesses again performed well, as fixed operations delivered same-store growth of 4% and F&I income reached a record level of $1,057 per vehicle retailed." "We also made significant progress during the quarter in adjusting expenses to the current market conditions, by reducing our advertising, staffing levels and used vehicle inventories," Mr. Oglesby added. Income from continuing operations, adjusted for non-core items, for the year ended Dec. 31, 2007, increased 5% to $69.5 million from $66.2 million in 2006. For the year, income from continuing operations was $54.3 million compared with $67.1 million in 2006. Net income for the year totaled $51.0 million compared to $60.7 million last year. "For the full year, diluted earnings per share, excluding non-core items, increased 8%, a solid performance in view of the retail environment," Mr. Oglesby continued. "We achieved significant cost savings from our debt refinancing early in the year, and began implementing a new dealership technology platform that will reduce expenses and drive efficiency gains in the years ahead." "We also successfully stepped up our acquisition program, acquiring dealerships with approximately $350 million in annualized revenues, well above our target of $200 million," Mr. Oglesby stated. "While retail market conditions are likely to remain difficult throughout 2008, we believe our expense reductions have positioned us well," J. Gordon Smith, senior vice president and chief financial officer, commented. "We are establishing an initial guidance range for 2008 diluted earnings per share from continuing operations of between $1.80 and $2.00." "This guidance is based on a range for U.S. new vehicle unit sales of between 15.3 million and 15.5 million for the full year, as well as a projected decline in our same store used unit volumes of between 5% and 8%," Mr. Gordon continued. On Jan. 31, 2008, Asbury's board of directors declared a quarterly cash dividend of $0.225 per share of the company's outstanding common stock payable on Feb. 29, 2008, to stockholders of record as of the close of business on Feb. 8, 2008. About Asbury Automotive Headquartered in New York, New York, Asbury Automotive Group Inc. (NYSE:ABG) -- http://www.asburyauto.com/-- is an automotive retailer in the United States. It operated in 114 franchises at 87 dealership locations in 21 metropolitan markets as of Dec. 31, 2006. The company offers its customers a range of automotive products and services, including new and used vehicles and related financing; vehicle maintenance and repair services; replacement parts, and warranty, insurance and extended service contracts. As of March 8, 2006, the companys retail network was organized into principally four regions and included 10 locally branded dealership groups: Florida; West; Mid-Atlantic, and South. Asbury Automotive Group Inc.s Plaza, Gray Daniels and Northern California dealerships remain standalone operations. In February 2007, the company sold two dealerships in Little Rock, Arkansas. * * * On September, 2006, Moody's Investor's Service assigned to Asbury a 'B1' probability of default rating. Such rating action still holds to date. Moody's gave its positive outlook to the company on March 2007. ASSET BACKED: Realized Losses Cues S&P to Junk Rating on Class M4 ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class M2, M3, and M4 asset-backed pass-through certificates issued by Asset Backed Securities Corp. Home Equity Loan Trust 2002-HE3. At the same time, S&P removed its rating on class M4 from CreditWatch with negative implications. The downgrades reflect a reduction in credit enhancement as a result of monthly realized losses. As of the February 2008 remittance date, cumulative realized losses, as a percentage of the original pool balance, were 4.09%. Severe delinquencies (90- plus days, foreclosures, and REOs), as a percentage of the current pool balance, were 13.43%. Losses have outpaced excess interest over the past six months by an average of 3.62x. Overcollateralization for this series is 136 basis points below its target. S&P removed its rating on class M4 from CreditWatch negative because S&P lowered it to 'CCC' and it does not anticipate further actions on this class in the near future. Subordination, overcollateralization, and excess spread provide credit support for this transaction. The collateral for this transaction originally consisted primarily of first-lien, fixed- and adjustable-rate mortgage loans with original terms to maturity of not more than 30 years. Ratings Lowered Asset Backed Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-HE3 M2 BBB A 2002-HE3 M3 B BBB Rating Lowered and Removed From CreditWatch Negative Asset Backed Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2002HE3 M4 CCC B/Watch Neg ASSET BACKED: Fitch Downgrades Ratings on $2.8 Bil. Certificates ---------------------------------------------------------------- Fitch Ratings has taken rating actions on Asset Backed Securities Corporation mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously on Rating Watch Negative are now removed. Affirmations total $773.2 million and downgrades total $2.8 billion. Additionally, $1.1 billion remains on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: ABSC 2006-HE1 -- $170.4 million class A1 affirmed at 'AAA', (BL: 50.89, LCR: 2.01); -- $174.7 million class A3 affirmed at 'AAA', (BL: 54.06, LCR: 2.13); -- $21.8 million class A4 rated 'AAA', remains on Rating Watch Negative (BL: 50.60, LCR: 1.99); -- $43.5 million class M1 rated 'AA+', remains on Rating Watch Negative (BL: 44.38, LCR: 1.75); -- $40.2 million class M2 downgraded to 'BB' from 'AA' (BL: 37.94, LCR: 1.49); -- $28.1 million class M3 downgraded to 'BB' from 'AA-' (BL: 33.37, LCR: 1.31); -- $19.3 million class M4 downgraded to 'B' from 'A+' (BL: 30.20, LCR: 1.19); -- $19.3 million class M5 downgraded to 'B' from 'A' (BL: 27.01, LCR: 1.06); -- $17.1 million class M6 downgraded to 'CCC' from 'A-' (BL: 24.13, LCR: 0.95); -- $18.2 million class M7 downgraded to 'CCC' from 'BBB+' (BL: 20.93, LCR: 0.82); -- $13.2 million class M8 downgraded to 'CC' from 'BBB' (BL: 18.56, LCR: 0.73); -- $12.1 million class M9 downgraded to 'CC' from 'BBB-' (BL: 16.29, LCR: 0.64); -- $12.1 million class M10 downgraded to 'CC' from 'BB+' (BL: 14.20, LCR: 0.56); -- $8.3 million class M11 downgraded to 'CC' from 'BB' (BL: 12.88, LCR: 0.51); Deal Summary -- Originator: Aegis Mortgage Corporation (100%) -- 60+ day Delinquency: 27.36% -- Realized Losses to date (% of Original Balance): 1.80% -- Expected Remaining Losses (% of Current balance): 25.38% -- Cumulative Expected Losses (% of Original Balance): 16.09% ABSC 2006-HE2 -- $158.3 million class A1 rated 'AAA', remains on Rating Watch Negative (BL: 53.50, LCR: 1.99); -- $17.6 million class A1-A downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 46.23, LCR: 1.72); -- $1.1 million class A2 affirmed at 'AAA', (BL: 99.53, LCR: 3.7); -- $118.3 million class A3 rated 'AAA', remains on Rating Watch Negative (BL: 49.13, LCR: 1.83); -- $15.4 million class A4 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 46.13, LCR: 1.71); -- $36.2 million class M1 downgraded to 'BB' from 'AA+' (BL: 38.70, LCR: 1.44); -- $23.9 million class M2 downgraded to 'B' from 'AA' (BL: 33.44, LCR: 1.24); -- $14.2 million class M3 downgraded to 'B' from 'AA-' (BL: 30.28, LCR: 1.13); -- $13.1 million class M4 downgraded to 'B' from 'A+' (BL: 27.34, LCR: 1.02); -- $12.7 million class M5 downgraded to 'CCC' from 'A' (BL: 24.49, LCR: 0.91); -- $11.6 million class M6 downgraded to 'CCC' from 'BBB+' (BL: 21.82, LCR: 0.81); -- $10.8 million class M7 downgraded to 'CC' from 'BBB-' (BL: 19.20, LCR: 0.71); -- $5.6 million class M8 downgraded to 'CC' from 'BB+' (BL: 17.78, LCR: 0.66); -- $5.6 million class M9 downgraded to 'CC' from 'BB' (BL: 16.15, LCR: 0.6); -- $6.0 million class M10 downgraded to 'CC' from 'B+' (BL: 14.46, LCR: 0.54); -- $7.5 million class M11 downgraded to 'C' from 'CCC' (BL: 12.62, LCR: 0.47); Deal Summary -- Originator: New Century Mortgage Corporation (100%) -- 60+ day Delinquency: 28.50% -- Realized Losses to date (% of Original Balance): 1.16% -- Expected Remaining Losses (% of Current balance): 26.90% -- Cumulative Expected Losses (% of Original Balance): 17.98% ABSC 2006-HE3 -- $85.9 million class A1 downgraded to 'AA' from 'AAA' (BL: 49.36, LCR: 1.98); -- $83.1 million class A2 rated 'AAA', remains on Rating Watch Negative (BL: 49.57, LCR: 1.99); -- $18.7 million class A3 affirmed at 'AAA', (BL: 97.22, LCR: 3.9); -- $165.3 million class A4 rated 'AAA', remains on Rating Watch Negative (BL: 48.72, LCR: 1.96); -- $25.6 million class A5 downgraded to 'AA' from 'AAA' (BL: 47.20, LCR: 1.89); -- $70.5 million class M1 downgraded to 'BB' from 'AA' (BL: 35.54, LCR: 1.43); -- $19.3 million class M2 downgraded to 'BB' from 'AA' (BL: 32.19, LCR: 1.29); -- $16.4 million class M3 downgraded to 'B' from 'AA-' (BL: 29.33, LCR: 1.18); -- $15.4 million class M4 downgraded to 'B' from 'A+' (BL: 26.57, LCR: 1.07); -- $14.0 million class M5 downgraded to 'CCC' from 'A' (BL: 23.91, LCR: 0.96); -- $13.5 million class M6 downgraded to 'CCC' from 'BBB+' (BL: 21.22, LCR: 0.85); -- $11.6 million class M7 downgraded to 'CCC' from 'BBB' (BL: 18.85, LCR: 0.76); -- $6.8 million class M8 downgraded to 'CC' from 'BBB-' (BL: 17.31, LCR: 0.69); -- $4.8 million class M9 downgraded to 'CC' from 'BBB-' (BL: 16.20, LCR: 0.65); -- $9.7 million class M10 downgraded to 'CC' from 'BB+' (BL: 14.06, LCR: 0.56); -- $7.7 million class M11 downgraded to 'CC' from 'BB-' (BL: 12.64, LCR: 0.51); Deal Summary -- Originators: Option One Mortgage Corporation (100%) -- 60+ day Delinquency: 22.16% -- Realized Losses to date (% of Original Balance): 0.76% -- Expected Remaining Losses (% of Current balance): 24.92% -- Cumulative Expected Losses (% of Original Balance): 15.73% ABSC 2006-HE4 -- $69.5 million class A1 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 49.65, LCR: 1.47); -- $8.8 million class A1-A downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 49.20, LCR: 1.46); -- $81.4 million class A2 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 48.69, LCR: 1.45); -- $42.9 million class A4 affirmed at 'AAA', (BL: 86.87, LCR: 2.58); -- $101.0 million class A5 downgraded to 'AA' from 'AAA' (BL: 51.24, LCR: 1.52); -- $23.2 million class A6 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 47.87, LCR: 1.42); -- $87.3 million class M1 downgraded to 'CCC' from 'AA' (BL: 31.66, LCR: 0.94); -- $25.0 million class M2 downgraded to 'CCC' from 'AA-' (BL: 26.98, LCR: 0.8); -- $17.7 million class M3 downgraded to 'CC' from 'A-' (BL: 23.65, LCR: 0.7); -- $16.8 million class M4 downgraded to 'CC' from 'BBB' (BL: 20.46, LCR: 0.61); -- $10.5 million class M5 downgraded to 'CC' from 'BBB-' (BL: 18.43, LCR: 0.55); -- $11.4 million class M6 downgraded to 'C' from 'BB' (BL: 16.13, LCR: 0.48); -- $6.8 million class M7 downgraded to 'C' from 'BB-' (BL: 14.72, LCR: 0.44); -- $10.9 million class M8 downgraded to 'C' from 'B+' (BL: 12.33, LCR: 0.37); -- $11.4 million class M9 downgraded to 'C' from 'CCC' (BL: 9.94, LCR: 0.3); -- $9.1 million class M10 downgraded to 'C' from 'CCC' (BL: 8.45, LCR: 0.25); Deal Summary -- Originator: New Century Mortgage Corporation (100%) -- 60+ day Delinquency: 29.03% -- Realized Losses to date (% of Original Balance): 2.16% -- Expected Remaining Losses (% of Current balance): 33.68% -- Cumulative Expected Losses (% of Original Balance): 22.03% ABSC 2006-HE5 -- $155.8 million class A1 downgraded to 'AA' from 'AAA' (BL: 55.53, LCR: 1.7); -- $58.2 million class A2 affirmed at 'AAA', (BL: 80.15, LCR: 2.45); -- $65.3 million class A3 affirmed at 'AAA', (BL: 65.39, LCR: 2); -- $92.2 million class A4 downgraded to 'AA' from 'AAA' (BL: 53.54, LCR: 1.64); -- $15.4 million class A5 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 52.17, LCR: 1.59); -- $55.8 million class M1 downgraded to 'BB' from 'AA+' (BL: 43.93, LCR: 1.34); -- $48.9 million class M2 downgraded to 'B' from 'AA' (BL: 36.36, LCR: 1.11); -- $17.8 million class M3 downgraded to 'B' from 'AA-' (BL: 33.59, LCR: 1.03); -- $22.9 million class M4 downgraded to 'CCC' from 'A+' (BL: 30.03, LCR: 0.92); -- $18.3 million class M5 downgraded to 'CCC' from 'A' (BL: 27.17, LCR: 0.83); -- $13.3 million class M6 downgraded to 'CCC' from 'A-' (BL: 25.06, LCR: 0.77); -- $16.0 million class M7 downgraded to 'CC' from 'BBB+' (BL: 22.41, LCR: 0.69); -- $8.7 million class M8 downgraded to 'CC' from 'BBB' (BL: 20.90, LCR: 0.64); -- $11.9 million class M9 downgraded to 'CC' from 'BBB-' (BL: 18.56, LCR: 0.57); -- $15.1 million class M10 downgraded to 'C' from 'BB-' (BL: 15.59, LCR: 0.48); -- $11.0 million class M11 downgraded to 'C' from 'B' (BL: 13.85, LCR: 0.42); Deal Summary -- Originator: Option One Mortgage Corporation (100%) -- 60+ day Delinquency: 26.43% -- Realized Losses to date (% of Original Balance): 0.55% -- Expected Remaining Losses (% of Current balance): 32.71% -- Cumulative Expected Losses (% of Original Balance): 23.52% ABSC 2006-HE6 -- $120.2 million class A1 downgraded to 'A' from 'AAA' (BL: 44.78, LCR: 1.4); -- $137.9 million class A2 affirmed at 'AAA', (BL: 66.87, LCR: 2.1); -- $78.2 million class A3 rated 'AAA', remains on Rating Watch Negative (BL: 56.82, LCR: 1.78); -- $125.5 million class A4 downgraded to 'A' from 'AAA' (BL: 46.47, LCR: 1.46); -- $40.9 million class A5 downgraded to 'A' from 'AAA' (BL: 44.31, LCR: 1.39); -- $50.7 million class M1 downgraded to 'B' from 'AA+' (BL: 37.47, LCR: 1.17); -- $42.0 million class M2 downgraded to 'CCC' from 'AA' (BL: 31.73, LCR: 0.99); -- $15.9 million class M3 downgraded to 'CCC' from 'AA-' (BL: 29.53, LCR: 0.93); -- $18.8 million class M4 downgraded to 'CCC' from 'A+' (BL: 26.89, LCR: 0.84); -- $16.9 million class M5 downgraded to 'CCC' from 'A' (BL: 24.45, LCR: 0.77); -- $11.1 million class M6 downgraded to 'CC' from 'A-' (BL: 22.79, LCR: 0.71); -- $11.6 million class M7 downgraded to 'CC' from 'A-' (BL: 20.95, LCR: 0.66); -- $8.7 million class M8 downgraded to 'CC' from 'BBB+' (BL: 19.46, LCR: 0.61); -- $11.6 million class M9 downgraded to 'CC' from 'BBB' (BL: 17.36, LCR: 0.54); -- $14.5 million class M10 downgraded to 'C' from 'BB' (BL: 14.83, LCR: 0.46); -- $13.0 million class M11 downgraded to 'C' from 'B+' (BL: 12.95, LCR: 0.41); Deal Summary -- Originators: Nationstar Mortgage (52.84%), Ameriquest Mortgage Company (47.16%) -- 60+ day Delinquency: 19.89% -- Realized Losses to date (% of Original Balance): 0.22% -- Expected Remaining Losses (% of Current balance): 31.91% -- Cumulative Expected Losses (% of Original Balance): 24.57% ABSC 2006-HE7 -- $209.7 million class A1 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 41.91, LCR: 1.24); -- $104.0 million class A2 affirmed at 'AAA', (BL: 70.61, LCR: 2.09); -- $76.3 million class A3 downgraded to 'AA' from 'AAA' (BL: 56.96, LCR: 1.69); -- $134.4 million class A4 downgraded to 'A' from 'AAA' (BL: 43.86, LCR: 1.3); -- $32.8 million class A5 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 41.96, LCR: 1.24); -- $55.8 million class M1 downgraded to 'B' from 'AA+' (BL: 34.98, LCR: 1.04); -- $47.6 million class M2 downgraded to 'CCC' from 'AA' (BL: 29.03, LCR: 0.86); -- $13.4 million class M3 downgraded to 'CCC' from 'AA-' (BL: 27.33, LCR: 0.81); -- $22.2 million class M4 downgraded to 'CC' from 'A+' (BL: 24.47, LCR: 0.73); -- $18.6 million class M5 downgraded to 'CC' from 'A' (BL: 22.04, LCR: 0.65); -- $9.8 million class M6 downgraded to 'CC' from 'A-' (BL: 20.72, LCR: 0.61); -- $11.4 million class M7 downgraded to 'CC' from 'BBB+' (BL: 19.11, LCR: 0.57); -- $9.3 million class M8 downgraded to 'CC' from 'BBB' (BL: 17.64, LCR: 0.52); -- $11.9 million class M9 downgraded to 'C' from 'BBB-' (BL: 15.65, LCR: 0.46); -- $13.4 million class M10 downgraded to 'C' from 'BB' (BL: 13.41, LCR: 0.4); -- $14.0 million class M11 downgraded to 'C' from 'B' (BL: 11.54, LCR: 0.34); Deal Summary -- Originators: Ameriquest Mortgage Company (100%) -- 60+ day Delinquency: 25.54% -- Realized Losses to date (% of Original Balance): 0.49% -- Expected Remaining Losses (% of Current balance): 33.73% -- Cumulative Expected Losses (% of Original Balance): 26.66% The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. ASSET BACKED: Fitch Junks Ratings on 30 Certificate Classes ----------------------------------------------------------- Fitch Ratings has taken rating actions on four Asset Backed Funding Corp. mortgage pass-through certificate transactions. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $494.1 million and downgrades total $2.6 billion. In addition, $1.1 billion is placed on or remains on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class, rated 'B' or higher, are included with the rating actions as: ABFC 2006-HE1 -- $234.0 million class A-1 downgraded to 'A' from 'AAA' and remains on Rating Watch Negative (BL: 36.96, LCR: 1.38); -- $249.9 million class A-2A affirmed at 'AAA' (BL: 56.55, LCR: 2.12); -- $107.9 million class A-2B, rated 'AAA' and remains on Rating Watch Negative (BL: 48.33, LCR: 1.81); -- $180.4 million class A-2C downgraded to 'A' from 'AAA' (BL: 39.89, LCR: 1.49); -- $118.2 million class A-2D downgraded to 'A' from 'AAA' and remains on Rating Watch Negative (BL: 36.29, LCR: 1.36); -- $46.0 million class M-1 downgraded to 'B' from 'AA+' (BL: 32.29, LCR: 1.21); -- $43.2 million class M-2 downgraded to 'B' from 'AA' (BL: 28.48, LCR: 1.07); -- $26.9 million class M-3 downgraded to 'CCC' from 'AA-' (BL: 26.08, LCR: 0.98); -- $23.4 million class M-4 downgraded to 'CCC' from 'A+' (BL: 23.94, LCR: 0.90); -- $22.6 million class M-5 downgraded to 'CCC' from 'A' (BL: 21.80, LCR: 0.82); -- $21.2 million class M-6 downgraded to 'CC' from 'A-' (BL: 19.71, LCR: 0.74); -- $18.4 million class M-7 downgraded to 'CC' from 'BBB+' (BL: 17.77, LCR: 0.66); -- $12 million class M-8 downgraded to 'CC' from 'BBB' (BL: 16.38, LCR: 0.61); -- $10.6 million class M-9 downgraded to 'CC' from 'BBB-' (BL: 15.14, LCR: 0.57); -- $14.2 million class B downgraded to 'CC' from 'B+' (BL: 13.90, LCR: 0.52). Deal Summary -- Largest Originator: 72.54% Accredited Home Lenders, Inc.; -- 60+ day Delinquency: 18.93%; -- Realized Losses to date (% of Original Balance): 0.79%; -- Expected Remaining Losses (% of Current Balance): 26.73%; -- Cumulative Expected Losses (% of Original Balance): 22.84%. ABFC 2006-OPT1 -- $102.2 million class A-1 downgraded to 'AA' from 'AAA' and remains on Rating Watch Negative (BL: 51.94, LCR: 1.69); -- $100.9 million class A-2 downgraded to 'AA' from 'AAA' and remains on Rating Watch Negative (BL: 52.19, LCR: 1.70); -- $75.7 million class A-3A affirmed at 'AAA' (BL: 77.37, LCR: 2.52); -- $79.7 million class A-3B affirmed at 'AAA' (BL: 64.07, LCR: 2.08); -- $75.0 million class A-3C1 downgraded to 'AA' from 'AAA' (BL: 53.46, LCR: 1.74); -- $33.5 million class A-3C2 downgraded to 'AA' from 'AAA' (BL: 53.46, LCR: 1.74); -- $18.8 million class A-3D downgraded to 'AA' from 'AAA' and remains on Rating Watch Negative (BL: 51.76, LCR: 1.68); -- $57.4 million class M-1 downgraded to 'BB' from 'AA+' (BL: 44.91, LCR: 1.46); -- $55.2 million class M-2 downgraded to 'B' from 'AA' (BL: 37.92, LCR: 1.23); -- $20.0 million class M-3 downgraded to 'B' from 'AA-' (BL: 35.38, LCR: 1.15); -- $23.3 million class M-4 downgraded to 'B' from 'A+' (BL: 32.40, LCR: 1.05); -- $21.1 million class M-5 downgraded to 'CCC' from 'A' (BL: 29.69, LCR: 0.97); -- $16.2 million class M-6 downgraded to 'CCC' from 'A-' (BL: 27.56, LCR: 0.90); -- $20.6 million class M-7 downgraded to 'CCC' from 'BBB' (BL: 24.54, LCR: 0.80); -- $12.4 million class M-8 downgraded to 'CC' from 'BBB-' (BL: 22.63, LCR: 0.74); -- $15.2 million class M-9 downgraded to 'CC' from 'BB' (BL: 20.10, LCR: 0.65); -- $20.0 million class B downgraded to 'CC' from 'CCC' (BL: 17.21, LCR: 0.56). Deal Summary -- Originator: 100% Option One Mortgage Corp.; -- 60+ day Delinquency: 22.37%; -- Realized Losses to date (% of Original Balance): 0.46%; -- Expected Remaining Losses (% of Current Balance): 30.76%; -- Cumulative Expected Losses (% of Original Balance): 22.70%. ABFC 2006-OPT2 -- $162.2 million class A-1 downgraded to 'A' from 'AAA' (BL: 42.37, LCR: 1.42); -- $146.2 million class A-2 downgraded to 'A' from 'AAA' (BL: 43.79, LCR: 1.47); -- $88.9 million class A-3A affirmed at 'AAA' (BL: 65.22, LCR: 2.19); -- $52.9 million class A-3B, rated 'AAA' and remains on Rating Watch Negative (BL: 55.62, LCR: 1.87); -- $97.0 million class A-3C, rated 'AA' from 'AAA' and remains on Rating Watch Negative (BL: 45.18, LCR: 1.52); -- $45.9 million class A-3D downgraded to 'A' from 'AAA' (BL: 42.28, LCR: 1.42); -- $49.5 million class M-1 downgraded to 'B' from 'AA+' (BL: 36.27, LCR: 1.22); -- $30.6 million class M-2 downgraded to 'B' from 'AA' (BL: 32.52, LCR: 1.09); -- $21.6 million class M-3 downgraded to 'B' from 'AA-' (BL: 29.84, LCR: 1.00); -- $19.2 million class M-4 downgraded to 'CCC' from 'A+' (BL: 27.42, LCR: 0.92); -- $19.2 million class M-5 downgraded to 'CCC' from 'A' (BL: 24.84, LCR: 0.83); -- $18.7 million class M-6 downgraded to 'CCC' from 'A-' (BL: 22.23, LCR: 0.75); -- $17.0 million class M-7 downgraded to 'CC' from 'BBB+' (BL: 19.71, LCR: 0.66); -- $10.4 million class M-8 downgraded to 'CC' from 'BBB' (BL: 18.13, LCR: 0.61); -- $8.8 million class M-9 downgraded to 'CC' from 'BBB-' (BL: 16.65, LCR: 0.56); -- $11.0 million class B downgraded to 'CC' from 'B+' (BL: 15.12, LCR: 0.51). Deal Summary -- Originator: 100% Option One Mortgage Corp.; -- 60+ day Delinquency: 22.50%; -- Realized Losses to date (% of Original Balance): 0.17%; -- Expected Remaining Losses (% of Current Balance): 29.82%; -- Cumulative Expected Losses (% of Original Balance): 22.59%. ABFC 2006-OPT3 -- $87.7 million class A-1 downgraded to 'BBB' from 'AAA' and remains on Rating Watch Negative (BL: 44.96, LCR: 1.22); -- $91.3 million class A-2 downgraded to 'BBB' from 'AAA' and remains on Rating Watch Negative (BL: 44.69, LCR: 1.22); -- $142.9 million class A-3A downgraded to 'AA' from 'AAA' (BL: 59.92, LCR: 1.63); -- $165.1 million class A-3B downgraded to 'BBB' from 'AAA' and remains on Rating Watch Negative (BL: 45.01, LCR: 1.23); -- $5.5 million class A-3C downgraded to 'BBB' from 'AAA' and remains on Rating Watch Negative (BL: 44.75, LCR: 1.22); -- $35.0 million class M-1 downgraded to 'B' from 'AA+' (BL: 39.61, LCR: 1.08); -- $32.1 million class M-2 downgraded to 'CCC' from 'AA' (BL: 34.90, LCR: 0.95); -- $18.6 million class M-3 downgraded to 'CCC' from 'AA-' (BL: 32.10, LCR: 0.87); -- $16.0 million class M-4 downgraded to 'CCC' from 'A+' (BL: 29.53, LCR: 0.80); -- $15.6 million class M-5 downgraded to 'CC' from 'A' (BL: 26.94, LCR: 0.73); -- $13.9 million class M-6 downgraded to 'CC' from 'A-' (BL: 24.52, LCR: 0.67); -- $13.5 million class M-7 downgraded to 'CC' from 'BBB' (BL: 22.01, LCR: 0.60); -- $12.2 million class M-8 downgraded to 'CC' from 'BBB-' (BL: 19.66, LCR: 0.54); -- $10.6 million class M-9 downgraded to 'C' from 'BB+' (BL: 17.80, LCR: 0.48); -- $10.1 million class B downgraded to 'C' from 'B+' (BL: 16.35, LCR: 0.45). Deal Summary -- Originator: 100% Option One Mortgage Corp.; -- 60+ day Delinquency: 23.53%; -- Realized Losses to date (% of Original Balance): 0.18%; -- Expected Remaining Losses (% of Current Balance): 36.72%; -- Cumulative Expected Losses (% of Original Balance): 30.66%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006, and late 2005 with regard to continued poor loan performance and home price weakness. AVNET INC: Moody's Upgrades CFR on Improving Operating Efficiency ----------------------------------------------------------------- Moody's Investors Service raised the corporate family and senior unsecured ratings of Avnet Inc. to Baa3 from Ba1 with a stable outlook. "The upgrade reflects our expectation that Avnet's operating performance will continue to benefit from the secular outsourcing trend underway in the electronics OEM space, improved product mix, as ll as enhanced scale, increasing geographic diversity and an expanded line card with access to new customer relationships as a result of recent acquisitions," according to Moody's Vice President & Senior Analyst Gregory Fraser, CFA. Moody's cited the upgrade considers the solid execution, operating efficiency improvements and working capital management that have exceeded expectations resulting in operating margin and ROA expansion, improved credit protection measures, higher gross cash flow levels and an enhanced business model that has the propensity to deliver consistent levels of positive free cash flow especially during periods of industry akness. The steady improvement in financial leverage, which Moody's expects to continue, also supports the upgrade, as does Avnet's disciplined financial philosophy with respect to maintaining strong balance sheet liquidity and modest financial leverage. "Barring an extended period of economic weakness, we expect Avnet to continue to grow operating income at a faster pace than revenues and maintain a focus on balance sheet de-leveraging via either free cash flow generation targeted towards debt reduction or higher levels of operating cash flow," Mr. Fraser added. The stable ratings outlook reflects expectations for stable financial leverage and interest coverage metrics, relatively steady vendor/customer relationships, and maintenance of operating margins in the 2-4% range during an economic cycle. The rating outlook factors in Moody's expectation that debt to book capitalization will remain below 35% and retained cash flow to debt will remain above 25% in a downturn scenario. Despite Avnet's end market and geographic diversification, there is some concern that the current weak macro-economic environment could result in a broad-based corporate IT spending slowdown, potentially impacting Avnet's operating profitability. However, in a reasonable downside scenario, which is incorporated in the Baa3 rating, Moody's does not expect operating margins to fall below 2.5% based on Avnet's enhanced scale and current operating leverage. Additionally, given Avnet's ongoing focus on cost controls, Moody's believes the company should be less vulnerable during an industry retrenchment than in previous cycles. Nonetheless, the rating could experience downward pressure to the extent operating margins were to fall below 2.5% on a sustained basis (two to four quarters). The rating factors the volatility of inventory and payables usage which can be irregular from quarter to quarter given the working capital intensity of the business model driven by seasonal demands. Mitigating this concern is Avnet's improved working capital leverage and cash conversion cycle as well as higher absolute yearly gross cash flow levels that cushion periods of high working capital consumption. The company maintains very good liquidity and financial flexibility. This is driven by Avnet's $417 million of cash, Moody's expectations for free cash flow generation of at least $300 million in fiscal 2008, plus full access to a $450 million accounts receivable securitization program (maturing 2008) and $500 million unsecured revolver (maturing 2012). These ratings were upgraded: -- Corporate Family Rating to Baa3 from Ba1 -- Senior Unsecured Notes to Baa3 from Ba1 -- Senior / Subordinated Shelf Ratings to (P)Baa3 / (P)Ba1 from (P)Ba1 / (P)Ba2 Concurrently, Moody's has withdrawn these ratings and expects to withdraw the corporate family rating shortly as well, as these measures are applicable only for below investment grade companies: -- Probability of Default Rating -- All LGD Assessments Avnet, Inc., headquartered in Phoenix, Arizona, is one of the largest worldwide distributors of electronic components and computer products, primarily for industrial customers. Revenues and EBITDA for the twelve months ended Dec. 29, 2007 were $17.0 billion and $873 million, respectively. AXCAN INTERMEDIATE: Moody's Holds B1 Ratings on Capital Changes --------------------------------------------------------------- Moody's Investors Service affirmed the B1 Corporate Family and Probability of Default ratings of Axcan Intermediate Holdings, Inc., following changes to the capital structure that had originally been proposed in connection with the acquisition of Axcan Pharma Inc. The changes to the capital structure reflect difficult market conditions in the bank loan market. The ratings rationale was set out in a press release dated Jan. 25, 2008. Moody's took these rating actions: -- Withdrew the Ba2 (LGD 2, 26%) rating on the originally proposed $350 million senior secured term loan B due 2015; -- Assigned Ba2 (LGD 2, 29%) to $175 million senior secured term loan A due 2014; -- Assigned Ba2 (LGD 2, 29%) to $228 million senior secured notes due 2015; -- Affirmed the B1 Corporate Family Rating; -- Affirmed the B1 Probability of Default Rating; -- Affirmed the Ba2 (LGD 2, 29%) rating on $115 million senior secured revolving credit facility due 2014; -- Affirmed the B3 (LGD 5, 83%) rating on $235 million senior unsecured notes due 2016; The ratings outlook is stable. Moody's also affirmed the Speculative Grade Liquidity Rating of SGL 2. Axcan Pharma Inc., based in Mont St-Hilaire, Quebec, is a specialty pharmaceutical company concentrating in the field of gastroenterology with operations in North America and Europe. Axcan had revenue of approximately $349 million for the fiscal year ended Sept. 30, 2007. BASIC MORTGAGE: Fitch Chips Ratings on Seven Certificate Classes ---------------------------------------------------------------- Fitch Ratings has taken rating actions on BASIC mortgage pass- through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $63.3 million and downgrades total $45.6 million. Additionally, $11.4 million remains on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: BASIC Asset Backed Securities Trust 2006-1 -- $5.8 million class A-1 affirmed at 'AAA', (BL: 97.72, LCR: 3.56); -- $57.4 million class A-2 affirmed at 'AAA', (BL: 54.60, LCR: 1.99); -- $11.4 million class A-3 rated 'AAA', remains on Rating Watch Negative (BL: 50.27, LCR: 1.83); -- $16.2 million class M-1 downgraded to 'BB' from 'AA' (BL: 37.24, LCR: 1.36); -- $13.1 million class M-2 downgraded to 'CCC' from 'A' (BL: 26.82, LCR: 0.98); -- $6.9 million class M-3 downgraded to 'CCC' from 'BBB+' (BL: 21.09, LCR: 0.77); -- $2.9 million class M-4 downgraded to 'CC' from 'BBB-' (BL: 18.48, LCR: 0.67); -- $2.3 million class M-5 downgraded to 'CC' from 'BB+' (BL: 16.38, LCR: 0.6); -- $2.1 million class M-6 downgraded to 'CC' from 'BB' (BL: 14.57, LCR: 0.53); -- $2.1 million class M-7 downgraded to 'C' from 'B+' (BL: 13.14, LCR: 0.48); Deal Summary -- Originators: Various -- 60+ day Delinquency: 30.94% -- Realized Losses to date (% of Original Balance): 0.54% -- Expected Remaining Losses (% of Current balance): 27.47% -- Cumulative Expected Losses (% of Original Balance): 16.78% The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. BEST BRANDS: Covenant Violations Won't Affect S&P's Junk Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings and outlook on Minnetonka, Minn.-based Best Brands Corp. (CCC/Negative/--) remain unchanged following the company's disclosure that it is in violation of its financial covenant compliance under its first- and second-lien bank credit agreement for the quarter ended Dec. 31, 2007. Financial results have been weaker than expected due to high commodity costs and sales weakness within select product categories. In addition, integrating the December 2006 Telco acquisition has been more complex than anticipated. Best Brands had about $17 million in cash on its balance sheet at Dec. 31, 2007 and currently has access to its $30 million revolver. However, S&P is concerned about the company's liquidity, and ratings could be lowered if the company is unable to obtain a waiver and bank amendment in a timely and cost- effective manner given current market conditions. BRANDYWINE REALTY: Earns $31.5 Mil. in Quarter Ended December 31 ---------------------------------------------------------------- Brandywine Realty Trust reported its financial and operating results for the three and twelve month periods ended Dec. 31, 2007. Net income totaled $31.5 million in the fourth quarter of 2007, compared to $22.1 million in the fourth quarter of 2006. Net income in the fourth quarter of 2007 included a $40.5 million gain on the disposition of real estate related to the formation of its joint venture with DRA Advisors LLC and the $3.7 million hedge settlement expense, while net income in the fourth quarter of 2006 included an $11.6 million gain on the disposition of undepreciated real estate and a $15.1 million gain on the disposition of discontinued real estate. Net income totaled $48.5 million for 2007, compared to $2.5 million or $0.03 per diluted share for 2006. Net income in 2007 included the $40.5 million gain on the disposition of real estate related to the formation of our joint venture with DRA Advisors, a $25.7 million gain on the disposition of discontinued real estate and the $3.7 million hedge settlement expense, while net income in 2006 included a $14.2 million gain on the disposition of undepreciated real estate, a $20.2 million gain on the disposition of discontinued real estate and a $3.1 million gain on the settlement of a purchase contract. At Dec. 31, 2007, the company's core portfolio was 93.9% occupied and 94.7% leased, reflecting leases commencing after Dec. 31, 2007, versus 91.5% and 93.2% at Dec. 31, 2006. The company owned 257 properties at Dec. 31, 2007, encompassing 243 properties in its core portfolio and 14 properties under development or redevelopment. At Dec. 31, 2007, the company's balance sheet showed total assets of $5.21 billion, total liabilities of $3.47 billion and total beneficiaries' equity of $1.74 billion. Investment Highlights -- The company acquired no properties in the fourth quarter of 2007. -- During the fourth quarter of 2007, it sold two office properties, 111/113 Pencader Drive in Newark, Delaware and 2490 Boulevard of the Generals in West Norriton, Pennsylvania, for $5.1 million and $1.5 million, and realized total gains on the sales of $0.3 million. The company also completed the sale and contribution of a portfolio of 29 suburban Philadelphia office properties to a joint venture consisting of DRA Advisors LLC with an 80% interest and affiliates of Brandywine Realty Trust with a 20% interest. The company sold the venture an 89% interest in three of the properties, and sold or contributed 100% interests in the rest. The overall portfolio was valued at $245.4 million, reflecting 100% interests throughout. In conjunction with the sale and contribution, the company realized $230.9 million of net proceeds after deducting its transaction expenses, and recorded a gain on the sale and contribution of $40.5 million. -- At Dec. 31, 2007, the company was working on seven ground-up office developments and seven office redevelopments with a total identified cost of $718.3 million of which $442.6 million remained to be funded. These amounts include $375.0 million of costs for the combined 30th Street Post Office and garage development in Philadelphia, Pennsylvania of which $331.9 million remained to be funded at Dec. 31, 2007, for the most part in 2009 and 2010. Since Sept. 30, 2007, the company signed a series of new leases aggregating 301,487 square feet, bringing the total leasing rate to 57.5% for our seven ground-up developments and to 69.4% for its seven redevelopments. Capital Markets Highlights -- During the fourth quarter of 2007, the company closed and funded a $150 million, three-year unsecured term loan with a floating rate of LIBOR plus 80 basis points. The net proceeds were used to reduce indebtedness under its unsecured revolving credit facilities. -- At Dec. 31, 2007, its net debt to gross assets measured 53.6% compared to 52.0% at Dec. 31, 2006 and 54.3% at Sept. 30, 2007. At Dec. 31, 2007, the company has $475.7 million available for use and drawdown under its various credit facilities. -- The company achieved 2.5 times interest coverage ratio for the year ended Dec. 31, 2007 versus 2.4 for the year ended Dec. 31, 2006. "Throughout the year, we have maintained consistently high levels of occupancy, retention and absorption in our core portfolio, while continuing to reduce the capital outlays to achieve these results," Gerard H. Sweeney, president and CEO of Brandywine Realty Trust, stated. "Our joint venture with DRA Advisors has established a good, alternative source of capital and we hope to increase our activities in this area as part of our overall capital recycling and balance sheet strengthening initiatives." "We have also had some recent success in the lease-up of our development and redevelopment projects and will continue to push hard on that front," Mr. Sweeney added. "Our 2008 business and capital plans reflect a somewhat more cautious view on the economy, yet reinforce our commitment to maximizing total shareholder return. On a personal note, I want to thank Mike Prentiss and Tom August, our departing board trustees, for their fine service and contributions to Brandywine and wish them well in their future endeavors." Distributions On Dec. 11, 2007, the company's board of trustees declared a quarterly dividend distribution of $0.44 per common share that was paid on Jan. 18, 2008, to shareholders of record as of Jan. 4, 2008. Its board also declared quarterly dividend distributions of $0.46875 per 7.50% Series C Cumulative Redeemable Preferred Share and $0.460938 per 7.375% Series D Cumulative Redeemable Preferred Share that were paid on Jan. 15, 2008, to holders of record as of Dec. 30, 2007, of the Series C and Series D Preferred Shares. Share Repurchase Program The company wa authorized to purchase an additional 539,200 common shares and may make repurchases from time to time in the open market or in privately negotiated transactions, subject to market conditions and compliance with legal requirements. The share repurchase program does not contain any time limitation and does not obligate us to repurchase any shares. The company did not purchase any shares in the fourth quarter of 2007 or to date in 2008 and may discontinue the program at any time. About Brandywine Headquartered in Radnor, Pennsylvania, Brandywine Realty Trust (NYSE: BDN), http://www.brandywinerealty.com/-- is one of the full-service, integrated real estate companies in the United States and is focused primarily on the ownership, management and development of class A, suburban and urban office buildings in selected markets aggregating approximately 42 million square feet. * * * Fitch and Moody's each assigned a 'BB+' rating on Brandywine Realty Trust's Preferred Stock. The ratings still hold to date with positive and stable outlooks. BROWN SHOE: Richard Schumacher to Retire Effective March 31 ----------------------------------------------------------- Richard C. Schumacher, senior vice president and chief accounting officer of Brown Shoe Company Inc., will be retiring from the company effective March 31, 2008, the company disclosed in a regulatory filing with the U.S. Securities and Exchange Commission dated Feb. 19, 2008. About Brown Shoe Company Headquartered in St. Louis, Missouri, Brown Shoe Company Inc. (NYSE:BWS) -- http://www.brownshoe.com/-- is a $2.4 billion footwear company. Brown Shoe's Retail division operates Famous Footwear, the 1,000-store chain that sells brand name shoes for the family, approximately 300 specialty retail stores in the U.S. and Canada under the Naturalizer, FX LaSalle, and Franco Sarto names, and Shoes.com, the company's e-commerce subsidiary. Brown Shoe, through its wholesale divisions, owns and markets footwear brands including Naturalizer, LifeStride, Via Spiga, Nickels Soft, Connie and Buster Brown; it also markets licensed brands including Franco Sarto, Dr. Scholl's, Etienne Aigner, and Carlos by Carlos Santana and Barbie, Disney and Nickelodeon character footwear for children. * * * Moody's Investor Services placed Brown Shoe Company Inc.'s probability of default rating at 'Ba3' in September 2006. The rating still holds to date with a positive outlook. BUCYRUS INTERNATIONAL: Amends RAG Coal Share Purchase Deal ---------------------------------------------------------- On Feb. 18, 2008, Bucyrus International Inc. and its special- purpose acquisition subsidiary, DBT Holdings GmbH, entered into a Third Addendum to the Dec. 16, 2006 Share Purchase Agreement with RAG Coal International GmbH, pursuant to which the company purchased the shares of DBT GmbH on May 4, 2007. In accordance with this amendment, the parties agreed to a cash settlement of certain of the company's indemnification claims against the RAG Coal under the Agreement, in exchange for the company agreeing to an accelerated release of the lock-up and transfer restrictions on the 471,476 shares of the company's class A common stock issued to the RAG Coal pursuant to the Agreement. Under the original Agreement, with certain limited exceptions, RAG Coal could not, without the company's prior written consent, directly or indirectly sell or otherwise transfer (i) any of its company shares prior to May 4, 2008; (ii) more than 30% of its company shares prior to May 4, 2009; and (iii) more than 60% of its company shares prior to May 4, 2010. Under the terms of the Amendment, RAG Coal may now sell or transfer (subject to certain requirements to help ensure an orderly market distribution) up to 50% of its company shares beginning on Feb. 15, 2008, with the next 25% of its company shares eligible for sale on or after May 4, 2009, and the final 25% eligible for sale on or after May 4, 2010. About Bucyrus International Headquartered in South Milwaukee, Wisconsin, Bucyrus International Inc. (Nasdaq: BUCY) -- http://www.bucyrus.com/-- is a global manufacturer of electric mining shovels, walking draglines and rotary blasthole drills and provides aftermarket replacement parts and services for these machines. In 2006, it had sales of $738 million. * * * Moody's Investor Service placed the company's long-term corporate family rating at 'Ba3' in April 2007. The rating still holds to date with a stable outlook. BUFFETS HOLDINGS: Receives Final Approval for DIP Financing ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted on February 22, 2008, final approval of Buffets Holdings, Inc.'s debtor-in-possession credit facility, consisting of $85 million of new funding and $200 million carried over from the company's prepetition credit facility. The Debtors sought permission to borrow up to $385 million. The DIP credit facility will be used to enhance the company's liquidity during the reorganization process. The Court authorized and directed each Debtor to pay from the borrowings under the DIP Documents interest, fees and expense reimbursements, and all fees -- including an annual administrative agent fee of $200,000 and an arrangement fee of $250,000 -- and expense reimbursements of Credit Suisse Cayman Islands Branch, as DIP Agent, and Credit Suisse Securities (USA) LLC, as sole lead arranger and book runner, and the reasonable fees and expense reimbursements of their attorneys, financial advisors and other professionals, and the reasonable fees and expenses of the attorneys for each of the DIP Lenders. All of the DIP Obligations, including the Roll-Up, will constitute an allowed claim, subject to payment of the Carve-Out against each Borrower and each Guarantor, with priority over any and all administrative expenses, diminution claims, all claims of any kind asserted by the Prepetition Lenders, and all other claims against the Debtors. This Superpriority Claim will be payable from and have recourse to all pre- and postpetition property of the Debtors and all proceeds from the property, subject only to the payment of the Carve-Out. As security for the DIP Obligations, security interests and liens are granted to the Agent for its own benefit and the benefit of the DIP Lenders, subject only to the extent of any payment of the Carve-Out. In addition, the Court authorized the Debtors to use all Cash Collateral of the Prepetition Lenders, and the Prepetition Lenders are directed promptly to turn over to the Debtors all Cash Collateral received or held by them. The Debtors' right to use Cash Collateral will terminate automatically, without further order or relief from the Court, on the earlier to occur of (i) the acceleration of any DIP Obligations and (ii) the Final DIP Order ceasing to be in full force and effect for any reason. The Prepetition Lenders are entitled to adequate protection of their interest in the Prepetition Collateral, including the Cash Collateral to the extent of the diminution in the value of their valid and perfected security interests and liens in the Prepetition Collateral as of the Petition Date. The Debtors acknowledge, among other things, that as of the Petition Date, they were indebted to the Prepetition Lenders in the aggregate principal amount of $565,353,000 under the revolving credit facilities and the term facility, and $67,261,633 in face amount of issued letters of credit, each plus accrued per diem interest with respect thereto and any fees, costs and charges provided under the Existing Credit Agreement. Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims and balloting agent. The U.S Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. CAPITALSOURCE INC: Reports $15MM Net Loss for 2007 Fourth Quarter ----------------------------------------------------------------- CapitalSource Inc. reported a net loss of $15.0 million for the fourth quarter ended Dec. 31, 2007 compared to net income of $60.3 million for the same period of the previous year. For the