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/raid1/www/Hosts/bankrupt/TCR_Public/080229.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 29, 2008, Vol. 12, No. 51 Headlines ACANDS INC: Trustee Opposes Plan; Wants Claims Release Justified ACANTO SADDLEBACK: Sec. 341(a) Creditors Meeting Set for March 3 ACCEPTANCE INSURANCE: Can File Chapter 11 Plan Until May 30 AIRWAY MOVING: Case Summary & 20 Largest Unsecured Creditors ALANCO TECH: Posts $2,005,800 Net Loss in 2nd Qtr. Ended Dec. 31 AMERICAN MEDIA: Dec. 31 Balance Sheet Upside-Down by $369.0 Mil. AMERICAN STANDARD: Expects to File for Chapter 11 Protection ATLANTIS PLASTICS: S&P Ratings Tumbles to 'D' on Covenant Defaults AVANTAIR INC: Dec. 31 Balance Sheet Upside-Down by $22.3 Million AVENTINE RENEWABLE: Liquidity Issues Incite Failed Auctions AVENTINE RENEWABLE: Earns $3.2 Mil. For Fourth Qtr. Ended Dec. 31 AVENTINE RENEWABLE: Moody's Lowers SGL Rating on Failed Auctions BALLY TOTAL: Reaches Settlement with SEC After Fraud Allegations BELDEN INC: Board Appoints Judy Brown as Director CALPINE CORP: Inks Geothermal Purchase Agreement With PG&E CATHOLIC CHURCH: Objection Deadline on Calkin Retention is March 3 CATHOLIC CHURCH: Century Balks at Davenport's Disclosure Statement CATHOLIC CHURCH: Regina High Opposes Davenport's Bankruptcy Plan CATHOLIC CHURCH: Portland's Bankruptcy Reopened by Judge Perris CATHOLIC CHURCH: Spokane's Ranch Faces Suit Filed by Ex-Residents CATHOLIC CHURCH: Tuscon Can Distribute $1 Million For Tort Claims CENTRAL IOWA: McGladrey & Pullen Expresses Going Concern Doubt CHRYSLER LLC: Idles Plant in Ontario Due to TRW's Workers Strike CHRYSLER LLC: Plastech to Continue Sending Supplies Until March 3 CITICORP MORTGAGE: Fitch Rates $1.392MM Class B-4 Certs. at BB CLOROX COMPANY: Prices $500 Million Offering of 5% Senior Notes COLTRANE CLO: Fitch Cuts Ratings to "CC" on 4 Classes of Notes COMMODORE CDO: Moody's Reviews Junk Rating on $17.5 Million Notes COMMUNITY HEALTH: Posts $88MM Net Loss in Qtr. Ended December 31 CORNERSTONE MINISTRIES: Wants Scroggins & Williamson as Counsel CORNERSTONE MINISTRIES: Wants Miller & Martin as Outside Counsel CORNERSTONE MINISTRIES: Wants eNable Business as Financial Advisor CORNERSTONE MINISTRIES: Schedules Filing Period Moved to March 11 CRDENTIA CORP: Completes $10 Million Long Term Debt Financing CREDIT-SUISSE: Fitch Cuts Rating on $500,000 Cl. B-3 Certs. to BB CREDIT SUISSE: Fitch Chips Ratings on $113.2 Million Certificates DEALMAKER DEVELOPMENTS: Voluntary Chapter 11 Case Summary DELPHI CORP: Shareholder Settlement Hearing Set for April 29 DILLARD'S INC: S&P Supersedes Outlook From Stable to Negative DIRECTV GROUP: Stake Swap Results in Two Board Seats for Liberty DIRECTV GROUP: FCC Sees Liberty Media Deal to Benefit Public EQUIFIRST MORTGAGE: Class B-2 Cert. Gets S&P's Junk Rating From BB FAIRPOINT COMMS: S&P Lifts Rating to 'BB' on Merger With Verizon FAIRPOINT COMMS: Proposed Merger Approval Cues Moody's 'B1' Rating FIDELITY NATIONAL: Earns $108 Mil. in Quarter ended December 31 FINLAY ENTERPRISES: Deal with NRDC Ends Over Fortunoff Sale FIRST NLC: Adverse Pool Performance Spurs S&P's Rating Downgrades FORTUNOFF: Asset Sale Causes Termination of Finlay-NRDC Agreement FORTUNOFF: Highest Bid Awarded to NRDC Equity's H Acquisition FREESTAR TECH: Posts $4,568,270 Net Loss in 2nd Qtr. Ended Dec. 31 GARTECH ELECTRICAL: Case Summary & 59 Largest Unsecured Creditors GENERAL MOTORS: Idles Assembly Plant Due to AAM Workers' Strike GENERAL MOTORS: Supplier's Workers Strike Won't Affect S&P Rating GLOBAL SIGNAL: Fitch Holds 'BB+' Rating on $122.4MM Class F Certs. GLOBAL SIGNAL: Fitch Holds 'BB-' Rating on $3.8MM Class G Certs. IDEARC INC: CEO John Mueller Steps Down After 10 Days of Service IMPLANT SCIENCES: Posts $4,815,000 Net Loss in Qtr. Ended Dec. 31 IPS CORP: Moody's Changes Outlook to Negative; Holds 'B2' Ratings IRVINE SENSORS: Posts $3.7 Million Net Loss in Qtr. Ended Dec. 30 IXIS REAL: S&P Slashes Five Classes' Ratings on Weak Performance JAMES LULL: Debt from "Ponzi Scheme" May Have Reached $50 Million KEFTON CDO: Moody's Junks Rating on Up To $67 Mil. Notes From 'A3' KELLWOOD CO: S&P Chips Rating to B+ After Sun Capital Tender Offer LASALLE COMM: Increased Loss Expectations Cue Fitch to Cut Ratings LENNAR CORP: Receives Purchase Offer from UAE Group, Report Says LIBERTY MEDIA: Gains 41% Interest in DirecTV After Swap LIBERTY MEDIA: FCC Sees DirecTV Group Deal to Benefit Public LILLIAN VERNON: Has Interim Authority to Tap $8.5MM DIP Financing LONGPORT FUNDING: Six Classes of Notes Get Moody's Junk Ratings LOUISIANA-PACIFIC CORP: Moody's Chips Senior Debt Rating to ' Ba2' MASTR ASSET: Class M-9 and Class M-10 Gets S&P's Rating Downgrades MCCALL CITY: Council Passes Resolution Allowing Bankruptcy Filing MEDICOR LTD: Court Approves $7 Million DIP Financing MEDICOR LTD: Wants Until May 26 to File Chapter 11 Plan MIIX INSURANCE: Court Wants Creditors to Appear at April 9 Hearing MILACRON INC: Dec. 31 Balance Sheet Upside-Down by $51.1 Million MORGAN STANLEY: Fitch Holds Junk Rating on $5.3MM Class M Certs. MORGAN STANLEY: Moody's Pares Ratings on 47 Tranches From 14 Deals MSGI SECURITY: Dec. 31 Balance Sheet Upside-Down by $4,245 NATIONWIDE HEALTH: Fitch Affirms 'BB+' Rating on Preferred Stock NEUMANN HOMES: Court Extends Exclusive Plan Filing Periods NEW CENTURY: Moody's Cuts Ratings on Five Tranches From Two Deals NORTEL NETWORKS: Posts $844 Mil. Net Loss in Fourth Quarter 2007 OFF PRICE: Chapter 7 Filing and Store Closures Hurt Customers ONEIDA LTD: Selling Business in Australia to McPherson's Limited OVERSEAS SHIPHOLDING: Net Income Drops at $21.2MM For 4th Qtr. OVERSEAS SHIPHOLDING: S&P Ratings Unaffected By Net Profit Decline PACIFIC PINNACLE: Moody's Junks Ratings on Five Classes of Notes PAMPELONNE CDO: Moody's Junks Rating on $50 Mil. Notes From 'Ba1' PELOTON PARTNERS: Liquidates $2 Billion ABS Fund PHARMED GROUP: Wants Exclusive Plan Filing Period Extended PHARMED GROUP: Taps Jonathan Green as Special Tax Counsel PINNACLE PEAK: Moody's Junks Rating on $140 Mil. Notes From 'Aaa' PLASTECH ENGINEERED: Court Extends DIP Financing Until March 3 PLASTECH ENGINEERED: Agrees to Supply Chrysler Until March 3 POPE & TALBOT: Has Interim OK to Obtain DIP Loan; Monitor Comments POPE & TALBOT: Court Fixes Claims Bar Date at April 3 PRB ENERGY: Defaults Obligations Under Senior Secured Debentures QUIGLEY COMPANY: Posts $7.2 Million Net Loss in Year Ended Dec. 31 SCHUYLER GUEST: Case Summary & 17 Largest Unsecured Creditors SCOTTISH RE: A.M. Best Chips Issuer Credit Rating to bb from bbb- SEVERNA PARK: Case Summary & 17 Largest Unsecured Creditors SHARPER IMAGE: Asks Court to Extend Schedules Filing Deadline to SHARPER IMAGE: Court Grants Request to Pay Vendor Obligations SHILOH'S INDUSTRIES: Moody's Holds Ba3 Rating With Stable Outlook SIRVA INC: Obtains Additional $10 Million DIP Loan; Panel Objects SOLIDUS NETWORKS: Auction of Three Non-Core Businesses Adjourned SPRINT NEXTEL: Reports $29.5 Billion Net Loss in 4th Quarter 2007 SPRINT NEXTEL: Expected Bad Fin'l Results Cue Fitch to Cut Ratings SPRINT NEXTEL: Moody's Give Negative Outlook on Weak Operations SPRINT NEXTEL: Losses Cues S&P to Put Ratings on Negative Watch SOLIDUS NETWORKS: No Qualified Offers Obtained to Buy Core Assets SOLIDUS NETWORKS: Whorl LLC Balks at Asset Sale and DIP Financing SOLUTIA INC: Gets Exit Financing; Emerges From Ch. 11 Protection SOLUTIA INC: Judge Beatty OKs Bank of New York Settlement Pact SOLUTIA INC: Court Approves Bayer & Lanxess Claims Settlement SOLUTIA INC: Court Approves Quinn Emanuel as Conflicts Counsel SPOTTED DOG: Case Summary & 20 Largest Unsecured Creditors ST MARY LAND: Inks $42 Million Oil and Gas Assets Acquisition Deal STONE ENERGY: Earns $65 Million in Quarter ended December 31 SUMMERWIND INVESTORS: Voluntary Chapter 11 Case Summary TEMBEC INC: Ontario Court Approves Plan of Arrangement under CBCA TRAILER BRIDGE: Moody's Gives Negative Outlook; Keeps All Ratings TRW AUTOMOTIVE: CAW Workers Rally at Windsor Plant in Ontario URS CORP: Earns $132 Million in Fiscal Year Ended December 28 USG CORP: Weak Fin'l Performance Cues Moody's Rating Cuts to 'Ba2' VALENCE TECH: Inks Agreement to Sell $1 Million Common Shares VALLE GRANDE: Case Summary & Three Largest Unsecured Creditors VALLEJO CITY: Reaches Tentative Deal with Labor Unions WELLS FARGO: Fitch Rates $1.35 Million Class B-5 Certificates at B WICKES FURNITURE: Liquidation Sale of All Stores Starts Tomorrow WOLVERINE TUBE: Credit & Receivables Sales Facilities Amended WOODCOCK ESTATE: Case Summary & 20 Largest Unsecured Creditors YOUR RV WIZARD: Voluntary Chapter 11 Case Summary ZALE CORP: Reduces Staffing on New Operational Efficiency Program * S&P Says 418 ABS Ratings Affected by Bond Insurer Rating Actions * S&P Downgrades 85 Tranches' Ratings From 16 Cash Flows and CDOs * Ropes & Gray Opens Chicago Office and Welcomes Three Partners * BOOK REVIEW: Inside Investment Banking: Second Edition ********* ACANDS INC: Trustee Opposes Plan; Wants Claims Release Justified ---------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, objects to ACandS, Inc.'s Second Amended Chapter 11 Plan of Reorganization, saying that the company should justify the proposed release of claims belonging to certain third-party claimants. The Amended Plan provides for the issuance of injunctions under Section 524(g) of the U.S. Bankruptcy Code that result in channeling of certain asbestos-related liabilities of the Debtor into a trust. The Debtor said that its $449,000,000 insurance claim against Travelers Casualty and Surety Company is its most valuable asset. The Debtor also said that a Trust will be created which will (i) possess the status and features of a "qualified settlement fund" for the purposes of Section 468B of the Internal Revenue Code, (ii) assume the Debtor's liabilities with respect to all Asbestos Personal Injury Claims, and (iii) use Trust Assets and income to pay Asbestos Personal Injury Claims, as provided in the Plan and Trust Documents. The U.S. Trustee said in court documents that with respect to proposed claims release, there appears to be no evidence or basis for releasing widespread claims against certain parties and other entities including, as defined in the Debtor's Plan, officers, counsel, bankers, advisors, or agents of the Debtor. To the extent that the Debtors are requesting a non-consensual release of third-party claims, the U.S. Trustee says, the Debtor must establish the legal and factual bases for that request. The U.S. Trustee reminds the U.S. Bankruptcy Court for the District of Delaware that she reserves the right to cross-examine any witnesses whose testimony is offered by the Debtor in support of these provisions and to take a position on the propriety of the releases at the confirmation hearing based upon the record. As reported in the Troubled Company Reporter on Feb. 22, 2008, Owens-Illinois Inc., a creditor of ACandS Inc., objected to the Plan, arguing that a trust created under the plan has "overly broad powers". About AcandS Inc. Based in Lancaster, Pennsylvania, ACandS Inc. was an insulation contracting company, primarily engaged in the installation of thermal and mechanical insulation. In later years, the Debtor also performed a significant amount of asbestos abatement and other environmental remediation work. The company filed for chapter 11 protection on Sept. 16, 2002 (Bankr. Del. Case No. 02- 12687). Laura Davis Jones, Esq., Curtis A. Hehn, Esq., James E. O'Neill, Esq., and Michael Paul Migliore, Esq., at Pachulski Stang Ziehl & Jones, P.C., represent the Debtor in its restructuring efforts. Kathleen Campbell Davis, Esq., Aileen F. Maguire, Esq., Mark T Hurford, Esq., and Marla Rosoff Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. At Dec. 31, 2006, the Debtor disclosed that it had book assets of approximately $11.78 million and book liabilities, including liabilities for the payment of asbestos-related and other claims of $11.78 million. At June 30, 2007, net book assets before liabilities for asbestos-related and other claims was approximately $9,010,000. The Court set April 21, 2008 to consider confirmation of the Debtor's Second Amended Chapter 11 Plan of Reorganization. ACANTO SADDLEBACK: Sec. 341(a) Creditors Meeting Set for March 3 ---------------------------------------------------------------- The United States Trustee for Region 16 will convene a meeting of creditors in Acanto Saddleback Homes LLC's chapter 11 case, on March 3, 2008, at 10:00 a.m., at 411 West Fourt Street, Room 1-159 in Santa Ana, California. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in the Debtors' case. The Section 341(a) Meeting has been scheduled within the time required by Rule 2003 of the Federal Rules of the Bankruptcy Procedure. All creditors are invited, but not required, to attend. The Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Based in Newport Beach, California, Acanto Saddleback Homes, LLC -- is a housing community. The company filed for chapter 11 on Jan. 30, 2008 (Bank.C.D.Ca. Case No. 08-10426). Robert P. Goe, Esq., at Goe & Forthsythe, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. ACCEPTANCE INSURANCE: Can File Chapter 11 Plan Until May 30 ----------------------------------------------------------- The United States Bankruptcy Court for the District of Nebraska extended Acceptance Insurance Companies Inc. and its debtor- affiliates' exclusive period to file a Chapter 11 plan until May 30, 2008, Bloomberg News reports. The Court also extended the exclusive right to solicit acceptances of that plan until July 30, 2008. As reported in the Troubled Company Reporter on Feb. 5, 2008, the Debtors told the Court that they need sufficient time to negotiate and propose a Chapter 11 plan of reorganization and to rehabilitate their business. The Debtors related that the Official Committee of Unsecured Creditors has retained StoneRidge Advisors LLC to assist the Committee, as well the Debtors, with transactions that may form the basis of a plan. John J. Jolley, Jr., Esq., at Kutak Rock LLP in Omaha, Nebraska, said that the Debtors have yet to resolve Granite Reinsurance Ltd.'s $10 million claim against the Debtors, which is pending before the Bankruptcy Appellate Panel for the Eighth Circuit Court of Appeals. About Acceptance Insurance Headquartered in Council Bluffs, Iowa, Acceptance Insurance Companies Inc. -- http://www.aicins.com/-- owns, either directly or indirectly, several companies, one of which is an insurance company that accounts for substantially all of the business operations and assets of the corporate groups. The company filed for chapter 11 protection on Jan. 7, 2005 (Bankr. D. Nebr. Case No. 05-80059). The Debtor's affiliates -- Acceptance Insurance Services Inc. and American Agrisurance Inc. -- each filed chapter 7 petitions (Bankr. D. Nebr. Case Nos. 05-80056 and 05-80058) on Jan. 7, 2005. John J. Jolley, Esq., at Kutak Rock LLP, represents the Debtor in its restructuring efforts. Lawyers at McGrath North Mullin & Kratz, PC LLO represent the the Official Committee of Unsecured Creditors in Acceptance Insurance's case. As of December 2007, the Debtor listed $36,326,172 in total assets and $138,187,943 in total debts. AIRWAY MOVING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Airway Moving & Storage, Inc. dba Airway Moving Systems, Inc. dba Airway Moving & Storage of Georgia, Inc. dba Nu-Jax P.O. Box 13009 New Bern, NC 28561-3009 Bankruptcy Case No.: 08-01282 Type of Business: The Debtor is a moving company. Chapter 11 Petition Date: February 27, 2008 Court: Eastern District of North Carolina (Wilson) Judge: J. Rich Leonard Debtor's Counsel: Trawick H. Stubbs, Jr. (efile@stubbsperdue.com) Stubbs & Perdue, P.A. P. O. Drawer 1654 New Bern, NC 28563 Tel: (252) 633-2700 Fax: (252) 633-9600 http://www.stubbsperdue.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Gran Alley Co., Inc. N.C. 106-6 $129,232 Attention: Manager or Agent N.C. 104-6 P.O. Box 773 N.C. 107-6 Goldsboro, NC 27530 Charles McEachern $125,000 The Gables at Wolfcreek 5228 Forsyth Road, Suite 275 Macon, GA 31210 Community Yellow Pages N.B.K. 06, N.B.K. 07 $13,513 Attention: Manager or Agent P.O. Box 10629 Goldsboro, NC 27532 Fisher Oil Co. $9,000 City of New Bern Tax $8,497 Shoppe of Crafts $8,212 Security Moving $6,523 Craven Co. Tax Collector $5,988 Eagle Transportation $3,670 White Directory Publisher $3,560 Trans Guard General Agency $2,525 Bell South $2,309 Embarq $1,532 D.E.X. $1,464 Industrial Truck $1,419 Stewart Equipment $1,404 East Carolina Forklifts $1,169 Mover Specialty Service, Inc. $1,070 Employment Security Committee $981 Wayne's Service Center $853 ALANCO TECH: Posts $2,005,800 Net Loss in 2nd Qtr. Ended Dec. 31 ---------------------------------------------------------------- Alanco Technologies Inc. reported a net loss of $2,005,800 for the second quarter ended Dec. 31, 2007, an increase of $1,365,400, compared to the prior year period loss of $640,400. Sales for its second quarter ended Dec. 31, 2007, were $3,770,200, a decrease of $1,820,900, compared to sales of $5,591,100 for the same period of the prior year. The company's Data Storage segment (Excel Meridian Data Inc.) reported decreased sales of $917,200 due to an unusually large $945,000 sale recorded in the prior year second quarter that was not duplicated in the current quarter. The company's Wireless Asset Management segment (StarTrak Systems) reported a sales decrease of $814,800 due to its inability to replace a contract with a large volume customer that significantly increased hardware sales in the prior year second quarter. StarTrak's sales shortfall was further impacted by delays in its new "Sentry" product introduction targeted at the refrigerated truck/trailer market that had been planned for the current quarter. Approximately 50% of the increase in net loss resulted from a decrease in gross profit. The balance of the increased loss was due to increased StarTrak SG&A expenses incurred to accelerate and complete commercialization of the new Sentry product line and increased corporate expenses in the quarter due to a one-time $300,000 insurance settlement recorded in the prior year. Robert R. Kauffman, Alanco chairman and chief executive officer, commented, "The first half performance was obviously unacceptable, and management responded with an aggressive corporate-wide SG&A expense reduction program and a reorganization of StarTrak's technical staff to focus on the critical Sentry truck/trailer product commercialization project. These efforts led to an approximate $250,000 per quarter reduction in the company's SG&A expenses and the successful introduction of the Sentry product line in November/December, 2007." "Currently, midway into our third quarter, each of our three operating subsidiaries is on track to contribute to a significant narrowing of our total company operating loss in the current quarter, ending March 31, and realistic expectation of a complete operating turnaround and positive EBITDA in the final quarter ending June 30, 2008." Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $28,791,900 in total assets, $11,797,200 in total liabilities, $856,700 in Series B preferred stock, and $16,138,000 in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2892 Going Concern Disclaimer As reported in the Troubled Company Reporter on Oct. 4, 2007, Semple, Marchal & Cooper LLP, in Phoenix, Arizona, expressed substantial doubt about Alanco Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended June 30, 2007, and 2006. The auditing firm reported that the company incurred significant losses from operations, anticipates additional losses in fiscal 2008, and has insufficient working capital as of June 30, 2007, to fund the anticipated losses. About Alanco Technologies Headquartered in Scottsdale, Arizona, Alanco Technologies, Inc. (NASDAQ: ALAN) -- http://www.alanco.com/-- provides wireless tracking and asset management solutions through its StarTrak Systems and Alanco/TSI PRISM subsidiaries. AMERICAN MEDIA: Dec. 31 Balance Sheet Upside-Down by $369.0 Mil. ---------------------------------------------------------------- American Media Inc. disclosed financial results of its subsidiary American Media Operations Inc. for the third quarter ended Dec. 31, 2007. At Dec. 31, 2007, American Media Operations Inc.'s consolidated balance sheet showed $952.8 million in total assets and $1.32 billion in total liabilities, resulting in a $369.0 million total stockholders' deficit. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $138.5 million in total current assets available to pay $149.0 million in total current liabilities. The company reported a net loss of $14.0 million for the third quarter ended Dec. 31, 2007, compared with a net loss of $306.9 million in the corresponding period ended Dec. 31, 2006. For the nine months ended Dec. 31, 2007, net loss was $31.8 million, compared with a net loss of $338.7 million in the corresponding period ended Dec. 31, 2006. Revenue for the third quarter of fiscal year 2008 was $114.5 million, as compared to $107.1 million in the third quarter of fiscal year 2007, representing a 7% increase. For the nine months ended Dec. 31, 2007, revenues were $367.6 million, as compared to $346.4 million in the prior-year period, representing a 6% increase. The increases in revenue during both the quarter and nine-month periods were primarily attributable to favorable results in advertising and newsstand revenue. The company's Shape, Star and Men's Fitness magazines all delivered strong performances in calendar year 2007 versus calendar year 2006. As measured by Publishers Information Bureau (PIB), an independent organization that tracks advertising carried by consumer magazines, Shape ad pages were up 13%, Star ad pages were up 25% and Men's Fitness ad pages were up 25%. All three leading AMI titles outperformed their respective categories during calendar year 2007. As compiled by PIB, the category in which Shape is ranked increased 10%; the category in which Star is ranked grew 6%; and, the category in which Men's Fitness is ranked increased 11%. Operating income for the third quarter of fiscal year 2008 was $17.2 million, as compared to a loss of $302.2 million in the third quarter of fiscal year 2007. For the nine months ended Dec. 31, 2007, operating income was $74.6 million, as compared to a loss of $275.4 million in the prior-year period. Excluding a $305.4 million non-cash provision for impairment of intangible assets and goodwill in the prior-year period, the increase in operating income for the quarter and nine months ended Dec. 31, 2007 would have been 467% and 150%, respectively. These increases were primarily due to the above mentioned increase in revenue and the cost reductions generated by the company as a result of its implementation of its management action plan. EBITDA for the third quarter of fiscal year 2008 was $24.0 million, as compared to $12.0 million in the third quarter of fiscal year 2007. For the nine months ended Dec. 31, 2007, EBITDA was $95.0 million, as compared to $56.0 million in the prior-year period. At Dec. 31, 2007, the company's cash and cash equivalent balances were $56.5 million. Management Comments AMOI chairman and chief executive officer David Pecker said, "In our third quarter of fiscal year 2008, AMOI saw continued strong revenue growth driven by both advertising and circulation gains from our major titles Shape, Star and Men's Fitness, each of which is experiencing a record advertising year." AMOI executive vice president and chief financial officer Dean Durbin said, "Over the first three quarters of fiscal year 2008, we made excellent progress towards the cost-reduction and revenue- enhancement goals we outlined in our management action plan in February 2007. This contributed to a 7% decrease in expenses in the third quarter and a 7% decrease in expenses in the first nine months of fiscal year 2008 when the non-cash provision for impairment is excluded. Based on our performance to date, as well as on our projections for the fourth fiscal quarter, we fully expect to achieve the $36.0 million target contemplated under our management action plan." "Looking ahead, we believe AMI is well positioned, despite an increasingly challenging environment," concluded Mr. Pecker. "We have the leading titles in two of the strongest publishing categories today, health & fitness and celebrity, and their performance continues to be solid in the current quarter." Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2893 About American Media Operations Headquartered in Boca Raton, Florida, American Media Operations Inc. -- http://www.americanmediainc.com/-- is a publisher in the field of celebrity journalism, and health and fitness magazines. The company's publications include Star, Shape, Men's Fitness, Fit Pregnancy, Natural Health, Muscle & Fitness, Muscle & Fitness Hers, Flex, National Enquirer, Globe, Country Weekly, Mira!, Sun, National Examiner and other publications. The company is a wholly owned subsidiary of American Media Inc. * * * As reported in the Troubled Company Reporter on Dec. 10, 2007, Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on American Media Operations Inc. and raised the rating on the company's senior secured bank loan to 'B' from 'B-'. At the same time, S&P removed the ratings from CreditWatch with negative implications, where they were placed on Feb. 21, 2006, based on the company's delay in filing its financial statements. The outlook is developing. AMERICAN STANDARD: Expects to File for Chapter 11 Protection ------------------------------------------------------------ American Standard Building Systems expects to file for Chapter 11 bankruptcy liquidation in the coming days, blaming U.S. subprime mortgage crisis, crash of the real estate market and lack of bank financing, Ginny Wray of the Martinsville Bulletin reports citing James Lester, the company's president and CEO. The paper relates that the company, which has 57 regular workers and 23 temporary workers, closed on Jan. 25 when the bank would not provide it a loan. Certain workers did not receive wages and certain customers did not get the products they bought, Ms. Wray disclosed. Originally, the company planned to file for Chapter 7 liquidation but decided to file for Chapter 11, wherein the company's counsel will negotiate between the creditors to pump up sale proceeds and taking care of those "who got hurt," Ms. Wray recounts quoting Mr. Lester. "The company has no money and neither do I," Mr. Lester said. "No promises can be made but there is a chance customers and employees can get something." Headquartered in Martinsville, Virginia, American Standard Building Systems manufactures prefabricated wood buildings. ATLANTIS PLASTICS: S&P Ratings Tumbles to 'D' on Covenant Defaults ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Atlantis Plastics Inc. to 'D' from 'CCC-' and its rating on the company's $75 million junior secured term loan C due 2012 to 'D' from 'C'. S&P removed all ratings from CreditWatch with negative implications where they were placed on Aug. 1, 2007, when the company announced that it was in default of certain financial covenants under its secured credit facility. At the same time, S&P lowered the rating on the company's first- lien credit facilities, consisting of a $120 million senior secured term loan B and a $25 million revolving credit facility both due in 2011, to 'CCC' from 'CCC+'. "The rating actions follow the company's failure to make its interest payment on its $75 million junior secured term loan C due 2012," said Standard & Poor's credit analyst Anna Alemani. The recovery rating on the first-lien facilities remains '1', indicating expectations of very high recovery (90%-100%) following the default. The recovery rating on the $75 million junior secured second-lien term loan remains at '6', indicating S&P's expectations of negligible recovery (0%-10%). Recovery prospects are based on an enterprise value approach. Atlantis, which has annual revenues of about $400 million, manufactures plastic films, including stretch films and custom films (about 64% of revenues). Injection-molded products (about 28% of revenues) include components sold to original equipment manufacturers, mainly in the home appliance industry, and siding panels for the homebuilding industry and residential replacement market. The company's profile-extruded products (8% of revenues) are used in recreational vehicles, mobile homes, and other consumer and commercial products. AVANTAIR INC: Dec. 31 Balance Sheet Upside-Down by $22.3 Million ---------------------------------------------------------------- Avantair Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $192.8 million in total assets, $200.7 million in total liabilities, and $14.4 million in Series A convertible preferred stock, resulting in a $22.3 million total stockholders' deficit. At Dec. 31, 2007, the company's consolidated financial statements also showed strained liquidity with $49.6 million in total current assets available to pay $77.6 million in total current liabilities. Net loss for the second quarter of fiscal 2008 was $5.3 million compared to a net loss of $6.6 million for the second quarter of fiscal 2007. Loss from operations for the second quarter of fiscal 2008 decreased approximately 20% to $4.8 million from $6.0 million in the year-ago quarter. Total revenues for the second quarter of fiscal 2008 increased approximately 60% to $28.6 million, from $17.9 million in the second quarter of fiscal 2007. Revenues from fractional aircraft shares sold increased approximately 50% to $10.6 million, from $7.1 million in the year- ago quarter. This reflects an increase of 40% in cumulative new aircraft shares sold to 590 at the end of the second quarter of fiscal 2008, from 421.5 in the same period last year. Price per aircraft share increased to $415,000 versus $405,000 a year ago. Revenues from maintenance and management fees increased approximately 53% to $14.1 million for the second quarter of fiscal 2008, from $9.2 million in the second quarter of fiscal 2007, primarily reflecting the aforementioned increase in cumulative aircraft shares sold at Dec. 31, 2007. Additionally, monthly management fees increased to $9,400 during the second quarter of fiscal 2008, compared to $8,900 in the year-ago period. Charter card revenue increased by 200% to $2.1 million for the second quarter of fiscal 2008, from $690,019 in the second quarter of fiscal 2007, due to increased advertising and customer acceptance of the charter card program resulting in an increase in hours flown and a corresponding increase in charter card revenue. Demonstration and other revenues, which consist of charges for demonstration flights, fees for remarketing of used aircraft shares, and rent and fuel sales from the company's FBO operations, increased approximately 89% to $1.7 million for the quarter from $941,348 in the year-ago period. The cost of fractional aircraft shares sold increased to $8.9 million for the three months ended Dec. 31, 2007, from $6.4 million for the same period last year, due to the 40% increase in the cumulative number of fractional shares sold through Dec. 31, 2007, over the prior year. Cost of flight operations for the second quarter of fiscal 2008, excluding fuel costs, were $13.4 million, or 47% of revenue, compared to $8.3 million, or 46% of revenue, for the second quarter of fiscal 2007. The increase is due to higher maintenance expenses and an increase in the number of pilots hired during the quarter in accordance with the company's plan. Fuel expenses increased to $3.9 million for the quarter, compared to $2.4 million in the second quarter of fiscal 2007, attributable to the increased number of hours flown and the higher cost of fuel. "We are pleased to report strong year-over-year increases in all our revenue streams, led by the more than 50% increase in fractional shares revenue," commented Mr. Steven Santo, chief executive officer of Avantair. "Furthermore, while cost of flight operations increased slightly as a percentage of revenue in the current quarter, they were basically flat with the prior period as we experienced significant reductions in charter and repositioning costs due to several initiatives implemented during the quarter. "In addition, we purchased two additional core aircraft to help mitigate future repositioning costs to meet customer requests. We did experience a slight slowdown in share sales in late December, which we believe was partly due to market seasonality, broader economic challenges and the late delivery of aircraft at the end of the month. Nonetheless, fractional sales for our aircraft have increased in January over the prior month." G&A expenses for the second quarter of fiscal 2008 were $4.8 million, or 17% of revenue, compared to $5.6 million, or 31% of revenue, in the second quarter of fiscal 2007. The decrease is primarily due to a reduction in stock-based compensation expense of $2.3 million, partially off-set by an increase of fixed-based operation costs of $900,000, payroll taxes of $200,000, expenses related to being a public company of approximately $200,000, and other aircraft expenses of $200,000. Depreciation and amortization was $984,673 versus $177,990 in the prior-year period due to a reclassification of assets from available for sale to fixed during the fourth quarter of fiscal 2007. Selling expenses increased to $1.4 million for the three months ended Dec. 31, 2007, from $1.0 million for the same year ago period primarily due to an increase in advertising expenses. Mr. Santo continued, "Our outlook for the remainder of the year remains very positive. We plan to take delivery of 14 total planes in fiscal 2008, having received five of these aircraft in the fiscal second quarter. We also continue to aggressively pursue new fractional shareowners. Our charter card program remains a strong top-line contributor and, more importantly, enables us to reach new customers, introduce them to the aircraft and creates a source of potential future shareowners. In fact, in the first six months of fiscal 2008, we converted 20% of our charter card members to fractional shareowners. "While we continue to closely monitor the broader economic condition and its potential effect on our business, our new lead generation and demo flights evidence continued strong demand, particularly as customers begin to explore more cost-efficient alternatives in private jet travel. We are focused on continuing to capitalize on this market opportunity, while improving operating efficiencies to position Avantair for long-term profitability," Mr. Santo concluded. Year To Date Financial Results For the six months ended Dec. 31, 2007, total revenues increased approximately 57% to $54.3 million, from $34.7 million for the first six months of fiscal 2007. Loss from operations for the first six months of fiscal 2008 was $9.3 million versus $9.0 million in same period in fiscal 2007. Net loss for the first half of fiscal 2008 decreased to $10.1 million from a net loss of $10.4 million in the prior year period. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2897 Going Concern Disclaimer As reported in the Troubled Company Reporter on Oct. 2, 2007, Jericho, N.Y.-based J.H. Cohn LLP expressed substantial doubt about Avantair Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm pointed to the company's recurring losses resulting and an accumulated deficit of $56,198,527 as of June 30, 2007. In addition, the company has a working capital deficiency of $8,407,103 as of June 30, 2007. About Avantair Inc. Based in Clearwater, Florida, Avantair Inc. (OTC BB: AAIR) -- http://www.avantair.com/-- offers private travel solutions for individuals and companies at a fraction of the cost of whole aircraft ownership. The company is the sole North American provider of fractional aircraft shares in the Piaggio Avanti P.180 aircraft. The company currently manages a fleet of 39 fractional aircraft plus 7 core planes, with another 63 Piaggio Avanti IIs on order through 2012. It also has announced an order of 20 Embraer Phenom 100s. AVENTINE RENEWABLE: Liquidity Issues Incite Failed Auctions ----------------------------------------------------------- At Dec. 31, 2007, Aventine Renewable Energy Holdings Inc. had invested $211.5 million in taxable auction rate securities which it classified as current assets. The auction rate securities held by the company are private placement securities with long-term stated maturities for which the interest rates are reset through a Dutch auction every 28 days. The auctions have historically provided a liquid market for these securities as investors historically could readily sell their investments at auction. With the liquidity issues experienced in global credit and capital markets, the auction rate securities held by the company have experienced multiple failed auctions, beginning on Feb. 8, 2008, as the amount of securities submitted for sale has exceeded the amount of purchase orders. Subsequent to Dec. 31, 2007, the company began to exit its position in these securities. As of Feb. 21, 2008, the company had successfully liquidated $84.3 million of these securities, thereby leaving us with $127.2 million invested in ARS as of February 21. Aventine incurred a pre-tax loss of approximately $1.5 million in connection with these liquidations. All of these securities continue to carry AAA/Aaa ratings, have not experienced any payment defaults and are backed by student loans which carry guarantees as provided for under the federal family education loan program of the U.S. Department of Education. Nonetheless, if uncertainties in the credit and capital markets continue, these markets deteriorate further or there are any ratings downgrades on any auction rate securities the company holds, it may be required to recognize impairments or reclassify these investments from short-term to long-term investments. In addition, these securities may not provide the liquidity to us as Aventine needs it, as it could take until the final maturity of the underlying notes to realize its investments' recorded value. Currently, there is a very limited market for any of these securities and further liquidations at this time, if possible, would likely be at a significant discount. Accordingly, Aventine does not currently intend to attempt to liquidate any more of these securities until market conditions improve or its liquidity needs require us to do so. Cash and cash equivalents as of Dec. 31, 2007 was $17.2 million. Successful auction rate securities liquidations completed in 2008 generated $82.8 million. At Dec. 31, 2007, the company also had availability under its secured revolving credit facility of $122.6 million. The company's total estimated remaining expenditures needed to complete its two new facilities at Dec. 31, 2007 are estimated to be between $295 million and $305 million approximately evenly spent over the balance of the construction period through Q1'09. After utilization of the company's current available resources, should it not be able to liquidate a substantial portion of the remaining portfolio of these ARS securities on a timely basis and on acceptable terms, the company will have to either attempt to raise additional funds or slow down the construction of its new facilities, or both. In addition, delays in the construction of Aventine's new facilities could expose us to material penalties. The amount available to the company under its secured revolving credit facility is calculated using a borrowing base. In addition to a component relating to inventory and receivables, there is a fixed asset component included in this borrowing base. The amount of fixed assets eligible to be included as collateral in Aventine's borrowing base at Dec. 31, 2007 was $48.2 million, and decreases by $1.8 million each quarter thereafter. Aventine's liquidity facility is a $200 million facility, subject to collateral availability, and is expandable under certain conditions to $300 million. About Aventine Renewable Headquartered in Pekin, Illinois, Aventine Renewable Energy Holdings Inc. (NYSE:AVR) -- http://www.aventinerei.com-- produces and markets ethanol in the United States, based on both the number of gallons produced and the number of gallons sold. Through its own production facilities, marketing alliances with other ethanol producers and its purchase or resale operations, the company marketed and distributed 695.8 million gallons of ethanol during the year ended Dec. 31, 2006. For 2006, Aventine sold approximately 12.9% of the total volume of ethanol sold in the United States. The company markets and distributes ethanol to energy companies in the United States, including Royal Dutch Shell and its affiliates, Marathon Petroleum, BP, ConocoPhillips, Valero Marketing and Supply Company, Exxon/Mobil, and Texaco/Chevron. In addition to producing ethanol, the company's facilities also produce several co-products, such as distillers' grain, corn gluten feed, corn germ and brewers' yeast. AVENTINE RENEWABLE: Earns $3.2 Mil. For Fourth Qtr. Ended Dec. 31 ----------------------------------------------------------------- Aventine Renewable Energy Holdings Inc. reported net income of $3.2 million for the three months ended Dec.31, 2007 compared to $12.8 million net income for the 2006 fourth quarter. For the full fiscal year ended Dec. 31, 2007, net income was found at $33.8 million compared to $54.9 million income for 2006. Total net sales for the 2007 fourth quarter are $379.3 million in comparison to $360.7 million sales for the same period of the prior year. For the fiscal 2007, the company's total net sales were $1,571.6 million compared to the net sales for fiscal 2006 at $1,592.4 million. "We continue to successfully steer our way through a difficult commodity environment as both income and EBITDA turned positive," Ron Miller, Aventine's president and chief executive officer, said. "While ethanol prices rose during the quarter, they did not increase enough to allow the average price received for ethanol in the fourth quarter to exceed the average for the third quarter." "We were able to offset, however, the lower average ethanol price with lower corn costs for the quarter," Mr. Miller continued. "Our fourth quarter corn costs averaged $3.66 per bushel, or $0.15 per bushel less than in the third quarter." "Our co-product returns for the fourth quarter increased to 45.3%, as prices for germ, meal, DDGS and feed all increased significantly," Mr. Miller added. "Overall, the commodity spread for the quarter, defined as gross ethanol selling price per gallon less net corn cost per gallon, increased to $1.17 per gallon, from $1.09 in Q3'07." "As the commodity spread remains tight, the co-product returns provided by our wet mill have become increasingly more important," Mr. Miller explained. "Higher volumes of ethanol shipped in the fourth quarter versus the third quarter helped reduce freight costs per gallon, in spite of continued fuel surcharges." "Our plants ran at 89% of capacity during the fourth quarter of 2007 and 93% of capacity for the full year 2007 as compared to 89% for the full year 2006," Mr. Miller added. "The construction of our new facilities in Aurora, Nebraska and Mt. Vernon, Indiana continue to move forward." "We expect these facilities to ramp up ethanol production beginning in Q1'09," Mr. Miller stated. "We would like to thank all of the U.S. Senators and Representatives that continue to support and believe in the ethanol industry for passing the Energy Independence and Security Act of 2007, and for President Bush signing the bill into law." "Ethanol supports more than corn farmers or the ethanol industry itself," Mr. Miller imparted. "From seed and fertilizer companies to heavy equipment manufacturers and independent gasoline retailers, to local school districts in rural communities that have received boosts in property taxes, the investments made in ethanol by our political leadership is proving to be a wise investment for America." "The passage of a new renewable fuels standard in December helped to quell some of the concerns surrounding the supply/demand equation," Mr. Miller elaborated. "The new renewable fuel standard requirement for corn based ethanol of 15 billion gallons in 2015 exceeds, according to the Renewable Fuels Association, the combined capacity of 13.4 billion gallons from existing producing ethanol plants as well as those listed as currently under construction." "However, we, along with others in the industry, must continue to find and open new markets for ethanol," Mr. Miller concluded. As of Dec. 31, 2007, the company had $762.2 million total assets, $418.3 total debts resulting to a total stockholder's equity of $343.9 million. About Aventine Renewable Headquartered in Pekin, Illinois, Aventine Renewable Energy Holdings Inc. (NYSE:AVR) -- http://www.aventinerei.com-- produces and markets ethanol in the United States, based on both the number of gallons produced and the number of gallons sold. Through its own production facilities, marketing alliances with other ethanol producers and its purchase or resale operations, the company marketed and distributed 695.8 million gallons of ethanol during the year ended Dec. 31, 2006. For 2006, Aventine sold approximately 12.9% of the total volume of ethanol sold in the United States. The company markets and distributes ethanol to energy companies in the United States, including Royal Dutch Shell and its affiliates, Marathon Petroleum, BP, ConocoPhillips, Valero Marketing and Supply Company, Exxon/Mobil, and Texaco/Chevron. In addition to producing ethanol, the company's facilities also produce several co-products, such as distillers' grain, corn gluten feed, corn germ and brewers' yeast. AVENTINE RENEWABLE: Moody's Lowers SGL Rating on Failed Auctions ---------------------------------------------------------------- Moody's Investors Service downgraded the speculative grade liquidity rating of Aventine Renewable Energy Holdings, Inc.'s (B2 corporate family rating / stable outlook) to SGL-3 and moved the ratings outlook to negative. The company's B2 corporate family rating and B3 rating on its senior unsecured notes due 2017 were affirmed. These summarizes the ratings. Aventine Renewable Energy Holdings, Inc. Ratings changes: -- Speculative grade liquidity rating: SGL-3 from SGL-1 Ratings affirmed: -- Corporate family rating: B2 -- Probability of default rating: B2 -- $300mm Sr unsec notes due 2017: B3, LGD5, 76% The downgrade in the speculative grade liquidity rating follows the disclosure by the company that approximately $127 million of auction rate securities held as short-term investments were illiquid as a result of experiencing failed remarketing auctions earlier in February. The company was able to sell approximately $84 million of auction rate securities prior to the failed February 8th auction, which resulted in a loss of $1.5 million. Cash balances and liquid marketable securities balances as of Dec. 31, 2007, pro forma for the $84 million of sales of auction rate securities was approximately $100 million. It is uncertain if the next remarketing auctions for securities held by Aventine will be successful, however the company may have the opportunity to sell additional securities at discounts to their par value outside of the typical remarketing auctions. The SGL-3 liquidity rating also reflects cash balances that are expected to be exhausted during 2008 (to fund an estimated $315 million to $330 million of capital expenditures), the current unattractive commodity pricing environment, the expectation that the company will need to fund capital expenditures with its $200 million revolving credit facility and the generally difficult liquidity environment that might preclude the company from raising significant funds from uncommitted sources. Elevated corn prices (recently exceeding $5 per bushel) and ethanol prices that have traded at a discount or small premium to gasoline prices are resulting in slim margins for ethanol producers (despite favorable federal legislation passed in December 2007 mandating increased ethanol usage in 2008 and future years) and slightly negative cash flow from operations in the fourth quarter of 2007 for Aventine. Continuation of current commodity prices could lead to meager cash flows that would not contribute significantly to capital expenditure requirements or improve liquidity. It is plausible that the company will have sufficient funds for 2008, but there could be scenarios under which they could experience a liquidity shortfall. The company noted these in its earnings announcement dated Feb. 22, 2008: "After utilization of our current available resources, should we not be able to liquidate a substantial portion of the remaining portfolio of these ARS [auction rate securities] securities on a timely basis and on acceptable terms, we will have to either attempt to raise additional funds or slow down the construction of our new facilities, or both. In addition, delays in the construction of our new facilities could expose us to material penalties." The negative outlook reflects the uncertainty about Aventine's future profitability (given current commodity prices) and its liquidity as it spends heavily on new plant construction. Aventine expects to spend $295 million to $305 million to complete construction for two new ethanol plants in the first quarter of 2009 and $20 million to $25 million of other capital expenditures in 2008. It is expected that these expenditures will be funded from existing cash balances and its revolving credit facility. While on negative outlook, factors Moody's will consider include the company's success in selling its $127.2 million of illiquid auction rate securities, the impact that commodity prices have on the company's margins and Aventine's ability to generate cash flow from operations to contribute to capital expenditure requirements in 2008. A deterioration in operating margins due to adverse movements in commodity prices or further levering of Aventine's balance sheet could put negative pressure on the rating. Aventine is a producer and marketer in the United States of ethanol used as a blending component for gasoline. It produces ethanol and co-products at its wholly-owned Pekin, Illinois wet milling and dry milling plants, and its 78.4% owned dry milling Aurora, Nebraska plant. Additionally, the firm operates a marketing alliance that pools ethanol from multiple third party producers and sells it nationwide for which it receives a commission. Revenues for the FYE Dec. 31, 2007 were approximately $1.6 billion. BALLY TOTAL: Reaches Settlement with SEC After Fraud Allegations ---------------------------------------------------------------- Bally Total Fitness Holding Corporation and its debtor-affiliates have reached a settlement with the U.S. Securities and Exchange Commission concerning the SEC's investigation relating to the restatement of the company's financial statements for 2002 and 2003 and selected financial data for 2000 and 2001. In a lawsuit brought before the U.S. District Court in the District of Columbia on Feb. 28, 2008, the SEC filed financial fraud charges against against Bally alleging that the Company violated securities law -- and misled investors -- by issuing financial reports which fraudulently misrepresented Bally's financial condition during the years from 1997 to 2003, reports the Chicago Tribune. Specifically, the SEC alleges that: -- from at least 1997 through 2003, Bally's financial statements were affected by more than two dozen accounting improprieties, which caused Bally to overstate its originally reported year-end 2001 stockholders' equity by nearly $1.8 billion, or more than 340%. -- Bally understated its originally reported 2002 net loss by $92.4 million, or 9341%, and understated its originally reported 2003 net loss by $90.8 million, or 845%. -- Bally violated the antifraud, reporting, books and records, and internal control provisions of the federal securities laws. -- Bally fraudulently accounted for (i) three types of revenue it received from its members: initiation fees, prepaid dues, and reactivation fees; and (ii) its membership acquisition costs. "These frauds account for $1.2 billion of the $1.8 billion overstatement of Bally's originally reported year-end 2001 stockholders' equity," the SEC said in its complaint. In addition, Bally's accounting for more than 20 other revenue or expense items failed to conform to Generally Accepted Accounting Principles, which account for the remaining $600 million of the $1.8 billion overstatement of Bally's originally reported year-end 2001 stockholders' equity, said the SEC. Bally Settles In a "consent decree," says the Tribune, the suit was filed, and Bally settled the charges simultaneously. The company settled the proceedings without admitting or denying the SEC's findings, according to reports. The settlement does not require the Company to pay a monetary penalty. In accepting Bally's settlement offer, the SEC said, the Commission took into account "Bally's cooperation with the commission staff in the investigation leading to this action and (its) prompt commencement of remedial action," reports the Tribune. As part of the settlement, the company has consented to a final judgment requiring future compliance with Federal securities laws and regulations. Since the suit asks the Court only to enjoin Bally from future violations, the litigation appears to be resolved. However, the SEC said that its investigation of events "is continuing," the Tribune adds. "I am pleased that the conclusion of the government investigations puts these matters behind us as we continue to execute our strategies for the long-term success of our business," said Don R. Kornstein, Chairman of Bally Total Fitness. The Department of Justice also closed the criminal investigation involving Bally's restatement, without action against the company, according to a statement issued by Bally. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre-packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham & Watkins, L.L.P. represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had $408,546,205 in total assets and $1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. On Aug. 13, 2007, they filed an Amended Joint Prepackaged Plan and on Aug. 17 filed a Modified Amended Prepackaged Plan. BELDEN INC: Board Appoints Judy Brown as Director ------------------------------------------------- The board of directors of Belden Inc. appointed Judy Brown as a director and member of the audit committee of the board. Ms. Brown, 39, is executive vice president, chief financial officer and chief accounting officer of Perrigo Company, a post she has held since July 2006. She joined Perrigo in September 2004 as vice president and corporate controller. Perrigo is a healthcare supplier that develops, manufactures and distributes over-the-counter and prescription pharmaceuticals, nutritional products, active pharmaceutical ingredients and consumer products for the store brand market. Before joining Perrigo, Ms. Brown held various senior positions in finance and operations at Whirlpool Corporation from 1998 to August 2004, in Italy and the US and at Ernst & Young, 1990-1998, in both the US and Germany. She received a B.S. degree from the University of Illinois and an M.B.A. from the University of Chicago. "We are delighted to welcome Judy Brown to Belden's board of directors and the audit committee of the board, John Stroup, president and chief executive officer of Belden Inc., said. "Her financial expertise and her background in European operations make her a valuable addition to our board." About Belden Inc. Headquartered in St. Louis, Missouri, Belden Inc. (NYSE:BDC) -- http://www.belden.com/-- fka Belden CDT Inc., designs, manufactures, and markets signal transmission solutions for data networking and specialty electronics markets including entertainment, industrial, security and aerospace applications. * * * As reported in the Troubled Company Reporter on Feb. 15, 2008, Moody's Investors Service upgraded Belden Inc.'s corporate family ratings to Ba1 from Ba2. The rating outlook is stable. CALPINE CORP: Inks Geothermal Purchase Agreement With PG&E ---------------------------------------------------------- Calpine Corporation and Pacific Gas and Electric Company have entered into a 175-megawatt geothermal power purchase agreement, which consolidates six existing qualifying facility agreements totaling 118MW and adding 57MW of new renewable energy to PG&E's supply. The Purchase Agreement will be submitted for approval to the California Public Utilities Commission. With this agreement, 20% of PG&E's contracts for future energy delivery now meet California's renewable energy standard, PG&E said in a press release. "This agreement marks a major milestone toward meeting California's renewable standard," said Fong Wan, PG&E's vice president of energy procurement, said in a press release. "PG&E already provides our customers with some of the cleanest energy in the nation and we will continue to aggressively add more renewables to our portfolio." Starting in September 2008, the agreement will deliver renewable energy from Calpine's geothermal plants in Lake and Sonoma Counties in northern California in an area known as The Geysers. The Geysers generate about 725MW, of which 375MW will go to PG&E and the rest to other utilities like Southern California Edison. The Geysers, which can power up to 45,000 homes, is the largest producer of geothermal electricity in the world. Commercial geothermal power has been generated continuously at The Geysers since 1960. Geothermal energy accounts for three percent of PG&E's current overall energy mix. On average, more than 50% of the energy PG&E delivers comes from carbon-free sources. The agreement filed on February 20, 2008, with the California Public Utilities Commission extends PG&E's broader renewable energy portfolio. Qualifying renewable sources in PG&E's portfolio include solar, wind, biomass, geothermal, and small hydroelectric. Since July 2007, PG&E has signed renewable energy contracts totaling 1,024 MW, including this Calpine agreement, 553 MW of solar thermal with Solel-MSP-1, 85 MW of wind power from PPM, two MW of wave energy with Finavera Renewables, 177 MW of solar thermal with Ausra Inc., and 150 MW of wind energy with enXco. PG&E is still seeking regulatory approval for the Calpine, Finavera, Ausra and enXco contracts. California's Renewable Portfolio Standard (RPS) Program requires each utility to increase its procurement of eligible renewable generating resources by one percent of load per year to achieve a 29% renewables goal by 2010. The RPS Program was passed by the Legislature and is managed by California's Public Utilities Commission and Energy Commission. Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2007, the Debtors disclosed total assets of $18,467,000,000, total liabilities not subject to compromise of $11,207,000,000, total liabilities subject to compromise of $15,354,000,000 and stockholders' deficit of $8,102,000,000. On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC, and Silverado Geothermal Resources, Inc., filed voluntary chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198). On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another affiliate, also filed a voluntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 07-12967). On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. Calpine filed a Second Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a Third Amended Plan. On Sept. 25, 2007, the Court approved the adequacy of the Debtors' Disclosure Statement and entered a written order on September 26. On Dec. 19, 2007, the Court confirmed the Debtors' Plan. Calpine's Amended Plan was deemed effective as of January 31, 2008. CATHOLIC CHURCH: Objection Deadline on Calkin Retention is March 3 ------------------------------------------------------------------ At the Diocese of Davenport and its Official Committee of Unsecured Creditors' behest, the U.S. Bankruptcy Court for the Southern District of Iowa sets March 3, 2008, as the bar date for filing objections to the parties' application to employ Richard M. Calkins, Esq., at Calkins Law Firm, in Des Moines, Iowa, as special arbitrator in the bankruptcy case. The Diocese and the Creditors Committee have previously asked for an expedited consideration of the application because Mr. Calkins will have to start reviewing 160 proofs of claim filed in the case, among other tasks. Joint Application for Retention of Special Arbitrator The Diocese of Davenport and its Official Committee of Unsecured Creditors seek authority from the U.S. Bankruptcy Court for the Southern District of Iowa to employ Mr. Calkins as special arbitrator in the Diocese's Chapter 11 case. Hamid R. Rafatjoo, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, California, relates that central to the Joint Plan of Reorganization, which was recently filed by the Diocese and the Creditors Committee, is the role of the Special Arbitrator. The Plan provides that the holder of a tort claim against the Diocese can choose to have his or her Tort Claim treated pursuant to a convenience or matrix process. The Special Arbitrator determines the allowance and amount of the Tort Claim under those two processes, Mr. Rafatjoo tells the Court. The Special Arbitrator will also be responsible for computing the aggregate amount of the matrix, litigation and non-releasing litigation tort claims under the Plan, Mr. Rafatjoo says. He notes that for the claims processes to move efficiently and successfully, the Special Arbitrator should begin his work before Plan confirmation. Mr. Calkins will be paid at the hourly rate of $200 for his services, and $100 for travel time. He will also be reimbursed for necessary and reasonable costs. He may also utilize his paralegal staff at an hourly rate of $100. Pre-confirmation, Mr. Calkins will make periodic applications for compensation and reimbursement. Payment for his staff will be promptly and directly paid by the Diocese. Mr. Calkin assures the Court that he is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Diocese of Davenport The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on Oct. 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. Hamid R. Rafatjoo, Esq., and Gillian M. Brown, Esq., at Pachulski Stang Zhiel Young Jones & Weintraub LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Davenport Diocese reported $4,492,809 in assets and $1,650,439 in liabilities. The Court will hear the adequacy of Davenport's disclosure statement explaining its reorganization plan on March 5, 2008. (Catholic Church Bankruptcy News, Issue No. 115; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000). CATHOLIC CHURCH: Century Balks at Davenport's Disclosure Statement ------------------------------------------------------------------ Century Indemnity Company, as successor to CCI Insurance Company and Insurance Company of North America, objects to the Diocese of Davenport's Disclosure Statement because it lacks adequate information as required by Section 1125 of the Bankruptcy Code. Richard K. Updegraff, Esq., at Brown, Winick, Graves, Gross, Baskerville & Schoenebaum PLC, in Des Moines, Iowa, relates that Century Indemnity is not an insurer of the Diocese, and that the only record of insurance coverage it issued to the Diocese is a two-day policy, effective June 18 to 20, 1968, which covered "[a]ll activities incidental to installation of Bishop" at the Sacred Heart Cathedral. Mr. Updegraff notes that Century Indemnity does not have a copy of the Policy's liability coverage, and neither does the Diocese nor the Cathedral. Century Indemnity, however, is included in the Plan's definition of "Insurance Company," which includes any company that "allegedly provided" coverage to any Catholic Entities, Mr. Updegraff says. He argues that the Plan appears to be designed to abrogate virtually all basic policy rights, including the right to control defense of tort claims against an insured, because handling of the tort claims is put in complete control of a special arbitrator. Mr. Updegraff contends that the Disclosure Statement fails to disclose any basis for the U.S. Bankruptcy Court for the Southern District of Iowa to exercise issues over (i) tort claims against the Cathedral, and other non-debtors, or (ii) the Policy, which, if its terms and conditions are proved, would be a contract between two non-debtors. He adds that the Disclosure Statement also fails to disclose anything about the insurance policies allegedly issued to non-debtors, and the Plan's intended impact on those policies, which are not property of the bankruptcy estate. Mr. Updegraff further contends, among other things, that the Disclosure Statement does not disclose whether the priests, or other perpetrators of alleged abuse at the Cathedral were employees of the Cathedral. He notes that the Disclosure Statement is extraordinary in its failure to make disclosure about insurance. Hence, Century Indemnity asks the Court to deny approval of the Disclosure Statement. About Diocese of Davenport The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on Oct. 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. Hamid R. Rafatjoo, Esq., and Gillian M. Brown, Esq., at Pachulski Stang Zhiel Young Jones & Weintraub LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Davenport Diocese reported $4,492,809 in assets and $1,650,439 in liabilities. The Court will hear the adequacy of Davenport's disclosure statement explaining its reorganization plan on March 5, 2008. (Catholic Church Bankruptcy News, Issue No. 115; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000). CATHOLIC CHURCH: Regina High Opposes Davenport's Bankruptcy Plan ---------------------------------------------------------------- Iowa City Regina High School objects to the Diocese of Davenport's Joint Plan of Reorganization and accompanying Disclosure Statement to the extent that the Plan purports or attempts to bind Regina High to perform certain obligations set forth in the Plan. The Disclosure Statement is inaccurate and misleading in that it states that the Plan terms were negotiated over four days by certain Catholic entities, including parishes and churches located within the territorial Diocese's limits, Paula L. Roby, Esq., at Elderkin & Pirnie PLC, in Cedar Rapids, Iowa, argues. She notes that Regina High is a Catholic entity, as defined in the Plan, but was excluded from the negotiations, even after requesting to participate. "Regina [High] believes that not one single 'Catholic Entity' was allowed to participate in the negotiations," Ms. Roby tells the U.S. Bankruptcy Court for the Southern District of Iowa. Ms. Roby further argues that the Disclosure Statement inaccurately describes the balloting tabulation process by failing to note that the requirements of two-thirds in amount and one-half in number for affirmative ballots applies only to the number of creditors actually casting ballots, and not to the total number of creditors in each class. About Diocese of Davenport The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on Oct. 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. Hamid R. Rafatjoo, Esq., and Gillian M. Brown, Esq., at Pachulski Stang Zhiel Young Jones & Weintraub LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Davenport Diocese reported $4,492,809 in assets and $1,650,439 in liabilities. The Court will hear the adequacy of Davenport's disclosure statement explaining its reorganization plan on March 5, 2008. (Catholic Church Bankruptcy News, Issue No. 115; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000). CATHOLIC CHURCH: Portland's Bankruptcy Reopened by Judge Perris --------------------------------------------------------------- The Hon. Elizabeth L. Perris of the U.S. Bankruptcy Court for the District of Oregon has reopened the bankruptcy case of the Archdiocese of Portland in Oregon for further administration. Erin K. Olson, Esq., at the Law Office of Erin Olson, P.C., in Portland, Oregon, previously asked the Court to reopen the case to resolve certain issues, including her request to unseal, and file in redacted form, the documents and accompanying exhibits filed as Docket Nos. 4765 and 4766 in the bankruptcy case. Fathers Joseph Bacelleri, Donald Durand, Maurice Grammond, Gary Jacobson, Rocco Perrone, Michael W. Sprauer, Ronald Warren, and Chester Wrzaszczak objected to the reopening of the case. They complained that the case has been completed, claims have been settled and closed, and that the matter should be at an end. Alternatively, the priests asked the Court to refer the disclosure issues to mediators, Judge Velure and Judge Hogan, for mediation and arbitration, as has been previously agreed upon by the Archdiocese and certain of the claimants' counsel. Documents Should Not Be Unsealed The Archdiocese tells Judge Perris that in essence, Ms. Olson's request to unseal seeks relief from the protective order that is guarding the documents. Thomas V. Dulcich, Esq., at Schwabe, Williamson & Wyatt, P.C. in Portland, Oregon, relates that Kelly Clark, Esq., has raised the exact same issue, which through an agreement with certain interested parties, will be subject to a mediation with Judge Velure commencing April 1, 2008. Accordingly, aside from its previous request to appoint Judge Hogan as special master or preserving the status quo with respect to the documents at issue, the Reorganized Debtor also asks the Court to set a briefing schedule on the issues raised by Ms. Olson, so that the Court may be fully informed about them. Father M, for its part, asks the Court to deny Ms. Olson's request to unseal documents because the tort claimants have settled their claims and the Court has closed the bankruptcy case. He contends that if the Court determines that Ms. Olson's request merits attention, then, the Court should direct her to participate in the mediation with Judge Velure, and, if necessary, a final arbitration to be determined by Judge Hogan. Father M points out that Ms. Olson has refused to participate in the agreed upon mediation process, but continues to raise the same issues that the process is designed to resolve. Confidential defendant "Defendant Smith" asks Judge Perris to defer consideration of Ms. Olson's request until parties complete Judge Velure's mediation. Defendant Smith argues that the documents at issue consist entirely of civil discovery, which were exchanged by certain parties under the protection of a confidentiality agreement. Ms. Olson, who did not represent any party, should not be allowed to presumptively deny to those parties the benefits of the Confidentiality Agreement, he says. About Archdiocese of Portland The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Court approved the Debtor's disclosure statement explaining its Second Amended Joint Plan of Reorganization on Feb. 27, 2007. On April 17, 2007, the Court confirmed Portland's 3rd Amended Plan. On Sept. 28, 2007, the Court entered a final decree closing Portland's case. (Catholic Church Bankruptcy News, Issue No. 115; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Spokane's Ranch Faces Suit Filed by Ex-Residents ----------------------------------------------------------------- Three former residents of Morning Star Boys Ranch, which is operated by the Diocese of Spokane, have filed suit in Spokane County Superior Court, The Associated Press reports. Thirteen former residents previously sued the ranch over claims of abuse. In their lawsuit, the Plaintiffs accuse Morning Star of negligent supervision and knowingly allowing employees to abuse its residents. The Plaintiffs alleged that they were physically and sexually abused by former Morning Star director, Rev. Joseph Weitensteiner, Rev. Patrick O'Donnell and an unnamed volunteer employee in the 1960s, 1970s and 1980s. Rev. Weitensteiner resigned in 2006, and has denied abusing ranch residents. Jenn Kantz, Morning Star's spokeswoman, said that the ranch had not seen the lawsuit and cannot comment on specific allegations, AP says. She was quoted as saying that the ranch is a safe and therapeutic place. According to AP, Rev. O'Donnell has acknowledged sexually molesting dozens of boys over three decades. He was named in 66 of the 176 claims alleging sexual abuse by priests in the Diocese's bankruptcy case. About The Diocese of Spokane The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. On April 24, 2007, the Court confirmed Spokane's 2nd Amended Joint Plan. That plan became effective on May 31, 2007. (Catholic Church Bankruptcy News, Issue No. 115; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Tuscon Can Distribute $1 Million For Tort Claims ----------------------------------------------------------------- The Hon. James M. Marlar of the U.S. Bankruptcy Court for the District of Arizona approved the distribution of $1,000,000 from funds remaining in the unknown claims reserve to the tort claimants in the bankruptcy case of the Diocese of Tucson. In a four-page memorandum decision, Judge Marlar noted that decisions, which affect Unknown Claimants, must be approached cautiously. "The mutual effort of all involved produced a humane result. To move too quickly could adversely impact innocent parties whom all have striven so diligently to protect. Caution must therefore be the watchword," Judge Marlar said. The Official Committee of Tort Claimants has previously asked for the distribution of $3,000,000 from the Unknown Claims Reserve among allowed claims in Tiers 1 to 4, and the California Tier, whose claims have not already been fully satisfied. The Unknown Claims class, represented by A. Bates Butler, opposed the Committee's request, contending that it is currently premature, and that the amount requested was too high. Mr. Butler suggested that $1,000,000 is a reasonable and realistic amount to reallocate and redistribute. The guardian ad litem for the minor children class of claimants, Charles L. Arnold, agreed with Mr. Butler's position. Instructions for Interim Distribution In a separate order, the Court instructed and directed the trustee of the bankruptcy settlement trust to make an interim distribution of the funds amounting to $800,000 among the holders of certain allowed claims in these amounts: -- $7,729 to each of the Tier 1 Claimants; -- $15,458 to each of the Tier 2 Claimants; -- $27,053 to California Tier Claimant No. 45; -- $38,647 to each of the Tier 3 Claimants; and -- $54,106 to each of the Tier 4 Claimants. Judge Marlar also directed the Trustee to allocate to the Diocese $200,000, concurrently with the claimants distributions, pursuant to a sharing arrangement under the Diocese's confirmed plan of reorganization. Panel Wants Approval on $3MM Distribution As reported in the Troubled Company Reporter on Jan. 8, 2008, the Official Committee of Tort Claimants of the Diocese of Tucson asked the Court to authorize the trustee of the bankruptcy settlement trust to distribute $3,000,000 from the funds remaining in the unknown claims reserve, in accordance with the Weighted Distribution Ratio, among allowed claims in Tiers 1 to 4, and the California Tier, whose claims have not already been fully satisfied. About the Diocese of Tucson The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. Tucson's Third Amended and Restated Plan of Reorganization became effective on Sept. 20, 2005. (Catholic Church Bankruptcy News, Issue No. 115; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CENTRAL IOWA: McGladrey & Pullen Expresses Going Concern Doubt -------------------------------------------------------------- McGladrey & Pullen, CPA's, raised substantial doubt about the ability of Central Iowa Energy, LLC, to continue as a going concern after it audited the company's financial statements for the year ended Sept. 30, 2007. The auditor reported that the company has suffered losses from operations and has experienced significant increases in the input costs for its products. This has created liquidity issues and the company is or, will likely be, in violation of its bank debt covenants and there is no assurance that such violations will be waived. The company related that it has also been experiencing decreasing demand for its biodiesel. As of the fiscal year ended Sept. 30, 2007, the company operated at 97% of its nameplate capacity, but it is currently only operating at 72% of nameplate capacity. Should the company continue to endure the current high raw material costs without an increase in the price for its biodiesel, it may have to continue to scale back or cease operations at the biodiesel plant, either on a temporary or permanent basis. This may affect the company's ability to generate revenues and could decrease or eliminate the value of its units. The company posted a net loss of $3,046,370 on total revenues of $36,052,541 for the year ended Sept. 30, 2007, as compared with a net loss of $490,722 on zero revenue in the prior year. The company stated that the total project cost for the construction and startup of its biodiesel plant was estimated to be approximately $50,554,000, based on the design-build agreement it entered into with its design-builder, Renewable Energy Group, Inc. The company financed the construction and startup of the plant with a combination of equity and debt capital. At Sept. 30, 2007, the company's balance sheet showed $51,316,608 n total assets, $31,459,046 in total liabilities and $19,857,562 stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, showed strained liquidity with $11,267,545 in total current assets available to pay $30,714,046 in total current liabilities. A full-text copy of the company's 2007 annual report is available for free at: http://ResearchArchives.com/t/s?2887 About Central Iowa Central Iowa Energy, LLC -- http://www.centraliowaenergy.com/-- uses vegetable oils (primarily soybean oil) and animal fats to manufacture biodiesel. The alternative energy manufacturing company produces domestic and renewable energy at its site on the Iowa Interstate Railroad in Newton, Iowa. CHRYSLER LLC: Idles Plant in Ontario Due to TRW's Workers Strike ---------------------------------------------------------------- A Chrysler LLC assembly plant in Windsor, Ontario was forced to temporarily shut down after Canadian Auto Workers union members of TRW Automotive Inc. went on strike Thursday due to failed wage increase talks, according to various papers. TRW supplies Chrysler suspension modules for Dodge Caravan and Town & Country minivans, Dow Jones Newswires relates. Reuters discloses citing Chrysler spokeswoman Michele Tinson that the automaker's assembly plant in Windsor has 4,475 hourly workers as of December 2007. A Chrysler assembly plant in St. Louis that also produces minivans is not affected by the rally because it doesn't use TRW's products. Dow Jones Newswires relates that TRW and Canadian Auto Workers union representatives failed to reach an agreement on salary increases, spurring the protest. Reuters discloses that TRW spokesman John Wilkerson proposes to maintain TRW plant production using salaried workers and hopes to continue negotiations with the union as soon as possible. About TRW Headquartered in Livonia, Michigan, TRW Automotive, Inc., supplies automotive systems, modules, and components to global vehicle manufacturers and related aftermarket. The company has three operating segments; Chassis Systems, Occupant Safety Systems, and Automotive Components. Its primary business lines encompass the design, manufacture and sale of active and passive safety related products. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. S&P said the outlook is negative. CHRYSLER LLC: Plastech to Continue Sending Supplies Until March 3 ----------------------------------------------------------------- Plastech Engineered Products Inc. and its debtor-affiliates have agreed to continue to supply parts to Chrysler LLC until March 3, 2008, Crain's Detroit Business reports. As reported in the Troubled Company Reporter on Feb. 22, 2008, the Debtors and Chrysler previously agreed to an extension of their interim production agreement, under which Plastech will continue to manufacture and deliver component parts to Chrysler until Feb. 27, 2008. Pursuant to the initial interim agreement between the parties: -- Chrysler was obligated to make certain payments to Plastech in conjunction with the continued production of component parts; and -- The Debtors are to allow BBK, as agents for Chrysler, to have supervised access to Plastech facilities for the purpose of inspecting and conducting an inventory of all tooling used for Chrysler production. The U.S. Bankruptcy Court for the Eastern District of Michigan denied Chrysler LLC's request to pull out the tooling equipment from Plastech's plants a few weeks ago. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. About Chrysler LLC Based in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. S&P said the outlook is negative. CITICORP MORTGAGE: Fitch Rates $1.392MM Class B-4 Certs. at BB -------------------------------------------------------------- Citicorp Mortgage Securities, Inc.'s REMIC pass-through certificates, series 2008-1, are rated by Fitch as: -- $297,142,648 classes IA-1, IA-2, IA-IO, IIA-1, IIA-IO and A-PO certificates (senior certificates) 'AAA'; -- $5,875,000 class B-1 'AA'; -- $2,010,000 class B-2 'A'; -- $927,000 class B-3 'BBB'; -- $1,392,000 non-offered class B-4 'BB'; -- $463,000 non-offered class B-5 'B'. The 'AAA' rating on the senior certificates reflects the 3.90% credit enhancement provided by the 1.90% class B-1, the 0.65% class B-2, the 0.30% class B-3, the 0.45% non-offered class B-4, the 0.15% non-offered class B-5, and the 0.45% non-offered and non-rated class B-6. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and CitiMortgage, Inc.'s servicing capabilities (rated 'RPS1' by Fitch) as primary servicer. The certificates represent ownership in a trust fund, which consists primarily of 523 one-to four-family conventional, fixed- rate mortgage loans secured by first liens on residential mortgage properties. As of the cut-off date (Feb. 1, 2008), the mortgage pool has an aggregate principal balance of approximately $309,201,928, a weighted average original loan-to-value ratio of 70.67%, a weighted average coupon of 6.822%, a weighted average remaining term to maturity of 343 months, and an average balance of $591,208. The mortgage loans consist of 100% fixed rate loans. The weighted average credit score of the mortgage loans is expected to be approximately 727. The loans are primarily located in California (26.67%), New York (10.39%) and Florida (7.73%). The mortgage loans were originated or acquired by CMI and in turn sold to CMSI. A special purpose corporation, CMSI, deposited the loans into the trust, which then issued the certificates. U.S. Bank National Association (rated 'AA-/F1+' by Fitch) will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CLOROX COMPANY: Prices $500 Million Offering of 5% Senior Notes --------------------------------------------------------------- The Clorox Company has priced the offering of $500 million aggregate principal amount of its 5% senior notes due 2013 in an underwritten registered public offering. The offering was made pursuant to an effective shelf registration statement Clorox filed with the Securities and Exchange Commission on Oct. 3, 2007. The offering is expected to close on March 3, 2008, subject to customary closing conditions. Clorox intends to use the net proceeds from the offering to retire commercial paper. Citigroup Global Markets Inc., J.P. Morgan Securities Inc. and Wachovia Capital Markets LLC acted as joint lead book-running managers. Copies of preliminary prospectus supplement and an accompanying prospectus are available by contacting: a) Citigroup Global Markets Inc. 388 Greenwich St. New York, NY 10013 Tel (877) 858-5407 b) J.P Morgan Securities Inc. 270 Park Ave. New York, NY 10017 Tel (212) 834-4533 c) Wachovia Capital Markets LLC 301 South College St. Charlotte, NC 28202 Tel (800) 326-5897 About The Clorox Company Headquartered in Oakland, California, The Clorox Company (NYSE: CLX) -- http://www.thecloroxcompany.com/-- manufactures and markets household cleaning products with fiscal year 2007 revenues of US$4.8 billion. Clorox markets some of consumers' most trusted and recognized brand names, including its namesake bleach and cleaning products, Green Works(TM) natural cleaners, Armor All(R) and STP(R) auto-care products, Fresh Step(R) and Scoop Away(R) cat litter, Kingsford(R) charcoal, Hidden Valley(R) and K C Masterpiece(R) dressings and sauces, Brita(R) water-filtration systems, Glad(R) bags, wraps and containers, and Burt's Bees(R) natural personal care products. Clorox has manufacturing facilities in China, Costa Rica, Dominican Republic, Malaysia, Panama, Peru, United Kingdom, among others. At Dec. 31, 2007, Clorox's balance sheet showed total assets of $4.85 billion and total liabilities of $5.4 billion, resulting to a stockholders' deficit of $0.55 billion. COLTRANE CLO: Fitch Cuts Ratings to "CC" on 4 Classes of Notes -------------------------------------------------------------- Fitch Ratings has downgraded 4 classes of notes issued by Coltrane CLO p.l.c. All classes remain on Rating Watch Negative by Fitch. These rating actions are effective immediately: -- EUR26,000,000 class B notes to 'CC' from 'CCC'; -- EUR45,000,000 class C notes to 'CC' from 'CCC'; -- EUR1,750,000 class D-1 notes to 'CC' from 'CCC'; -- EUR2,000,000 class D-2 notes to 'CC' from 'CCC'. On Feb. 25, 2008, Fitch received notice that Coltrane CLO p.l.c. had entered into an Event of Default as a result of a Threshold Value Event which remained uncured for five business days. Fitch has not received confirmation that the Controlling Class or the Trustee plan to liquidate the underlying loan collateral in the immediate near term. In the event that the Controlling Class or the Trustee chooses to liquidate the underlying loan collateral, subsequent rating action may be taken. Of note, since the last rating action on Feb. 20, 2008 in which Fitch downgraded 24 classes from nine total rate of return collateralized loan obligations, loan prices in the secondary market, as reported by the Loan Syndications and Trading Association, have remained relatively stable, slightly increasing to 86.84 as of Feb. 26, 2008 from 86.27 as of Feb. 15, 2008. As a result, the cushions in the transactions which have not yet breached their TRS termination or liquidation triggers remain relatively stable. Also, Fitch has confirmed that three transactions have enacted amendments or entered into agreements outside of the transaction to avoid breaching a termination trigger, or to prevent a liquidation of the portfolio in the case where a termination trigger has been breached. COMMODORE CDO: Moody's Reviews Junk Rating on $17.5 Million Notes ----------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade these notes issued by Commodore CDO I, Limited. Class Description: $17,550,000 Class C Floating Rate Notes -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. COMMUNITY HEALTH: Posts $88MM Net Loss in Qtr. Ended December 31 ---------------------------------------------------------------- Community Health Systems Inc. reported financial and operating results for the three months and year ended Dec. 31, 2007. The company's net loss for three months was $88.26 million compared to net income of $53.62 million for the same period in the previous year. The company's net income for full year was $30.29 million compared to net income of $168.26 million in 2006. The consolidated financial results for the three months ended Dec. 31, 2007, reflect a 102.1% increase in total admissions compared with the same period in 2006. This increase is primarily attributable to hospitals acquired during 2007, including the former Triad hospitals. The company completed its acquisition of Triad Hospitals Inc. on July 25, 2007. With completion of the Triad acquisition, the company enhanced the scope of its operations and geographic diversity. Financial and statistical data reported includes Triad's operating results from July 25, 2007. In conjunction with the acquisition of Triad and the integration of the former Triad hospitals' accounting processes into the company, and a review of the company's contractual and bad debt allowances, various analyses were performed to assess the net realizable value of accounts receivable, including an updated analysis of historical cash collections. These analyses resulted in updating the assumptions used by the former Triad hospitals and management, well as changing the company's own estimates. Based upon these analyses, the financial results for the three months and year ended Dec. 31, 2007, include a change in estimates of the company's contractual and bad debt allowances. The acquisition of Triad necessitated changes in both companies' methodologies, well as provided additional data and a larger comparative population on which to base the company's estimates. The information developed from these analyses indicated lower rates of collectability resulting in the company increasing its contractual reserves and its allowance for doubtful accounts. The company believes these lower collectability rates are the result of an increase in the number of patients qualifying for charity care, reduced enrollment in certain state Medicaid programs and an increase in the number of patients who are indigent non-resident aliens. The impact of these changes decreased accounts receivable by $166.4 million, reduced net operating revenues by $96.3 million and increased the provision for bad debts by $70.1 million. This change reduced income from continuing operations by $105.4 million for the three months and year ended Dec. 31, 2007. Excluding the change in estimates, net operating revenues for the three months ended Dec. 31, 2007, totaled $2.625 billion, a 137.6% increase compared with $1.105 billion for the same period in 2006. Including the change in estimates, net operating revenues for the three months ended Dec. 31, 2007, totaled $2.528 billion, a 128.9% increase compared with $1.105 billion for the same period in 2006. "Our fourth quarter performance capped off a year of significant growth and progress for Community Health Systems," Wayne T. Smith, chairman, president and chief executive officer of Community Health Systems Inc., said. "We reached an important milestone in 2007 with the completion of the Triad acquisition and we have continued to focus on the integration of the Triad facilities into our portfolio of hospitals. We intend to build on our past success as a proven operator and leverage these assets to further extend our record of growth." During 2007, the company completed the acquisition of Triad Hospitals, Inc., well as the acquisition of hospitals in Ruston, Louisiana, and Valparaiso, Indiana. "We have continued to identify and execute on suitable acquisition opportunities," Mr. Smith added. "With the Triad acquisition, we have greatly expanded our market reach, and, more importantly, created the opportunity to enhance the level of healthcare in more communities throughout the country. Looking ahead, we will continue to pursue our strategy of recruiting qualified physicians, making suitable capital investments in our existing facilities and adding essential healthcare services that meet the needs of each community. We are excited about our prospects for 2008 and we remain focused on delivering value to both our shareholders and the communities we serve." At Dec. 31, 2007, the company's balance sheet showed total assets of $13.49 billion, total liabilities of $11.79 billion and total stockholders' equity of $1.71 million. About Community Health Systems Inc. Located in the Nashville, Tennessee, suburb of Franklin, Community Health Systems Inc. -- http://www.chs.net/-- (NYSE: CYH) operates general acute care hospitals in non-urban communities throughout the United States. Through its subsidiaries, the company currently owns, leases or operates 80 hospitals in 23 states. Its hospitals offer inpatient medical and surgical services, outpatient treatment and skilled nursing care. * * * Standard & Poor's Ratings Services placed Community Health Systems Inc.'s long term foreign and local issuer credit ratings at 'B+' in June 2007. The ratings still hold to date. CORNERSTONE MINISTRIES: Wants Scroggins & Williamson as Counsel --------------------------------------------------------------- Cornerstone Ministries Investments Inc., asks the U.S. Bankruptcy Court for the Northern District of Georgia for permission to employ Scroggins & Williamson as its bankruptcy counsel. Scroggins & Williamson will: a. prepare pleadings and applications; b. conduct examinations; c. advise the applicants of its rights, duties and obligations as debtor-in-possession; d. consult the applicant and represent it with respect to a Chapter 11 plan; e. perform legal services incidental and necessary to the day-to-day operation of the applicant's business including, but not limited to, institution and prosecution of necessary legal proceedings and general business and corporate legal advice and assistance; f. take any and all actions incidental to the proper preservation and administration of the applicant's estate and business. The firm will be paid in its ordinary rates of $250 to $350 per hour for attorneys, and $75 per hour for legal assistants. To the best of the Debtor's knowledge, J. Robert Williamson, Esq., an attorney of the firm, represents no interest adverse to it in matters upon which the firm is to be engaged. Scroggins & Williamson can be reached at: J Robert Williamson 1500 Candler Building 127 Peachtree Street, NE Atlanta, Georgia 30303 Tel: (404) 893-3880 Headquartered in Cumming, Georgia, Cornerstone Ministries Investments Inc. -- http://www.cmiatlanta.com/-- is engaged in financing the acquisition and development of facilities for use by churches, faith-based or non-profit organizations and for-profit organizations. The company offers development, construction, bridge and interim loans, usually due within one to three years. The company makes loans to four distinct groups of borrowers, including churches, senior housing facilities, family housing development projects and daycare/faith-based schools. The company filed for Chapter 11 protection on Feb. 10, 2008 (N.D. Ga. Case No. 08-20355). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtor. When the Debtor filed for protection from its creditors, it listed assets was $159,118,892 and debts of $153,847,984. CORNERSTONE MINISTRIES: Wants Miller & Martin as Outside Counsel ---------------------------------------------------------------- Cornerstone Ministries Investments, Inc. asks the United States Bankruptcy Court for the Northern District of Georgia for authority to employ Miller & Martin, P.L.L.C. as its principal outside counsel. Miller & Martin, P.L.L.C. is expected to: a. serve as federal securities counsel, which has involved, among other things, assisting the Debtor with the preparation and filing of two post-effective amendments to the Debtor's Form SB-2 registration statement with the United States Securities and Exchange Commission related to the Debtor's offering of its Series G bonds; assisting the Debtor with the review and filing of various Form 8-K filings; assisting the Debtor with the review of a proxy statement that was filed by the Debtor in 2007; and fielding inquiries by representatives of the Debtor regarding compliance with federal securities laws; b. assist the Debtor in negotiations with state securities regulators in the States of Virginia, North Carolina and Georgia related to various securities matters, including issues related to disclosures in registration statements that were filed prior to Miller & Martin's representation of the Debtor; c. prepare commercial loan documents and closing commercial loan transactions involving loans by the Debtor to various borrowers, using commitment letters and term sheets pre- approved by the Debtor, the majority of which involved modifications and amendments to existing loan documents; d. represent the Debtor as a borrower in certain commercial loan transactions involving loans from First United Bank, a lender based in Arkansas, the principal amounts of which totaled $6,000,000; e. prepare loan participation agreements with respect to certain existing loans of the Debtor; f. represent the Debtor's wholly-owned subsidiary, C.M.I. Asset Pool I, L.L.C., in the performance of its rights and obligations under a revolving loan agreement between such subsidiary and Bernard National Senior Funding, Ltd. dated Aug. 31, 2006, including the negotiation of payoffs of existing borrowings under such agreement, and the negotiation of the replacement of eligible loans under such agreement; and g. provide ongoing general representation and general legal advice as to general corporate, finance and securities matters, including providing necessary transactional background and other information and related communications with representatives of the Debtor and its general bankruptcy counsel, Scroggins & Williamson, as and when appropriate. The Debtor will pay Miller & Martin at it standard hourly rates.: Designation Rate ------------ ---- Attorneys $165 to $610 Document Clerks $100 to $210 Paralegals $100 to $210 Professional Designation Rate ------------ ----------- ---- David A. Flanigan, Jr., Esq. Partner US$390 Michael Marshall, Esq. Partner US$355 Robert Dann, Esq. Partner US$350 William Eiselstein, Esq. Partner US$355 The Debtor believe that the employment of Miller & Martin is necessary and in the best interest of its estates. To the best of Debtor's knowledge, the firm does not currently hold any adverse interest to the former's estate. Headquartered in Cumming, Georgia, Cornerstone Ministries Investments, Inc.-- http://www.cmiatlanta.com/--offers financial assistance in the form of bridge, construction, development, and interim loans to four non-profit groups: churches, daycare and faith-based schools, family housing developments, and senior housing facilities. Founded in 1985 as Presbyterian Investors Fund, it began providing loans to for-profit agencies in late 2004 as long as the projects meet certain criteria (primarily affordable housing and senior living facilities). The Debtor filed for Chapter 11 protection on Feb. 10, 2008, (Bankr. N.D. Ga. Case No. 08-20355). J. Robert Williamson, Esq. at Scroggins and Williamson represented the Debtor in its restructuring efforts. The Debtor listed total assets at $159,118,892 and total debts at $153,847,984 at the time of filing. CORNERSTONE MINISTRIES: Wants eNable Business as Financial Advisor ------------------------------------------------------------------ Cornerstone Ministries Investments, Inc. asks the United States Bankruptcy Court for the Northern District of Georgia for authority to employ eNable Business Solutions, Inc. as its investment and financial advisor on Feb. 13, 2008, pursuant to a prepetition advisory agreement entered into on Aug. 1, 2004. According to the pre-petition advisory agreement, eNable Business Solutions is expected to continue to: a. serve as the investment and financial advisor and provide research and economic and statistical data in connection with the Debtor's assets and investment policies; b. provide the daily management and perform and supervise the various administrative functions reasonably necessary for the management of the Debtor, including cash management services; c. locate, analyze and select potential investments in mortgage loans, bonds or other investments; structure and negotiate the terms and conditions of transactions pursuant to which investments in mortgage loans will be made by the Debtor; make investments in mortgage loans, bonds and other investments on behalf of and in compliance with the investment objectives and policies of the Debtor; arrange for financing and refinancing and make other changes in the asset or capital structure of investments in mortgage loans, bonds and other investments; sell, dispose of, reinvest the proceeds from the sale of, or otherwise deal with the investments in mortgage loans, bonds and other investments on behalf of and in compliance with the investment objectives and policies of the Debtor; and enter into leases and services contracts and, to the extent necessary, perform all other operational functions for the maintenance and administration of the Debtor's assets; d. negotiate with banks or lenders for loans, and negotiate with investment banking firms and brokers-dealers or negotiate private sales of shares, bonds and other securities all on behalf of the Debtor, but in no event in such a way so that eNable Business Solutions will be acting as a broker-dealer or underwriter; and provided, further, that any fees and costs payable to third parties incurred by eNable Business Solutions will be the responsibility of the Debtor; e. investigate, select and engage and conduct business on behalf of the Debtor with such persons as eNable Business Solutions deems necessary to the proper performance of its obligations hereunder, including but not limited to consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, mortgagors, and any and all agents, including affiliates of eNable Business Solutions, and persons acting in any other capacity deemed by eNable Business Solutions necessary or desirable for the performance of any of the services, including but not limited to entering into contracts in the name of the Debtor; f. consult with the officers and directors of the Debtor and assist them in the formulation and implementation of financial policies, and, as necessary, furnish them with advice and recommendations with respect to the making of investments consistent with the investment objectives and policies of the Debtor in connection with the borrowings proposed to be undertaken by the Debtor; g. obtain reports (which may be prepared by eNable Business Solutions or its affiliates), where applicable, concerning the value of investments or contemplated investments of the Debtor; h. from time to time, or at any time reasonably requested by the directors, make reports to the directors of its performance of services to the Debtor under this agreement; i. do all things necessary to assure its ability to render the services described in this agreement; j. deliver to or maintain on behalf of the Debtor copies of all appraisals obtained in connection with the investments in properties and mortgage loans; and k. notify the Board of Directors of all proposed material transactions before they are completed. The Debtor will still pay eNable Business Solutions according to the pre-petition advisory agreement: a. a monthly management fee equal to 10% of the former's gross income plus 30% of the latter's income received from lan participation agreements. b. a loan origination fee equal to 30% of the loan fees realized by the Debtor. In addition, independent directors of the Debtor will determine at least annually whether or not the compensation payed for eNable Business Solutions's services is reasonable. Based on such determination, the Debtor will adjust the compensation in any renewal of the pre-petition advisory agreement, so that such compensation is reasonable. The Debtor believe that the employment of eNable Business Solutions is necessary and in the best interest of its estates. To the best of the Debtor's knowledge, the firm does not currently hold any adverse interest to the former's estate. Headquartered in Cumming, Georgia, Cornerstone Ministries Investments, Inc.-- http://www.cmiatlanta.com/--offers financial assistance in the form of bridge, construction, development, and interim loans to four non-profit groups: churches, daycare and faith-based schools, family housing developments, and senior housing facilities. Founded in 1985 as Presbyterian Investors Fund, it began providing loans to for-profit agencies in late 2004 as long as the projects meet certain criteria (primarily affordable housing and senior living facilities). The Debtor filed for Chapter 11 protection on Feb. 10, 2008, (Bankr. N.D. Ga. Case No. 08-20355). J. Robert Williamson, Esq. at Scroggins and Williamson represented the Debtor in its restructuring efforts. The Debtor listed total assets at $159,118,892 and total debts at $153,847,984 at the time of filing. CORNERSTONE MINISTRIES: Schedules Filing Period Moved to March 11 ----------------------------------------------------------------- The Hon. Robert Brizendine of the U.S. Bankruptcy Court for the Northern District of Georgia, Gainesville Division, set March 11, 2008, as the deadline within which Cornerstone Ministries Investments Inc. is required to file its schedules of assets and liabilities, and statements of financial affairs. The Court finds that the Debtor needs additional time to prepare its schedules and statements, gather information from books, records and documents pertaining to a multitude of transactions, as the debtor pointed out. Headquartered in Cumming, Georgia, Cornerstone Ministries Investments Inc. -- http://www.cmiatlanta.com/-- is engaged in financing the acquisition and development of facilities for use by churches, faith-based or non-profit organizations and for-profit organizations. The company offers development, construction, bridge and interim loans, usually due within one to three years. The company makes loans to four distinct groups of borrowers, including churches, senior housing facilities, family housing development projects and daycare/faith-based schools. The company filed for Chapter 11 protection on Feb. 10, 2008 (N.D. Ga. Case No. 08-20355). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtor. When the Debtor filed for protection from its creditors, it listed assets was $159,118,892 and debts of $153,847,984. CRDENTIA CORP: Completes $10 Million Long Term Debt Financing ------------------------------------------------------------- Crdentia Corp. completed a $10.2 million long-term debt financing with ComVest Capital LLC, based in Palm Beach, Florida. Proceeds will be used to replace Crdentia's existing credit facility and for general working capital purposes. The $10.2 million financing consists of a two-year $5.2 million Revolving Credit Note, bearing interest at the greater of the Prime Rate plus 2% or 8.5%, and two separate two-year term loans, each amounting to $2.5 million and bearing annual interest of 12.5%. "We are pleased to have completed this long-term financing that reduces Crdentia's overall borrowing costs while enhancing our financial flexibility with the addition of substantial working capital," John Kaiser, CEO of Crdentia said. "Crdentia is now on a much stronger financial footing as we move forward with our objectives of achieving profitability through improved operating performance and executing our growth initiatives to bolster our presence in key Sun Belt markets." Headquatered in Dallas, Texas, Crdentia Corp. (OTCBB: CRDT) -- http://www.crdentia.com/-- is a provider of healthcare staffing services to 1,500 healthcare providers in 49 states. Crdentia provides temporary healthcare staffing comprised of travel and per diem nursing, locum tenens, and allied healthcare staffing. Going Concern Doubt KBA Group LLP, in Dallas, expressed substantial doubt about Crdentia Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm reported that the company has incurred net losses totaling $16.1 million and $6.3 million for the years ended Dec. 31, 2006, and 2005, respectively, and has used cash flows from operating activities totaling $4.1 million and $5.1 million for the years ended Dec. 31, 2006, and 2005. Additionally, at Dec. 31, 2006, the company's current liabilities exceed their current assets by $8.1 million. In the company's financial report ended Sept. 30, 2007, it related certain conditions that raise substantial doubt about its ability to continue as a going concern. The company generated net loss of $12,902,861 and used cash in operations of $3,661,367 during the nine months ended Sept. 30, 2007. Additionally, the company needed to raise additional funds during the next 12 months to satisfy debt service requirements of approximately $2.5 million due in January 2008, and working capital needs of between $500,000 and $1,000,000 over the next 12 months. CREDIT-SUISSE: Fitch Cuts Rating on $500,000 Cl. B-3 Certs. to BB ----------------------------------------------------------------- Fitch Ratings has taken these rating actions on one Credit-Suisse First Boston mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $74.5 million and downgrades total $500,000. Additionally, $2.2 million remains on Rating Watch Negative. CSFB Seasoned Loan Trust 2006-1 -- $66.3 million class A affirmed at 'AAA'; -- $4.7 million class M-1 affirmed at 'AA'; -- $3.5 million class M-2 affirmed at 'A'; -- $1.5 million class B-1 rated 'BBB+', remains on Rating Watch Negative; -- $0.7 million class B-2 rated 'BBB', remains on Rating Watch Negative; -- $0.5 million class B-3 downgraded to 'BB' from 'BBB-'. Deal Summary -- Originators: Various; -- 60+ day Delinquency: 11.42%; -- Weighted Average Seasoning as of the Cut-Off Date: 107 months. 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. CREDIT SUISSE: Fitch Chips Ratings on $113.2 Million Certificates ----------------------------------------------------------------- Fitch Ratings has taken these rating actions on Credit Suisse First Boston Mortgage Securities Corp. Home Equity Mortgage Trust mortgage pass-through certificates. Downgrades total $113.2 million. In addition, $188 million was placed 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: CSFB HEMT 2006-2 Group 1 (100% Second Liens) -- $67.7 million class 1A-1 rated 'AAA' (BL: 71.88, LCR: 1.58), placed on Rating Watch Negative; -- $25.7 million class 1A-2 downgraded to 'BBB' from 'A+' (BL: 61.08, LCR: 1.34); -- $25.7 million class 1A-3 downgraded to 'BB' from 'A-' (BL: 51.73, LCR: 1.14); -- $15.7 million class 1M-1 downgraded to 'CC/DR4' from 'BBB'; -- $18.2 million class 1M-2 downgraded to 'C/DR6' from 'BB'; -- $7 million class 1M-3 downgraded to 'C/DR6' from 'BB-'; -- $8.7 million class 1M-4 downgraded to 'C/DR6' from 'B'; -- $7.3 million class 1M-5 remains at 'C/DR6'; -- $5.6 million class 1M-6 remains at 'C/DR6'; -- $6.4 million class 1M-7 remains at 'C/DR6'; Deal Summary -- Originators: Various -- 60+ day Delinquency: 14.2%; -- Realized Losses to date (% of Original Balance): 10.16%; -- Expected Remaining Losses (% of Current Balance): 45.57%; -- Cumulative Expected Losses (% of Original Balance): 35.15%. CSFB HEMT 2006-2 Group 2 (100% HELOCS) -- $112.9 million class 2A-1 rated 'AA' (BL: 20.43, LCR: 0.72), remains on Rating Watch Negative; -- $2.2 million class 2M-1 downgraded to 'C/DR6' from 'BB-'; -- $2.5 million class 2M-2 downgraded to 'C/DR6' from 'B+'; Deal Summary -- Originators: Various -- 60+ day Delinquency: 6.3%; -- Realized Losses to date (% of Original Balance): 2.99%; -- Expected Remaining Losses (% of Current Balance): 28.35%; -- Cumulative Expected Losses (% of Original Balance): 16.68%. The rating actions are based on deterioration in the relationship between credit enhancement and expected losses and reflect continued poor loan performance and home price weakness. Minimum LCR's specifically for subprime second lien transactions are: AAA: 2.00; AA: 1.75; A: 1.50; BBB: 1.30; BB 1.10; B: 1.00. DEALMAKER DEVELOPMENTS: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Dealmaker Developments, L.L.C. Attention: Thomas Daigle, Attorney 711 Johnston Street Lafayette, LA 70501 Bankruptcy Case No.: 08-50215 Chapter 11 Petition Date: February 27, 2008 Court: Western District of Louisiana (Lafayette/Opelousas) Judge: Robert Summerhays Debtor's Counsel: William C. Vidrine, Esq. (williamv@vidrinelaw.com) Vidrine & Vidrine 711 West Pinhook Road Lafayette, LA 70503 Tel: (337) 233-5195 Fax: (337) 233-3897 http://www.vidrinelaw.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. DELPHI CORP: Shareholder Settlement Hearing Set for April 29 ------------------------------------------------------------ The Hon. Gerald E. Rosen of the U.S. District Court for the Eastern District of Michigan, Southern Division, will convene a hearing on April 29, 2008, to decide, among other things, final Court approval of a settlement providing for a recovery of $38,250,000 to be paid by Deloitte & Touche LLP, Delphi Corp.'s outside auditor; and on the dismissal of claims against Deloitte & Touche. District Court Certifies Class The Court has preliminarily certified a class consisting of all persons and entities who purchased or acquired publicly traded securities issued by Delphi Trust I and Delphi Trust II between March 7, 2000, and March 3, 2005, inclusive, and who suffered damages thereby, including all entities who acquired shares of Delphi common and preferred stock in the secondary market and debt securities in Delphi. The case is in In re Delphi Securities, Derivative and ERISA Litigation, MDL No. 1725, Case No. 05-md- 1725. The District Court also preliminarily approved the Deloitte & Touche Settlement providing for a recovery of $38,250,000 to be paid by Deloitte & Touche LLP, Delphi Corp.'s outside auditor during the Class Period. The Class will receive an interest on the Deloitte & Touche Settlement Amount. Copies of the full printed Deloitte & Touche Notice and the Proof of Claim and Release form may be obtained at http://www.delphiclasssettlement.comor by contacting: In re Delphi Corporation Securities Litigation Settlement c/o The Garden City Group, Inc. Claims Administrator P.O. Box 9185 Dublin, OH 43017-4185 Inquiries may be made to the four co-lead counsel for the Lead Plaintiffs in the Securities Litigation: * Bradley E. Beckworth, Esq. Nix, Patterson & Roach, L.L.P. 205 Linda Drive Daingerfield, Texas 75638 * Sean Handler, Esq. Schiffrin Barroway Topaz & Kessler, LLP 280 King of Prussia Road Radnor, PA 19087 * Jeffrey N. Leibell, Esq. Bernsten Litowitz Berger & Grossmann, LLP 1285 Avenue of the Americas New York 10019 * Stuart Grant, Esq. Grant & Eisenhofer P.A. Chase Manhattan Centre Suite 2100 1201 N. Market St. Wilmington, DE 19801 Further information may also be obtained by writing to the Claims Administrator or calling 1-800-918-0998 toll-free. The Securities Litigation has been resolved with respect to the Debtors pursuant to the Court-approved Multidistrict Litigation Settlements between the Debtors and the Lead Plaintiffs. Under the terms of the MDL Settlements, the Debtors granted the Lead Plaintiffs claims that will be satisfied through Delphi's confirmed Plan of Reorganization. To participate in the Deloitte & Touche Settlement, parties-in- interest must have submitted a valid proof of claim in connection with the MDL Settlements or submit a valid proof of claim to the Claims Administrator postmarked not later than May 30, 2008. The deadline for filing objection and the receipt of requests for exclusions is April 15, 2008. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. As reported in the Troubled Company Reporter on Jan. 11, 2008, Standard & Poor's Ratings Services expects to assign its 'B' corporate credit rating to Troy, Michigan-based automotive supplier Delphi Corp. upon the company's emergence from Chapter 11 bankruptcy protection, which may occur by the end of the first quarter of 2008. S&P expects the outlook to be negative. In addition, Standard & Poor's expects to assign these issue-level ratings: a 'B+' issue rating (one notch above the corporate credit rating), and '2' recovery rating to the company's proposed $3.7 billion senior secured first-lien term loan; and a 'B-' issue rating (one notch below the corporate creditrating), and '5' recovery rating to the company's proposed $825 million senior secured second-lien term loan. DILLARD'S INC: S&P Supersedes Outlook From Stable to Negative ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Little Rock, Arkansas-based Dillard's Inc. to negative from stable. "The outlook change is based on continued lackluster operating performance," said Standard & Poor's credit analyst Jackie E. Oberoi. The outlook revision reflects a 4% decrease in total sales and a 5% drop in same-store sales for the year ended Feb. 2, 2008. While still within the range for the 'BB' rating, credit metrics have worsened. "Continued deterioration of credit metrics could lead to levels below standard for the rating,"she added. DIRECTV GROUP: Stake Swap Results in Two Board Seats for Liberty ---------------------------------------------------------------- Liberty Media Corporation has completed the exchange of its 16.3% stake in News Corporation for a subsidiary of News that holds a 41% stake in The DIRECTV Group Inc., regional sports networks in Denver, Pittsburgh, and Seattle, and $465 million of cash. John Malone and Greg Maffei have been appointed to the DIRECTV board, filling two of the three seats previously held by News representatives. Chase Carey will continue to serve as DIRECTV's president and CEO. "This transaction is strategically important, financially attractive, and will provide new focus to Liberty Media," said Liberty CEO Greg Maffei. "We've been impressed with Chase Carey and his team and are thrilled to welcome them to the Liberty family. We look forward to a partnership with DIRECTV." The reclassification of Liberty Capital Tracking stock is expected to be completed in the next three to five business days and the new Liberty Entertainment and Liberty Capital tracking stocks will commence trading early next week. About News Corp. News Corporation is a diversified international media and entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers; book publishing; and other. The activities of News Corporation are conducted principally in the United States, Continental Europe, the United Kingdom, Australia, Asia and the Pacific Basin. About Liberty Media Headquartered in Englewood, Colorado, Liberty Media Corporation (NasdaqGS: LINTA) -- http://www.libertymedia.com/-- owns interests in a broad range of electronic retailing, media, communications and entertainment businesses. Those interests are attributed to two tracking stock groups: the Liberty Interactive group, which includes Liberty's interests in QVC, Provide Commerce, IAC/InterActiveCorp, and Expedia, and the Liberty Capital group, which includes Liberty's interests in Starz Entertainment, News Corporation, and Time Warner. * * * Liberty Media Corporation continues to carry Fitch Ratings' 'BB' long-term issuer default and senior unsecured debt ratings, which were placed in December 2006. About DirecTV Group Headquartered in El Segundo, California, The DirecTV Group Inc. (NASDAQ:DTV) -- http://www.DirecTV.com/-- provides digital television entertainment in the United States and Latin America. The company's two business segments, DirecTV U.S. and DirecTV Latin America, are engaged in acquiring, promoting, selling and/or distributing digital entertainment programming via satellite to residential and commercial subscribers. DirecTV Holdings LLC and its subsidiaries are a provider of direct-to-home digital television services and a provider in the multi-channel video programming distribution industry in the United States. DTVLA is a provider of DTH digital television services throughout Latin America. In January 2007, the company acquired Darlene Investments LLC's 14.1% equity interest in DirecTV Latin America, LLC. DirecTV Latin America LLC is a multinational company, which, as a result of this transaction, became a wholly owned subsidiary of the company. * * * In April 2007, Standard and Poor's Ratings Services assigned a 'BB+' Rating on The DirecTV Group Inc.'s long-term foreign and local issuer credit rating with a stable outlook. This rating action still holds to date. DIRECTV GROUP: FCC Sees Liberty Media Deal to Benefit Public ------------------------------------------------------------ The Federal Communications Commission approved the transfer of control of DirecTV Group Inc. to Liberty Media Corp., subject to conditions. The Commission concluded that, as conditioned, the public interest benefits of the transfer outweighed the potential harms and would be consistent with applicable Commission rules and policies. As reported in the Troubled Company Reporter on Feb. 11, 2008, under the deal, News Corp. will exchange its interest in DirecTV Group Inc. with Liberty Media's interest in News Corp. Liberty Media said it plans to exchange its stake in News Corp. for 39% of DirectTV. The parties reached an $11 billion deal that includes News Corp.'s stake in DirectTV. As a benefit of the transaction, Liberty Media and News Corp., which is the majority stakeholder of DirecTV, would sever their ownership interests with each other which will decrease media consolidation and reduce vertical integration therefore benefiting the public. The Order also imposes certain conditions to ensure that the transaction will serve Commission's competition and diversity goals. The Order requires that Liberty and DirecTV abide by program access, program carriage, Regional Sports Network arbitration, retransmission consent arbitration conditions, modeled on similar conditions imposed in 2003, when the Commission approved the transfer of DIRECTV from Hughes to News Corp. In addition, the Order requires that all of the attributable ownership interests connecting DirecTV-Puerto Rico and Liberty Cablevision of Puerto Rico, Ltd., which will be under common control as a result of the transaction, be severed within one year, at which point the companies must certify either that they have reduced the relevant interests to a non-attributable level or that they have filed any applications necessary to divest assets. On balance, the Commission found that the transaction, as conditioned, would serve the public interest. About News Corp. News Corporation is a diversified international media and entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers; book publishing; and other. The activities of News Corporation are conducted principally in the United States, Continental Europe, the United Kingdom, Australia, Asia and the Pacific Basin. About Liberty Media Headquartered in Englewood, Colorado, Liberty Media Corporation (NasdaqGS: LINTA) -- http://www.libertymedia.com/-- owns interests in a broad range of electronic retailing, media, communications and entertainment businesses. Those interests are attributed to two tracking stock groups: the Liberty Interactive group, which includes Liberty's interests in QVC, Provide Commerce, IAC/InterActiveCorp, and Expedia, and the Liberty Capital group, which includes Liberty's interests in Starz Entertainment, News Corporation, and Time Warner. About DirecTV Headquartered in El Segundo, California, The DIRECTV Group Inc. (NYSE: DTV) -- http://www.directv.com/ -- provides digital television entertainment services. Through its subsidiaries and affiliated companies in the United States, Brazil, Mexico and other countries in Latin America, the DIRECTV Group provides digital television service to more than 16.5 million customers in the United States and over 4.6 million customers in Latin America. * * * In April 2007, Standard & Poor's Ratings Services affirmed the 'BB' corporate credit and 'BB-' senior unsecured debt rating on The DIRECTV Group Inc. S&P said the outlook is stable. In addition, Standard & Poor's raised the bank loan rating on $2 billion of credit facilities at DIRECTV Holdings LLC, a wholly owned subsidiary of The DIRECTV Group Inc, to 'BB+' from 'BB' and revised the recovery rating to '1' from '3'. EQUIFIRST MORTGAGE: Class B-2 Cert. Gets S&P's Junk Rating From BB ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on the class B-1 and B-2 asset-backed certificates from Equifirst Mortgage Loan Trust 2004-3. Concurrently, S&P affirmed its ratings on the remaining 10 classes from this transaction. The downgrades reflect collateral performance that has eroded available credit support during recent months. As of the January 2008 remittance period, cumulative losses were $9.6 million, or 2.04% of the original principal balance. Serious delinquencies (90-plus days, foreclosures, and REOs) were $28.25 million, about 4.5x greater than the $6.227 million in current overcollateralization (O/C), which is $3.153 million below its target of $9.38 million. Losses have consistently outpaced excess interest for nine of the 12 most recent months. Current and projected credit support percentages are sufficient to support the classes with affirmed ratings. Subordination, O/C, and excess spread provide credit support for this series. The loan pool consists of conventional, one- to four-family, adjustable- and fixed-rate mortgage loans secured by first liens on residential properties. Ratings Lowered Equifirst Mortgage Loan Trust 2004-3 Asset-backed certificates series 2004-3 Rating ------ Class To From ----- -- ---- B-1 BB- BB+ B-2 CCC BB Ratings Affirmed Equifirst Mortgage Loan Trust 2004-3 Asset-backed certificates series 2004-3 Class Rating ----- ------ M-1 AA+ M-2 AA M-3 AA- M-4 A+ M-5 A M-6 A- M-7 BBB+ M-8 BBB M-9 BBB- M-10 BBB- FAIRPOINT COMMS: S&P Lifts Rating to 'BB' on Merger With Verizon ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Charlotte North Carolina-based local exchange carrier, FairPoint Communications Inc. to 'BB' from 'BB-' and removed the ratings from CreditWatch. The outlook is stable. At the same time, S&P assigned ratings to the new bank loan and notes that will used to finance FairPoint's pending merger with an entity spun off from Verizon Communications Inc. The upgrade reflects expected operating and financial improvements following the completion of FairPoint's merger with the company formed through the spinoff of certain of Verizon's New England wireline assets. FairPoint's ratings were placed on CreditWatch with positive implications on Jan. 17, 2007, following the announcement of the merger agreement with the Verizon Spinco recognizing the benefits of greater scale and a potentially less aggressive financial policy. S&P assigned a 'BB+' issue rating and '2' recovery rating to FairPoint's proposed $2.080 billion senior secured credit facility. The '2' recovery rating indicates expectations of substantial (70%-90%) recovery in the event of a payment default. S&P also assigned a 'B+' rating to FairPoint's proposed $540 million of senior unsecured notes. The notes are rated two notches below the corporate credit rating because priority debt, consisting primarily of secured bank loans, will exceed 30% of total assets. The ratings on the outstanding $688.5 million FairPoint credit facility were not raised and will be withdrawn because this facility will be repaid concurrent with the completion of the spinoff and merger. Debt outstanding at closing is expected to total about $2.1 billion. The rating upgrade on FairPoint reflects the increased size and scale of the new company, which is expected to result in improved operating efficiencies; moderate cable modem overlap of 60%-70%, which provides some medium-term protection against cable competition for voice and data services; and prospects for revenue growth by expanding DSL service in the former Verizon territories. Tempering factors include significant integration risk given that post-merger the company will be almost six times larger than the legacy FairPoint operations. Additionally, FairPoint is expected to incur material transition related expenses during the first year of combined operations, and geographic diversity is limited with over 88% of the combined company's access lines located in Maine, Vermont and New Hampshire. "FairPoint's financial policy will be somewhat more moderate than prior to the merger," said Standard & Poor's credit analyst Susan Madison. "Nevertheless, it is still considered aggressive and remains a limiting rating factor." Pro forma for the transaction, FairPoint will be an incumbent local exchange carrier providing voice and data communications services to approximately two million total access line equivalents. By leveraging its increased size and scale, FairPoint expects to realize significant cost savings beginning in 2009, which should help to offset the revenue impact of a declining access line base. FAIRPOINT COMMS: Proposed Merger Approval Cues Moody's 'B1' Rating ------------------------------------------------------------------ Moody's Investors Service assigned a B1 corporate family rating and a positive outlook to FairPoint Communications, Inc., following the announcement that all three states have approved the proposed merger with Verizon Communications' Maine, New Hampshire and Vermont wireline operations in a reverse Morris Trust transaction, valued at $2.4 billion in cash and stock (net of $235 million of working capital contribution by Verizon). In connection with the merger, FairPoint will issue $2.08 billion of senior secured debt, to which Moody's has assigned a Ba3 rating (LGD3-42%) and will assume $540 million in senior unsecured notes issued by Verizon, to be rated B3 (LGD6-91%). The existing debt at FairPoint will be repaid at closing of the transaction, and the ratings will be withdrawn. As part of the ratings action, Moody's assigned an SGL-2 liquidity rating to FairPoint. These summarizes the rating actions taken by Moody's: -- Corporate Family Rating: Assigned B1 -- Probability of Default Rating: Assigned B1 -- Speculative Grade Liquidity Rating: Assigned SGL-2 -- Senior Secured Bank Facilities: Assigned Ba3 (LGD3: 42%) -- Senior Unsecured Notes: Assigned B3 (LGD6: 91%) -- Rating Outlook: Positive Although Moody's notes that FairPoint's fundamental credit profile exhibits stronger features than the assigned B1 corporate family rating, it also reflects the continued downward pressure on wireline revenue and cash flow growth in the future and the substantial integration risk of assuming the much larger VZ-NE operation, specifically the near term uncertainty that the systems upgrade, transition and integration will go smoothly. Moody's Vice President and Senior Analyst, Gerald Granovsky says further that, "Until the switchover of systems from Verizon to FairPoint is done, this risk will not go away, although the ratings agency would be able to assess the results within a relatively short time following the completion of the acquisition." For this reason, and the expected continued improvement in the company's credit profile, aided by the 35% reduction in the dividend payout, the ratings agency assigned a positive outlook. FairPoint's overall adjusted leverage (Debt/EBITDA) is expected to decrease to about 3.8x at closing, pro forma for the acquisition, from 5.1x for LTM 3Q 2007. However, the rating agency believes that the integration costs and the mandated additional capital needed to upgrade the acquired lines for higher speed internet access will stress the financial metrics over the intermediate term, resulting in an increase in leverage to 5.5x at year-end 2008, before reducing to about 4.2x at year-end 2009. Moody's expects FairPoint's steady-state free cash flow available for debt reduction to remain in the 4% 5% range over the next two years. FairPoint's SGL-2 short-term liquidity rating reflects the company's good liquidity in the twelve months after closing VZ-NE acquisition. FairPoint's liquidity primarily consists of modest amounts of cash-on-hand and the $200 million revolving credit facility, which is expected to remain undrawn in the twelve months after closing VZ-NE acquisition. FairPoint plans to fund nearly $140 million of anticipated cash burn, due to about $340 million of extraordinary capital expenditures and integration-related costs in the first year of operation, by borrowing up to $200 million under a committed delayed draw term loan facility. The Baa1 senior unsecured non-guaranteed debt ratings of Verizon- New England remain on review, direction uncertain, pending the further review of Verizon-New England's prospective capital structure. Pro-forma for the transaction, FairPoint, headquartered in Charlotte, North Carolina, will become the eight largest wireline telecommunications company in the US, serving about 1.6 million access lines in primarily rural areas and small- and medium-sized cities. Verizon Communications is headquartered in Basking Ridge, New Jersey. FIDELITY NATIONAL: Earns $108 Mil. in Quarter ended December 31 --------------------------------------------------------------- Fidelity National Information Services Inc. disclosed financial results for the quarter and year ended Dec. 31, 2007. Fourth quarter 2007 net earnings totaled $108.4 million compared to net earnings of $75.12 million for the same period in the previous year. FIS' fourth quarter 2007 results include approximately $140 million in revenue from eFunds. Excluding eFunds, the company reported fourth quarter revenue growth of 7.4%. For the full year 2007, net earnings totaled $561.2 million compared to net earnings of $259.09 million in 2006. These results include revenue of approximately $167 million attributable to eFunds, which was acquired by FIS in September 2007. Excluding eFunds, full year revenue increased 11.0% to $4.6 billion, compared to pro forma revenue of $4.1 billion in 2006. The increase was driven by 10.5% growth in Transaction Processing Services and 11.2% growth in Lender Processing Services. "It was a good quarter and great year for FIS," William P. Foley, II, executive chairman of FIS, stated. "Double digit revenue growth in Transaction Processing Services and Lender Processing Services enabled us to achieve excellent financial performance in 2007, despite a highly challenging economic environment. We expect to make significant progress with the eFunds integration, and are on track to complete the spin-off of our Lender Processing business by mid 2008." About Fidelity National Based in Jacksonville, Florida, Fidelity National Information Services, Inc. -- http://www.fidelityinfoservices.com/-- provides core processing for financial institutions; card issuer and transaction processing services; mortgage loan processing and mortgage related information products; and outsourcing services to financial institutions, retailers, mortgage lenders and real estate professionals. FIS has processing and technology relationships with 35 of the top 50 global banks, including nine of the top ten. Nearly 50% of all US residential mortgages are processed using FIS software. FIS maintains a strong global presence, serving over 7,800 financial institutions in more than 60 countries worldwide, including Brazil and Japan. * * * As reported in the Troubled Company Reporter on Oct. 30, 2007, following Fidelity National Information Systems Inc.'s announcement of a plan to split the company into two segments, Fitch Ratings will reevaluate Fidelity's Issuer Default Rating and debt ratings once further clarity is available on the final capital structure and operating profile of each entity. Fitch currently rates Fidelity as: IDR 'BB'; $900 million secured revolving credit facility 'BB+'; $2.1 billion secured term loan A 'BB+'; $1.6 billion secured term loan B 'BB+'; and 4.75% senior notes 'BB+'. The Rating Outlook is Stable. FINLAY ENTERPRISES: Deal with NRDC Ends Over Fortunoff Sale ----------------------------------------------------------- Finlay Enterprises Inc. received notification from Lord & Taylor that the company's license agreements will not be renewed upon the expiration of the agreements on Jan. 31, 2009. The company will close a total of 47 Lord & Taylor locations at the end of fiscal 2008. This development follows the acquisition of Fortunoff Fine Jewelry and Silverware LLC out of bankruptcy by an affiliate of NRDC Equity Partners LLC, which owns the Lord & Taylor department store chain. Lord & Taylor has indicated its intent to operate its own jewelry departments through Fortunoff. In fiscal 2007, the Lord & Taylor locations generated approximately $44 million in revenue for Finlay. Finlay is currently evaluating the impact of the expected closings on its financial results for fiscal 2008 and beyond. Arthur E. Reiner, chairman and chief executive officer of Finlay Enterprises commented, "Given the recent evolving department store landscape, we have focused on the diversification of our business over the last three years by entering into the luxury free- standing specialty jewelry sector. We will continue to focus on further penetrating this sector, while also maximizing the return of our existing lease business." About Fortunoff New York-based Fortunoff Fine Jewelry and Silverware LLC -- http://www.fortunoff.com/-- is a family owned business since 1922 founded by by Max and Clara Fortunoff. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff and two affiliates, M. Fortunoff of Westbury LLC and Source Financing Corp., filed for chapter 11 petition on Feb. 4, 2008 (Bankr. S.D.N.Y. Case Nos. 08-10353 through 08-10355) in order to effectuate a sale to NRDC Equity Partners LLC, -- http://www.nrdcequity.com/-- a private equity firm that owns of Lord & Taylor from Federated Department Stores. Due to the U.S. Trustee's objection, Fortunoff is backing out of its request to employ Skadden Arps Meagher & Flom LLC, as bankruptcy counsel. Fortunoff is hiring Togut Segal & Segal LLP, as their general bankruptcy counsel, but Skadden Arps will continue to serve the Debtors as special counsel in connection with the sale the Debtors' assets. Logan & Company, Inc., serves as the Debtors' claims, noticing, and balloting agent. FTI Consulting Inc. are the Debtors' proposed crisis manager. An Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, they listed assets and debts between $100 million to $500 million. The Debtors' exclusive period to file a plan of reorganization ends on June 3, 2008. (Fortunoff Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) About Finlay Enterprises Headquartered in New York City, Finlay Enterprises Inc. (Nasdaq: FNLY) -- http://www.finlayenterprises.com/-- through its wholly- owned subsidiary, Finlay Fine Jewelry Corporation, retails fine jewelry and operates luxury stand-alone specialty jewelry stores primarily located in the southeastern United States and licensed fine jewelry departments in department stores throughout the United States. The number of locations at the end of fiscal 2007 totaled 794, including 69 Bailey Banks & Biddle, 32 Carlyle and five Congress specialty jewelry stores. * * * As reported in the Troubled Company Reporter on Feb. 13, 2008, Standard & Poor's Ratings Services said that the closure of 94 stores due to the consolidation of Macy's divisions will have no immediate impact on Finlay Enterprises' (Finlay; B-/Negative/--) rating or outlook. Pro forma the closure, S&P estimates the EBITDA loss to be approximately $4 million and that interest coverage will be less than 1x. Finlay entered into a new $500 million revolving credit facility in November 2007 with the only financial covenant that the company maintains a minimum availability of $30 million. FIRST NLC: Adverse Pool Performance Spurs S&P's Rating Downgrades ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on eight classes of mortgage-backed certificates and callable mortgage- backed notes from First NLC Trust's series 2005-1 and 2005-2. The downgrades reflect continuous adverse pool performance, which has eroded available credit support during recent months and as of the January 2008 remittance period. For series 2005-1, cumulative losses were $12.13 million and serious delinquencies (90-plus days, foreclosures, and REOs) were $75.61 million as of the January 2008 remittance period. For series 2005-2, cumulative losses were $8.51 million and serious delinquencies were $69.56 million. For both loan groups, losses have outpaced excess interest for the most recent 12 months, and current overcollateralization (O/C) levels are below their targets. O/C, excess spread, and subordination provide credit support for these deals. Both mortgage pools consist of 30-year, conventional, fixed- and adjustable-rate subprime mortgage loans secured by first liens on one- to four-family residential properties and single-unit condominiums. Ratings Lowered First NLC Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-1 M13 BB BBB+ 2005-1 M14 BB- BBB+ 2005-1 M15 B BBB- 2005-2 M7 A- A 2005-2 M8 BBB- A- 2005-2 M9 BB BBB+ 2005-2 M10 B BBB 2005-2 M11 CCC BBB- FORTUNOFF: Asset Sale Causes Termination of Finlay-NRDC Agreement ----------------------------------------------------------------- Finlay Enterprises Inc. received notification from Lord & Taylor that the company's license agreements will not be renewed upon the expiration of the agreements on Jan. 31, 2009. The company will close a total of 47 Lord & Taylor locations at the end of fiscal 2008. This development follows the acquisition of Fortunoff Fine Jewelry and Silverware LLC out of bankruptcy by an affiliate of NRDC Equity Partners LLC, which owns the Lord & Taylor department store chain. Lord & Taylor has indicated its intent to operate its own jewelry departments through Fortunoff. In fiscal 2007, the Lord & Taylor locations generated approximately $44 million in revenue for Finlay. Finlay is currently evaluating the impact of the expected closings on its financial results for fiscal 2008 and beyond. Arthur E. Reiner, chairman and chief executive officer of Finlay Enterprises commented, "Given the recent evolving department store landscape, we have focused on the diversification of our business over the last three years by entering into the luxury free- standing specialty jewelry sector. We will continue to focus on further penetrating this sector, while also maximizing the return of our existing lease business." About Finlay Enterprises Headquartered in New York City, Finlay Enterprises Inc. (Nasdaq: FNLY) -- http://www.finlayenterprises.com/-- through its wholly- owned subsidiary, Finlay Fine Jewelry Corporation, retails fine jewelry and operates luxury stand-alone specialty jewelry stores primarily located in the southeastern United States and licensed fine jewelry departments in department stores throughout the United States. The number of locations at the end of fiscal 2007 totaled 794, including 69 Bailey Banks & Biddle, 32 Carlyle and five Congress specialty jewelry stores. About Fortunoff New York-based Fortunoff Fine Jewelry and Silverware LLC -- http://www.fortunoff.com/-- is a family owned business since 1922 founded by by Max and Clara Fortunoff. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff and two affiliates, M. Fortunoff of Westbury LLC and Source Financing Corp., filed for chapter 11 petition on Feb. 4, 2008 (Bankr. S.D.N.Y. Case Nos. 08-10353 through 08-10355) in order to effectuate a sale to NRDC Equity Partners LLC, -- http://www.nrdcequity.com/-- a private equity firm that owns of Lord & Taylor from Federated Department Stores. Due to the U.S. Trustee's objection, Fortunoff is backing out of its request to employ Skadden Arps Meagher & Flom LLC, as bankruptcy counsel. Fortunoff is hiring Togut Segal & Segal LLP, as their general bankruptcy counsel, but Skadden Arps will continue to serve the Debtors as special counsel in connection with the sale the Debtors' assets. Logan & Company, Inc., serves as the Debtors' claims, noticing, and balloting agent. FTI Consulting Inc. are the Debtors' proposed crisis manager. An Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, they listed assets and debts between $100 million to $500 million. The Debtors' exclusive period to file a plan of reorganization ends on June 3, 2008. (Fortunoff Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FORTUNOFF: Highest Bid Awarded to NRDC Equity's H Acquisition ------------------------------------------------------------- The bid put forth by NRDC Equity Partners LLC, through affiliate H Acquisition, emerged as the "highest and best bid" available to the estate of Fortunoff Fine Jewelry and Silverware LLC and its debtor-affiliates. Todd M. Goren, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., in New York, on behalf of the Official Committee of Unsecured Creditors said that after a full and fair -- albeit abbreviated -- process, the only party willing to submit a going concern bid for the Debtors' assets was H Acquisition. H Acquisition in its asset purchase agreement with the Debtors offered to purchase Fortunoff for $80,000,000, but the offer was still subject to competing bids at an auction scheduled for Feb. 26, 2008. "While the Committee wishes the circumstances were such that more parties had been interested in purchasing the Debtors' business, which would have resulted in a more competitive auction, this was unfortunately, the hand we were dealt," Mr. Goran said. "As a result, the bid put forth by the H Acquisition, which was improved in numerous respects over the course of the auction, is the highest and best bid available to the estate." The Committee, in its letter of support on the sale, said it has been an active participant in the sale process. Committee to Support Sale Despite No Recovery to Constituents The Committee said in light of the circumstances, it supports the sale of the Debtors' assets to H Acquisition despite the fact that the sale will unlikely provide any distribution to unsecured creditors. The Committee noted that the sale will allow the Debtors to continue as a going concern entity. "The benefits associated with the a sale far outweigh what could have been achieved in a liquidation -- thousands of employees will retain their jobs, many lease and contract counterparties will have their agreements assumed and be paid on account of any existing defaults, holders of gift certificates and merchandise credits will be allowed to continue to use the credits in the ordinary course, and importantly the Debtors' vendors will continue to have a customer with which to do business going forward." Noting of the "numerous benefits associated with closing the sale", the Committee added that the sale must be allowed to close, notwithstanding the objections filed by a number of parties, including vendors who shipped goods on "memorandum". Landlords Object to Cure Amounts As previously reported, part of the Debtors' proposed bidding procedures for the sale of substantially all of their assets, contemplates (i) their assumption and assignment of certain contracts to H Acquisition, LLC -- or the successful bidder at the auction, and (ii) the execution and delivery to H Acquisition -- or the successful bidder, as the case may be -- of the documents or other instruments as may be necessary to assign and transfer the Assumed Contracts to the buyer. A number of landlords object to the Debtors' proposed cure amounts in connection with the Assumed Contracts, and submitted to the Court their individual computations of what they assert are the appropriate Cure Amounts. These are: Cure Amount Landlord Asserted -------- ----------- Bloomingdale Road Investors LLC $1,288,335 El-Kam Realty Co. 630,906 Century Road Plaza, LLC 195,827 Wayne Towne Center Associates, L.L.C 195,055 Maclara LLC 90,039 RTC Properties, Inc. 82,787 Centro NP, LLC 65,113 Simon Property Group, Inc. 56,282 UB Danbury, Inc. 20,282 Valley Forge Center Associates 14,384 Developers Diversified Realty Corp., as managing agent for Inland Southeast Brick LLC, wants cure payment of $24,341 for the assumption of a lease at Brick Center Plaza Shopping Center, in Brick, New Jersey. General Growth Properties, Inc., asserts a $65,233 cure payment for the assumption of a mall lease at Paramus Park Shopping Center, in Paramus Park, New Jersey, and $3,500 for a lease at Woodbridge Center, in Woodbridge, New Jersey. UB Danbury also objects to the assumption and assignment of a lease agreement with the Debtors on grounds that it was not provided sufficient information that would allow it to assess whether assumption and assignment of the lease is proper under the Bankruptcy Code. Simon Property Group asserts that any assignee must specifically agree to take its leases subject to all charges accrued, but not yet billed under the leases, including, common area maintenance, real estate taxes, overage rent, percent rent and utilities. Wayne Town Center, RTC Properties and Valley Forge Center seek from the Debtors, adequate assurance of future performance from any proposed assignee of a real property lease. Section 365(f) of the Bankruptcy Code provides that the Debtors may assign an unexpired lease only if adequate assurance of future performance by the assignee of the lease is provided, whether or not there has been a default in lease. More Diamond Suppliers Want Share from Proceeds A. Martin Flyer Martin Flyer, Inc., seeks clarification that the diamonds, gemstones and other merchandise it consigned to Fortunoff Fine Jewelry and Silverware LLC, are outside the scope of the sale of substantially all assets of the Debtors for $80,000,000. Martin Flyer filed on Dec. 14, 2004, a Uniform Commercial Code-1 statement to secure its interest in merchandise it delivered to the Debtors. Martin Flyer asserts that its security interest is a valid and perfected security interest that should not be subject to the liens granted to the Debtors' DIP Lenders. Should Martin Flyer's merchandise be included in the sale, any proceeds from the sale should be attributed to the payment of Martin Flyer's security interests, in advance of any DIP Liens, asserts Edward J. Estrada, Esq., at Reed Smith, LLP, in New York. Mr. Estrada contends the merchandise delivered by Martin Flyer are not property of the Debtors' estates and cannot be sold free and clear of liens, regardless if the sale occurs in the ordinary course under Section 363(f). Mr. Estrada adds that even if the Court were to determine that the Martin Flyer merchandise were property of the Debtors' estate, each memorandum agreement -- the document signed by Fortunoff acknowledging the receipt goods on the term specified -- is an executory contract, hence, the Debtors cannot sell the subject merchandise without performing according to the terms of each memorandum and curing all contractual defaults. B. Lazare Kaplan Lazare Kaplan International Inc. joins in the request of Verstandig & Sons, Inc., and other jewelry suppliers (i) to exclude goods they delivered to the Debtors from the bulk sale of the Debtors' assets, or (ii) for payment of their merchandise from the proceeds of the sale. LKI, a jewelry and diamond wholesaler, supplied goods to the Debtors and non-debtor Fortunoff Fine Jewelry and Silverware Inc. Certain of the goods delivered prior to the bankruptcy filing were delivered "on memo" pursuant to the specific terms and conditions set forth in the memorandum agreement which accompanied each and every delivery of goods delivered to the Debtors. Diamond suppliers have argued that pursuant to the memorandums, the Debtors the title of the goods received by the Debtors remain with the suppliers, and the Debtors have no right to sell the goods absent the respective supplier's consent. LKI asserts claims aggregating $793,698 for goods delivered before the bankruptcy filing. However, it notes that the aggregate value of the Memo Goods as of the bankruptcy filing is unknown to it because it is unaware of the value of the goods sold by Fortunoff Inc. or the Debtors prior to the bankruptcy filing. C. DDI and DSD Jewelry wholesalers D'Annunzio Distribution, Inc., and D' Annunzio Showcase Dealers, Inc., also delivered goods "on memo" to the Debtors. D'Annunzio filed U.C.C.-1 financing statements evidencing the delivery of the Memo Goods. DDI's total claim for the Memo Goods is $369,855, and DSD's is $142,690. D'Annunzio asks the Court to prohibit or condition the sale of the Memo Goods to protect its interests. Debtors Say Sale Should Move Forward The Debtors inform the Court that the buyer of their assets are currently in discussions with the landlords who have filed objections to the proposed sale, which includes the assumption by Fortunoff, and the assignment to the buyer, of certain executory contracts and leases. In light of Simon Property Group's objections, the Debtors are no longer assuming the Simon Group leases. Simon had contended, among others, that all bidders should be required to operate under the use restrictions of the leases. Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, refutes allegations by diamond and jewelry suppliers that the Debtors are barred from selling the goods they delivered to Fortunoff: -- The Memo Goods sellers have only an unperfected consignment. The Memo Vendors that failed to file U.C.C. financing statements are merely unsecured creditors. Two vendors who claimed to have filed U.C.C. statements have filed invalid statements -- (i) D'Annunzio's U.C.C. filing was filed in the wrong state, New York, against the wrong entity (Fortunoff); it should have been filed in Delaware against Fortunofff Fine Jewelry and Silverware, LLC; and (ii) Martin Flyer's U.C.C. should have been filed in Delaware against Fortunoff Fine Jewelry and Silverware, LLC, instead of Fortunoff Fine Jewelry Inc. -- There is no constructive trust because (i) there has been no unjust enrichment; (ii) there is no fiduciary relationship; and (iii) no equitable remedy is necessary when a legal remedy exists, i.e., a claim in bankruptcy. The Memo Vendors' relationship with the Debtors is an arm's-length commercial relationship that does not give rise to fiduciary obligations. -- The Memorandums are not executory contracts because the Debtors have no material obligatings remaining; their only only obligation is to pay money; and -- The Debtors did not hold the Memo Goods under a common law bailment. The Memo Goods were not delivered to the Debtors with the expectation that they would be redelivered to the Memo Vendors or "kept until[ ] reclaim[ed]" by them. Because the Memo Vendors are unsecured creditors, on account of the unperfected U.C.C. filings, they are not entitled to adequate protection under Section 363(e) of the Bankruptcy Code, Ms. Henry adds. Section 363(e) only protects secured creditors against the diminution in value of their collateral. The Debtors also contest certain of the Memo Vendors' claims that the Memo Goods are not property of the estate on account of the Memorandums. Ms. Henry notes that, under the U.C.C., the Memo Vendors' attempts to retain title are simply not relevant to the Debtors' ability to sell the Memo Goods in the proposed sale. She cites Valley Media, 279 B.R. at 121, which held that documentatiaon stating that diamonds remain property of transferor has "no bearing" in construing transaction. The Debtors reject Georgianna Koulianos Designs, Inc.'s arguments that its goods should not be included in the proposed sale. The Debtors say Georgianna has no reclamation rights because its interessts are subjec to the Term D Lenders' pre-existing undersecured lien on inventory. Committee Wants Memo Vendors Rights Preserved The Committee submitted a statement airing its support to the sale of the Debtors' assets to H Acquisition. The Committee, however, said it is cognizant of the fact that many of the Debtors' vendors who shipped goods on "memorandum- dispute the Debtors' ability to transfer the goods to H Acqusition. The Committee asserts that unless the Court can adequately determine the rights of Memo Goods vendors at the hearing to approve the sale, the rights of the vendors should be preserved for a future hearing, at which time the Court can adjudicate whether the vendors have senior interests in the Memo Goods. About Fortunoff New York-based Fortunoff Fine Jewelry and Silverware LLC -- http://www.fortunoff.com/-- is a family owned business since 1922 founded by by Max and Clara Fortunoff. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff and two affiliates, M. Fortunoff of Westbury LLC and Source Financing Corp., filed for chapter 11 petition on Feb. 4, 2008 (Bankr. S.D.N.Y. Case Nos. 08-10353 through 08-10355) in order to effectuate a sale to NRDC Equity Partners LLC, -- http://www.nrdcequity.com/-- a private equity firm that owns of Lord & Taylor from Federated Department Stores. Due to the U.S. Trustee's objection, Fortunoff is backing out of its request to employ Skadden Arps Meagher & Flom LLC, as bankruptcy counsel. Fortunoff is hiring Togut Segal & Segal LLP, as their general bankruptcy counsel, but Skadden Arps will continue to serve the Debtors as special counsel in connection with the sale the Debtors' assets. Logan & Company, Inc., serves as the Debtors' claims, noticing, and balloting agent. FTI Consulting Inc. are the Debtors' proposed crisis manager. An Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, they listed assets and debts between $100 million to $500 million. The Debtors' exclusive period to file a plan of reorganization ends on June 3, 2008. (Fortunoff Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FREESTAR TECH: Posts $4,568,270 Net Loss in 2nd Qtr. Ended Dec. 31 ------------------------------------------------------------------ FreeStar Technology Corp. recorded a net loss of $4,568,270 for the second quarter ended Dec. 31, 2007, compared to a net loss of $3,124,456 for the three months ended Dec. 31, 2006, an increase of $1,443,814 or approximately 46%. Ciaran Egan, FreeStar's chief financial officer, commented that "approximately $2,300,000 of this amount consisted of non-cash compensation in the form of stock, stock options, and warrants issued to consultants and employees. We continue to launch new innovative products and expand our geographical market for increased growth opportunities in 2008. We believe that our investment program in our product and sales and marketing programs together with our growing pipelines will drive revenue growth in 2008." Revenue for the three months ended Dec. 31, 2007, was $1,448,713 compared to $811,902 for the three months ended Dec. 31, 2006, an increase of $636,811 or approximately 78%. Revenue consisted of transaction processing and related revenue of $512,782; consulting services revenue of $683,862 and hardware and related revenue of $252,069. FreeStar Technology president and chief executive officer Paul Egan said, "We expect to see continued increased hardware related sales to our expanding customer base, but also recognize increasing revenue streams from annual maintenance fees and service initiation fees. "Our cross border payments processing has now expanded to Spain, Iceland, Denmark, Sweden and the U.K. We are seeing a steady increase in DCC (Dynamic Currency Conversion) Transactions from our partner, Global Refunds. We have successfully deployed terminals in Dominican Republic and see continuing growth in the region. Our International projects are nearing deployment and can expect to see a large increase in processing revenues throughout the remainder of fiscal 2008." Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $8,201,305 in total assets, $3,509,597 in total liabilities, $407,398 in minority interest, and $4,284,310 in total stockholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $1,945,907 in total current assets available to pay $3,509,597 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?288f Going Concern Disclaimer As reported in the Troubled Company Reporter on Oct. 4, 2007, New York-based RBSM LLP expressed substantial doubt about FreeStar Technology Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended June 30, 2007. The auditing frim said the company is experiencing difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. About FreeStar Technology Based in Dublin, Ireland, FreeStar Technology Corp. (OTC BB: FSRT) -- http://www.freestartech.com/-- provides electronic payment processing services, including credit and debit card transaction processing, point-of-sale related software applications and other value-added services. The company was incorporated in the State of Nevada. The company also has offices in Helsinki, Finland; Stockholm, Sweden; Geneva, Switzerland; and Santo Domingo, the Dominican Republic. GARTECH ELECTRICAL: Case Summary & 59 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Gartech Electrical Contracting 100 Hinsdale Street Brooklyn, NY 11207 Bankruptcy Case No.: 08-41082 Type of Business: The Debtor is an industrial electrician specializing in public projects like as subway tunnel lighting. Chapter 11 Petition Date: February 26, 2008 Court: Eastern District of New York (Brooklyn) Judge: Elizabeth S. Stong Debtor's Counsel: Mark L. Cortegiano, Esq. (marklcortegiano@verizon.net) 65-12 69th Place Middle Village, NY 11379 Tel: (718) 894-9500 Fax: (718) 326-3781 Total Assets: $2,571,865 Total Debts: $5,836,942 Debtor's 59 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Avon Electrical Supplies Job Materials $2,006,650 60 Hoffman Avenue and Lawsuit Hauppauge, NY 11788 Turtle & Hughes, Inc. Job Materials $1,583,515 1900 Lower Road Linden, NJ 07036 I.R.S. Payroll taxes $649,914 625 Fulton Street Metrotech Center Brooklyn, NY 11201 Joint Industry Union $429,107 Board-Electrical benefits 158-11 Harry Van Arsdale, Jr. Flushing, NY 11365 Graybar Job Materials $345,761 21-15 Queens Plaza N. Long Island City, NY 11101 Millennium Electrical Supply Lawsuit $230,438 New York State Tax Department Payroll $169,602 Casey Systems Equipment rental $53,692 H.O. Penn Machinery Co., Inc. Machinery $43,346 Travelers, The Phoenix Insurance $29,134 Insurance Co. Alrick Goulborne Wages $22,280 New York State Department of Unemployment $22,172 Labor Insurance Robert Young Wages $18,327 Witmann Plumbing Rent $15,600 Arthur Hylton Wages $13,260 Mark Hylton Wages $12,965 Michael Garnett Wages $10,850 Leslie Betancourt Wages $10,504 Sprint Customer Service Cellular $8,771 Communications Empire Tools, L.L.C. Tools & $8,085 Equipment Kevin Manning Wages $8,039 Allstate Indemnity $7,689 Leon Noble $6,516 Brian Bishop $6,258 Lawrence Lowy Associates $6,104 Leonnard Brown $5,566 Evret Young $5,309 Judlau Contracting, Inc. $5,000 Humberto Lopez $4,777 Williams Scotsman $3,754 Odean Campbell $3,721 Calbert Hayles $3,525 Junior Preudhomme $3,344 Deslandes Parks $3,039 Donovan Callum $2,006 Hilti, Inc. $1,963 Rafael Nunez $1,948 Diversified Electrical Prod. $1,900 Montana Datacom $1,756 Colonial Hardware Corp. $1,437 Raphael Aiken $1,378 New York State Insurance $1,270 Fun. Devon Cameron $1,225 A.I.C.C.O., Inc. $1,189 National Benefit Life $857 Insurance Co. Quill $738 Verizon $616 Action Environmental Service $458 Julian Smith $443 Junior Hayles $431 New York State Child Support $427 Processing ThyssenKrupp Safeway, Inc. $271 Brooklyn Progress Blue Print $245 Water Boy $234 Staples Business Advantage $110 New York City Department of $75 Finance Staples Credit Plan $48 D.H.L. Express (U.S.A.), Inc. $38 New York City Department of $25 Finance Cheryl Durham unknown GENERAL MOTORS: Idles Assembly Plant Due to AAM Workers' Strike --------------------------------------------------------------- American Axle & Manufacturing Inc.'s worker strike has affected the production of General Motors Corp.'s vehicles equipped with the former's auto parts sooner that it thought, various sources report. GM's production of Chevrolet Silverado and GMC Sierra pickups at the Pontiac Assembly Center, which has 2,500 hourly and salaried employees, in Michigan, ceased after the first shift Thursday, the Associated Press related citing GM spokesman Tom Wickham. As reported in the Troubled Company Reporter on Feb. 27, 2008, although the strike of union workers at its supplier American Axle and Manufacturing Inc. does not affect General Motors Corp.'s plant production yet, the auto maker says it is following the protest closely. GM has a large inventory of pickups and sport utility vehicles, which are equipped with American Axle's parts. However, if the strike lasts longer than the supply, GM's assembly lines would suffer. United Auto Workers union president Ron Gettelfinger and Vice President James Settles disclosed that members at American Axle began an unfair labor practices strike at 12:01 a.m. on Feb. 26, 2008, following expiration of a four-year master labor agreement. Talks broke off Monday with major issues unresolved. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on Feb. 28, 2008, Fitch Ratings has affirmed the Issuer Default Rating of General Motors at 'B', with a Rating Outlook Negative. As reported in the Troubled Company Reporter on Nov. 9, 2007, Moody's Investors Service affirmed its rating for General Motors Corporation (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured and SGL-1 Speculative Grade Liquidity rating) but changed the outlook to Stable from Positive. In an environment of weakening prospects for US auto sales GM has announced that it will take a non-cash charge of $39 billion for the third quarter of 2007 related to establishing a valuation allowance against its deferred tax assets in the US, Canada and Germany. As reported in the Troubled Company Reporter on Oct. 23, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with positive implications, where they were placed Sept. 26, 2007, following agreement on the new labor contract. The outlook is stable. GENERAL MOTORS: Supplier's Workers Strike Won't Affect S&P Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on General Motors Corp. (GM; B/Stable/B-3) are not immediately affected by the United Auto Workers work stoppage at key supplier American Axle and Manufacturing Holdings Inc. (BB/Negative/--) that began Feb. 26. S&P expects American Axle and the UAW to reach an agreement that will improve American Axle's cost position. However, if the American Axle work stoppage were to persist beyond a brief period (likely measured in days, not weeks), it would begin to affect GM's production schedules and there would be a ripple effect on many of GM's suppliers as well. If S&P came to believe that the American Axle work stoppage would draw out, S&P could place the ratings on GM on CreditWatch with negative implications, along with the ratings on certain suppliers that depend heavily on GM production. S&P already expects GM's first-quarter production to be below year-earlier levels, which should provide some room for a short work stoppage. In addition, S&P estimates that GM has about $27.3 billion in cash, marketable securities, and readily available assets in its existing VEBA trust. The company also has access to $7 billion in committed U.S. credit lines. GLOBAL SIGNAL: Fitch Holds 'BB+' Rating on $122.4MM Class F Certs. ------------------------------------------------------------------ Fitch Ratings has affirmed Global Signal Trust III, series 2006-1, commercial mortgage pass-through certificates as: -- $352.4 million class A-1-FX at 'AAA'; -- $350.0 million class A-1-FL at 'AAA'; -- $132.2 million class A-2 at 'AAA'; -- $175.7 million class B at 'AA'; -- $175.7 million class C at 'A'; -- $175.7 million class D at 'BBB'; -- $65.9 million class E at 'BBB-'; -- $122.4 million class F at 'BB+'. The affirmations are due to the stable performance of the collateral. As of the September 2007 distribution date, the collateral balance remains unchanged since issuance at $1,550 billion. The loan is secured by mortgages on 6,322 wireless communication sites and cross-guaranteed first priority perfected security interest in 100% of the equity interest of each of the three borrowers, which have combined interest in 8,123 wireless communication sites, based on a management report dated Sept. 30, 2007. As part of its review, Fitch analyzed the management report provided by the servicer, Midland Loan Services. As of third- quarter 2007, aggregate annualized run rate revenue increased to $402.8 million, a 9.6% increase from issuance. The actual servicer-reported debt service coverage ratio was 2.5 times, compared to 2.3x at issuance. The tenant type concentration is stable. As of Sept. 30, 2007, total revenue contributed by telephony tenants is 80.7% compared to 77.6% at issuance. GLOBAL SIGNAL: Fitch Holds 'BB-' Rating on $3.8MM Class G Certs. ---------------------------------------------------------------- Fitch Ratings has affirmed the classes of Global Signal Trust II, commercial mortgage pass-through certificates, series 2004-2 as: -- $148.9 million class A at 'AAA'; -- $31.3 million class B at 'AA'; -- $31.3 million class C at 'A'; -- $31.3 million class D at 'BBB'; -- $11.8 million class E at 'BBB-'; -- $35.4 million class F at 'BB'; -- $3.8 million class G at 'BB-'. The affirmations are due to the stable performance of the collateral. As of the February 2008 distribution date, the collateral balance remains unchanged from issuance at $293.8 million. The loan is secured by 1,169 wireless communication sites owned, leased, or managed by the borrower, based on a management report dated Sept. 30, 2007. As part of its review, Fitch analyzed the management report provided by the servicer, Midland Loan Services. As of third- quarter 2007, aggregate annualized run rate revenue increased to $56.6 million, a 32.2% increase from issuance. Over the same time period, the Fitch adjusted net cash flow increased 23% since issuance. Although revenues increased significantly, operating expenses also increased and the resulting debt service coverage ratio was relatively stable from issuance: the actual servicer- reported DSCR was 2.6 times compared to 2.20x at issuance. The tenant type concentration is stable: total revenues contributed by telephony tenants is 82.2% compared to 83.2% at issuance. IDEARC INC: CEO John Mueller Steps Down After 10 Days of Service ---------------------------------------------------------------- Idearc Inc. said Wednesday that John J. Mueller has resigned as the company's chairman and chief executive officer for unforeseen health reasons, effective immediately. The Idearc board of directors has appointed Frank P. Gatto, currently executive vice president of Idearc, as interim CEO while a search is conducted for a permanent replacement. Donald B. Reed, lead independent director of Idearc, said: "We appreciate all of [Mr. Mueller]'s contributions to Idearc, and we regret that he will be unable to serve as the company's chairman and CEO." Mr. Reed continued: "[Mr. Mueller] was instrumental in establishing Idearc as a public company following its spin-off from Verizon Communications. Despite the fact that [Mr. Mueller] was just recently appointed to the role of CEO, the Board fully understands and supports his decision to focus on his health as a top priority." "Frank Gatto is a proven leader with 30 years of experience in the directory, telecommunications, and manufacturing industries. The Board is confident that Frank's extensive knowledge of our business and his executive experience are strong assets to the company during this time of transition," Mr. Reed concluded. As executive vice president of Idearc, Mr. Gatto, 53, is responsible for leadership of Idearc's sales operations, customer care, strategic planning, marketing, advertising, publishing, printing, directory distribution, information technology, billing and collections. Prior to becoming EVP, Mr. Gatto advanced through several positions at Idearc including president for the northeast region of the United States and senior vice president for operations support. Mr. Gatto began his company career in 1978 and progressed through positions including assistant vice president -- investment and strategic planning for GTE Service Corp., and vice president -- finance and planning for GTE Airfone. Prior to joining Idearc, he was vice president -- finance and chief financial officer for the Puerto Rico Telephone Company, where he had served from September 1999 to September 2001. Mr. Gatto earned a bachelor's degree in economics from Villanova University and a master's of business administration degree in finance from Boston College. Mr. Gatto said, "I am honored to assume the role of CEO of Idearc on an interim basis, and look forward to leading the Company during this time of transition. As we continue our evolution to a multi-platform business, I know our employees will remain committed to meeting the needs of our customers, while positioning the Company to further enhance value for our investors." Mueller Appointment On Feb. 19, 2008, Idearc disclosed that Mr. Mueller was appointed CEO, effective as of Feb. 16, 2008, to replace Katherine J. Harless, also the company's president. At that time, the company expected to enter into an employment agreement with Mr. Mueller. His employment agreement was to be a three-year term with a base salary of $900,000 per year, reviewable annually, short-term bonus award target of 100% of base salary, long-term incentive award target of 300% of base salary, and a restricted stock award worth $1,000,000 to be granted upon the signing of the employment agreement and vesting equally over three years. Mr. Mueller, 51, was chairman of the board and has served in that role since November 2006. Prior to his appointment as CEO, Mr. Mueller was a business consultant and the interim chief executive officer of Connexion Technologies, a fiber-optic amenity company that builds and operates entertainment and communication networks coast to coast. He is a current member of the board of directors of Centennial Communications Corp., a provider of regional wireless and integrated communications services. Previously, Mr. Mueller was chief executive officer and president of Valor Telecommunications LLC from 2004 to 2006, prior to the integration of Valor and Alltel's wireline businesses, which is now known as Windstream. From 2005 to 2006, he also served as chief executive officer and president and as a member of the board of directors of Valor Communications Group, Inc., Valor's parent company. Prior to becoming chief executive officer and president, Mueller served as Valor's president and chief operating officer. Before joining Valor, Mueller spent 23 years at Cincinnati Bell Inc., serving in various positions including: president, Cincinnati Bell Telephone Company; general manager -- consumer markets; and president and chief executive officer of CBD, Cincinnati Bell's directory subsidiary. About Idearc Inc. Dallas, Texas-headquartered Idearc Inc. (NYSE: IAR) -- http://www.idearc.com/-- is yellow pages directories publisher in the United States. Its products include print yellow pages, print white pages, an Internet yellow pages directory, Superpages.com and an information directory for wireless subscribers, Superpages MobileSM. The company publishes its directories in approximately 360 markets in 35 states across the United States and the District of Columbia. The company completed its spin-off from Verizon on Nov. 17, 2006, but had various agreements with Verizon, including a 30-year publishing agreement as the official publisher of Verizon print directories with rights to publish yellow pages under the Verizon brand in both its incumbent and independent markets. On July 20, 2006, it purchased Inceptor Inc., a provider of Internet search engine marketing technology. * * * As reported in the Troubled Company Reporter on Feb. 13, 2008, Standard & Poor's Ratings Services revised its rating outlook on Idearc Inc. to negative from stable. Ratings on the company, including the 'BB' corporate credit rating, were affirmed. IMPLANT SCIENCES: Posts $4,815,000 Net Loss in Qtr. Ended Dec. 31 ----------------------------------------------------------------- Implant Sciences Corporation reported a net loss of $4,815,000 for the second quarter ended Dec. 31, 2007, compared to a net loss of $397,000 for the three months ended Dec. 31, 2006. Net loss for the six months ended Dec. 31, 2007, was $7,017,000, compared to a net loss of $2,007,000 for the six months ended Dec. 31, 2006. Included in the net loss in each of the three and six months ended Dec. 31, 2007,is an approximate $2,224,000 charge for the impairment of long-lived assets and goodwill associated with the company's semiconductor reporting unit. Total revenues for the three months ended Dec. 31, 2007, were $1,884,000 as compared to $4,858,000 for the comparable prior year period, a decrease of $2,974,000 or 61%. Total revenues for the six months ended Dec. 31, 2007, were $5,102,000 as compared to $8,122,000 for the comparable prior year period, a decrease of $3,020,000 or 37%. The decrease in total revenues for the three and six month periods ended Dec. 31, 2007, as compared to the comparable prior year periods is attributable to i) the company's continuing efforts to withdraw from medical operations; ii) downtime in the company's semiconductor business resulting from the consolidation in Sunnyvale, California; and iii) reduced sales of security equipment resulting from the restructuring of the company's security sales and marketing efforts. As of Dec. 31, 2007, the company's cash position decreased by $4,817,000 to $4,804,000 as compared to $9,621,000 as of June 30, 2007. "Our fiscal 2008 second quarter has been a period of change requiring significant investment in the repositioning of our business to clearly focus on opportunities in the Safety, Security and Defense market," stated Phillip C. Thomas, chief executive officer and president. "We believe the costs incurred in the second quarter ended Dec. 31, 2007, which contributed to the approximate $2.9 million second quarter loss, before the effect of a $2.2 million non-cash impairment charge related to our semiconductor business unit, have been necessary to improve our overall position in the market. "Meanwhile, we have improved the quality of our current explosives detection products, restructured our sales and marketing groups to effectively target and close on orders for security products, added industry savvy product development personnel to identify security market opportunities and products necessary to meet market demands, and expanded our scientific and technical resources to develop new commercial products. I am confident the actions undertaken by the company over the past year, and especially during our second quarter of fiscal 2008, provide the foundation necessary to grow our SS&D business with the achievement of sustained profitability being our main goal." Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $11,212,000 in total assets, $5,183,000 in total liabilities, $2,813,000 in Series D cumulative redeemable convertible preferred stock, and $3,216,000 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?288e About Implant Sciences Based in Wakefield, Massachusetts, Implant Sciences Corporation -- http://www.implantsciences.com/-- develops, manufactures and sells products through its primary business units: (i) explosives trace detection systems for homeland security, defense, and other security related applications and (ii) state of the art services for the medical and semiconductor industries. The company has developed proprietary technology used in its commercial portable and bench-top ETD systems, which ship to a growing number of locations domestically and around the world. * * * As reported in the Troubled Company Reporter on Oct. 19, 2007, UHY LLP raised substantial doubt about Implant Sciences Corporation's ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended June 30, 2007. The auditing firm pointed to the company's recurring losses from operations. IPS CORP: Moody's Changes Outlook to Negative; Holds 'B2' Ratings ----------------------------------------------------------------- Moody's Investors Service changed IPS Corporation's rating outlook to negative from stable. Moody's also affirmed the B2 corporate family rating and B2 probability of default rating, as well as the Ba2 senior first lien debt ratings and the Caa1 rating on the senior subordinated notes. The change in outlook is predicated on Moody's expectation of more challenging market conditions for IPS in the near term, which could create downward pressures on the company's operating performance and less solidly position IPS in the B2 rating category. In the next few months, the rating agency believes that IPS will continue to face depressed conditions in the new residential construction market. Additionally, there is in Moody's opinion, a material risk of weaker housing-related consumer spending, which could affect the remodeling market, and deteriorating conditions in commercial construction. Against this backdrop, it is less likely that IPS'growing international business will continue to offset poor domestic performance. The generation by IPS of negative free cash flow, an increase in debt/EBITDA to a level above 6.5 times or the deterioration of liquidity, which is currently considered acceptable by Moody's in view of the company's cash balances, would lead to a downgrade. Headquartered in Compton, California, IPS Corporation is a manufacturer of a wide range of adhesive cements and plumbing products primarily for the new residential, remodeling and commercial construction markets. IRVINE SENSORS: Posts $3.7 Million Net Loss in Qtr. Ended Dec. 30 ----------------------------------------------------------------- Irvine Sensors Corp. reported a net loss of $3.7 million for the fiscal 2008 first quarter ended Dec. 30, 2007, compared with a net loss of $6.4 million in the corresponding period ended Dec. 31, 2006. The net loss in the fiscal 2007 quarter includes a $4.4 million nonrecurring loss on extinguishment of debt. Total revenues were $8.0 million as compared to $8.1 million in the first quarter of fiscal 2007. The virtually unchanged consolidated total revenues reflected an approximate $1.5 million decline in revenues of the company's Costa Mesa operation, largely in contract research and development revenue, offset by an approximate $1.3 million increase in product sales of the company's Optex subsidiary. Balance Sheet At Dec. 30, 2007, the company's consolidated balance sheet showed $34.0 million in total assets and $31.7 million in total liabilities, and $2.3 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 30, 2007, are available for free at http://researcharchives.com/t/s?2891 Going Concern Disclaimer As reported in the Troubled Company Reporter on Jan. 24, 2008, Grant Thornton LLP expressed substantial doubt about Irvine Sensors Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Sept. 30, 2007. The auditing firm reported that the company incurred net losses for the years ended Sept. 30, 2007, Oct. 1, 2006 and Oct. 2, 2005, respectively, and the company has working capital of only $1,799,100 at Sept. 30, 2007. About Irvine Sensors Based in Costa Mesa, California, Irvine Sensors Corporation (Nasdaq: IRSN) -- http://www.irvine-sensors.com/-- is a vision systems company engaged in the development and sale of miniaturized infrared and electro-optical cameras, image processors and stacked chip assemblies, the manufacture and sale of optical systems and equipment for military applications through its Optex subsidiary and research and development related to high density electronics, miniaturized sensors, optical interconnection technology, high speed network security, image processing and low- power analog and mixed-signal integrated circuits for diverse systems applications. IXIS REAL: S&P Slashes Five Classes' Ratings on Weak Performance ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on five classes of mortgage pass-through certificates from IXIS Real Estate Capital Trust 2004-HE4. Concurrently, S&P affirmed its ratings on the remaining two classes from this deal. The downgrades reflect collateral performance that has eroded available credit support during recent months. As of the January 2008 remittance period, cumulative losses were $9.6 million, or 1.34% of the original principal balance. Serious delinquencies (90-plus days, foreclosures, and REOs) were $18.46 million, about 18.5x greater than the current overcollateralization, which is $2.55 million below its $3.6 million target. Losses have consistently outpaced excess interest for eight of the 12 most recent months. Current and projected credit support percentages are sufficient to support the affirmed ratings at their current levels. Subordination, overcollateralization, and excess spread provide credit support for this series. The collateral for this transaction consists primarily of fixed- and adjustable-rate conventional, fully amortizing, and balloon mortgage loans secured by first and second liens on one- to four-family residential properties. Ratings Lowered IXIS Real Estate Capital Trust 2004-HE4 Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- M-3 BB- A- B-1 B BBB+ B-2 B- BBB B-3 CCC BBB- B-4 CCC BB Ratings Affirmed IXIS Real Estate Capital Trust 2004-HE4 Mortgage pass-through certificates Class Rating ----- ------ M-1 AA M-2 A JAMES LULL: Debt from "Ponzi Scheme" May Have Reached $50 Million ----------------------------------------------------------------- The debt of James W. Lull, former branch manager of U.S. Financial Mortgage Corp., is expected to reach $50 million, Jim Dooley writes for the Honolulu Advertiser, citing trustee counsel, Stephen Jones, Esq. Mr. Lull filed personal bankruptcy in December 2006, and at that time, disclosed having $6.7 million in assets and $31 million in debts, Advertiser reports. According to trustee Ronald Kotoshirodo, Mr. Lull ran a "Ponzi scheme" convincing several people in Kaua'i, Hawaii to put up investments and promising to give them high returns, Advertiser says. Based on the report, Mr. Lull told investors he was using the people's money to fund real property development as bridge loans. About "Ponzi" Schemes The U.S. Securities and Exchange Commission stated at -- http://www.sec.gov/answers/ponzi.htm-- that Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Decades later, the Ponzi scheme continues to work on the "rob- Peter-to-pay-Paul" principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses. Defrauded Investors James Wagner, Esq., argued that his client did not operate a Ponzi scheme, and Mr. Lull, who served U.S. Financial Mortgage Corp. from 1994 until 2004, has not been found guilty, Advertiser says. Contrary to the trustee's claim, Mr. Wagner argued that his client's debt is only between $10 million and $20 million, Advertiser reports. Among his defrauded investors are three-time world champion surfer Philip A. Irons and brother, Bruce, who were owed $1 million sometime 1998 through 2006. In January 2008, the Hon. Lloyd King for the U.S. Bankruptcy Court for the District of Hawaii found that Mr. Lull obtained a total of about $3,000,000 from Donald Tipaldi from 2004 through 2006, Advertiser reveals. Judge King ruled that Mr. Lull intended "to defraud" Mr. Tipaldi, the report relates. Mr. Tipaldi filed his claims with the Court asserting that Mr. Lull used his money for personal gain and stating that around March 2006, Mr. Lull issued him a $300,000 check that bounced. Mr. Lull also owed Stephani and William Britt about $500,000 in life savings in 2006, Advertiser adds. The couple, says the report, had already paid Elijah Yip, Esq., at least $40,000 in efforts to get their money back. FBI spokesman Brandon Simpson told Advertiser he can't ascertain if a criminal investigation on Mr. Lull's activities is ongoing. James W. Lull currently lives in the State of Washington. He listed three real properties -- two on Kuaa'i and one in Idaho -- as principal assets worth around $6 million, but had mortgages of about $8.4 million. KEFTON CDO: Moody's Junks Rating on Up To $67 Mil. Notes From 'A3' ------------------------------------------------------------------ Moody's Investors Service downgraded ratings of six classes of notes issued by Kefton CDO I, LTD. The notes affected by this rating action are: Class Description: Up to $67,000,000 Class II Senior Floating Rate Notes Due January 2047 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: C Class Description: Up to $70,000,000 Class III Senior Floating Rate Notes Due January 2047 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: C Class Description: Up to $14,500,000 Class IV Senior Floating Rate Notes Due January 2047 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: C Class Description: Up to $27,000,000 Class V Mezzanine Floating Rate Deferrable Notes Due January 2047 -- Prior Rating: Ca -- Current Rating: C Class Description: Up to $24,000,000 Class VI Mezzanine Floating Rate Deferrable Notes Due January 2047 -- Prior Rating: Ca -- Current Rating: C Class Description: Up to $8,000,000 Class VII Mezzanine Floating Rate Deferrable Notes Due January 2047 -- Prior Rating: Ca -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence as reported by the Issuer on Feb. 12, 2008, of an event of default caused when the Par Value Coverage Amount divided by the sum of the Available Supersenior Swap Amount plus the Aggregate Outstanding Amount of the Class II Notes and the Used Supersenior Swap Amount is less than 101 percent, pursuant to Section 5.1(d) of the Indenture dated Dec. 14, 2006. This event of default is still continuing. Kefton CDO I, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. In this regard the Trustee reports that the Controlling Class has directed the Trustee to accelerate the Notes and to proceed with the sale of the Collateral. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. KELLWOOD CO: S&P Chips Rating to B+ After Sun Capital Tender Offer ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on women's apparel designer and marketer Kellwood Co., including its corporate credit rating, to 'B+' from 'BB-'. S&P also removed the ratings from CreditWatch, where they were initially placed with negative implications on Sept. 19, 2007, and subsequently withdrew the ratings. These rating actions follow the completion of Sun Capital Securities LLC's tender offer to Kellwood's shareholders. Sun Capital, through an affiliate, became the majority holder of Kellwood's common stock. Kellwood is now an operating subsidiary of Sun Capital, and is no longer required to file financial statements with the SEC. The initial CreditWatch listing on Sept. 19, 2007, followed Kellwood's receipt of an unsolicited bid from Sun Capital to buy the company. Ratings were subsequently lowered on Oct. 17, 2007, reflecting weak underlying business trends and the tougher operating environment in retail, as well as weakening credit protection measures. "This downgrade reflects the challenging retail environment, the company's weak credit metrics that have continued to decline from historical levels, and our expectation that the company will pursue a more aggressive financial policy going forward," said Standard & Poor's credit analyst Susan Ding. While Sun capital has not disclosed any information regarding Kellwood's capital structure following the acquisition, S&P expects that the company will remain highly leveraged. Leverage has remained in the 4.5x- 4.8x within the past several years. LASALLE COMM: Increased Loss Expectations Cue Fitch to Cut Ratings ------------------------------------------------------------------ Fitch Ratings has downgraded and assigned distressed recovery ratings to LaSalle Commercial Mortgage Securities, Inc. commercial mortgage pass-through certificates, series 2006-MF3, as: -- $3.7 million class E to 'BBB-' from 'BBB'; -- $6.8 million class G to 'B+' from 'BB'; -- $2.5 million class H to 'B-' from 'BB-'; -- $1.9 million class J to 'CCC/DR1' from 'B+'; -- $1.2 million class K to 'CCC/DR1' from 'B'; -- $2.5 million class L to 'C/DR6' from 'B-'; -- $1.2 million class M to 'C/DR6' from 'CCC/DR1'. Fitch also affirmed these classes: -- $386.8 million class A at 'AAA'; -- Interest-only class X at 'AAA'; -- $8.0 million class B at 'AA'; -- $13.0 million class C at 'A'; -- $8.0 million class D at 'BBB+'; -- $4.9 million class F at 'BBB-'. Fitch does not rate the $7.1 million class N certificates. The downgrades are the result of additional specially serviced loans and increased loss expectations since Fitch's last rating action. Fitch expects losses to ultimately deplete the non-rated class N and negatively impact credit enhancement levels. As of the February 2008 remittance report, the transaction has been reduced 9.3% to $447.6 million from $493.4 million at issuance. Fitch identified 173 loans (41%) as loans of concern as a result of declines in occupancy and performance as well as the transaction's 23 (6.2%) specially serviced loans. The largest specially serviced loan (0.8%) is secured by a multifamily property in Lubbock, Texas and is 90 days delinquent. The property continues to show declines in occupancy and performance since issuance. The special servicer is proceeding with foreclosure. The second largest specially serviced loan (0.6%) is secured by a multifamily property in Oklahoma City, Oklahoma and is 90 days delinquent. The property is in poor condition with declining performance. The special servicer filed for foreclosure in December 2007 and a receiver was placed at the property in January 2008. The third largest specially serviced loan (0.4%) is secured by a multifamily property in Tampa, Florida and is 90 days delinquent. The property operations have been impacted due to poor management. The special servicer is in the process of proceeding with foreclosure. LENNAR CORP: Receives Purchase Offer from UAE Group, Report Says ---------------------------------------------------------------- A group from the United Arab Emirates has offered to buy Lennar Corp., according to Ilaina Jonas of Reuters, citing a report posted at Theflyonthewall.com The report cited Buck Horne, an analyst with Raymond James and Associates, as saying that Goldman Sachs Group Inc. was rumored to have been hired as the investment banker for the deal. The report of the possible sale and a remark by real estate tycoon Sam Zell predicting a start of a recovery in the housing market this spring buoyed the company's share 8.7 percent, or $1.63, to $20.41 on the New York Stock Exchange, according to the report. As reported by the Troubled Company Reporter on Jan. 28, 2008, Lennar reported fourth quarter net loss in 2007 was $1.3 billion, compared to a net loss of $195.6 million in 2006. It reported net loss for the year ended Nov. 30, 2007 of $1.9 billion, compared to net earnings of $593.9 million for the year ended Nov. 30, 2006. The company has completed an amendment to its senior unsecured revolving credit facility that modified certain covenants, which included minimum tangible net worth, borrowing base and maximum leverage ratio, as well as added a new covenant to reduce the recourse indebtedness of joint ventures in which the company participates. Under this amendment, the maximum amount the company can borrow was reduced from $3.1 billion to $1.5 billion. Following the earnings report, Standard & Poor's Ratings Services said that its corporate credit rating, debt ratings, and outlook on Lennar Corp.(BB+/Negative/--) are not immediately affected by a large loss in its fiscal fourth-quarter 2007. About Lennar Corp. Headquartered in Miami, Florida, Lennar Corporation (NYSE: LEN and LEN.B) -- http://www.lennar.com/-- founded in 1954, builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides mortgage financing, title insurance, and closing services for both buyers of the company's homes and others. LIBERTY MEDIA: Gains 41% Interest in DirecTV After Swap ------------------------------------------------------- Liberty Media Corporation has completed the exchange of its 16.3% stake in News Corporation for a subsidiary of News that holds a 41% stake in The DIRECTV Group Inc., regional sports networks in Denver, Pittsburgh, and Seattle, and $465 million of cash. John Malone and Greg Maffei have been appointed to the DIRECTV board, filling two of the three seats previously held by News representatives. Chase Carey will continue to serve as DIRECTV's president and CEO. "This transaction is strategically important, financially attractive, and will provide new focus to Liberty Media," said Liberty CEO Greg Maffei. "We've been impressed with Chase Carey and his team and are thrilled to welcome them to the Liberty family. We look forward to a partnership with DIRECTV." The reclassification of Liberty Capital Tracking stock is expected to be completed in the next three to five business days and the new Liberty Entertainment and Liberty Capital tracking stocks will commence trading early next week. About News Corp. News Corporation is a diversified international media and entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers; book publishing; and other. The activities of News Corporation are conducted principally in the United States, Continental Europe, the United Kingdom, Australia, Asia and the Pacific Basin. About DirecTV Group Headquartered in El Segundo, California, The DirecTV Group Inc. (NASDAQ:DTV) -- http://www.DirecTV.com/-- provides digital television entertainment in the United States and Latin America. The company's two business segments, DirecTV U.S. and DirecTV Latin America, are engaged in acquiring, promoting, selling and/or distributing digital entertainment programming via satellite to residential and commercial subscribers. DirecTV Holdings LLC and its subsidiaries are a provider of direct-to-home digital television services and a provider in the multi-channel video programming distribution industry in the United States. DTVLA is a provider of DTH digital television services throughout Latin America. In January 2007, the company acquired Darlene Investments LLC's 14.1% equity interest in DirecTV Latin America, LLC. DirecTV Latin America LLC is a multinational company, which, as a result of this transaction, became a wholly owned subsidiary of the company. * * * In April 2007, Standard and Poor's Ratings Services assigned a 'BB+' Rating on The DirecTV Group Inc.'s long-term foreign and local issuer credit rating with a stable outlook. This rating action still holds to date. About Liberty Media Headquartered in Englewood, Colorado, Liberty Media Corporation (NasdaqGS: LINTA) -- http://www.libertymedia.com/-- owns interests in a broad range of electronic retailing, media, communications and entertainment businesses. Those interests are attributed to two tracking stock groups: the Liberty Interactive group, which includes Liberty's interests in QVC, Provide Commerce, IAC/InterActiveCorp, and Expedia, and the Liberty Capital group, which includes Liberty's interests in Starz Entertainment, News Corporation, and Time Warner. * * * Liberty Media Corporation continues to carry Fitch Ratings' 'BB' long-term issuer default and senior unsecured debt ratings, which were placed in December 2006. LIBERTY MEDIA: FCC Sees DirecTV Group Deal to Benefit Public ------------------------------------------------------------ The Federal Communications Commission approved the transfer of control of DirecTV Group Inc. to Liberty Media Corp., subject to conditions. The Commission concluded that, as conditioned, the public interest benefits of the transfer outweighed the potential harms and would be consistent with applicable Commission rules and policies. As reported in the Troubled Company Reporter on Feb. 11, 2008, under the deal, News Corp. will exchange its interest in DirecTV Group Inc. with Liberty Media's interest in News Corp. Liberty Media said it plans to exchange its stake in News Corp. for 39% of DirectTV. The parties reached an $11 billion deal that includes News Corp.'s stake in DirectTV. As a benefit of the transaction, Liberty Media and News Corp., which is the majority stakeholder of DirecTV, would sever their ownership interests with each other which will decrease media consolidation and reduce vertical integration therefore benefiting the public. The Order also imposes certain conditions to ensure that the transaction will serve Commission's competition and diversity goals. The Order requires that Liberty and DirecTV abide by program access, program carriage, Regional Sports Network arbitration, retransmission consent arbitration conditions, modeled on similar conditions imposed in 2003, when the Commission approved the transfer of DIRECTV from Hughes to News Corp. In addition, the Order requires that all of the attributable ownership interests connecting DirecTV-Puerto Rico and Liberty Cablevision of Puerto Rico, Ltd., which will be under common control as a result of the transaction, be severed within one year, at which point the companies must certify either that they have reduced the relevant interests to a non-attributable level or that they have filed any applications necessary to divest assets. On balance, the Commission found that the transaction, as conditioned, would serve the public interest. About News Corp. News Corporation is a diversified international media and entertainment company with operations in eight industry segments: filmed entertainment; television; cable network programming; direct broadcast satellite television; magazines and inserts; newspapers; book publishing; and other. The activities of News Corporation are conducted principally in the United States, Continental Europe, the United Kingdom, Australia, Asia and the Pacific Basin. About DirecTV Headquartered in El Segundo, California, The DIRECTV Group Inc. (NYSE: DTV) -- http://www.directv.com/ -- provides digital television entertainment services. Through its subsidiaries and affiliated companies in the United States, Brazil, Mexico and other countries in Latin America, the DIRECTV Group provides digital television service to more than 16.5 million customers in the United States and over 4.6 million customers in Latin America. * * * In April 2007, Standard & Poor's Ratings Services affirmed the 'BB' corporate credit and 'BB-' senior unsecured debt rating on The DIRECTV Group Inc. S&P said the outlook is stable. In addition, Standard & Poor's raised the bank loan rating on $2 billion of credit facilities at DIRECTV Holdings LLC, a wholly owned subsidiary of The DIRECTV Group Inc, to 'BB+' from 'BB' and revised the recovery rating to '1' from '3'. About Liberty Media Headquartered in Englewood, Colorado, Liberty Media Corporation (NasdaqGS: LINTA) -- http://www.libertymedia.com/-- owns interests in a broad range of electronic retailing, media, communications and entertainment businesses. Those interests are attributed to two tracking stock groups: the Liberty Interactive group, which includes Liberty's interests in QVC, Provide Commerce, IAC/InterActiveCorp, and Expedia, and the Liberty Capital group, which includes Liberty's interests in Starz Entertainment, News Corporation, and Time Warner. * * * Liberty Media Corporation continues to carry Fitch Ratings' 'BB' long-term issuer default and senior unsecured debt ratings, which were placed in December 2006. LILLIAN VERNON: Has Interim Authority to Tap $8.5MM DIP Financing ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave interim authority to Lillian Vernon Corp. and its debtor- affiliates to obtain up to $8,500,000 in postpetition financing from Wachovia Bank, N.A., as agent for a consortium of lenders. The Debtors also won permission to use their lenders' cash collateral. Prior to the Debtors' bankruptcy filings, Wachovia and the other lenders made loans, advances, and financial accommodations to the Debtors pursuant to a loan and security agreement, as amended. As of the date of bankruptcy, the aggregate amount of all loans, letters of credit and other obligations owed by the Debtors to the lenders under the financing agreements was approximately $15,569,767. The prepetition obligations include a revolving Loan B in the aggregate outstanding principal amount of $10,000,000, plus interest. The lenders claimed valid, first priority security interests and liens upon all of the prepetition collateral -- subject only to liens provided in the existing loan agreement -- as security for the repayment of prepetition obligations less the amount of Loan B obligations. The Debtors are also indebted to their subordinated noteholders on a certain note purchase agreement. The investor-noteholders claim a second priority lien on substantially all of the Debtors' personal assets and general intangibles. As of the date of bankruptcy, the indebtedness under the loan agreement was approximately $7.5 million plus interest. In addition, the Debtors have placed letters of credit to secure the performance under certain real property and personal property leases for $600,000. The Debtors told the Court that they don't have sufficient available cash to meet ongoing obligations necessary to run their businesses, and that it needs to urgently obtain credit and additional capital to pursue going concern interests. The Debtors and Wachovia have entered into a ratification and amendment agreement, whereby the lenders would extend financing to the bankruptcy estate. The DIP loan will not exceed $8,500,000 -- and will not exceed $18,500,000 when including Revolving Loan B -- on a final basis. The term of the postpetition financing will end on: -- May 31, 2008; or -- the confirmation of the Debtors' plan of reorganization. In addition, the Court allowed the Debtors, on the interim, to grant the lenders superpriority administrative claims status pursuant to Section 364(c)(1) of the U.S. Bankruptcy Code in respect of all postpetition obligations. The Debtors are required to pay a $100,000 closing fee, as well as a host of other fees for any unused portion of the facility. The Debtors can also use cash collateral subject to the liens and security interest of the lenders, and give adequate protection by providing the lenders with replacement liens and superpriority administrative claims status. About Lillian Vernon Based in Virginia Beach, Virginia, Lillian Vernon Corp. -- http://www.lillianvernon.com/-- and its affiliates are direct mail specialty catalog and online companies concentrating on the marketing of gifts, holiday products, toys and children's products, personal and home accessories, kitchen and houseware products and garden and outdoor products. They have developed a proprietary customer database containing information about its customers, including such data as order frequency, size and date of last order and type of products purchased. The database contains information with respect to over 27 million customers, gift recipients and people who have requested its catalogs. In the fiscal year ended February 22, 2003, they published 33 catalog editions and mailed approximately 150,000,000 catalogs to past and prospective customers. They also offer products over the Internet. The company and six of its affiliates filed for Chapter 11 protection on Feb. 20, 2008 (Bankr. D.D., Delaware, Case No. 08- 10323). Ann C. Cordo, Esq., Daniel B. Butz, and Esq., J. Dehney, Esq. at Morris, Nichols, Arsht & Tunnell, L.L.P. represent the Debtors in their restructuring efforts. Lillian Vernon's parent, Sun Capital Partners Inc., a privately held investment company with offices in Boca Raton, Fla., is not included in the bankruptcy filing. The company listed assets of $1 million to $100 million and debts of $1 million to $100 million in its bankruptcy filing. LONGPORT FUNDING: Six Classes of Notes Get Moody's Junk Ratings --------------------------------------------------------------- Moody's Investors Service downgraded ratings of seven classes of notes issued by Longport Funding III, Ltd., and left on review for possible further downgrade the rating of one of these classes of notes. The notes affected by this rating action are: Class Description: $450,000,000 Class A1-VF Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade Class Description: $63,750,000 Class A2A Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ca Class Description: $45,000,000 Class A2B Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ca Class Description: $97,500,000 Class B Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ca Class Description: $26,250,000 Class C Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2051 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: C Class Description: $26,250,000 Class D Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2051 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: C Class Description: $12,000,000 Class E Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2051 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence, as reported by the Trustee on Feb. 12, 2008, of an event of default caused by a failure of the Class A1-VF Overcollateralization Ratio to be greater than or equal to 100 per cent pursuant Section 5.1(i) of the Indenture dated April 4, 2007. Longport Funding III, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities. Recent ratings downgrades on the underlying portfolio caused ratings-based haircuts to affect the calculation of overcollateralization. Thus, the Class A1-VF Overcollateralization Ratio failed to meet the required level. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by certain Noteholders. Because of this uncertainty, the rating assigned to Class A1-VF Notes remains on review for possible further action. LOUISIANA-PACIFIC CORP: Moody's Chips Senior Debt Rating to ' Ba2' ------------------------------------------------------------------ Moody's Investors Service downgraded Louisiana-Pacific Corporation's senior unsecured debt rating to Ba2 from Baa3, concluding a review for possible downgrade initiated on Feb. 13, 2008. At the same time, Moody's assigned a Ba2 corporate family rating and SGL-2 liquidity rating to LP. The downgrade reflects LP's deteriorating financial performance, weakened credit protection metrics, and reduced liquidity position with the expectation that market conditions will remain challenging over the next 12 to 18 months. The rating outlook is negative. The severe downturn in new residential construction, the reduction in home repairs and remodeling activities, the oriented strandboard capacity additions, and the impact of tighter home mortgage standards on housing starts are expected to continue to create a weak pricing environment for the company's principal products. The company's credit protection metrics remain challenged by the extremely weak pricing of LP's core product - OSB, the company's volatile cash flow stream, its relatively modest size, and its single product line and geographic concentration. These challenges are partially offset by the company's low debt level and good liquidity position, however, a material portion of LP's previously sizeable cash and short-term investments have been applied towards funding negative cash flows and the company has some of its bank debt maturing over the next 12 months. The Ba2 rating anticipates that 2008 and 2009 will be challenging years and LP's credit protection metrics will continue to deteriorate. With current US housing starts hovering around 1 million starts and with industry OSB capacity aligned towards approximately 2 million starts, OSB pricing is not expected to materially increase over the next few years. OSB pricing has remained at or below cash costs for most of the past 18 months and Moody's expectation is that OSB pricing will remain challenged until industry capacity utilization rates increase significantly. With approximately 40% of its assets located in Canada, LP's margins are further challenged by the strong Canadian dollar. Although LP is taking measures to preserve cash, the ongoing cash needs to fund its operations continue to deplete the company's liquidity. Credit positives include the positive long term industry fundamentals as OSB continues to take market share from plywood due to its relative cost advantage. LP is the largest OSB producer in North America and generates substantial free cash flow in strong OSB pricing environments. LP maintains a strong balance sheet and has committed to maintain at least $250 million in cash. The SGL-2 liquidity rating indicates anticipated good liquidity over the next 12 months given the company's strong cash balances that should cover the company's anticipated operating needs. The negative outlook reflects the potential for further downward ratings adjustment should the weakness in the OSB market prevail for a longer period of time and cause a material deterioration in liquidity arrangements. Industry-wide operating conditions indicate that cash flow may not improve and LP will continue to fund its negative cash flow from its cash and investments. Downgrades: Issuer: Louisiana-Pacific Corporation -- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 from Baa3 -- Senior Unsecured Shelf, Downgraded to (P)Ba2 from (P)Baa3 Assignments: Issuer: Louisiana-Pacific Corporation -- Speculative Grade Liquidity Rating, Assigned SGL-2 Reinstatements: Issuer: Louisiana-Pacific Corporation -- Corporate Family Rating, Reinstated to Ba2 Outlook Actions: Issuer: Louisiana-Pacific Corporation -- Outlook, Changed To Negative From Rating Under Review Moody's last rating action on LP was on Feb. 13, 2008 when the Baa3 senior unsecured debt ratings were placed under review for possible downgrade. Headquartered in Nashville, Tennessee, Louisiana-Pacific Corporation is a leading manufacturer and distributor of wood based building materials, and is North America's largest producer of oriented strandboard. The company has approximately 24% and 15% market share for OSB and structural panels respectively. MASTR ASSET: Class M-9 and Class M-10 Gets S&P's Rating Downgrades ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on the class M-9 and M-10 mortgage pass-through certificates from MASTR Asset Backed Securities Trust 2005-NC1. The downgrades of these classes reflect continuous adverse pool performance. As of the January 2008 remittance period, cumulative losses were $8.92 million, or 0.91% of the original pool balance. Serious delinquencies (90-plus days, foreclosures, and REOs) were $51.36 million of the current pool balance, up $4.5 million from 12 months ago. The underlying collateral for this transaction originally consisted of subprime fixed- and adjustable-rate first and second liens on owner-occupied one- to four-family residential properties. Ratings Lowered MASTR Asset Backed Securities Trust 2005-NC1 Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- M-9 BB BBB- M-10 B BBB- MCCALL CITY: Council Passes Resolution Allowing Bankruptcy Filing ----------------------------------------------------------------- The McCall City Council on Monday authorized city attorneys to file for Chapter 9 municipal bankruptcy, Lora Volkert of Idaho Business News reports. As reported by the Troubled Company Reporter on Feb. 26, 2008, a bankruptcy filing will allow it to postpone paying $6 million to St. Clair Contractors, a wastewater treatment facility contractor and Employers Insurance of Wausau, which provided the contractor's performance bond. McCall had claimed that the contractor didn't do the agreed work properly. The contractor demanded payment of $6.5 million. Since May of last year, the city has paid back $1 million of that debt, according to KTVB.com of Idaho. Wasau is now asking a judge to force the city to pay all the debt back immediately. They want to prohibit McCall from making any payments to anyone until that judgment is satisfied, according to the report. Meanwhile, the city has applied for judicial confirmation. A judicial confirmation hearing to determine whether McCall is authorized by state law to issue bonds for the $6 million legal judgment without holding an election was held Wednesday. On Wednesday, a judge indicated he's inclined to grant the city permission to sell revenue bonds without getting voter approval, according to Alyson Outen of KTVB (Idaho). McCall is a city in Valley County, Idaho. MEDICOR LTD: Court Approves $7 Million DIP Financing ---------------------------------------------------- The United States Bankruptcy Court for the District of Delaware approved MediCor Ltd. and its debtor-affiliates' request seeking to further increase their debtor-in-possession financing to $7 million, Bloomberg New Reports. According to Bloomberg, the Court also extended the loan maturity date of the financing until April 15, 2008. As reported in the Troubled Company Reporter on Dec. 14, 2007, the Debtors asked the Court to increase their DIP financing from $2.2 million to $5 million The Debtors said that they need a larger loan to pay bills that prompted them to seek the additional funds. About MediCor Headquartered in North Las Vegas, Nevada, MediCor Ltd. -- http://www.medicorltd.com/-- manufactures and markets products primarily for aesthetic, plastic and reconstructive surgery and dermatology markets. The company and seven of its affiliates filed for chapter 11 protection on June 29, 2007 (Bankr. D. Del. Case No. 07-10877) to effectuate the orderly marketing and sale of their business. Kenneth A. Rosen, Esq., Jeffrey D. Prol, Esq., and Jeffrey A. Kramer, Esq., at Lowenstein Sandler PC represent the Debtors in their restructuring efforts. Dennis A. Meloro, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, acts as the Debtors' Delaware counsel. The Debtors engaged Alvarez & Marsal North America LLC as their restructuring advisor. David W. Carickhoff, Jr., Esq., and Jason W. Staib, Esq., at Blank Rome LLP serve as the Official Committee of Unsecured Creditor's counsel. In its schedules of assets and debts filed with the Court, Medicor disclosed total assets of $96,553,019, and total debts of $158,137,507. MEDICOR LTD: Wants Until May 26 to File Chapter 11 Plan ------------------------------------------------------- MediCor Ltd. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware to further extend the exclusive periods to: a) file a Chapter 11 plan until May 26, 2008; and b) solicit acceptances of that plan until July 24, 2008. The Debtors need substantial amount of time to complete the sale of all their assets, including the assets of their European affiliates -- Eurosilicone SAS; Biosil Ltd.; and Nagor Ltd. As previously reported, the Debtors asked the Court to approve the bidding procedure for the sale of their assets. To date, the Debtors have not received any qualified bids. However, an interested purchaser has resurfaced and wants to continue talks to purchase all the Debtors' European assets. The Debtors say that they expect that a sale agreement will be completed shortly and an appropriate request for approval will be filed before the Court. The move to further extend the Debtors' exclusive rights will enable them to formulate a confirmable plan, according to the Debtors. The Debtors assure the Court that the request will not harm their creditors or other parties in interest in these cases. The Debtors' exclusive period to file a Chapter 11 plan expired on Feb. 25, 2008. A hearing has been set on March 17, 2008, at 10:30 a.m., whether to approve the Debtors' request. Objections, if any, must be filed on or before March 10, 2008. About MediCor Headquartered in North Las Vegas, Nevada, MediCor Ltd. -- http://www.medicorltd.com/-- manufactures and markets products primarily for aesthetic, plastic and reconstructive surgery and dermatology markets. The company and seven of its affiliates filed for chapter 11 protection on June 29, 2007 (Bankr. D. Del. Case No. 07-10877) to effectuate the orderly marketing and sale of their business. Kenneth A. Rosen, Esq., Jeffrey D. Prol, Esq., and Jeffrey A. Kramer, Esq., at Lowenstein Sandler PC represent the Debtors in their restructuring efforts. Dennis A. Meloro, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, acts as the Debtors' Delaware counsel. The Debtors engaged Alvarez & Marsal North America LLC as their restructuring advisor. David W. Carickhoff, Jr., Esq., and Jason W. Staib, Esq., at Blank Rome LLP serve as the Official Committee of Unsecured Creditor's counsel. In its schedules of assets and debts filed with the Court, Medicor disclosed total assets of $96,553,019, and total debts of $158,137,507. MIIX INSURANCE: Court Wants Creditors to Appear at April 9 Hearing ------------------------------------------------------------------ The Honorable Neil H. Shuster of the Superior Court of New Jersey, Chancery Division-Mercer County advised that any person or entity having an interest in or claim against MIIX Insurance Company appear before the Court on April 9, 2008, at 2:00 p.m., 210 Broad Street, 5th Floor, in Trenton, New Jersey. In 2004, Judge Shuster appointed Holly C. Bakke, Commissioner of Banking and Insurance for the State of New Jersey, as the Rehabilitator for MIIX Insurance Company. At the same time, all directors and officers of MIIX Insurance and of its two subsidiaries, Lawrenceville Holdings, Inc. and MIIX Insurance Company of New York, resigned from their positions. Claimants are compelled, during the appearance, to show cause why the Court should not: a) appoint the Commissioner as liquidator of MIIX; b) direct the Commissioner to liquidate MIIX; c) terminate the order of rehabilitation of MIIX entered on Sept. 28, 2004; d) permanently enjoin all persons and entities from pursuing litigation against MIIX, or from interfering with the Commissioner's efforts to liquidate MIIX; e) halt all further payments of claims by MIIX; f) provide that all claims must be asserted against MIIX no later than one year from the date of the liquidation order, in the form established by the Commissioner; g) establish procedures governing the payment of claims by MIIX; and h) grant the Commissioner other injunctive and equitable relief as may be necessary to protect the policyholders and creditors of MIIX and the public. The Court also declared MIIX to be insolvent. The Court also stayed all court actions, arbitrations and mediations in which MIIX is a party of. If any interested party intends to file answering affidavits, briefs, or seek other kind of relief concerning the matter, the appropriate papers should be filed on March 20, 2008, with: Emerald Erickson Kuepper, Esq. Senior Deputy Attorney General Counsel for the Commissioner 22 South Clinton Avenue Building 4, 2nd Floor P.O. Box 117 Trenton, NJ 08628-0117 Based in Lawrenceville, New Jersey, MIIX Insurance Company -- http://www.miix.com/-- is a subsidiary of The MIIX Group, Incorporated (OTC: MIIX). The group provides management and claims administrative services to the medical professional liability insurance industry, and a range of consulting products to physician and healthcare providers. The MIIX Group of Companies currently protects existing physician, medical professional, and institutional insureds through its long- term commitment to run-off insurance operations. MILACRON INC: Dec. 31 Balance Sheet Upside-Down by $51.1 Million ---------------------------------------------------------------- Milacron Inc. released its results for the fourth quarter ended Dec. 31, 2007. The company's balance sheet showed total assets of $ 592.9 million and total liabilities of $644 million, resulting in a $51.1 million stockholders' deficit. Deficit, at Dec. 31, 2006, was $21.3 million. The company reported a net loss in the fourth quarter of 2007 of $73.4 million, caused primarily by a non-cash writedown of deferred tax assets of $63.0 million associated with the change of ownership of the majority of the company's preferred stock, as announced in October. The loss also included $7.4 million in restructuring charges, $1.9 million in one-time costs related to the curtailment of the company's U.S. pension plan, as well as $1.4 million in expenses related to the preferred stock transaction. This compared to a net loss in the fourth quarter of 2006 of $8.6 million, which included $5.1 million in restructuring costs and $1.8 million in refinancing charges. "We continue to make solid progress throughout the company in terms of our restructuring and other cost reduction initiatives," Ronald D. Brown, chairman, president and chief executive officer, said. "Our manufacturing margins and operating cash flow or EBITDA are both up significantly from the year-ago quarter. And our efforts to expand Milacron's presence in faster-growing markets of the world are also paying off. In fact, our sales to markets outside the U.S., Canada and Western Europe are up well in excess of 20% and now represent about 25% of our total sales." These gains in non-traditional markets helped offset declines in North America, as fourth quarter 2007 sales reached $217 million, up 10% from $198 million in the year-ago quarter. About half of the sales increase came as a result of favorable currency translation effects. New orders in the quarter were $213 million, up from $203 million in 2006, entirely due to currency translation. Aided by favorable resolutions of long-standing product liability claims and the benefits of restructuring and product cost reduction initiatives, manufacturing margins in the quarter rose to 22.3%, up from 19.4% in the year ago quarter. Net cash provided by operations during the quarter was $9.6 million, compared to a use of cash by operations of $800,000 in the fourth quarter of 2006. At the end of the quarter, Milacron had $41 million in cash, up $3 million from the beginning of the quarter. The company also had $34 million in borrowing availability under its North American revolving credit agreement, down from $42 million at the beginning of the quarter. Year 2007 Milacron's net loss for the year was $88.8 million, or $19.59 per share. This included the writedown of tax assets of $63.0 million, restructuring charges of $12.5 million, $1.9 million in one-time costs for pension plan curtailment, as well as $1.9 million in expenses for the preferred stock transaction. In 2006, Milacron lost $39.7 million, or $10.15 per share, which included $17.4 million in restructuring costs and $1.8 million in refinancing charges. Operating earnings in 2007 improved to $3.1 million, up from a loss of $7.2 million in 2006. Sales in 2007 fell to $808 million from $820 million in 2006, while new orders were $826 million, down slightly from $828 million in the prior year. 2007 sales and new orders were helped by approximately $29 million in favorable currency translation effects. Throughout 2007, Milacron faced severe declines in two of its largest markets in North America: injection molding machinery and mold technologies, which have been impacted by the shakeout in U.S. auto parts suppliers and the decline in new housing starts. During the year, however, restructuring measures helped reduce overall operating expenses by $12 million, while global redesign and sourcing initiatives cut product costs by $6 million. To further soften the impact of the downturn in capital spending in North America, Milacron focused on growing aftermarket sales, which approached $200 million and grew to represent 36% of total machinery sales. The company also accelerated efforts to further penetrate markets outside the U.S., Canada and Western Europe. As a result, sales to these non-traditional markets rose to $187 million in 2007, up 27% over 2006. Continued cost reductions and efficiency improvements helped raise manufacturing margins in 2007 to 20.2%, a significant increase over 18.5% in 2006. Net cash provided by operations for the year was $9.6 million, compared to a use of cash by operations of $19.2 million in 2006. Outlook "The economic outlook for 2008 is mixed," Mr. Brown said. "We expect to see continued growth in most of our markets outside of North America, particularly in China, India and other faster- growing economies. Due to uncertainty in the automotive and housing sectors, however, we are not anticipating any market growth in North America. "We entered the year with a solid backlog for the first quarter. This should enable us to show significant year-over-year improvement in sales and operating results compared to the first quarter of 2007. "We continue to work hard to make 2008 a significantly better year for Milacron," Mr. Brown said. "In addition to improved operating results from restructuring efforts, our cash flow will benefit from the U.S. pension plan freeze we implemented at the end of last year, from lower insurance costs going forward and from the ongoing sale of redundant or non-core assets. We are also in the process of negotiating an asset-based loan in Europe, which will increase our overall liquidity." Annual Meeting Date Set Milacron's board of directors set May 8, 2008 as the date of the annual meeting of shareholders to be held in Cincinnati, Ohio, and March 12, 2008 as the record date for determination of shareholders entitled to notice of and to vote at the annual meeting. About Milacron Headquartered in Cincinnati, Ohio, Milacron Inc. -- http://www.milacron.com/-- supplies plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. First incorporated in 1884, Milacron is also manufactures synthetic water-based industrial fluids used in metalworking applications. * * * As reported in the Troubled Company Reporter on Dec. 26, 2007, Moody's Investors Service lowered the ratings of Milacron Inc. Corporate Family, to Caa2 from Caa1; Probability of Default, to Caa2 from Caa1; and senior secured notes, to Caa2 from Caa1. The lowered ratings reflect the company's weak credit metrics and ongoing cash flow pressures. MORGAN STANLEY: Fitch Holds Junk Rating on $5.3MM Class M Certs. ---------------------------------------------------------------- Fitch Ratings has affirmed Morgan Stanley Capital I Inc.'s commercial pass-through certificates, series 1998-WF2 as: -- Interest only class X at 'AAA'; -- $33.9 million class B at 'AAA'; -- $47.8 million class C at 'AAA'; -- $53.1 million class D at 'AAA'; -- $21.2 million class E at 'AAA'; -- $21.2 million class F at 'AAA'; -- $23.9 million class G at 'A+'; -- $10.6 million class H at 'BBB+'; -- $8 million class J at 'BBB'; -- $8 million class K at 'BB+'; -- $15.9 million class L at 'B-'; -- $5.3 million class M at 'CCC/DR1'. Fitch does not rate the $2.5 million class N. The class A-1 and A-2 certificates have been paid in full. Although credit enhancement has increased due to scheduled amortization and loan payoffs since Fitch's prior ratings action, affirmations are warranted because of adverse selection and an increase in expected losses. As of the February 2008 distribution date, the pool's aggregate balance has been reduced 76.3%, to $251.4 million from $1.06 billion at issuance. Fitch has identified twelve Loans of Concern (11.9%), including one real-estate owned asset in special servicing (0.8%) with losses expected. The loan is secured by a retail property located in Lansing, Michigan and remains 100% vacant since 2002. Recent valuations of the asset indicate losses upon liquidation. The largest Loan of Concern (2.9%) is secured by an industrial warehouse facility in Lodi, California. Occupancy as of September 2007 was 61%. The loan is scheduled to mature in March 2008. The second largest Loan of Concern (1.8%) is secured by an office property in Charleston, West Virginia and is current. Occupancy as of June 2007 was 82%. The loan maturity has been extended until April 2008. The largest remaining loan (16.9%) is an office property located in Washington, D.C. The fully amortizing loan is scheduled to mature in 2023 and had a year-end 2006 debt service coverage ratio of 1.51 times. The second largest remaining loan (10.2%) is secured by a retail property in Los Angeles, California. The loan is scheduled to mature in May 2008 and had a YE 2006 DSCR of 1.48x. Fitch continues to monitor upcoming maturities, with 44.8% of the pool scheduled to mature in 2008, of which 1.5% is defeased. These loans have a weighted average coupon of 7.10%. MORGAN STANLEY: Moody's Pares Ratings on 47 Tranches From 14 Deals ------------------------------------------------------------------ Moody's Investors Service has downgraded 47 tranches from 14 Morgan Stanley transactions. Moody's also placed twelve tranches from these transactions on review for possible downgrade. The collateral backing these transactions consists primarily of fixed- rate and adjustable rate first lien subprime mortgage loans. These rating actions are based on a comparison of the bonds' credit enhancement, including excess spread, relative to the current projected loss numbers. The overwhelming majority of these transactions have pool factors of less than 10% and the average note factor of certificates being downgraded to impairment ratings is approximately 17%. The actions are the result of volatility due to tail end risks even though the overall collateral performance is in the area of initial expectations. The complete rating actions are: Morgan Stanley ABS Capital I Inc. 2002-NC6 -- Cl. M-1 Currently Aa2, on review for possible downgrade, -- Cl. M-2, Downgraded to Ba2, previously A2, -- Cl. B-1, Downgraded to Ca, previously Ba2, -- Cl. B-2, Downgraded to C, previously B2, Morgan Stanley ABS Capital I Inc. Mortgage Loan Asset-Backed Certificates, Series 2001-WF1 -- Cl. M-1 Currently Aa2, on review for possible downgrade, -- Cl. M-2, Downgraded to B2, previously A2, -- Cl. B-1, Downgraded to Ca, previously Baa3, Morgan Stanley ABS Capital I Inc. Trust 2003-HE1 -- Cl. M-3, Downgraded to Baa2, previously A3, -- Cl. B-1, Downgraded to Baa3, previously Baa1, -- Cl. B-2, Downgraded to Ba3, previously Baa2, -- Cl. B-3, Downgraded to Caa3, previously Baa3, Morgan Stanley ABS Capital I Inc. Trust 2003-HE3 -- Cl. B-2, Downgraded to Ba3, previously Baa2, -- Cl. B-3, Downgraded to Caa3, previously Baa3, Morgan Stanley ABS Capital I Inc. Trust 2003-NC6 -- Cl. M-2 Currently Aa3, on review for possible downgrade, -- Cl. M-3, Downgraded to Baa3, previously A3, -- Cl. B-1, Downgraded to Ba3, previously Baa1, -- Cl. B-2, Downgraded to Caa3, previously Ba2, -- Cl. B-3, Downgraded to Ca, previously B3, Morgan Stanley ABS Capital I Inc. Trust 2004-NC2 -- Cl. M-3, Downgraded to Baa2, previously A3, -- Cl. B-1, Downgraded to Ba1, previously Baa1, -- Cl. B-2, Downgraded to B2, previously Baa2, -- Cl. B-3, Downgraded to Ca, previously Ba1, -- Cl. B-4, Downgraded to Ca, previously Ba3, Morgan Stanley ABS Capital I Inc. Trust 2005-WMC1 -- Cl. M-2 Currently Aa2, on review for possible downgrade, -- Cl. M-3 Currently Aa3, on review for possible downgrade, -- Cl. M-4, Downgraded to Baa2, previously A1, -- Cl. M-5, Downgraded to Baa3, previously A2, -- Cl. M-6, Downgraded to Ba3, previously A3, -- Cl. B-1, Downgraded to B2, previously Baa1, -- Cl. B-2, Downgraded to Caa3, previously Baa2, -- Cl. B-3, Downgraded to Ca, previously Baa3, Morgan Stanley Capital I Inc. Trust 2003-NC4 -- Cl. M-1 Currently Aaa, on review for possible downgrade, -- Cl. M-2 Currently Aa2, on review for possible downgrade, -- Cl. M-3, Downgraded to Baa2, previously A1, -- Cl. B-1, Downgraded to Ba3, previously Baa1, -- Cl. B-2, Downgraded to Caa3, previously Ba2, -- Cl. B-3, Downgraded to C, previously B3, Morgan Stanley Dean Witter Capital I Inc. Mortgage Pass-Through Certificates, Series 2001-NC3 -- Cl. M-2, Downgraded to Baa1, previously A2, -- Cl. B-1, Downgraded to Caa2, previously Ba1, Morgan Stanley Dean Witter Capital I Inc. Trust 2002-HE1 -- Cl. M-1 Currently Aa2, on review for possible downgrade, -- Cl. M-2, Downgraded to Ba1, previously A2, -- Cl. B-1, Downgraded to Caa2, previously Baa2, -- Cl. B-2, Downgraded to C, previously Ba1, Morgan Stanley Dean Witter Capital I Inc. Trust 2002-HE2 -- Cl. M-2, Downgraded to Baa2, previously A2, -- Cl. B-1, Downgraded to Caa2, previously B1, -- Cl. B-2, Downgraded to C, previously Caa1, Morgan Stanley Dean Witter Capital I Inc. Trust 2002-NC4 -- Cl. M-1 Currently Aaa, on review for possible downgrade, -- Cl. M-2, Downgraded to Ba1, previously A3, -- Cl. B-1, Downgraded to Caa3, previously B3, -- Cl. B-2, Downgraded to C, previously Ca, Morgan Stanley Dean Witter Capital I Inc. Trust 2003-NC1 -- Cl. M-2 Currently Aa3, on review for possible downgrade, -- Cl. M-3, Downgraded to Baa3, previously A3, -- Cl. B-1, Downgraded to Caa2, previously Ba3, -- Cl. B-2, Downgraded to C, previously B3, Morgan Stanley Dean Witter Capital I Inc. Trust 2003-NC2 -- Cl. M-1 Currently Aaa, on review for possible downgrade, -- Cl. M-2 Currently Aa2, on review for possible downgrade, -- Cl. M-3, Downgraded to Baa3, previously A3, -- Cl. B-1, Downgraded to Caa2, previously Ba1, -- Cl. B-2, Downgraded to Ca, previously Ba3. MSGI SECURITY: Dec. 31 Balance Sheet Upside-Down by $4,245 ---------------------------------------------------------- MSGI Security Solutions Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $7,854,332 in total assets, and $7,858,577 in total liabilities, resulting in a $4,245 total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $6,726,000 in total current assets available to pay $7,258,564 in total current liabilities. MSGI Security Solutions Inc. reported a net loss of $9,628,708 on $-0- revenues for the second quarter ended Dec. 31, 2007, compared with a net loss of $1,268,9156 on total revenue of $77,895 for the same period ended Dec. 31, 2006. The net loss for the December 2007 quarter includes non-cash interest charges of approximately $8.2 million. The company received orders for approximately $4,865,000 in the December quarter and prepaid $2,500,000 to its suppliers for the required inventory; however components did not begin to arrive until Jan. 3, 2008, effectively pushing the December business into January, the third quarter. As a result of these unanticipated delays by its supplier, the company was unable to report any revenue for the December quarter. For the three months ended Dec. 31, 2007, loss from operations was $1,105,479 as compared to loss from operations of $835,289 for the same quarter in 2006. The $270,190 increase in loss of operations was directly related to a one-time transaction related increase in certain professional fees. As previously disclosed, the Callable Secured Convertible 8% Notes originally issued July 2005 to September 2005 and the Callable Secured 6% Notes originally issued on Dec. 13, 2006, were converted into shares of common stock, which were immediately purchased by certain institutional investors on Oct. 3, 2007, from the original note holders. The transaction did not result in any proceeds to MSGI. The institutional investors fully converted all such Notes into approximately 7.7 million shares of the company's stock, which eliminated approximately $3.5 million of debt. Conversion of the debt resulted in significant non-cash charges to the company. The non-cash interest expenses from acceleration of the accretion of the debt discounts as well as certain additional beneficial conversion adjustments upon conversion of the former Notes plus additional debt discounts derived from anti-dilution provisions which were triggered by the conversions resulted in significant non-cash interest charges to the company of approximately $8.9 million for the six months ended Dec. 31, 2007,and $8.2 million for the three months ended Dec. 31, 2007. Cash and equivalents as of Dec. 31, 2007, were $301,440. Accounts receivable totaled $3,916,560. Subsequent to the quarter the company received payment of $3.8 million of the accounts receivable representing full payment from Apro Media related business. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2890 Going Concern Disclaimer As reported in the Troubled Company Reporter on Oct. 18, 2007, Amper, Politziner & Mattia, P.C., in Edison, N.J., expressed substantial doubt about MSGI Security Solutions Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing frim stated that the company has suffered recurring losses and negative cash flows from operations. About MSGI Security MSGI Security Solutions Inc. (Other OTC: MSGI) -- http://www.msgisecurity.com/-- provides of proprietary security products and services to commercial and governmental organizations worldwide. MSGI is developing a combination of innovative emerging businesses that leverage information and technology with a focus on encryption technologies for actionable surveillance and intelligence monitoring. The company is headquartered in New York City where it serves the needs of counter-terrorism, public safety, and law enforcement in the United States, Europe, the Middle East and Asia. NATIONWIDE HEALTH: Fitch Affirms 'BB+' Rating on Preferred Stock ---------------------------------------------------------------- Fitch Ratings has affirmed the existing ratings for Nationwide Health Properties as: -- Issuer Default Rating at 'BBB-'; -- Unsecured bank credit facility at 'BBB-'; -- Senior unsecured notes at 'BBB-'; -- Preferred stock at 'BB+'. The Rating Outlook has been revised to Positive from Stable. The rating action affects approximately $1.3 billion of outstanding securities. The Positive Outlook follows NHP's announcement that it has signed definitive agreements with Pacific Medical Buildings to acquire $915 million of medical office buildings, a 50% interest in a full service property management service provider, and an exclusive right to acquire up to $1 billion of additional medical office assets to be developed by PMB in the future. Fitch notes that the acquisition is expected to grow NHP's existing asset base by approximately 25% over the next three years, increase its exposure to medical office buildings, and decrease its reliance on revenue from its top senior housing and long term care operators. The medical office buildings to be purchased through 2010 are high quality and well-leased at 95.2% as of Dec. 31, 2007. One of Fitch's key credit concerns relating to NHP has been the operator concentration inherent within the portfolio. NHP's top five operators represented 46% of its total cash rents in the fourth quarter of 2007. By the end of 2008, these operators are projected to represent approximately 33% of total cash rents. As of Dec. 31, 2007, 84% of the company's investments were subject to master leases. Additionally, the majority of NHP's leases contain cross-collateralization and cross-default provisions. This minimizes adverse selection risk on weaker facilities in the portfolio. Fitch notes that NHP intends to maintain debt service coverage ratios and leverage within existing ranges after the acquisitions are closed. Interest coverage, as defined by recurring EBITDA to total interest expense was 2.9 times in 2007, compared to 2.7x in 2006, and 3.0x in 2005. Fixed charge coverage, as defined by recurring EBITDA less capitalized expenditures to total interest plus preferred dividends, was 2.6x in 2007, 2.3x in 2006, and 2.5x in 2005. NHP's total debt to undepreciated book capital was 44.9% and total debt plus preferred securities to total undepreciated book capital was 48% at Dec. 31, 2007. In addition to the company's solid credit metrics, an important contributor to NHP's existing ratings is the company's financial flexibility, which is particularly critical given the current volatility in the capital markets. NHP has maintained a sizable unencumbered asset pool, which included 392 assets with a gross book value of approximately $2.9 billion at Dec. 31, 2007. Fitch calculates NHP's unencumbered asset coverage of unsecured debt to be 1.8x, which is appropriate for the rating category. Additionally, NHP has limited debt maturities over the next several years, limiting refinancing risk. Fitch notes that the successful integration of the PMB platform into NHP is critical to the success of the announced transaction, due to NHP's limited expertise with respect to managing medical office buildings. PMB Real Estate Services, the property management firm in which NHP is acquiring a 50% interest, has been managing medical office facilities for 35 years. Fitch would expect to see evidence of a smooth integration between PMB and NHP over the next 12 to 24 months in conjunction with the resolution of the Positive Outlook. Based in Newport Beach, California, Nationwide Health Properties is a self-managed and self-administered real estate investment trust that invests in senior housing facilities, long-term care facilities, and medical office buildings. As of Dec. 31, 2007, the company had investments in 560 health care facilities in 43 states. NEUMANN HOMES: Court Extends Exclusive Plan Filing Periods ---------------------------------------------------------- The United States Bankruptcy Court for the Northern District of Illinois extended Neumann Homes Inc. and its debtor-affiliates' exclusive periods to (i) file a Chapter 11 plan until July 31, 2008 and (ii) solicit acceptances of that plan Oct. 31, 2008. As reported in the Troubled Company Reporter on Feb. 14, 2008, the Debtors' Plan Filing Deadline is set to expire Feb. 29, while their Solicitation Period is due April 29. George N. Panagakis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, said the request is appropriate since the Debtors met the requirements for a valid extension. "The Debtors' bankruptcy cases were relatively large in terms of overall value and scope of their assets, and are extremely complex due to the current economic conditions, the number of senior secured creditors, among others," Mr. Panagakis says. Mr. Panagakis asserted that an extension of the Exclusive Periods is also justified by the Debtor's progress in resolving issues facing its creditors and estates. The Debtors have dealt with most of the homes that were under construction as of the Petition Date as well as most of the secured claims related to the developed properties, Mr. Panagakis states. He says that the transfer of the developed properties is also nearly complete, adding that this would help increase in scope and space the resolution of trade claims to the developed properties. Mr. Panagakis further relates that the Debtors have also sold and liquidated unnecessary assets, reduced the administrative burdens upon their estates by rejecting numerous burdensome contracts and leases, among others. With respect to their remaining real property, the Debtors, in consultation with their special real estate consultant, Hilco Real Estate, LLC, have prepared valuations of and developed strategies to sell or otherwise dispose of the Developed Property that are designed to maximize and create value for the Debtors creditors, Mr. Panagakis says. He added that the Debtors have been in negotiations with each of their prepetition secured lenders and expect to seek Court authority to implement sales and marketing processes on a lender-by-lender basis in the coming days and weeks to execute their strategies and, thus, create a path for the remainder of the Debtors' cases. The Debtors anticipated that they will be in a better position to file a Plan upon the completion of those processes and, thus, require additional time to implement their strategies and formulate a Plan. "The extensions requested will not prejudice the legitimate interests of any party-in-interest in these Chapter 11 Cases," Mr. Panagakis points out, adding that the request is not a negotiation tactic but merely shows that the cases are not yet ripe for the formulation and confirmation of a viable Plan. Headquartered in Warrenville, Illinois, Neumann Homes Inc. -- http://www.neumannhomes.com/-- develops and builds residential real estate throughout the Midwest and West US. The company is active in the Chicago area, southeastern Wisconsin, Colorado, and Michigan. The company have built more than 11,000 homes in some 150 residential communities. The company offer formal business training to employees through classes, seminars, and computer- based training. The company filed for Chapter 11 protection on Nov. 1, 2007 (Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the Debtors to represent them in these cases. The Official Committee of Unsecured Creditors has selected Paul, Hastings, Janofsky & Walker LLP, as its counsel in these bankruptcy proceeding. When the Debtors filed for protection against its creditors, they listed assets and debts of more than $100 million. (Neumann Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000) NEW CENTURY: Moody's Cuts Ratings on Five Tranches From Two Deals ----------------------------------------------------------------- Moody's Investors Service downgraded five tranches from two New Century transactions. Moody's also placed one tranche from these transactions on review for possible downgrade. The collateral backing these transactions consists primarily of fixed-rate and adjustable rate first lien subprime mortgage loans. These rating actions are based on a comparison of the bonds' credit enhancement, including excess spread, relative to the current projected loss numbers. Both these transactions have pool factors of less than 10% and the average note factor of certificates being downgraded to impairment ratings is approximately 20%. The actions are the result of volatility due to tail end risks even though the overall collateral performance is in the area of initial expectations. The complete rating actions are: New Century Home Equity Loan Trust, Series 2003-2 -- Cl. M-2 Currently Aa3, on review for possible downgrade, -- Cl. M-3, Downgraded to Caa1, previously Ba2, -- Cl. M-4, Downgraded to C, previously B2, New Century Home Equity Loan Trust, Series 2003-6 -- Cl. M-4, Downgraded to Baa3, previously Baa1, -- Cl. M-5, Downgraded to Ba3, previously Baa2, -- Cl. M-6, Downgraded to Caa1, previously Baa3, NORTEL NETWORKS: Posts $844 Mil. Net Loss in Fourth Quarter 2007 ---------------------------------------------------------------- Nortel Networks Corp. reported financial and operating results for the fourth quarter and full year of 2007. The Company reported a net loss in the fourth quarter of 2007 of $844 million, compared to net loss of $80 million in the fourth quarter of 2006 and net income of $27 million in the third quarter of 2007. Nortel reported a net loss for 2007 of $957 million, compared to net earnings of $28 million for the year 2006. Revenue was $3.2 billion for the fourth quarter of 2007 compared to $3.3 billion for the fourth quarter of 2006 and $2.7 billion for the third quarter of 2007. In the fourth quarter of 2007, revenue increased by 18% compared to the third quarter of 2007 and excluding the impact of the UMTS Access divestiture, revenue increased by 2% compared with the year-ago quarter. For 2007, revenues were $10.95 billion compared to $11.4 billion for 2006. "Nortel continued to make strong progress in the fourth quarter as we completed a pivotal year in our transformation," Nortel President and CEO Mike Zafirovski said. "In a period of significant change for our industry, we have now reported six consecutive quarters of strong year over year improvement in operating margin, reflected in a 353 basis points improvement in the second half of 2006 and a 369 basis points improvement in 2007. Although our fourth quarter operating margin was below our target, it is the highest in 12 quarters. We also recorded a 386 basis point increase in gross margin to 43.7%, also the highest in 12 quarters. And most importantly, customers around the world are validating our strategic direction by signing up for multi-year engagements that leverage both our technological innovation and world-class know-how. We ended the year with a positive book to bill of 1.01 in the fourth quarter." Gross margin was 43.7% of revenue in the fourth quarter of 2007. This compared to gross margin of 39.8% for the fourth quarter of 2006 and 43.0% for the third quarter of 2007. Compared to the fourth quarter of 2006, gross margins benefited primarily from productivity improvements and mix. Cash balance at the end of the fourth quarter of 2007 was $3.5 billion, up from $3.13 billion at the end of the third quarter of 2007. The increase in cash was primarily driven by cash from operating activities of $417 million and a positive impact from foreign exchange of $16 million, partially offset by cash used in financing activities of $23 million and cash used in investing activities of $6 million. Outlook Nortel provided its financial outlook for the full year 2008, and expects: * Revenue to grow in the low single digits compared to 2007; * Gross Margin to be about our business model target of 43% of revenue; * Operating Margin as a percentage of revenue to increase by about 300 basis points compared to 2007. At Dec. 31, 2007, the company's balance sheet showed total assets of $17.0 billion and total liabilities of $13.4 billion, resulting in a $2.7 billion, stockholders' equity. Equity, on Sept. 30, 2007, was $2.9 billion and, on Dec. 31, 2006, was $1.1 billion. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. * * * Nortel Networks Corp. still carries Moody's Investors Service 'B3' Senior Unsecured Debt rating which was placed on March 22, 2007. OFF PRICE: Chapter 7 Filing and Store Closures Hurt Customers ------------------------------------------------------------- Off Price Furniture, dba American Discount Outlets, filed for chapter 7 liquidation with the U.S. Bankruptcy Court for the Northern District of Texas on Feb. 1, 2008, and closed stores. According to Foster's Daily Democrat in Dover, New Hampshire, parties owed money by Off Price will meet on March 13, 2008. Customers were frustrated because they couldn't replace items they bought or get their money back, Daily Democrat relates. The office of the Attorney General in Manchester, Texas, was flooded with customer complaints, Daily Democrat says. Senior Assistant Attorney General Lauren Noether, Esq., told Daily Democrat that customers should go to the Court and file proofs of claims in order to obtain recovery. However, Ms. Noether warned that Off Price's creditors will be the first to be repaid over consumers, Daily Democrat reports. Ms. Noether added that those who weren't able to get any products must approach their credit card companies to reverse the credit amounts. She said that Off Price wasn't required to notify customers about its closure and bankruptcy, Daily Democrat says. Off Price Furniture, dba American Discount Outlets, is owned by Carroll Dudley. ONEIDA LTD: Selling Business in Australia to McPherson's Limited ---------------------------------------------------------------- Oneida Ltd. has reached an agreement to sell its business in Australia to McPherson's Limited. As part of the sale, Oneida also has agreed to license certain trademarks to McPherson's for its exclusive use in Australia and New Zealand. The financial terms of the transaction were not disclosed. The transaction is expected to close today, Feb. 29, 2008. "Our business in Australia has been very successful and our brands are well known," James E. Joseph, president and chief executive officer of Oneida, said. "However, after a thorough analysis we determined that the best path for continued growth for the business would be to align it with a well established, diversified distributor of consumer products in the country. McPherson's is an outstanding company, and it will be an excellent platform for our brands." Under the terms of the agreement, Oneida will also license its Oneida, Sant'Andrea and Viners trademarks to McPherson's. "We see excellent potential to license our brands to well- established regional companies in order to expand our geographic footprint and exploit new markets, and we expect licensing to be an important source of growth for Oneida in the future," added Mr. Joseph. Upon completion, Gregory L. Woodhall, managing director of Oneida Australia, will be appointed head of Oneida's international foodservice division, a new position. He will be based in Oneida's Hong Kong office and will focus on Asia and the Middle East -- the world's fastest growing foodservice markets. "Greg is a highly capable individual, and we are very pleased that he will be leading our international foodservice business, which holds tremendous opportunities for growth and is a major strategic focus for the company," Mr. Joseph said. About McPherson's Limited Headquartered in Sydney, Australia, McPherson's Limited (ASX:MCP) -- http://www.mcphersons.com.au/-- is a consumer products company The product range includes cutlery, kitchen knives, glassware, kitchenutensils, scales, bakeware, hardware and garden products. The company also offers a range of commercial services in the production and distribution of loose-leaf product, journals, newsletters and technical manuals. About Oneida Ltd. Based in New York City and incorporated in 1880, Oneida Ltd. -- http://www.oneida.com/-- is a design, sourcing and distribution company for stainless steel and silver-plated flatware for both the consumer and foodservice industries. * * * Standard & Poor's placed Oneida Ltd.'s long term foreign and local issuer credit ratings at 'B' in June 2007. The ratings still hold to date with a negative outlook. OVERSEAS SHIPHOLDING: Net Income Drops at $21.2MM For 4th Qtr. -------------------------------------------------------------- Overseas Shipholding Group Inc. reported net income for the three months ended Dec. 31, 2007 of $21.2 million, a decline of $92.2 million, from $113.2 million net income for the same period of the prior year. For the fiscal year ended Dec. 31, 2007, the company's net income is $211.3 million compared to $392.7 million net income for fiscal 2006. The company generated shipping revenues of $276.8 million for the 2007 fourth quarter in comparison to $259.8 million for the 2006 fourth quarter. For the full fiscal year 2007, the company generated revenues of $1,129.3 million compared to $1,047.4 million revenues for 2006. "OSG's expansion and diversification has created a global shipping company that is well-positioned to thrive in any market," Morten Arntzen, president and chief executive officer of OSG, stated. "In 2007, we strengthened our leadership position in each of the markets we trade." "The acquisition of Heidmar Lightering, the IPO of substantially all of the assets in our U.S. Flag unit structured as a master limited partnership, the expansion and diversification of our crude oil and product fleets with Suezmax and LR1 tankers, and our entrance into the U.S. ultra-deepwater shuttle tanker trade, were just a few of the transactions undertaken to increase earnings and cash flows in the future," Mr. Arntzen continued. "In the last 18 months we repurchased nearly 22% of our total outstanding stock, and in 2007, our shareholders enjoyed a 32.2% year-over-year gain in our stock price compared with the Dow Jones Transportation average of less than 1%." "Indications are that the first quarter of 2008 will be a strong start to the year," Mr. Arntzen concluded >From Oct. 1, 2007 through Dec. 31, 2007, OSG repurchased 125,000 shares at an average price per share of $61.62. Since the initial statement of its share repurchase program on June 9, 2006, the company has repurchased 8.6 million shares, constituting 21.7% of total shares outstanding at a total cost of $569.5 million. The company's current $200 million repurchase program has a total of $44.8 million that remains outstanding. On Nov. 15, 2007, OSG completed the initial public offering of OSG America L.P., a master limited partnership, issuing 7.5 million common units, priced at $19.00 per unit. The transaction generated $129.3 million in proceeds to OSG, which the company used to pay down debt in the fourth quarter. As of Dec. 31, 2007, the company's balance sheet reflected total assets of $4.15 billion, total debts of $2.34 billion resulting to a total stockholder's equity of $1.81 billion. About Overseas Shipholding Headquartered in New York, New York, Overseas Shipholding Group, Inc. (NYSE:OSG) -- http://www.osg.com-- is a bulk shipping company engaged in the ocean transportation of crude oil and petroleum products. At Dec. 31, 2006, the company owned or operated a fleet of 103 vessels, of which 80 vessels operated in the international market and 23 operated in the United States flag market. OSG's newbuilding program of owned and chartered-in vessels totaled 34, and extends across each of its operating segments, bringing the company's total operating and newbuild fleet to 137 vessels. OSG's vessel operations are organized into strategic business units and focused on market segments each serve: crude oil, refined petroleum products, United States flag vessels and gas. In April 2007, the company completed the acquisition of the Heidmar lightering business from Heidmar Inc., a subsidiary of Morgan Stanley Capital Group Inc. OVERSEAS SHIPHOLDING: S&P Ratings Unaffected By Net Profit Decline ------------------------------------------------------------------ Overseas Shipholding Group Inc. (OSG; BB/Stable/--), reported a fourth-quarter 2007 net profit of $21 million, well below $113 million in the like period last year. Standard & Poor's Ratings Services said that its ratings on OSG, which were lowered to current levels Jan. 17, 2008, and outlook are not affected. The much-weaker results reflect significantly lower time-charter- equivalent rates for vessels operating in the spot market. OSG has about a 60% revenue contribution from the volatile spot market. OSG, like other carriers of crude oil and refined petroleum products, is susceptible to significant supply and demand fluctuations. The company expects a better TCE rate environment in the first quarter of 2008 and has a substantial portion of first-quarter 2008 revenues already locked in. Liquidity remains good, with about $500 million of unrestricted cash and about $1 billion available under its $1.8 billion revolving line of credit. PACIFIC PINNACLE: Moody's Junks Ratings on Five Classes of Notes ---------------------------------------------------------------- Moody's Investors Service downgraded ratings of seven classes of notes issued by Pacific Pinnacle CDO Ltd, and left on review for possible further downgrade the rating of five of these classes. The notes affected by this rating action are: Class Description: $800,000,000 Class A-1LA Floating Rate Notes Due January 2052 -- Prior Rating: Aaa -- Current Rating: Ba1, on review for possible downgrade Class Description: $74,600,000 Class A-1LB Floating Rate Notes Due January 2052 -- Prior Rating: Aaa -- Current Rating: Caa3, on review for possible downgrade Class Description: $75,400,000 Class A-1LC Floating Rate Notes Due January 2052 -- Prior Rating: Aaa -- Current Rating: Caa3, on review for possible downgrade Class Description: $18,000,000 Class A-2L Floating Rate Notes Due January 2052 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $12,000,000 Class A-3L Floating Rate Deferrable Interest Notes Due January 2052 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: C Class Description: $11,000,000 Class B-1L Floating Rate Deferrable Interest Notes Due January 2052 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: C Class Description: Class X Interest Only Notes Due January 2019 -- Prior Rating: Aaa -- Current Rating: Ba1, on review for possible downgrade The rating downgrade actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence on Jan. 30, 2008, as reported by the Trustee, of an event of default described in Section 5.1(d) of the Indenture dated Dec. 21, 2006. Pacific Pinnacle CDO Ltd is a collateralized debt obligation backed primarily by a portfolio of RMBS securities and CDO securities. Recent ratings downgrades on the underlying portfolio caused ratings-based haircuts to affect the calculation of the event of default trigger. Thus, the ratio of (x) the Par Value Coverage Amount less the Total Par Value Haircut Amount to (y) an amount equal to the Aggregate Outstanding Amount of the Class A-1 Notes is less than 100%, as required in Section 5.1(d) of the Indenture. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by certain Noteholders. Because of this uncertainty, the ratings assigned to the Class A-1LA Notes, Class A-1LB Notes, Class A-1LC Notes, Class A-2L Notes and the Class X Interest Only Notes remain on review for possible further action. PAMPELONNE CDO: Moody's Junks Rating on $50 Mil. Notes From 'Ba1' ----------------------------------------------------------------- Moody's Investors Service downgraded ratings of seven classes of notes issued by Pampelonne CDO I, Ltd., and left on review for possible further rating action ratings of one of these classes of notes. The notes affected by this rating action are: Class Description: Up to $1,062,500,000 Class S Notes -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: B3, on review with future direction uncertain Class Description: $50,000,000 Class A-1 Senior Floating Rate Notes Due 2051 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: C Class Description: $50,000,000 Class A-2 Senior Floating Rate Notes Due 2051 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: C Class Description: $43,750,000 Class B Floating Rate Notes Due 2051 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: C Class Description: $18,750,000 Class C Floating Rate Deferrable Notes Due 2051 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: C Class Description: $11,500,000 Class D Floating Rate Deferrable Notes Due 2051 -- Prior Rating: Ca -- Current Rating: C Class Description: $5,000,000 Class E Floating Rate Deferrable Notes Due 2051 -- Prior Rating: Ca -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence as reported by the Trustee on Nov. 9, 2007, of an event of default caused by a failure of the Class A-1 EOD Ratio to be greater than or equal to the required level pursuant Section 5.1(e) of the Indenture dated October 19, 2006. This event of default is still continuing. Pampelonne CDO I, Ltd. is a hybrid collateralized debt obligation backed primarily by a portfolio of RMBS securities CDO securities and synthetic securities in the form of credit default swaps. Reference obligations for the credit default swaps are RMBS and CDO securities. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. In this regard the Trustee reports that a majority of the Controlling Class has directed the Trustee to declare the principal of and accrued and unpaid interest on the Notes to be immediately due and payable and to terminate the Reinvestment Period. Furthermore, according to the Trustee, a majority of the Controlling Class has directed the Trustee to commence the process of the sale and liquidation of the Collateral in accordance with relevant provisions of the transaction documents. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and outcome of the liquidation. Because of this uncertainty, the ratings assigned to the Class S Notes remain on review for possible further action. PELOTON PARTNERS: Liquidates $2 Billion ABS Fund ------------------------------------------------ Peloton Partners LLP said that it is liquidating its $2 billion ABS Fund citing a drop in the value of highly rated mortgage securities as well as being unable to meet the "margin calls" made by banks, published reports say. Peloton founders Ron Beller and Geoff Grant, former Goldman Sachs Group Inc. partners, told investors that they would be selling off the assets of their billion ABS fund, stating that it was the "best solution" in order to "Stabilize the situation," reports say. Peloton also stopped redemptions from its $1.6 billion Multi- Strategy Fund, which according to reports, has a sizable stake in the ABS Fund. Citing a person familiar, The Wall Street Journal reports that Messrs. Beller and Grant lost about $120 million of personal money invested in Peloton. Headquartered in London, England, Peloton Partners LLP -- http://www.pelotonpartners.com/-- is a hedge fund manager that was recognized as one of the best performers in London's hedge fund community for 2007. The fund employs around 60 people in London and another 10 in Montecito, California. PHARMED GROUP: Wants Exclusive Plan Filing Period Extended ---------------------------------------------------------- Pharmed Group Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of Florida to extend their exclusive periods to: a) file a Chapter 11 plan until April 25, 2008; and b) solicit acceptances of that plan until May 25, 2008. The Debtors tell the Court that they need sufficient time to finalized and file a disclosure statement and proposed Chapter 11 plan. According to the motion, the Debtors and the appointed Official Committee of Unsecured Creditors are in talks regarding the terms of a joint liquidating plan. The Debtors say that they have made good progress towards reorganization and complied with all of the operating guidelines of the United States Trustee. The Debtors state that no creditors in interest will be prejudiced by the extension of their exclusive periods. The Debtors' exclusive period to file their plan expired on Feb. 25, 2008. About Pharmed Group Headquartered in Miami, Florida, Pharmed Group Holdings Inc. -- http://www.pharmed.com/-- and its affiliates sends drugs and medical supplies on Caribbean cruises. They distribute medical, rehabilitative, and surgical supplies throughout the southeastern U.S., as well as Caribbean, and Central and South American countries. They deliver products made by Dynatronics, Welch Allyn, and Smith & Nephew. In addition to their distribution businesses, they make and distribute vitamins, minerals, nutraceuticals, and dietary supplements. The company and four debtor-affiliates filed for chapter 11 protection on Oct. 26, 2007 (Bankr. S.D. Fl. Case Nos. 07-19187 through 07-19191). Paul Steven Singerman, Esq., and Brian Rich, Esq., at Berger Singerman PA, represent the Debtors. Trumbull Group LLC serves as the Debtors' claims and noticing agent. PHARMED GROUP: Taps Jonathan Green as Special Tax Counsel --------------------------------------------------------- Pharmed Group Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of Florida for permission to employ Jonathan H. Green & Associates P.A. as special tax counsel. As the Debtors' tax counsel, Jonathan Green will assist the Debtors in connection with the termination and liquidation of the Debtors' 401(k) profit sharing plan. In a separate Court filing, the Debtors also seek the Court's approval to appoint Neil A. Useden and Thomas H. Gellman of ERISA Pension Systems Incorporated in Miami, Florida, to assist the Debtors in the liquidation of the 401(k) plan. Messrs. Useden and Gellman will take control of the plan assets and calculate excise taxes for 2007 on a prohibited transaction. The Debtor will pay a flat fee of $7,500 to Jonathan Green for this engagement. To the best of the Debtors' knowledge, Jonathan Green does not hold any interests adverse to the Debtors' estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Pharmed Group Headquartered in Miami, Florida, Pharmed Group Holdings Inc. -- http://www.pharmed.com/-- and its affiliates sends drugs and medical supplies on Caribbean cruises. They distribute medical, rehabilitative, and surgical supplies throughout the southeastern U.S., as well as Caribbean, and Central and South American countries. They deliver products made by Dynatronics, Welch Allyn, and Smith & Nephew. In addition to their distribution businesses, they make and distribute vitamins, minerals, nutraceuticals, and dietary supplements. The company and four debtor-affiliates filed for chapter 11 protection on Oct. 26, 2007 (Bankr. S.D. Fl. Case Nos. 07-19187 through 07-19191). Paul Steven Singerman, Esq., and Brian Rich, Esq., at Berger Singerman PA, represent the Debtors. Trumbull Group LLC serves as the Debtors' claims and noticing agent. PINNACLE PEAK: Moody's Junks Rating on $140 Mil. Notes From 'Aaa' ----------------------------------------------------------------- Moody's Investors Service downgraded ratings of five classes of notes issued by Pinnacle Peak CDO I. Ltd and left on review for possible further downgrade the rating of one of these classes. In addition, Moody's has placed its ratings of two classes of Notes issued by the Issuer on review for possible downgrade. The notes affected by this rating action are: Class Description: $750,000,000 Class A1M Floating Rate Notes Due 2047 -- Prior Rating: Aaa, -- Current Rating: Aaa, on review for possible downgrade Class Description: $265,000,000 Class A1Q Floating Rate Notes Due 2047 -- Prior Rating: Aaa, -- Current Rating: Aaa, on review for possible downgrade Class Description: $260,000,000 Class A2 term loan made pursuant to the Class A2 Loan Agreement -- Prior Rating: Aaa (WD) -- Current Rating: A3, on review for possible downgrade Class Description: $140,000,000 Class A3 Floating Rate Notes Due 2047 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ca Class Description: $35,000,000 Class A4 Floating Rate Notes Due 2047 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: C Class Description: $15,000,000 Class B Deferrable Floating Rate Notes Due 2047 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: C Class Description: $15,000,000 Class C Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence on Jan. 10, 2008, as reported by the Trustee, of an event of default described in Section 5.1(d) of the Indenture dated July 3, 2007. Moody's has also received notification from the Trustee on Feb. 1, 2008 that the Controlling Party has directed the Acceleration of the Maturity consistent with Section 5.2(a) of the Indenture. Pinnacle Peak CDO I, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS Securities and ABS CDO Securities for which the primary exposure is to RMBS Securities. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, certain holders of Notes may be entitled to direct the Trustee to commence the process of sale and liquidation of the collateral. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and outcome of a liquidation. Because of this uncertainty, the ratings assigned to the Class A1 and Class A2 notes remain on review for possible further action. PLASTECH ENGINEERED: Court Extends DIP Financing Until March 3 -------------------------------------------------------------- The Honorable Phillip Shefferly of the U.S. Bankruptcy Court for the Eastern District of Michigan extended, until March 3, 2008, Plastech Engineered Products Inc. and its debtor-affiliates' postpetition loan provided by Bank of America, N.A., as administrative agent, and a syndicate of lenders. The Court authorized the Debtors to continue obtaining financing from the DIP Lenders of up to an aggregate principal amount outstanding at any time not to exceed $37,150,000 plus interest, fees and other charges payable. The Court also allowed the Debtors to continue using their lenders' cash collateral. The DIP Lenders are the same group who provided the Debtors with a $200,000,000 loan under a Revolving Credit Facility entered into on Feb. 12, 2007. The DIP Lenders' willingness to make additional credit extensions is conditioned upon, among other things: (i) the Debtors obtaining the Court's order authorizing the continued financing pursuant to the Amended DIP Credit Agreement and satisfying certain conditions, including, without limitation, obtaining and delivering to DIP Agent: -- an amended and restated guaranty from Plastech's major customers General Motors Corporation, Ford Motor Company, and Johnson Controls, Inc., and -- additional cash collateral of $6,900,000 -- bringing the total cash collateral delivered under the guaranty, as amended and restated, to $9,900,000, and (ii) the DIP Agent obtaining agreements duly executed and delivered by the Major Customers and Chrysler limiting set-offs on postpetition accounts to "ordinary course issues" capped at a percentage not to exceed 10% of invoice in the case of Major Customers and 5% of invoice in the case of Chrysler. No proceeds of DIP Loans and no Cash Collateral will be used for the Debtors' production for any customer -- other than their major customers General Motors Corporation, Ford Motor Company, and Johnson Controls, Inc. -- whose purchases represent more than 5% of the Debtors' total sales unless that customer provides financial accommodations to the Debtors of substantially the same nature and scope as those being provided by the Major Customers. The DIP Loans and Cash Collateral may be used by the Debtors to the extent necessary for the Debtors to discharge existing postpetition contractual obligations to Chrysler through February 15, 2008. Except with respect to production at the Debtors' plants located in Shreveport, Louisiana; Winnsboro, North Carolina; Wauseon, Ohio; Cleveland, Ohio; and Leamington, Ontario, each Major Customer will forbear from resourcing the production of its component parts currently on contract with any of the Debtors through the earlier of: (a) the occurrence of a Resourcing Default, i.e. (i) the Debtors are unable to meet timely their obligations to the applicable Major Customer without additional or further extraordinary customer accommodations or (ii) DIP Credit Parties declare a default under the Amended DIP Credit Agreement and cease making DIP Loans to Debtors, and (b) March 3, 2008. All amounts due under the DIP Facility will be immediately due and payable if the Court does not enter an order authorizing the Debtors to obtain permanent postpetition superpriority indebtedness under the DIP Facility by March 10, 2008. The Court is scheduled to convene a hearing to consider final approval of the DIP Facility on March 3, 2008, at 2:00 p.m., Eastern Time. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. PLASTECH ENGINEERED: Agrees to Supply Chrysler Until March 3 ------------------------------------------------------------ Plastech Engineered Products Inc. and its debtor-affiliates have agreed to continue its supply of parts to Chrysler LLC until March 3, 2008, Crain's Detroit Business reports. As reported in the Troubled Company Reporter on Feb. 22, 2008, the Debtors and Chrysler previously agreed to an extension of their interim production agreement, under which Plastech will continue to manufacture and deliver component parts to Chrysler until Feb. 27, 2008. Pursuant to the initial interim agreement between the parties: -- Chrysler was obligated to make certain payments to Plastech in conjunction with the continued production of component parts; and -- The Debtors are to allow BBK, as agents for Chrysler, to have supervised access to Plastech facilities for the purpose of inspecting and conducting an inventory of all tooling used for Chrysler production. The U.S. Bankruptcy Court for the Eastern District of Michigan denied Chrysler LLC's request to pull out the tooling equipment from Plastech's plants a few weeks ago. About Chrysler LLC Based in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. S&P said the outlook is negative. About Plastech Engineered Based in Dearborn, Michigan, Plastech Engineered Products, Inc. -- http://www.plastecheng.com/-- is full-service automotive supplier of interior, exterior and underhood components. It designs and manufactures blow-molded and injection-molded plastic products primarily for the automotive industry. Plastech's products include automotive interior trim, underhood components, bumper and other exterior components, and cockpit modules. Plastech's major customers are General Motors, Ford Motor Company, and Toyota, as well as Johnson Controls, Inc. Plastech is a privately held company and is the largest family- owned company in the state of Michigan. The company is certified as a Minority Business Enterprise by the state of Michigan. Plastech maintains more than 35 manufacturing facilities in the midwestern and southern United States. The company's products are sold through an in-house sales force. The company and eight of its affiliates filed for Chapter 11 protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C., represent the Debtors in their restructuring efforts. The Debtors chose Jones Day as their special corporate and litigation counsel. Lazard Freres & Co. LLC serves as the Debtors' investment bankers, while Conway, MacKenzie & Dunleavy provide financial advisory services. The Debtors also employed Donlin, Recano & Company as their claims and noticing agent. An Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. As of Dec. 31, 2006, the company's books and records reflected assets totaling $729,000,000 and total liabilities of $695,000,000. POPE & TALBOT: Has Interim OK to Obtain DIP Loan; Monitor Comments ------------------------------------------------------------------ The Honorable Christopher Sontchi of the U.S. Bankruptcy Court for the District of Delaware approved, on an interim basis, the terms and conditions and provisions of the Third Amendment to Pope & Talbot Inc. and its debtor-affiliates' DIP Credit and Security Agreement with Ableco Finance LLC, Wells Fargo Financial Corporation Canada, and certain other lenders. The Court also amended its Final DIP Order, to the extent necessary to incorporate the terms and conditions and provisions of the Third Amendment, including replacing, in paragraph 8, the words "January 31, 2008" with the words "the Final Maturity Date". Except as otherwise amended and modified by the Amended DIP Interim Order and the Third Amendment, the terms and conditions and provisions of the DIP Final Order will continue in all respects, in full force and effect. The Court will convene a final hearing on March 11, 2008, at 2:00 p.m., to consider the Debtors' DIP Extension Motion. Pursuant to Del. Bankr. LR 9006-2, the Debtors' request to extend their DIP financing is automatically extended until the conclusion of that hearing. Monitor's Comments PricewaterhouseCoopers Inc., as monitor of the proceedings commenced by Pope & Talbot Ltd. and its subsidiaries under the Companies' Creditors Arrangement Act, stated that the Applicants expect to remain in compliance with the terms and maximum commitment under revolver portion of the DIP Credit Agreement. Thus, neither of the Amendments provides for an increase in the amount available to the Company under the DIP Revolving Loan, the Monitor noted. However, the Monitor pointed out that the Amendment does not address the anticipated increase under the DIP Term Loan of $1,200,000, as provided in the Applicants' Revised Forecast. "This amount was provided in the Revised Forecast to cover additional Lender’s interest and professional fees associated with the extension," the Monitor explained. There are no additional funds available to the Applicants, the Monitor told the Canadian Court. According to the Monitor, the Third Amendment provides for Administrative Expense Priorities for trade and utility expenses to a maximum of $2,000,000. The Applicants typically maintain a trade accounts payable balance of between $2,000,000 and $8,000,000, and accordingly, the $2,000,000 caps will not likely provide for the payment of all post-filing creditors, the Monitor maintained. The post-filing creditors would then need to get satisfied from a surplus after repayment of the DIP loan, the Monitor stated. Although the Applicants are currently anticipating that there will be a surplus available to unsecured creditors, should current estimates change, it is possible that there will not be funds available to pay post-filing trade creditors. While the Monitor noted that it has not been involved in the Applicants' efforts to extend financing, nor was it involved in the negotiation of the Amendments, the Monitor understands that the Extended DIP Agreement represents the only additional financing that is currently available to the Applicants. The Monitor reported that as at Feb. 15, 2008, the total amount outstanding under the operating portion of the DIP Credit Agreement was $65,900,000. This includes outstanding revolver borrowings of $53,900,000 and DIP Term Borrowings of $12,000,000. About Pope & Talbot Based in Portland, Oregon, Pope & Talbot Inc. (Other OTC: PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products business. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the company's products include the US, Europe, Canada, South America and the Pacific Rim. The company and its U.S. and Canadian subsidiaries applied for protection under the Companies' Creditors Arrangement Act of Canada on Oct. 28, 2007. The Debtors' CCAA Stay expired on Jan. 16, 2008. The company and fourteen of its debtor-affiliates filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl & Jones L.L.P. represents the Debtors as bankruptcy co-counsel. The Official Committee of Unsecured Creditors selected Fried, Frank, Harris, Shriver & Jacobson LLP as its bankruptcy counsel. When the Debtors filed for bankruptcy, they listed total assets of $681,960,000 and total debts of $601,090,000. The Debtors' exclusive period to file a plan expires on March 18, 2008. Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21, 2007, filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants Pope & Talbot Europe's application, it is expected it will be liquidated through the bankruptcy proceeding. (Pope & Talbot Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). POPE & TALBOT: Court Fixes Claims Bar Date at April 3 ----------------------------------------------------- The Honorable Christopher Sontchi of the U.S. Bankruptcy Court for the District of Delaware approved Pope & Talbot Inc. and its debtor-affiliates' proposed claims protocol in all respects, and established: (i) April 3, 2008, as the deadline for creditors to assert claims arising on or before the bankruptcy filing against the Debtors to file original, written proofs of claim; and (ii) May 19, 2008, as the last day by which governmental units must file claims against any of the Debtors. Proofs of Claim should state whether they are filed in United States dollars or Canadian dollars, Judge Sontchi stated. If filed in Canadian dollars, the amount will be converted to United States dollars at the rate of CA$1 is to US$1.0481. All persons and entities that intend to rely on the Debtors' Schedules of Assets and Liabilities will have the responsibility for determining that their claims are accurately listed on the Schedules. Each claim holder who fails to timely file a claim will be forever barred from: * asserting the claim, whether directly or indirectly, against the Debtors; and * voting upon, or receiving distributions under, any plan of reorganization or liquidation in the Debtors' Chapter 11 proceedings. In the event the Debtors amend or supplement their Schedules, they will give notice of the amendment or supplement to the affected claim holders, which will afford the claim holders a 30-day extension from the date on which the notice is given to file a claim, if necessary, or be forever barred from doing so. The Court also approved the Debtors' proposed notice of the Bar Dates. Applicants Seek Approval of Claims Protocol The Applicants sought the British Columbia Supreme Court's approval of a claims process to solicit and quantify claims against them, and their directors and officers. The Applicants also asked the Canadian Court to establish four bar dates: (a) a claims bar date for the filing of claims on April 3, 2008; (b) a government claims bar date on May 19, 2008; (c) a directors and officers claims bar date, to be set 40 days after the closing of the last of four Sale transactions approved by the Court; and (d) a subsequent claims bar date for the filing of subsequent claims, arising as a result of repudiation or termination by the Applicants of any contract, lease or other agreement after the Canadian Filing Date, which will be the later of (1) the Claims Bar Date, or (2) 4:00 p.m. (PST) on the day which is 30 days after the date of the applicable repudiation or termination. Kathy L. Mah, Esq., at Stikeman Elliott LLP, in Toronto, Canada, told the Canadian Court that pursuant to the terms of the Initial Order, the Applicants are required to indemnify their directors and officers from all claims, costs, charges and expenses relating to the failure of the Applicants to make payments relating to employee wages, employee and pension benefits, vacation pay and bonuses, employee related deductions, and applicable sales and other taxes. To support the indemnity, the directors and officers were granted a Court-ordered charge over all of the Applicants' property of up to $13,000,000, which enjoys a super-priority status. To be able to distribute the proceeds of the sale of the Applicants' assets, it is necessary for them to conduct a claims process to determine what claims, if any, may exist against the directors and officers, which may be covered by the charge granted in favor of the directors and officers, Ms. Mah explained. The Applicants also sought the Canadian Court's approval of the same Claims Protocol approved by the Bankruptcy Court. PricewaterhouseCoopers Inc., as monitor of the proceedings commenced by Pope & Talbot Ltd. and its subsidiaries under the Companies' Creditors Arrangement Act, notes that the Debtors' Claims Protocol and the Applicants' Claims Procedure synchronize the Canadian and the U.S claims processes, while recognizing subtle differences in the laws and customary practices in each country. About Pope & Talbot Based in Portland, Oregon, Pope & Talbot Inc. (Other OTC: PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products business. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the company's products include the US, Europe, Canada, South America and the Pacific Rim. The company and its U.S. and Canadian subsidiaries applied for protection under the Companies' Creditors Arrangement Act of Canada on Oct. 28, 2007. The Debtors' CCAA Stay expired on Jan. 16, 2008. The company and fourteen of its debtor-affiliates filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl & Jones L.L.P. represents the Debtors as bankruptcy co-counsel. The Official Committee of Unsecured Creditors selected Fried, Frank, Harris, Shriver & Jacobson LLP as its bankruptcy counsel. When the Debtors filed for bankruptcy, they listed total assets of $681,960,000 and total debts of $601,090,000. The Debtors' exclusive period to file a plan expires on March 18, 2008. Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21, 2007, filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants Pope & Talbot Europe's application, it is expected it will be liquidated through the bankruptcy proceeding. (Pope & Talbot Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). PRB ENERGY: Defaults Obligations Under Senior Secured Debentures ---------------------------------------------------------------- PRB Energy Inc. is in default with respect to certain of its obligations under the Debentures and certain other related transaction documents, according to the company regulatory filing with the Securities and Exchange Commission. The company received written notice from DKR Soundshore Oasis Holding Fund Ltd. and West Coast Opportunity Fund LLC, the holders of the company's $15 million Senior Secured Debentures due Aug. 31, 2008. Specifically, the notice claims that the company defaulted by failing to honor its obligations under a letter agreement dated June 15, 2007 with the Senior Lenders relating to the proceeds from the company's settlement agreement with Rocky Mountain Gas and by failing to take all actions necessary to maintain title to certain of the collateral securing the company's obligations under the Debentures. The notice also notifies the company that as a remedy for such alleged defaults, an automatic redemption by the Company of the Debentures has occurred. The Senior Lenders assert that, upon default, the Debentures shall be redeemed by the Company at a price equal to 110% of the outstanding principal amount and accrued and unpaid interest and accrued and unpaid late charges and interest. The company disagrees with this assertion. The company does not believe that a default under the Debentures has occurred and is working with the Senior Lenders in an effort to settle the dispute of whether any default has occurred and whether a redemption has occurred. In addition, the company is exploring all of the strategic alternatives available to it under applicable law, including filing for bankruptcy protection, as a result of this notice from the Senior Lenders and given its current liquidity position. About PRB Energy Headquartered in Denver, PRB Energy, Inc. operates as an independent energy company. It engages in the acquisition, exploitation, development, and production of natural gas and oil. * * * As reported in the Troubled Company Reporter on Jan. 9, 2008, After reporting a positive working capital of $13.71 million at Dec. 31, 2006, PRB Energy, Inc. recorded a $35.39 million working capital deficit at Sept. 30, 2007. QUIGLEY COMPANY: Posts $7.2 Million Net Loss in Year Ended Dec. 31 ------------------------------------------------------------------ Quigley Company Inc. reported a net loss of $7,187,094 on total interest and services income of $1,411,483 for the year ended Dec. 31, 2007, compared with a net loss of $7,074,677 on total interest and services income of $1,539,545 for the year ended Dec. 31, 2006. At Dec. 31, 2007, the company's balance sheet showed $106,596,996 in total assets and $127,005,859 in total liabilities, resulting in a $20,408,863 total stockholders' deficit. This compares with total assets of $108,621,223, total liabilities of $121,842,992, and total stockholders' deficit of $13,221,769 as of Dec. 31, 2006. About Quigley Co. Quigley Company Inc., a division of Pfizer Inc., sold asbestos- containing insulation products until the early 1970s. Quigley filed for protection under chapter 11 of the United States Bankruptcy Code on Sept. 3, 2004 (Case No. 04-15739-SMB) in order to implement a proposed global resolution of all pending and future asbestos-related personal injury liabilities. Asbestos victims and Pfizer have been negotiating a settlement deal which calls for Pfizer to pay $430 million to 80% of existing plaintiffs. It will also place an additional $535 million into an asbestos settlement trust that will compensate future plaintiffs as well as the remaining 20% of current plaintiffs with claims against Pfizer and Quigley. The compensation deal is worth $965 million all up. Of that $535 million, $405 million is in a 40-year note from Pfizer, while $100 million will come from insurance policies. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. Reorganization Plan Update In August 2006, the Bankruptcy Court rejected the Debtor's Third Amended Plan of Reorganization after the Debtor failed to obtain acceptance of its Third Amended Plan of Reorganization from 75% of the holders of asbestos-related personal injury claims who voted to accept or reject the Plan. That 75% acceptance rate is required to confirm a chapter 11 plan centered around a trust formed under Sec. 524(g) of the Bankruptcy Code to future resolution of asbestos-related claims. The Debtor subsequently sought the Court's reconsideration on its Aug. 9, 2006 order, arguing that the claims voted by holders of asbestos personal injury claims who had entered into prepetition settlements with Pfizer should be reduced by 90% for voting purposes. The Debtor further argued that the Court may not have considered certain direct authority -- including the decisions of at least two Courts of Appeals and the decisions of many other courts following them -- that is in conflict with the Court's ruling. As reported in the Troubled Company Reporter on May 11, 2007, the company's Ad-hoc Committee of Tort Victims asked the Court to appoint a Chapter 11 trustee in the Debtor's bankruptcy proceeding. SCHUYLER GUEST: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Schuyler Guest Home, Inc. dba Cambridge Guest Home dba Schuyler Guest Home 167 Hayes Road Schuylerville, NY 12871 Bankruptcy Case No.: 08-10501 Type of Business: The Debtor provides health care services. Chapter 11 Petition Date: February 26, 2008 Court: Northern District of New York (Albany) Judge: Robert E. Littlefield Jr. Debtor's Counsel: Richard H. Weiskopf, Esq. (rweiskopf@oalaw.com) O'Connell & Aronowitz 54 State Street, 9th Floor Albany, NY 12207 Tel: (518) 462-5601 Fax: (518) 462-2670 http://www.oalaw.com/ Total Assets: $1,881,100 Total Debts: $2,107,880 Consolidated Debtor's List of 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ GA Bove $12,895 76 Railroad Street Mechanicville, NY 12118 Nolan & Heller $12,685 39 North Pearl Street Albany, NY 12207 National Grid $12,246 300 Erie Boulevard West Syracuse, NY 13202 Kone $5,306 Barrier Free Elevators $5,010 Jenkins Beecher & Bethel $5,000 Lapans $2,512 Napaul Publishers $1,942 Conover Electric $1,488 Just Service $1,434 MVP Healthcare $1,295 Eagle, The $1,121 International Built-in Systems Inc. $759 NAPA $741 Northeast Fire Protection $706 Bain, Catherine $705 Aubuchon Hardware $618 SCOTTISH RE: A.M. Best Chips Issuer Credit Rating to bb from bbb- ----------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to B(Fair) from B+(Good) and the issuer credit ratings to "bb" from "bbb-" of the primary operating insurance subsidiaries of Scottish Re Group Limited. A.M. Best also has downgraded the ICR to "b-"from "bb-" and the various debt ratings of Scottish Re. The outlook for all ratings is negative. These rating actions are based on A.M. Best's opinion that continuing market deterioration in the subprime mortgage loan market will result in additional delinquencies and losses and that the uncertainty surrounding the ultimate impact of investment write-downs on Scottish Re, its subsidiaries and special purpose vehicles such as Ballantyne Re are not appropriate for "Secure" FSRs. The rating downgrades also reflect A.M. Best's concerns with the ongoing pricing, volatility, valuation and default risk in the mortgage-backed securities market, which could result in substantial negative impact on the company's consolidated balance sheet. A.M. Best notes that Scottish Re remains heavily dependent upon off-shore securitizations for its XXX reserves. While a majority of Scottish Re's XXX reinsurance structures are bankruptcy remote, an additional rating concern is the deterioration in the market value of the underlying collateral, which reduces the amount available to fund future reserve increases. Large write-downs on subprime loans held in the SPV's investment portfolio could potentially deplete the capital held within those structures. If any deficiency were to develop, Scottish Re's operating subsidiaries may be required to pledge additional assets to secure reserve credit outside of the securitization structure. Given the increased risk commonly associated with lower rated companies, A.M. Best has widened the notching for its debt ratings and downgraded the senior debt. The FSR has been downgraded to B(Fair) from B+(Good) and the ICRs to "bb" from "bbb-" for these subsidiaries of Scottish Re Group Limited: -- Scottish Annuity & Life Insurance Company (Cayman) Ltd. -- Scottish Re (U.S.), Inc. -- Scottish Re Life Corporation -- Scottish Re Limited -- Orkney Re, Inc. The ICR has been downgraded to "b-" from "bb-" for Scottish Re Group Limited. These debt ratings have been downgraded: Scottish Re Group Limited -- -- to "ccc" from "b" on $125 million non-cumulative preferred shares Stingray Pass-thru Trust -- -- to "bb" from "bbb-"on $325 million 5.902% senior secured pass-thru certificates, due 2012 These indicative ratings for debt securities have been downgraded: Scottish Re Group Limited -- -- to "b-" from "bb-"on senior unsecured debt -- to "ccc+" from "b+" on subordinated debt -- to "ccc" from "b" on preferred stock -- Scottish Holdings Statutory Trust II and III -- -- to "ccc+" from "b+" on preferred securities SEVERNA PARK: Case Summary & 17 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Severna Park Photo, Inc. 551-C Baltimore-Annapolis Boulevard Severna Park, MD 21146 Bankruptcy Case No.: 08-12613 Type of Business: The Debtor offers printing services. See: http://www.severnaparkphoto.com/ Chapter 11 Petition Date: February 26, 2008 Court: District of Maryland (Baltimore) Judge: James F. Schneider Debtor's Counsel: Gary R. Greenblatt, Esq. (grgreen@mehl-green.com) Mehlman, Greenblatt & Hare, LLC 723 South Charles Street, Suite LL3 Baltimore, MD 21230 Tel: (410) 547-0300 Fax: (410)547-7474 http://www.mehl-green.com/ Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 million to $10 million Consolidated Debtor's List of 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wayne Gaver $400,000 15 Crestview Drive Milton, PA 17847 Thomas Alban $400,000 441 Rivendell Lane Severna Park, MD 21146 State of Maryland 2006 sales tax $95,154 Sales and Use Tax Division 301 W. Preston Street Room 409 Baltimore, MD 21201 Nikon, Inc. $45,834 Internal Revenue Service withholding taxes $33,521 Bogen Photo Group $23,024 Fuji Photo Film USA, Inc. $13,107 Eastman Kodak Co. $10,716 Bank of America $9,596 HBW Group $8,540 Capital-Gazette Newspaper $6,192 Timothy M. Hickey wages $5,873 Care First Blue Cross Blue $4,977 Shield of MD Catherine Ann Hickey wages $4,594 Marcy A.Kelly, CPA, PA $3,100 Baltimore Gas & Electric $3,055 Argraph Corporation $2,791 SHARPER IMAGE: Asks Court to Extend Schedules Filing Deadline to ----------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware granted a request by Sharper Image Corp. to extend a deadline for the Debtor to submit Schedules for an additional 15 days, or until April 4, 2008. Judge Kevin Gross will consider the Debtor's request for a waiver of the requirements to file the list of equity security holders on March 7, 2008, at 1:00 p.m. Under Section 521 of the Bankruptcy Code and Rule 1007 of the Federal Rules of Bankruptcy Procedure, a debtor is required to file a schedule of assets and liabilities; schedule of current income and expenditures; schedule of executory contract and unexpired leases; and statement of financial affairs within 15 days after it filed for bankruptcy. Rule 1007-1(b) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware provides that a debtor with over 200 creditors is given 30 days to file its schedules. Sharper Image asked the Court to extend the 30-day period to 60 days, without prejudice to the Debtor's ability to request additional time should it become necessary. Proposed counsel for the Debtor, Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, stated that the Debtor needs until May 19, 2008, to submit its Schedules. Mr. Kortanek asserted that the 60-day extension is justified on the grounds that: -- resources are strained; -- in view of the amount of work entailed in completing th Schedules and the competing demands on the Debtor's employees to assist in efforts to stabilize business operations during the initial postpetition period, the Debtor likely will not be able to properly and accurately complete the Schedules within the 30-day time period; -- the task of completing the schedules takes a significant amount of time and effort on the employees; and -- there is a large amount of information to be compiled and assembled. The Debtor also asked the Court to waive the requirement that it file a list of equity security holders within 15 days of the Petition Date. As of the Petition Date, the Debtor has approximately 15,172,523 shares of common stock outstanding. Mr. Kortanek noted that preparing a list of the equity security holders and sending of notice to all holders of the 15,172,523 shares is expensive and time consuming. Moreover, the equity security holders change on a daily basis. If it becomes necessary for the equity security holders to file proofs of interest, they will be provided with notice of the bar date and then will have an opportunity to assert their interests -- and therefore, will not be prejudiced, Mr. Kortanek says. SHARPER IMAGE: Court Grants Request to Pay Vendor Obligations ------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware granted a request by Sharper Image Corp. to pay its Vendor Obligations in the ordinary course of business The Debtor relies on providers of goods including, but not limited to, manufacturers and suppliers, as well as packagers, transporters, and product servicers, according to the Debtor's proposed counsel, Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware. Shipment and servicing of the Debtor's products from Vendors to the Debtor's warehouse and distribution facilities in California and Arkansas, as well as shipment of the Debtor's products to its stores, and retail and wholesale customers is typically effectuated through the services of common carriers, customs brokers, freight forwarders and third parties that service and repair certain of the Debtor's goods, Mr. Kortanek noted. As of the Debtors' bankruptcy petition, and in the ordinary course of business, the Debtor had approximately $113,000,000 of purchase orders outstanding with various manufacturers and suppliers, as well as packagers, transporters and product servicers for goods ordered prior to the Petition Date, and delivered postpetition. Mr. Kortanek explained that as a result of the Debtor's Chapter 11 case, Vendors may be concerned that the goods and services provided to the Debtor prior to the Petition Date, but delivered after the Petition Date, will make them general unsecured creditors of the Debtor's estate. There is the possibility, Mr. Kortanek said, that the Vendors may refuse to ship or transport goods or perform services with respect to the Outstanding Orders, unless the Debtor (i) issues substitute postpetition purchase orders, (ii) obtains a Court order granting all undisputed obligations of the Debtor arising from its postpetition receipt and acceptance goods and services subject to Outstanding Orders administrative expense priority status, (iii) obtains the Court's authority to satisfy the Undisputed Obligations, in the ordinary course of business. Custom Duties and Other Fees Mr. Kortanek related that the Debtor imports approximately $75,000,000 to $175,000,000 of goods per quarter. Furthermore, the Debtor engages V. Alexander & Co., a Custom Broker, and Panalpina Group, an import Freight Forwarder, to take all actions necessary, including making payment, to obtain the release of imported surcharged goods for delivery to the Debtor. As of the Petition Date, the Debtor estimates that it owes Alexander & Co. approximately $2,000, while Panalpina is owed roughly $250,000. Mr. Kortanek pointed out that prompt payment to these entities are vital to the Debtor's operations. The Debtor estimates that, as of the Petition Date, approximately $2,700,000 of imported goods have been paid for, and are either awaiting transit or are in transit to the U.S., all of which must be processed by Alexander & Co. or Panalpina. Prompt payment of the Customs Duties and other fees promotes the uninterrupted flow of retail products, which are essential to the Debtor's business, Mr. Kortanek maintained. Common Carriers and Product Servicers The Debtor's catalog and Internet sales are dependent on common carriers to ensure delivery of its customer orders, Mr. Kortanek told Judge Gross. As of the Petition Date, the Debtor owes approximately $850,000 to Common Carriers that are in possession of around $2,200,000 of the Debtor's goods. Furthermore, the Debtor also owes roughly $415,000 to Product Servicers who are in possession of in excess of $1,350,000 worth of the Debtor's goods. To avoid disruptions to the continuous and timely flow of products from the Vendors to the Debtor, which could result in insufficient goods with which to provide customers with the products they expect, the Court, at the Debtor's behest: * granted the Vendors administrative expense priority status for undisputed obligation arising from the postpetition delivery of goods and services ordered in the prepetition period; * authorized the Debtor to pay its Vendor Obligations in the ordinary course of business; * authorized the Debtor to pay all undisputed prepetition customs duties, broker's fees, freight forward charges, ocean freight charges, common carrier charges and product servicer charges, for an amount not exceeding $1,500,000, without further Court order; and * authorized the Debtor's banks to receive, process, honor and pay checks related to the undisputed prepetition obligations. Furthermore, upon the Debtor's payment of any undisputed prepetition obligation, any property held by any Vendor as security for the payment will be immediately released and delivered by the Vendor to its destination as directed by the Debtor. SHILOH'S INDUSTRIES: Moody's Holds Ba3 Rating With Stable Outlook ----------------------------------------------------------------- Moody's Investors Service affirmed Shiloh's Industries, Inc.'s existing ratings, including its Ba3 Corporate Family Rating. The ratings outlook remains stable. Shiloh's Ba3 Corporate Family Rating continues to be constrained by its relatively small revenue size within the highly fragmented auto supplier industry, continued weakness within the auto industry, high concentration with the Big Three U.S. automakers, adequate liquidity, and lack of material geographic diversification. With the recent announcement of the $16 million special dividend, Moody's notes that the company's financial policy has become more aggressive with two special dividend payments in as many years. Despite this and the moderate increase in financial leverage resulting from the recent $16 million special dividend announcement, the Ba3 rating was affirmed. Positive factors incorporated in the Corporate Family Rating include consideration of the company's sustained leading position within the engineered welded blanks space, its history of debt repayment and stable free cash flow. Although the special dividend increases the company's leverage position, Moody's expects that Shiloh's operating performance should provide sufficient ability to reduce debt in the medium term. Sidney Matti, Analyst, stated that, "Despite the expectation for continued weakness within the automotive sector, Shiloh has demonstrated its willingness and ability to repay debt resulting in Moody's anticipation of improving credit metrics over the intermediate term." The stable outlook reflects Moody's expectation for Shiloh's continued deleveraging and stable cash flow generation over the intermediate term in the face of a sustained decline in the auto industry. Tightening of the company's liquidity profile or the absence of meaningful and sustained reduction in financial leverage could result in negative pressure on the outlook or ratings. Additionally, negative pressure could result from a more pronounced and steeper than expected decline in the auto industry. These ratings were affirmed: -- Ba3 Corporate Family Rating; -- B1 Probability of Default Rating; -- Ba2 (to LGD2/22% from LGD2/24%) rating on the $125 million Senior Secured Revolver; and -- Ba2 (to LGD2/22% from LGD2/24%) rating on the $50 million Senior Secured Term Loan. Headquartered in Cleveland, Ohio, Shiloh Industries, Inc. is a manufacturer of first operation blanks, engineered welded blanks, complex stampings and modular assemblies for the automotive, heavy truck and other industrial markets. For the twelve months ended Jan. 31, 2008, the company reported approximately $578 million in revenues. SIRVA INC: Obtains Additional $10 Million DIP Loan; Panel Objects ----------------------------------------------------------------- The Honorable James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York gave interim permission to SIRVA Inc. and its debtor-affiliates to obtain $10,000,000 on top of the $100,000,000 that was authorized in the Court's interim order dated Feb. 5, 2008. According to Marc Kieselstein, P.C., at Kirkland and Ellis LLP in Chicago, Illinois, a creditors committee was formed on Feb. 20, 2008. To give the Official Committee of Unsecured Creditors sufficient time to evaluate the DIP Motion, the Debtors agreed to continue the Final DIP Hearing to February 28. "[T]he Debtors require an additional $10 million in funding over the initial $100 million amount authorized by the Interim DIP Financing Order to ensure sufficient liquidity during the additional four days before the Court can consider granting final relief," Mr. Kieselstein informed the Court. Without the additional liquidity, Mr. Kieselstein said, the Debtors may encounter additional difficulties in meeting certain critical cash needs, and subsequently cause an adverse impact on the Debtors' business operations and delay their Plan of Reorganization. The Creditors Committee did not object to the request for interim financing. Triple Net Objects Triple Net Investments IX, LP, holds a claim against one of the Debtors, North American Van Lines, Inc., for $2,021,546, of which $89,624 is an administrative claim for the February 2008 rent under a non-residential real property lease between Triple Net and North American. According to Triple Net, the DIP Motion works as a de facto substantive consolidation of the Debtors' assets, to secure the proposed $150,000,000 DIP financing, to cross collateralize SIRVA Worldwide, Inc.'s pre- and postpetition lender obligations, and to collateralize exit financing. Triple Net said it was denied recourse to a substantial unencumbered asset base, which it submits had been available prepetition to satisfy its claims against North American by the removal from North American's reach valuable North American solvent, non-debtor, foreign subsidiaries. Triple Net noted that the DIP Motion estimates the revenues of North American's subsidiaries to be $36,000,000 at September 30, 2007. Part of North American's equity in its subsidiaries was unencumbered by Debtors' obligations to prepetition secured lenders. Without discovery, Triple Net said, similar creditors including itself, as well as the Court, are "operating in the dark." Triple Net stated that the DIP Motion had also sought a $65,000,000 postpetition transfer to the Prepetition Secured Lenders, and that the transfer is preferential and was made in bad faith, since the Debtors should have known that Prepetition Secured Lenders were grossly undersecured when the prepetition loan was made. According to Triple Net, it was in fact an unsecured loan that was paid postpetition. Triple Net added that the the DIP Motion appears to be an integral component of a "prepackaged" plan of reorganization, which the Debtors are pushing through the confirmation process. Like the DIP Motion, the Plan, has as its "lynch-pin" the substantive consolidation of the Debtors' assets and liabilities, including those unencumbered assets of North American, Triple Net contended. Triple Net pointed out that the Plan provides for a zero distribution for general unsecured creditors like itself, while giving full payment to those that the Debtors elect to pay, either in the ordinary course of business or in full upon confirmation of the Plan. Triple Net asserted that if the Court approves the DIP Motion, it will be prejudiced because North American, through its subsidiaries, are solvent, and therefore able to pay Triple Net's claim in full. Triple Net accordingly sought a reconsideration of the interim relief which the Court had granted to the Debtors. It also asked the Court to deny the final relief sought by the DIP Motion, and to direct the Prepetition Secured Lenders to disgorge the $65,000,000 postpetition transfer. Debtors Respond Mr. Kieselstein told Judge Peck that Triple Net has not provided any justification for the Court to reconsider the Interim DIP Order, and provides no legal arguments that rebut the Court's ruling, other than its incorrect assertion that the loans were unsecured. He argued that the loans, refinanced under the Interim DIP Order, were entitled to priority over other prepetition facility claims, and are thus fully secured. The argument that the DIP Motion works as a de facto substantive consolidation is meritless, according to Mr. Kieselstein, since the DIP Facility mirrors the guarantee and security interest of the prepetition senior secured facility -- overlapping guarantees and security interests in the Debtors' assets. Hence, the DIP facility has a structure essentially identical to the Prepetition Facility, with extra collateral to secure the additional $35,000,000 in funds, advanced to the Debtors. As a result, Mr. Kieselstein explained, the Debtors were not required to notify Triple Net of the DIP Motion, since the service provided was adequate under Rules 4001 and 9014 of the Federal Rules of Bankruptcy Procedure, and Triple Net was not directly affected by the DIP Motion. Committee Objects to DIP Facility The Committee objects to the entry of a final order on the DIP Motion because: (i) the DIP Financing appears to be unnecessary, since the Debtors could operate on a cash collateral basis; and (ii) the DIP Financing is an attempt by the Debtors' Prepetition Secured Lenders to gain inappropriate leverage over the Committee concerning an "inevitable plan fight." According to the Committee, the Debtors suggested a lack of significant opposition to its Plan, and relied on this "global harmony" to obtain relief for its first-day motions. The Committee maintains that the Plan is not consensual. The Committee does not support the Plan because, unlike typical prepackaged plans, the Debtors propose to pay nothing to general unsecured creditors. With regard to the Debtors' assertion that the Plan is supported by "all classes entitled to vote," it is only because holders of Class 5 Claims are deemed to reject the Plan, and are not entitled to vote. The Committee believes that the Plan cannot be confirmed because in addition to discrimination issues, there appear to be holes in the Prepetition Secured Lenders' collateral position. It asserts that the Class 5 Claimants are as entitled as the other unsecured claimholders to reap the value of unencumbered assets. The Debtors and the Prepetition Secured Lenders have sought to rectify the problem by the superpriority $150,000,000 DIP Financing. However, the Committee says, the Lenders have used the DIP Financing to gain an advantage over the Class 5 Claimants since all of its proceeds are used: -- to satisfy prepetition claims, of which more than half are owed to the Lenders, and -- to pay interest and fees to the Lenders. The Committee maintains that the Debtors have not presented any meaningful evidence that they could not operate postpetition on a cash collateral basis, as long as they do not use the cash collateral to pay prepetition claims or other payments to their Prepetition Secured Lenders. According to the Committee, some of the most problematic aspects of the DIP Financing are: (a) $65,000,000 is used simply to repay the Prepetition Secured Lenders, without demonstrating that the payment benefits the Debtors' estates; (b) the premise of the Plan is that the Lenders' claims are undersecured, but the Debtors propose to use the DIP Financing proceeds for ongoing interest and expense payments, in violation of Section 506 of the Bankruptcy Code; (c) certain Debtors are not obligated on the prepetition debt, but become obligated to repay the DIP Financing; (d) the Committee is given a short investigation period of until March 11, 2008, and a limited funding of $50,000 or $833 per Debtor, to investigate the validity of the Lenders' liens and possible claims that the 61 Debtors may have against the Lenders; (e) the Lenders improperly take a lien on proceeds of avoidance actions; (f) the Lenders seek a surcharge waiver under Section 506(c), which is inappropriate under the DIP Financing circumstances; (g) the Lenders seek a prohibition on marshalling, which is improper given the unfairness of imposing obligations on Debtors not obligated on the Prepetition Debt; and (h) the DIP Financing attempts to impose burdens on the Committee for the sole reason of impeding its statutory duties, by the provision that the Committee has no standing to bring claims against the Lenders without permission from the Court. The Committee submits that a Court should approve a proposed DIP Financing only if it is in the best interest of the general creditor body, citing In re Roblin Industries, Inc., 52 B.R. 241, 244 (Bankr. W.D.N.Y. 1985). The Committee asks the Court to deny the final approval of the DIP Financing, and to terminate the Debtors' ability to borrow until payments to the Lenders are reversed. About Solutia Inc. Solutia Inc. (NYSE:SOA-WI) -- http://www.solutia.com/-- is a performance materials and specialty chemicals company. The company focuses on providing solutions for a better life through a range of products, including Saflex(r) interlayer for laminated glass, CPFilms(r) aftermarket window films, high-performance nylon polymers and fibers sold under brands including Vydyne(r) and Wear-Dated(r), Flexsys(r) chemicals for the rubber industry, and specialty products such as Skydrol(r) aviation hydraulic fluid and Therminol(r) heat transfer fluid. Solutia's businesses are world leaders in each of their market segments. With its headquarters in St. Louis, Missouri, USA, the company operates globally with approximately 6,000 employees in more than 60 countries that includes Malaysia, China, Singapore, Belgium, and Colombia. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed US$2,854,000,000 in assets and US$3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. (Sirva Inc. Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). SOLIDUS NETWORKS: Auction of Three Non-Core Businesses Adjourned ---------------------------------------------------------------- The auction of Solidus Networks Inc.'s under-performing assets, originally scheduled to commence on Feb. 21, 2008, was suspended for undisclosed reasons, Digital Transactions News says. As reported in the Troubled Company Reporter on Feb. 22, 2008, the Hon. Thomas B. Donovan of the U.S. Bankruptcy Court for the Central District of California was set to conduct a hearing on Feb. 25, 2008, at 9:30 a.m., to consider the sale of three non-performing business units owned by Solidus Networks Inc., dba Pay By Touch, and its debtor-affiliates. The sale hearing was to be held at Courtroom 1352, 255 East Temple Street in Los Angeles, California. An auction for the Pay By Touch Payment business was originally scheduled for Feb. 21, 2008, at the office of the Debtors' counsel, Hennigan, Bennett, Dorman LLP in Los Angeles. An auction for the ATM Direct and Pay By Check Secure businesses was to be held the following day at the same venue. Judge Donovan has approved bidding procedures intended to maximize the value of the Debtors' assets. Bids for any of the three businesses were supposed to be due February 19. Digital Transaction said that the Debtor calls its Pay By Touch Payment, ATM Direct and Pay By Check Secure businesses as non-core assets, while its Biometric business is its core-assets. About Solidus Networks Inc. Headquartered in Culver City, California, Solidus Networks Inc., dba Pay By Touch, -- http://www.paybytouch.com/-- is a biometric authentication, personalized marketing and payment solutions. To date, patented Pay By Touch(TM) biometric services have enabled over 4 million shoppers in the U.S., Europe and Asia to quickly and securely use a finger scan to access personalized offers, make purchases, and cash checks at more than 2,600 locations nationwide. Founded in 2002, Pay By Touch holds more than 60 issued patents and 175+ pending patents worldwide on secure, convenient and cost-effective transaction solutions. Gregg Eyman, James C. Lee and Laura Schoep Lee filed an involuntary Chapter 11 petition against the company on Oct. 31, 2007, (Bankr. C.D. Calif. Case Number. 07-20027) Robert M. Yaspan, Esq. of the Law Offices of Yaspan & Thau, represents the petitioners. On Dec. 14, 2007, the Debtors gave their consent to the entry of an order for chapter 11 bankruptcy relief. That order was entered by the Hon. Thomas B. Donovan on Dec. 17, 2007. Bruce Bennett, Esq., James O. Johnston, Esq., and Lance Miller, Esq., at Hennigan, Bennett & Dorman LLP, represent the Debtor in its restructuring efforts. The Debtors' schedules show total assets of $75,698,454 and total liabilities of $330,618,305. The United States Trustee for Region 16 has established a four- member official committee of unsecured creditors in the Debtors' cases. Stutman Treister & Glatt PC represents the Official Committee of Creditors Holding Unsecured Claims. SPRINT NEXTEL: Reports $29.5 Billion Net Loss in 4th Quarter 2007 ----------------------------------------------------------------- Sprint Nextel Corp. reported net loss of $29.5 billion compared to net income of $261 million in the fourth quarter a year ago, according to the company's regulatory filing with the Securities and Exchange Commission dated Feb. 28, 2008. In the quarter, the company recorded a non-cash goodwill impairment charge of $29.7 billion. the company's consolidated net operating revenues in the quarter were $9.8 billion, compared to $10.4 billion in the fourth quarter of 2006. Full-year 2007 revenues were $40.1 billion versus $41.0 billion in 2006. After adjusting for the goodwill impairment charge, as well as the effects of other special items and merger-related amortization costs, Adjusted EPS before Amortization*was 21 cents in the fourth quarter of 2007, compared to 29 cents in the fourth quarter of 2006. T he decline in earnings is due to a reduced contribution from Wireless, partially offset by an improved contribution from Wireline, an investment gain and an income tax benefit in the fourth quarter of 2007. As previously reported, wireless subscribers declined 108,000 in the fourth quarter, due to gains in wholesale and Boost Unlimited subscribers offset by decreases in iDEN post-paid and traditional Boost pre-paid users. For the quarter, post-paid churn was 2.3%, matching the third quarter of 2007 and the fourth quarter of 2006. Wireless post-paid ARPU in the quarter was a little more than $58, a 1% sequential decline and a 4% decrease compared to the fourth quarter of 2006. ARPU continues to be pressured by lower voice contributions, partially offset by growth in data services. "The fourth quarter financial results reflect the challenges facing our Wireless business," said Dan Hesse, Sprint Nextel CEO. "We are making significant changes across the organization in an effort to improve execution, stabilize our customer base and deliver on the opportunity provided by our assets. Given current deteriorating business conditions, which are more difficult than what I had expected to encounter, these changes will take time to produce improved operating performance, and our near-term subscriber and financial results will continue to be pressured. Additionally, in light of current capital market conditions, we are taking steps to increase our financial flexibility and mitigate refinancing risk by borrowing funds from a revolving credit facility and discontinuing declaring a dividend for the foreseeable future. "Internally, we have rolled out a unified company culture focused on accountability and on providing a superior customer experience. We plan to share some of our initiatives for improving the customer experience and operations next quarter. Strategic assessments and changes may take longer to complete," Hesse said. Revolving Credit Facility On Feb. 27, 2008, Sprint Nextel borrowed $2.5 billion in principal amount under its revolving credit facility. The company has no immediate need for additional liquidity, but in light of current market conditions borrowed the funds to provide greater financial flexibility and to mitigate any potential financing risk related to $1.25 billion in bonds that mature in November 2008, as well as the approximately $400 million outstanding under our commercial paper program, and $600 million of bonds that mature in May, 2009. The company has no other material refinancing scheduled until 2010. About $500 million of borrowing capacity remains available under the revolving credit facility. A full-text copy of Sprint Nextel's Fourth Quarter and Full-Year 2007 Results at http://ResearchArchives.com/t/s?289b About Sprint Nextel Sprint Nextel Corp. -- http://www.sprint.com/-- offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two robust wireless networks serving about 54 million customers at the end of the fourth quarter 2007; industry-leading mobile data services; instant national and international walkie- talkie capabilities; and a global Tier 1 Internet backbone. SPRINT NEXTEL: Expected Bad Fin'l Results Cue Fitch to Cut Ratings ------------------------------------------------------------------ Fitch Ratings has downgraded and placed on Rating Watch Negative the ratings for Sprint Nextel Corporation and its subsidiaries as: Sprint Nextel Corporation (Sprint Nextel) -- Issuer Default Rating to 'BB+' from 'BBB-'; -- Senior unsecured notes to 'BB+' from 'BBB-'; -- Short-term IDR to 'B' from 'F3'; -- Commercial paper to 'B' from 'F3'. Sprint Capital Corporation -- IDR to 'BB+' from 'BBB-'; -- Senior unsecured notes to 'BB+' from 'BBB-'; Nextel Communications Inc. (Nextel) -- IDR to 'BB+' from 'BBB-'; -- Senior unsecured notes to 'BB+' from 'BBB-'; US Unwired Inc (US Unwired) -- IDR to 'BB+' from 'BBB-'; -- Second priority secured notes to 'BB+' from 'BBB-'. Alamosa Delaware Inc. (Alamosa) -- IDR to 'BB+' from 'BBB-'; -- Senior unsecured notes to 'BB+' from 'BBB-'. The downgrade reflects Fitch's expectations that the company's financial metrics and operating results for 2008 will be significantly worse than expected. Fitch had downgraded Sprint ratings to 'BBB-' in January and had assigned a Negative Rating Outlook at that time. The Negative Outlook reflected the weaker operating trends and the potential that further erosion could occur to Sprint's operations if the company remained unsuccessful in stabilizing its business. If it became apparent credit metrics would further erode materially from the 2.5 times range, Fitch would take further rating actions. Based on the guidance Sprint released on their earning call this morning, postpaid net addition losses are now expected to be approximately 1.2 million for the first quarter. In addition, it's likely the subscriber losses would not improve materially in the second quarter. Particularly concerning, Sprint will now begin to experience erosion to its CDMA subscriber base absent transfers from the iDEN network. These negative trends coupled with the positive momentum by Verizon Wireless and AT&T Wireless heightens the challenge that Sprint Nextel faces in turning around its operating results. Fitch believes the company will experience significant difficulties in increasing its mix of prime subscribers given the high industry penetration rates, the past customer service issues, the low postpaid churn rates of its national competitors, the slowing economy and its competitive position. Accordingly, Fitch estimates that Sprint Nextel's postpaid gross additions decreased by 12% in the fourth quarter and Fitch expects further pressure during 2008. Fitch also notes Sprint Nextel experienced additional ARPU pressure due to mix changes and lower overage with expectations for further declines during 2008. Sprint announced the company drew down $2.5 billion on its credit facility to reduce refinancing risk over the next 18 months. At the end of the fourth quarter, Sprint had $400 million on commercial paper, $1.3 billion in debt coming due in November 2008 and $600 million in May 2009. Fitch expects Sprint Nextel to pay down its commercial paper over the upcoming months leaving the company with approximately $900 million availability on its $6 billion credit facility that matures in December 2010. Sprint also took actions to suspend its common dividend of approximately $300 million annually. Fitch expects to resolve the Rating Watch Negative over the next several weeks pending a more detailed review and analysis of Sprint Nextel's expected operating and financial performance for 2008. Fitch expects any further potential downgrades to be limited to one notch. SPRINT NEXTEL: Moody's Give Negative Outlook on Weak Operations --------------------------------------------------------------- Moody's Investors Service affirmed Sprint Nextel's existing ratings, including the company's Baa3 senior unsecured and Prime-3 commercial paper ratings, but changed its rating outlook to negative from stable. The rating affirmation reflects Sprint's ongoing ability to generate significant free cash flow from its valuable wireless and wireline assets, its strong balance sheet, ample liquidity, its conservative approach to managing its financial flexibility and refinancing needs and Moody's expectations that the company's new management team can be successful in improving operating performance. Moody's changed Sprint Nextel's rating outlook to negative from stable due to the rating agency's view that operational weakness (generally resulting from poor customer service) will persist longer and be more pronounced than previously expected causing subscriber losses to increase, at least in the near-term, rather than decline. For the past several quarters, lingering operational difficulties and strong competitive challenges have resulted in Sprint Nextel experiencing high churn, declining ARPU, loss of market share and margin pressure in its post-paid business. These trends persisted during the 4Q '07 as Sprint Nextel announced a decline of 683K post-paid subscribers and lost traditional pre-paid customers (202K). While Moody's had expected the company's subscriber base to continue shrinking in the first half of 2008, Moody's previously believed that various operational initiatives would slow the rate of decline. That seems unlikely now and subscriber losses are expected to increase substantially, at least during the first half of the year. In addition, economic weakness and heightened competitive challenges from the large national providers (i.e. AT&T Mobility, Verizon Wireless and T-Mobile) and all-you-can-eat carriers (i.e. Metro PCS and Leap) will make it more difficult and time consuming for Sprint Nextel to stabilize its performance. Consequently, Moody's expects the company's revenue and EBITDA base to weaken and lead to deterioration in credit metrics. Moody's notes that the company is undertaking various steps designed to support its financial profile in light of ongoing operational weakness. The company suspended its dividend and did not complete a previously announced share repurchase program. In addition, the company has drawn down $2.5 billion of its revolver and now has almost $5.0 billion of cash on hand to meet about $2.3 billion of upcoming maturities through 2009. At this point in time, Moody's believes that the company will maintain an adequate cushion under its credit facility which contains a 3.5x maximum debt to EBITDA maintenance covenant. However, the cushion could become tight by year-end if the company's operating performance remains weak. The rating could be placed on review for possible downgrade if post-paid subscriber losses approach 1.5 million in 1Q'08 or if EBITDA declines more than 15% from 4Q'07 to 1Q '08. Sprint Nextel Corporation, with headquarters in Overland Park, Kansas, is one of the largest telecommunications companies in the United States. It offers digital wireless services under the Sprint master brand name in addition to a broad suite of wireline communications services. The company operates two wireless networks, one based on CDMA technology and the other over the former Nextel Communication's iDEN network. SPRINT NEXTEL: Losses Cues S&P to Put Ratings on Negative Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BBB-' corporate credit rating and all other ratings on Sprint Nextel Corp. on CreditWatch with negative implications following the company's announcement that it expects to report EBITDA of $1.8 billion to $1.9 billion in the first quarter of 2008 because of post-paid subscriber losses, which are expected to be around 1.2 million and are unlikely to improve in the second quarter. "The erosion in Sprint Nextel's subscriber base and the resultant decline in EBITDA are substantially higher than we anticipated and the company's business profile is probably no longer supportive of an investment-grade rating," said Standard & Poor's credit analyst Allyn Arden. Additionally, Sprint Nextel said it will draw $2.5 billion of the approximately $3 billion available under its $6 billion revolving credit facility to mitigate potential refinancing risk related to the $1.25 billion in bonds that mature in November 2008, as well as about $400 million outstanding under its commercial paper program, and $600 million of bonds that mature in May 2009. While Sprint Nextel cited concerns about capital market conditions over the next year, S&P believes that a near-term degradation in the business, beyond our original expectations, coupled with the higher interim debt levels, could narrow the cushion under the senior unsecured credit facility, which contains a 3.5x maximum debt to EBITDA maintenance covenant. In its fourth quarter conference call, the company noted that under its current view, it expects to be in compliance with covenants. However, management is still reviewing its 2008 budget and we will need to get more clarity regarding its ability to maintain a reasonable cushion, especially at the EBITDA run-rate implied by the first quarter 2008 guidance. S&P will resolve the CreditWatch listing following discussions with management regarding its expectations for the next couple of years, as well as its strategy to improve operations, and its ability to comfortably maintain compliance under its covenants. A downgrade, if any, could exceed one notch. SOLIDUS NETWORKS: No Qualified Offers Obtained to Buy Core Assets ----------------------------------------------------------------- Restructuring expert Thomas Lumsden cited in a court document that until present time, no purchaser has been found to buy the assets of Solidus Networks Inc., dba Pay By Touch, Digital Transactions News reports. In December 2007, Mr. Lumsden was appointed to manage the Debtor's operations while in bankruptcy, Digital Transactions reports. Also in December 2007, the report relates that the Debtor engaged Jefferies & Co. to market the Biometric Business. Based on the report, the investment firm notified about 90 buyers, around 40 asked for further details, but none gave a favorable offer by Jan. 31, 2008. The TCR reported on Feb. 22, 2008, that Solidus was permitted permission to borrow up to $13.5 million in debtor-in-possession financing from Plainfield Asset Management in Connecticut. Under the terms of the DIP loan agreement, the Debtors must reach a binding sale agreement or effect a court-supervised sale of their assets by Jan. 31, 2008. That deadline was extended until February 8, according to Digital Transactions. In his declaration, Mr. Lumsden stated that there was no "binding offer" to support a reorganization plan or sale of the Debtor's assets as of the Feb. 8, 2008 extended deadline, set forth in the DIP facility agreement, Digital Transaction says. Hence, the Debtors have pursued to conduct an auction at his suggestion, Digital Transaction quotes Mr. Lumsden as stating. Sale of Biometric Business The TCR related yesterday, Feb. 28, 2008, that the Court allowed Solidus to auction its Biometric Payments and Personalized Marketing Business, as well as stock and membership interests in S&H Marketing Inc. and in in Loyalty Acquisition Sub LLC. Pursuant to the terms of the bidding procedures order, the auction of the assets will be conducted on March 5, 2008, 9:00 a.m. and bids must be received before 5:00 p.m. today. The sale hearing for the sale of Biometric Payments and other assets will be held on May 7, at 9:00 a.m. Digital Transactions reveals that the Biometric Business was unprofitable amid having countrywide presence in the U.S. with at least 700 outlets. Based on court documents, in 2007, Biometric incurred a net loss of $137 million on $600,000 revenue, the report says. In 2007, S&H Marketing had a net income of $2.4 million on $36 million revenue, Digital Transactions relates. S&H Marketing services grocery stores handling about 500,000 deals everyday and selling Greenpoints. In 2007, Loyalty Acquisition, which develops customer identification and loyalty programs, had a net loss of $2.5 million on $7.2 million revenue, based on the report. About Solidus Networks Inc. Headquartered in Culver City, California, Solidus Networks Inc., dba Pay By Touch, -- http://www.paybytouch.com/-- is a biometric authentication, personalized marketing and payment solutions. To date, patented Pay By Touch(TM) biometric services have enabled over 4 million shoppers in the U.S., Europe and Asia to quickly and securely use a finger scan to access personalized offers, make purchases, and cash checks at more than 2,600 locations nationwide. Founded in 2002, Pay By Touch holds more than 60 issued patents and 175+ pending patents worldwide on secure, convenient and cost-effective transaction solutions. Gregg Eyman, James C. Lee and Laura Schoep Lee filed an involuntary Chapter 11 petition against the company on Oct. 31, 2007, (Bankr. C.D. Calif. Case Number. 07-20027) Robert M. Yaspan, Esq. of the Law Offices of Yaspan & Thau, represents the petitioners. On Dec. 14, 2007, the Debtors gave their consent to the entry of an order for chapter 11 bankruptcy relief. That order was entered by the Hon. Thomas B. Donovan on Dec. 17, 2007. Bruce Bennett, Esq., James O. Johnston, Esq., and Lance Miller, Esq., at Hennigan, Bennett & Dorman LLP, represent the Debtor in its restructuring efforts. The Debtors' schedules show total assets of $75,698,454 and total liabilities of $330,618,305. The United States Trustee for Region 16 has established a four- member official committee of unsecured creditors in the Debtors' cases. Stutman Treister & Glatt PC represents the Official Committee of Creditors Holding Unsecured Claims. SOLIDUS NETWORKS: Whorl LLC Balks at Asset Sale and DIP Financing ----------------------------------------------------------------- Whorl LLC, pursuant to Rule 8006 of the Federal Rules of Bankruptcy Procedure, has taken an appeal from an interim order authorizing Solidus Networks Inc., dba Pay By Touch, to obtain up to $13.5 million in debtor-in-possession financing from Plainfield Asset Management in Connecticut. The interim order was entered by the U.S. Bankruptcy Court for the Central District of California on Dec. 17, 2007. In its statement of issues to be presented on appeal before the U.S. District Court for the Central District of California, Whorl also asked for the removal of Pay By Touch Checking Resources Inc. from the case. Whorl complained that the Bankruptcy Court erred in granting adequate protection against PBT Checking and ATMD Acquisition Corp., non-debtor entities. Whorl said that the lenders hold no interest in the assets of PBT Checking and ATMD since they are no indebted to the lenders. There is no need for adequate protection, Whorl claimed. Hence, PBT Checking must be removed from the bankruptcy case, Whorl demands. Whorl, successor to BioPay LLC, asserted that some of the intellectual property included in the core-assets of PBT Checking that Solidus wants to sell is part of BioPay, Digital Transactions News reveals. Whorl alleged that the debtor defaulted on its promissory notes, including a $15 million cash, used to finance the sale of BioPay, based on Digital Transaction's report. Lee R. Bogdanoff, Esq., and Martin R. Barash, Esq., at Klee Tuchin, Bogdanoff & Stern LLP serve as counsels for Whorl LLC. About Solidus Networks Inc. Headquartered in Culver City, California, Solidus Networks Inc., dba Pay By Touch, -- http://www.paybytouch.com/-- is a biometric authentication, personalized marketing and payment solutions. To date, patented Pay By Touch(TM) biometric services have enabled over 4 million shoppers in the U.S., Europe and Asia to quickly and securely use a finger scan to access personalized offers, make purchases, and cash checks at more than 2,600 locations nationwide. Founded in 2002, Pay By Touch holds more than 60 issued patents and 175+ pending patents worldwide on secure, convenient and cost-effective transaction solutions. Gregg Eyman, James C. Lee and Laura Schoep Lee filed an involuntary Chapter 11 petition against the company on Oct. 31, 2007, (Bankr. C.D. Calif. Case Number. 07-20027) Robert M. Yaspan, Esq. of the Law Offices of Yaspan & Thau, represents the petitioners. On Dec. 14, 2007, the Debtors gave their consent to the entry of an order for chapter 11 bankruptcy relief. That order was entered by the Hon. Thomas B. Donovan on Dec. 17, 2007. Bruce Bennett, Esq., James O. Johnston, Esq., and Lance Miller, Esq., at Hennigan, Bennett & Dorman LLP, represent the Debtor in its restructuring efforts. The Debtors' schedules show total assets of $75,698,454 and total liabilities of $330,618,305. The United States Trustee for Region 16 has established a four- member official committee of unsecured creditors in the Debtors' cases. Stutman Treister & Glatt PC represents the Official Committee of Creditors Holding Unsecured Claims. SOLUTIA INC: Gets Exit Financing; Emerges From Ch. 11 Protection ---------------------------------------------------------------- Solutia Inc. and its debtor-affiliates have emerged from Chapter 11 reorganization, pursuant to an agreement with their lenders who will provide exit financing to the Debtors. As reported in the Troubled Company Reporter on Feb. 26, 2008, the Debtors reached an agreement with Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. to fund Solutia's exit financing package and scheduled a closing date on Feb. 28, 2008. "Solutia has emerged as a well-positioned specialty chemicals and performance materials company with market-leading global positions and a diverse portfolio of high potential businesses," said Jeffry N. Quinn, chairman, president and chief executive officer. "We believe we are a stronger, healthier and more competitive company than at any point in our history. Over the past four years, we have transformed our portfolio through strategic acquisitions, internal investments, asset dispositions, and the re-deployment of significant nylon assets to higher-value uses." During its time in Chapter 11, Solutia has diversified from both an end-market and a geographic perspective. In 2007, the company's net sales from outside the United States were 55% of the total revenue, compared to 39% in 2003. The increase has been driven primarily by Solutia's Asian growth strategy, as well as significant growth in Europe. "During this period, we have made great strides in improving our financial position by reducing legacy liabilities, enhancing and focusing the business portfolio and delivering strong revenue and operating earnings growth and momentum," said James M. Sullivan, senior vice president and chief financial officer. "With a strong balance sheet and more than 50% of our portfolio growing at greater than two times global GDP, we believe we are positioned to deliver increased shareholder value." The U.S. Bankruptcy Court for the Southern District of New York confirmed Solutia's plan of reorganization and approved the company's exit from bankruptcy subject to certain conditions including the funding of an exit financing facility on Nov. 29, 2007. This exit financing is being used to pay certain creditors, and for ongoing operations. The new common stock of reorganized Solutia is scheduled to begin trading on the New York Stock Exchange under the ticker symbol SOA on Monday, March 3, 2008. Currently the stock symbol also includes the "WI" notation. The "old" Solutia stock, which was trading over-the-counter under the SOLUQ ticker symbol, together with warrants or options to purchase old common stock, were cancelled as of today. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ)(NYSE:SOA- WI) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. * * * As reported in the Troubled Company Reporter on Dec. 10, 2007, Standard & Poor's Ratings Services assigned its 'B+' loan rating to Solutia Inc.'s (D/--/--) proposed $1.2 billion senior secured term loan and a '3' recovery rating, indicating the likelihood of a meaningful (50%-70%) recovery of principal in the event of a payment default. The ratings are based on preliminary terms and conditions. S&P also assigned its 'B-' rating to the company's proposed $400 million unsecured notes. Standard & Poor's expects to assign its 'B+' corporate credit rating to Solutia if the company and its subsidiaries emerge from Chapter 11 bankruptcy proceedings in early 2008 as planned. S&P expect the outlook to be stable. SOLUTIA INC: Judge Beatty OKs Bank of New York Settlement Pact -------------------------------------------------------------- The Hon. Prudence C. Beatty of the U.S. Bankruptcy Court for the Southern District of New York approved Solutia Inc.'s settlement agreement with holders of Solutia's 11.25% Senior Secured Notes due July 2009, and the Bank of New York, as successor indenture trustee for the 2009 Notes. The Settlement will resolve the disputes that have arisen between the parties regarding the allowed amount of Claim No. 6210 filed by the Bank of New York on behalf of the Noteholders. Solutia will pay BNY $220,500,000 in cash plus all accrued but unpaid interest on the 2009 Notes through the Effective Date, at the rate of 11.25% per annum on the face amount of 2009 Notes. If the effective date of Solutia's reorganization plan occurs before the Settlement is approved, Solutia will pay about $210,000,000 plus accrued unpaid interest through the Effective Date. Committee Wants Settlement Delayed The Official Committee of Unsecured Creditors asked the Court to delay approval of the 2009 Settlement, in light of the then pending high-stakes litigation between the Debtors and their exit lenders. It argued that the Debtors must not be married to a financial arrangement that could preclude restructuring alternatives that may prove necessary, if the Debtors fail to resolved their disputes with their exit lenders Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The Debtors, however, have reached a settlement with the Exit Lenders. The Creditors Committee, however, had said the 2009 Settlement, should it be ripe for adjudication, requires key modifications. It noted that the 2009 Settlement, as drafted, materially impairs the Committee's rights with respect to the ultimate allowance of the 2009 Noteholders' claim in the event that the 2009 Settlement is declared void by the settling parties, or not approved by the Court. The Committee previously sought the Court's determination that the 2009 Noteholders will have received an $12,200,000 of postpetition cash interest payments in excess of the amount they are actually entitled to under Section 506(b) of the Bankruptcy Code. The Court denied the determination request, and the Committee has appealed the Order. The Committee has also filed a motion seeking to increase the 2009 Noteholders' disputed claims reserve under the Plan from $37,500,000 -- the amount in excess of $210,000,000 which BNY believes they are entitled to -- by $12,200,000 on account of the Overpayment. The Committee notes that in the event the 2009 Settlement is declared void, the parties would return to their pre-settlement litigation positions. However, should a distribution have already been made to the 2009 Noteholders that includes an amount equal to the Overpayment, the Committee's rights to the Overpayment would be rendered moot. The Committee also objected to the provision that provides, if the 2009 Settlement is declared void or stayed, the Debtors must establish a reserve funded only with $37,500,000. This provision, according to the Committee, would render the 2009 Settlement moot in the event the Court approves the Reserve Motion. Judge Beatty, however, held "The [Debtors' Settlement] Motion is granted in its entirety and approved in all respects." No objection to the Settlement has been filed by any holder of the 2009 Notes. Accordingly, the Court held that BNY is authorized to settle the claims on behalf of the holders of the 2009 Notes and will have no liability to any holder of the 2009 Notes as a result of its entry into the Settlement. Background to the BoNY Dispute As reported in the Troubled Company Reporter on May 25, 2006, the Court denied approval of the Disclosure Statement explaining the Plan of Reorganization filed by Solutia and its debtor- affiliates. BNY is the indenture trustee for the 11.25% Senior Secured Notes due 2009 issued by Solutia. BNY complains that as described in the Disclosure Statement, the Debtors' Plan of Reorganization purports to impair the Senior Secured Notes, which are designated in Class 3. On Nov. 1, 2007, the TCR said John K. Cunningham, Esq., at White & Case LLP, in New York, appeared before the Court on behalf of Bank of New York, regarding a $223,000,000 claim by the bank on account of the 11.25% Senior Secured Notes due 2009 issued by Solutia Inc. or its predecessor. Bank of New York serves as indenture trustee for the Senior Notes. Judge Beatty told BoNY's counsel, John K. Cunningham, Esq., at White & Case LLP, "Pigs become hogs and then hogs get slaughtered. And then eaten. What you're going for is so piggy that you risk getting nothing." At the hearing, which was held on Oct. 31, 2007, Judge Beatty urged Solutia to settle its dispute with Bank of New York, noting that the claim was the biggest hurdle to approval of Solutia's reorganization plan. "There are no cases that I have found which remotely approximate the application of these principles to a case of this financial magnitude," Judge Beatty stated. Judge Beatty said if no settlement is reached she will rule on the matter in about two weeks. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE: SOA-WI) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. (Solutia Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Dec. 10, 2007, Standard & Poor's Ratings Services assigned its 'B+' loan rating to Solutia Inc.'s (D/--/--) proposed $1.2 billion senior secured term loan and a '3' recovery rating, indicating the likelihood of a meaningful (50%-70%) recovery of principal in the event of a payment default. The ratings are based on preliminary terms and conditions. S&P also assigned its 'B-' rating to the company's proposed $400 million unsecured notes. Standard & Poor's expects to assign its 'B+' corporate credit rating to Solutia if the company and its subsidiaries emerge from Chapter 11 bankruptcy proceedings in early 2008 as planned. S&P expect the outlook to be stable. SOLUTIA INC: Court Approves Bayer & Lanxess Claims Settlement ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the stipulation signed by Solutia Inc. with LANXESS Corporation, Bayer AG, Bayer MaterialScience LLC and Bayer Corporation. As reported in the Troubled Company Reporter on Feb. 15, 2008, Bayer acquired Monsanto Company's styrenics business pursuant to an Asset Purchase Agreement dated Dec. 31, 1995. Monsanto later assigned the APA to Solutia Inc. in September 1997, as part of Solutia's spin off from Monsanto. Solutia and Bayer were parties to a Resimene Lease and Operating Agreement dated July 29, 1999. Solutia terminated the Resimene Agreement on June 28, 2000, with a termination fee of $2,922,300, payable to Bayer in 18 monthly installments. As of the bankruptcy filing, Solutia owed $432,761 to Bayer for the two remaining installment payments. Bayer and Monsanto were also parties to an Indian Orchard Lease and Services Agreement dated Oct. 31, 1995. The agreement was assigned to Solutia as part of the Spin Off. Bayer terminated the Indian Orchard Agreement, and Solutia agreed to a termination fee of $1,191,101, payable by Bayer in 18 monthly installments. As of the bankruptcy filing, Bayer owed $397,034 for the six remaining installment payments. As of the bankruptcy filing, Bayer also owed Solutia $295,771 for certain purchases of adipic acid. Since the bankruptcy filing, LANXESS Corporation, Bayer AG, Bayer MaterialScience LLC, and Bayer, have undergone corporate reorganizations, and as a result, Lanxess currently holds certain claims of Bayer and MaterialScience. Solutia objected to several of Bayer/Lanxess Parties Claims for damages arising under the APA. Solutia also filed Schedule No. 10115234 for $339,771, for amounts owed by Solutia to Bayer Polymers LLC, now known as MaterialScience. Settlement Agreement Following arm's-length negotiations regarding the resolution and treatment of the Claims, the parties have agreed, among other things, that Bayer and Lanxess will be entitled to recoup or offset $372,034 against the $397,034 owed to Solutia for the Indian Orchard Termination Fee. Bayer/Lanxess parties will pay Solutia $320,771, representing the $25,000 balance of the Indian Orchard Termination Fee after giving effect to the Set-Off, plus the $295,771 owed for adipic acid purchases. Also Solutia's Objection will be deemed withdrawn with respect to the Claims; and upon approval of the Stipulation, Solutia will be required to reserve the amount of the Allowed Claim in the Disputed Claims Reserve on account of the Claims. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE: SOA-WI) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. (Solutia Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Dec. 10, 2007, Standard & Poor's Ratings Services assigned its 'B+' loan rating to Solutia Inc.'s (D/--/--) proposed $1.2 billion senior secured term loan and a '3' recovery rating, indicating the likelihood of a meaningful (50%-70%) recovery of principal in the event of a payment default. The ratings are based on preliminary terms and conditions. S&P also assigned its 'B-' rating to the company's proposed $400 million unsecured notes. Standard & Poor's expects to assign its 'B+' corporate credit rating to Solutia if the company and its subsidiaries emerge from Chapter 11 bankruptcy proceedings in early 2008 as planned. S&P expect the outlook to be stable. SOLUTIA INC: Court Approves Quinn Emanuel as Conflicts Counsel -------------------------------------------------------------- Solutia Inc. and its Debtor-affiliates obtained approval from the U.S. Bankruptcy Court for the Southern District of New York's to employ Quinn Emanuel Urquhart Oliver & Hedges LLP, as their special litigation and conflicts counsel for matters arising in or related to the Debtors' Chapter 11 cases, nunc pro tunc to Jan. 22, 2008. The Troubled Company Reporter said on Feb. 6, 2008, that according to Rosemary L. Klein, general counsel of Solutia and an authorized officer of each of the other Debtors, because of Quinn Emanuel's experience in matters concerning complex bankruptcy and commercial litigation, the firm is well-suited to deal effectively with many of the potential legal issues that may arise in the Debtors' Chapter 11 cases. As special counsel, Quinn Emanuel will: (a) advise the Debtors regarding their ability to initiate actions to protect their rights under certain Oct. 25, 2007 Commitment Letter -- with respect to Solutia's exit financing -- and related documents and enforce the Commitment Parties' legally binding commitments for the benefit of their estates; (b) advise the Debtors regarding their ability to initiate actions to protect their rights as against the Debtors' postpetition lenders; and (c) commence and conduct any and all litigation necessary or appropriate to assert rights held by the Debtors, protect assets of the Debtors' Chapter 11 estates or otherwise further the goal of completing the Debtors' successful reorganization. The Debtors will pay Quinn Emanuel in accordance with its standard hourly rates and reimburse the firm of actual and necessary expenses. The firm informs the Court that its rates are subject to period adjustment to reflect economic and other conditions. The firm's current hourly rates are: Partners $660 - $950 Other Attorneys $380 - $950 Legal Assistants $250 - $280 Quinn Emanuel has not, does not, and will not represent any entities or any of their respective affiliates or subsidiaries, in matters related to the Debtors, their Chapter 11 cases, or other matters directly adverse to the Debtors during the pendency of their cases, Susheel Kirpalani, Esq., a member of Quinn Emanuel, assures the Court. Mr. Kirpalani asserts that the firm is a disinterested person, as the term is defined by Section 101(14) of the Bankruptcy Code. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE: SOA-WI) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. (Solutia Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Dec. 10, 2007, Standard & Poor's Ratings Services assigned its 'B+' loan rating to Solutia Inc.'s (D/--/--) proposed $1.2 billion senior secured term loan and a '3' recovery rating, indicating the likelihood of a meaningful (50%-70%) recovery of principal in the event of a payment default. The ratings are based on preliminary terms and conditions. S&P also assigned its 'B-' rating to the company's proposed $400 million unsecured notes. Standard & Poor's expects to assign its 'B+' corporate credit rating to Solutia if the company and its subsidiaries emerge from Chapter 11 bankruptcy proceedings in early 2008 as planned. S&P expect the outlook to be stable. SPOTTED DOG: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Spotted Dog, Inc. 5825 Glenridge Drive, Building 1, Suite 208 Atlanta, GA 30328 Bankruptcy Case No.: 08-63542 Chapter 11 Petition Date: February 27, 2008 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: Leon S. Jones, Esq. (ljones@joneswalden.com) Jones & Walden, L.L.C. 21 Eighth Street, Northeast Atlanta, GA 30309 Tel: (404) 564-9300 Fax: (404) 564-9301 Estimated Assets: Less than $50,000 Estimated Debts: $1 million to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Cornerstone Bank $1,316,491 2060 Mount Paran Road, Suite 100 Atlanta, GA 30327 Global Swift Funding, L.L.C. $308,000 809 Bowsprit Road Chula Vista, CA 91914 Reach Financial, L.L.C. $208,337 8813 Heatherton Ridge Drive Savage, MN 55378 Clever Ideas, Inc. $206,979 AdvanceMe, Inc. $139,143 Puget Sound Leasing $71,828 Inman Park Properties $33,571 Evans National Leasing $28,915 T.C.F. Equipment Finance $21,755 Georgia Power $8,826 Miltons $7,709 Johnson Deversey, Inc. $5,694 Jackson Comfort Systems $4,932 Georgia Natural Gas $3,796 Atlanta Sound Lighting $2,975 Schindler Elevator Corp. $2,008 Blockbuster Textiles $1,971 Encore Atlanta $1,600 East 48th Street Bakery $1,088 Waste Management $797 ST MARY LAND: Inks $42 Million Oil and Gas Assets Acquisition Deal ------------------------------------------------------------------ St. Mary Land & Exploration Company entered into an agreement to acquire producing and non-producing oil and gas assets adjacent to existing St. Mary acreage in East Texas for approximately $42 million in cash, subject to customary purchase price adjustments at closing. The transaction will be financed with the company's cash on hand and borrowings under its existing credit facility. The company related that the transaction will provide access to 3,000 gross acres in Panola County, Texas. Net proved reserves related to the properties are initially estimated to be approximately 22 BCFE. The closing of transaction is expected to occur by April 1, 2008, and is subject to customary due diligence. About St. Mary Land & Exploration Based in Denver, Colorado, St. Mary Land & Exploration Company (NYSE: SM) - http://www.stmaryland.com/-- is engaged in the exploration, exploitation, development, acquisition, and production of natural gas and crude oil in five core areas in the United States. The company invests in oil and gas producing assets that provide a superior return on equity while preserving underlying capital, resulting in a return on equity to stockholders that reflects capital appreciation as well as the payment of cash dividends. * * * As reported in the Troubled Company Reporter on Dec. 12, 2007, Standard & Poor's Ratings Services revised its outlook on oil and gas exploration and production company St. Mary Land & Exploration Co. to positive from stable and affirmed its 'BB-' corporate credit rating on the company. "The company's good operating results thus far in 2007 and its adherence to moderate financial leverage measures spurred the outlook change," said Standard & Poor's credit analyst David Lundberg. As of Sept. 30, 2007, St. Mary had $443 million in debt. STONE ENERGY: Earns $65 Million in Quarter ended December 31 ------------------------------------------------------------ Stone Energy Corporation reported fourth quarter ended Dec. 31, 2007, net income of $64.9 million and full year 2007 net income of $181.4 million. For the fourth quarter of 2007, net income of $64.9 million compared to a net loss of $298.5 million for the fourth quarter of 2006. The full year 2007 net income of $181.4 million compared to a 2006 net loss of $254.2 million. The results for both the fourth quarter and year-end 2007 included an $8.2 million pre-tax impairment charge on Stone's investment in China. The reported loss for both the fourth quarter and year-end 2006 included a pre-tax charge of $510.0 million incurred due to a ceiling test write-down. Discretionary cash flow for 2007 totaled $452.7 million compared to $456.4 million during 2006. Higher volumes and higher realized prices in 2007 resulted in revenues being $64.3 million higher than in 2006. Additionally, lease operating expenses and depreciation, depletion and amortization expenses were $9.3 million and $18.0 million lower in 2007 compared to 2006. However, all of these positive variances were offset by $95.6 million in current taxes in 2007 compared to $0.2 million of current taxes in 2006. For the fourth quarter 2007, discretionary cash flow totaled $125.9 million compared to $126.5 million during fourth quarter 2006. "We are pleased with our results for the year," CEO David Welch stated. "Early in 2007, we set key objectives to focus on low- risk exploitation projects, maintain production with a limited capital budget, and significantly reduce debt in order to position ourselves for per share growth in 2008. Our 2007 results show that we delivered on our promise." "During the year, we experienced a 91% drilling success rate, with 20 out of 22 wells being successful," Mr. Welch added. "Our 2007 production volumes came in on the high side of our original guidance despite selling our Rocky Mountain properties at mid- year, as our operations group reduced downtime, optimized compression and increased well work projects. After the sale of the Rocky Mountain properties, we reduced our debt by 50% from almost $800 million to $400 million and our year-end cash position of $475 million provides us with significant financial and operational flexibility." In the fourth quarter 2007, Stone's investment in China was impaired by $8.2 million after reviewing the results of the drilling program and the proposed areas of focus within the concession area. There were no borrowings outstanding at Dec. 31, 2007, under the company's bank credit facility. We had letters of credit totaling $52.8 million, resulting in $122.2 million of available borrowings at Dec. 31, 2007. The borrowing base under the credit facility is re-determined periodically based on the bank group's evaluation of our proved oil and gas reserves. At Dec. 31, 2007, the company's balance sheet showed total assets of $1.89 billion, total liabilities of $1.00 billion and total stockholders' equity of $0.89 billion. About Stone Energy Corporation Headquartered in Lafayette, Louisiana, Stone Energy Corporation (NYSE:SGY) -- http://www.stoneenergy.com/-- is an independent oil and natural gas company. The company is engaged in the acquisition and subsequent exploration, development, operation and production of oil and gas properties located in the conventional shelf of the Gulf of Mexico, the deep shelf of the Gulf of Mexico, the deepwater of the Gulf of Mexico, the Rocky Mountain Basins and the Williston Basin. Stone Energy is also engaged in an exploratory joint venture in Bohai Bay, China. * * * As reported in the Troubled Company Reporter on Oct. 25, 2007, Moody's Investors Service affirmed Stone's B3 corporate family rating and the B3 probability of default rating. Simultaneously, Moody's is upgrading Stone's speculative grade liquidity rating to SGL-2 from SGL-3. The outlook is also changed to stable from negative. SUMMERWIND INVESTORS: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Summerwind Investors, L.L.C. 30900 Rancho Viejo Road, Suite 100 San Juan Capistrano, CA 92675 Bankruptcy Case No.: 08-10952 Chapter 11 Petition Date: February 28, 2008 Court: Central District Of California (Santa Ana) Judge: Robert N. Kwan Debtor's Counsel: Robert P. Goe, Esq. (kmurphy@goeforlaw.com) Goe & Forsythe, L.L.P. 660 Newport Center Drive, Suite 320 Newport Beach, Ca 92660 Tel: (949) 467-3780 Fax: (949) 721-0409 http://www.goeforlaw.com/ Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor stated that its largest unsecured creditors are not known at this time. TEMBEC INC: Ontario Court Approves Plan of Arrangement under CBCA ----------------------------------------------------------------- Tembec Inc. disclosed that the plan of arrangement under the Canada Business Corporations Act, relating to the recapitalization transaction, has been approved and sanctioned by the Ontario Superior Court of Justice. The Court determined that the Plan of Arrangement met all statutory requirements, that it was brought in good faith and that it was fair and reasonable in the circumstances. Accordingly, the Court issued a final order approving the Plan of Arrangement. "This is excellent news for the company and its stakeholders," James Lopez, president and CEO of Tembec, said. "Court approval of the Plan of Arrangement is the final step in advance of closing the transaction. With a secure financial footing and solid stakeholder support, the company that will emerge from this transaction will be very well positioned to pursue its business strategy. The immediate focus will be on improving the operating and financial performance of the company with the short-term goal of restoring free cash flow." Resolutions relating to the Recapitalization were approved by in excess of 95% of shareholders of Tembec and by in excess of 98% of noteholders of Tembec Industries Inc. at meetings held on Feb. 22, 2008. Court approval of the Plan of Arrangement was the final outstanding approval requirement prior to implementation of the Recapitalization. The closing and implementation of the Recapitalization is expected to occur today, Feb. 29, 2008. The company also disclosed that these individuals will serve on the board of directors of the new Tembec Inc. effective as at the time of closing, on Feb 29: -- Norman Betts, Storytown, New Brunswick -- James Brumm, New York, New York -- Jim Chapman, Greenwich, Connecticut -- Jim Continenza, Lakeville, Minnesota -- Jim Lopez, North Bay, Ontario -- Luc Rossignol, Témiscaming, Québec -- Fran Scirrico, Cold Spring Harbor, New York -- David Steuart, Burlington, Ontario -- Lorie Waisberg, Toronto, Ontario "I am pleased to have this accomplished group of individuals join our board," Mr. Lopez concluded. "The unique mix of skills and experience they bring will be very helpful in providing the guidance necessary as the company charts its course forward following this very important transaction." About Tembec Headquartered in Montreal Quebec, Tembec Inc. (TSC:TBC) -- http://www.tembec.com -- operates an integrated forest products business. The company's operations consist of four business segments: forest products, pulp, paper and chemicals. The forest products segment consists primarily of forest and sawmills operations, which produce lumber and building materials. The pulp segment includes the manufacturing and marketing activities of a number of different types of pulps. The paper segment consists primarily of production and sales of newsprint and bleached board. The chemicals segment consists primarily of the transformation and sale of resins and pulp by-products. As of Sept. 29, 2007, Tembec operated manufacturing facilities in New Brunswick, Quebec, Ontario, Manitoba, Alberta, British Columbia, the states of Louisiana and Ohio, as well as in Southern France. * * * Standard & Poor's placed Tembec Inc.'s long-term foreign and local issuer credit ratings at 'CC' in Dec. 20, 2007. TRAILER BRIDGE: Moody's Gives Negative Outlook; Keeps All Ratings ----------------------------------------------------------------- Moody's Investors Service changed the rating outlook of Trailer Bridge, Inc. to negative from stable. In addition, Moody's has affirmed all of Trailer Bridge's existing ratings including the B3 corporate family and probability of default ratings, the B3 LGD 3 rating on the 9.25% guaranteed senior secured notes due 2011, and the speculative grade liquidity rating of SGL-3. This action follows weaker than expected performance for the company in the second half of 2007 and an expectation of continuing near term weakness in the Puerto Rico economy. The company's weaker than expected performance resulted from a market decline in ocean shipping volumes between the U.S. and Puerto Rico, ramp-up costs on Trailer Bridge's Dominican Republic loop that commenced in August 2007, and high fuel costs. Moody's anticipates that economic weakness in Puerto Rico could delay greater shipping volume growth needed to boost Trailer Bridge's operating performance. In addition to economic weakness, expected high fuel costs and need to achieve break even on the Dominican Republic loop will likely pose challenge in 2008. However, Moody's notes that Trailer Bridge has secured some new contracts which may help the company meet the challenge of a weak economy in 2008 such that credit metrics remain appropriate for the B3 rating level. The company has an established position in the relatively closed ocean shipping market between the U.S. and Puerto Rico which bodes well for Trailer Bridge's long term prospects. Furthermore, Trailer Bridge has stated that it gained market share in 2007. Moody's notes that the company received a waiver for a covenant breach that occurred in the fourth quarter of 2007 when fixed charge coverage fell below the required 1.0 times minimum. Trailer Bridge has a speculative grade liquidity rating of SGL-3 which reflects the company's adequate liquidity profile. The company has not historically relied on its $10 million revolving credit facility; nevertheless, with cash on hand at the end of 2007 of $1.9 million, Moody's considers Trailer Bridge's ability to access the revolving credit facility as a key aspect of the overall credit profile. In addition to ongoing performance weakness, inability to maintain credit facility compliance would subject the ratings to downward revision. For the March 31, 2008 covenant compliance test, a credit agreement amendment or another waiver will likely be required due to the high capital spending that occurred in 2007 and is causing fixed charge coverage below 1.0 times. Should the ability to obtain a credit facility amendment or a covenant compliance waiver come in doubt, the ratings would likely be downgraded. Trailer Bridge, Inc. headquartered in Jacksonville, Florida, is an integrated trucking and marine freight carrier that provides truckload freight transportation primarily between the continental U.S. and Puerto Rico. The company owns and operates two Roll- On/Roll-Off and five Triple Stack Box Carrier barges and specializes in 53 foot high-cube inter-modal containers. TRW AUTOMOTIVE: CAW Workers Rally at Windsor Plant in Ontario ------------------------------------------------------------- TRW Automotive Inc. union workers picketed at a plant in Windsor, Ontario, on Thursday, forcing a Chrysler LLC assembly plant also in Windsor to temporarily shut down, various sources report. TRW, which supplies Chrysler suspension modules for Dodge Caravan and Town & Country minivans, employs 190 salaried and hourly workers at the plant, Dow Jones Newswires relates. TRW and Canadian Auto Workers union representatives failed to reach an agreement on wage increases, spurring the protest. Reuters discloses that TRW spokesman John Wilkerson proposes to maintain TRW plant production using salaried workers and hopes to continue negotiations with the union as soon as possible. About Chrysler LLC Based in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. About TRW Headquartered in Livonia, Michigan, TRW Automotive, Inc., supplies automotive systems, modules, and components to global vehicle manufacturers and related aftermarket. The company has three operating segments; Chassis Systems, Occupant Safety Systems, and Automotive Components. Its primary business lines encompass the design, manufacture and sale of active and passive safety related products. * * * As reported in the Troubled Company Reporter on Jan. 25, 2008, Moody's Investors Service affirmed the ratings of TRW Automotive, Inc.: Corporate Family Rating, Ba2; senior secured bank credit facilities, Baa3; and senior unsecured notes, Ba3, but revised the rating outlook to negative from stable. URS CORP: Earns $132 Million in Fiscal Year Ended December 28 ------------------------------------------------------------- URS Corporation reported its financial results for the fiscal year ended Dec. 28, 2007. Revenues increased 27% to $5.38 billion from $4.22 billion in fiscal 2006. Net income for fiscal 2007 was $132.20 million, a 17% increase from $113.0 million in fiscal 2006. The Company's fiscal 2007 results include six weeks of operations of the former Washington Group International, Inc., which URS acquired on Nov. 15, 2007. Excluding the results of the Washington Division, as well as costs associated with the acquisition, URS' EPS for the year would have been $2.58, an 18% increase from fiscal 2006. As of Dec. 28, 2007, the Company's backlog was $18.71 billion, compared to $4.64 billion as of Dec. 29, 2006. The increase in backlog resulted from the acquisition of Washington Group and new contract awards during the year. "URS performed very well in 2007," Martin M. Koffel, Chairman and Chief Executive Officer, stated. "Our private sector and state and local government businesses were particularly robust as a result of favorable trends in the power market and strong infrastructure spending. We generated $311.9 million in cash from operations. We repaid $239 million in bank debt during the year, including $125 million of the debt related to the Washington Group acquisition." Fourth Quarter 2007 Results For the fourth quarter of fiscal 2007, the Company reported revenues of $1.74 billion and net income of $26.40 million. For the fourth quarter of fiscal 2006, the Company reported revenues of $1.08 billion and net income of $26.3 million. Fiscal 2008 Earnings Outlook URS expects its fiscal 2008 revenues to be approximately $9.8 billion. The Company expects that GAAP net income will be between $187 and $197 million and GAAP EPS will be in the range of $2.24 to $2.36 for fiscal 2008. Balance Sheet The company's balance sheet showed total assets of $6.92 billion and total liabilities of $3.42 billion, resulting in $3.47 billion stockholders' equity. Equity at Dec. 29, 2006 was $1.50 billion. About URS Corp. Headquartered in San Francisco, California, URS Corporation (NYSE:URS) -- http://www.urscorp.com/-- offers a comprehensive range of professional planning and design, systems engineering and technical assistance, program and construction management, and operations and maintenance services for transportation, facilities, environmental, water/wastewater, industrial infrastructure and process, homeland security, installations and logistics, and defense systems. The company operates in more than 20 countries with approximately 29,500 employees providing engineering and technical services to federal, state and local governmental agencies as well as private clients in the chemical, pharmaceutical, oil and gas, power, manufacturing, mining and forest products industries. The company also has offices in Argentina, Australia, Belgium, China, France, Germany, and Mexico, among others. * * * As reported in the Troubled Company Reporter on Dec. 7, 2007, Moody's Investors Service has downgraded the Corporate Family Rating of URS Corporation to Ba2 from Ba1 following the company's acquisition of Washington Group International, Inc. Moody's said the ratings outlook is stable. USG CORP: Weak Fin'l Performance Cues Moody's Rating Cuts to 'Ba2' ------------------------------------------------------------------ Moody's Investors Service downgraded the debt ratings of USG Corporation to Ba2 reflecting the ongoing pressure on the company's financial performance caused by the sharp contraction in the new home construction market. At the same time a corporate family rating of Ba2 and a speculative grade rating of SGL-2 were assigned. This action concludes the review that began on Jan. 31, 2008. The ratings outlook is negative. These debt ratings were downgraded or assigned: -- $650 million Revolving Credit Facility, downgraded to Ba2 (LGD4, 56%) from Baa3; -- $500 million Senior Notes, due 2016, downgraded to Ba2 (LGD4, 56%) from Baa3; -- $500 million Senior Notes, due 2018, downgraded to Ba2 (LGD4, 56%) from Baa3; -- $239 million of IRBs, various maturities, downgraded to Ba2 (LGD4, 56%) from Baa3; -- Corporate family rating, assigned at Ba2; -- Speculative grade liquidity rating, assigned at SGL-2. The ratings downgrade reflects the company's weak financial performance and poor outlook due to the homebuilding contraction and the pricing environment for the company's primary product, gypsum. As one of the world's largest providers of gypsum wallboard, the company's volumes are primarily driven by the new home construction and repair and remodeling activities. Given that estimated new home starts for 2008 are likely to be 25%, or so, below 2007's level, the company's financial performance is likely to remain under pressure for at least in 2008 and possibly longer. The effects of the homebuilding slowdown are slightly mitigated by the company's Worldwide Ceilings division and to a lesser degree its building products distribution business. Although these businesses are smaller than the wallboard business, they are performing better because the ceiling market has benefited from the commercial market's strength while the distribution market is more diversified in its sales. The SGL-2 liquidity rating reflects anticipated good liquidity for the next 12 months and takes into consideration both internal liquidity and external liquidity, covenant compliance, as well as alternate liquidity sources. The company's $650 million revolver is expected to have over $500 million in availability (including letters of credit) during 2008. The negative ratings outlook reflects prospects for continuing weakness in the gypsum business as well as the impact of a slowing economy on the rest of the company's businesses. The outlook is likely to remain negative until wallboard pricing and the company's overall margins improve. USG Corporation is a holding company headquartered in Chicago, Illinois. Through operating company subsidiaries, USG is a leading producer and distributor of building materials in the United States, Canada and Mexico. The company manufactures and markets various products that include gypsum wallboard, ceiling tiles and ceiling grids that are primarily used in commercial applications, and operates a network of distribution centers. Revenues for 2007 were approximately $5.2 billion. VALENCE TECH: Inks Agreement to Sell $1 Million Common Shares ------------------------------------------------------------- Valence Technology Inc. entered into an agreement last week to sell $1 million of its common stock to Berg & Berg Enterprises LLC, an affiliate of the company's chairman Carl E. Berg. The proceeds will be used to fund corporate operating needs and working capital. Under the terms of the agreement, the company will issue $1 million of its shares of common stock at a price to be determined based on the closing bid price on Feb. 27, 2008, in a private placement transaction exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. About Valence Technology Headquartered in Austin, Texas, Valence Technology Inc. (Nasdaq: VLNC) -- http://www.valence.com/-- develops and markets Lithium Phosphate Rechargeable Batteries. The company has facilities in Austin, Texas; Las Vegas, Nevada; Mallusk, Northern Ireland and Suzhou, China. Going Concern Doubt As reported in the Troubled Company Reporter on June 21, 2007, PMB Helin Donovan LLP, in Austin, Tex., expressed substantial doubt about Valence Technology, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2007. The auditing firm pointed to the company's recurring losses from operations, negative cash flows from operations and net stockholders' capital deficit. At Dec. 31, 2007, the company had US$20.06 million in total assets, US$8.61 million in redeemable convertible preferred stock, and US$81.23 million in total liabilities, resulting in a US$69.78 million total stockholders' deficit. VALLE GRANDE: Case Summary & Three Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Valle Grande Properties, L.L.C. dba Valle Grande Golf Course 7908 Calle Espada Bakersfield, CA 93309 Bankruptcy Case No.: February 28, 2008 Type of Business: The Debtor owns and operates a golf course. Chapter 11 Petition Date: Court: Eastern District of California (Fresno) Judge: Whitney Rimel Debtor's Counsel: Lawrence G. Campitiello, Esq. 5900 La Place Court, Suite 100 Carlsbad, CA 92008-8832 Tel: (760) 931-9086 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million Debtor's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mary Mata loan unknown 7908 Calle Espada Bakersfield, CA 93309 Ron Mata loan unknown 9811 Caswell Bakersfield, 93309 Patricia Parada loan unknown 601 Purdy Court Bakersfield, 93309 VALLEJO CITY: Reaches Tentative Deal with Labor Unions ------------------------------------------------------ Vallejo city officials and public safety labor unions reached a tentative agreement on Thursday hours before the council was set to vote on possibly filing for bankruptcy, Sarah Rohrs of San Jose Mercury News reports. According to the report, Vallejo firefighters union president Kurt Henke said that it's possible that a special council meeting will be held Monday to go over the proposed deal with the public. Details of the agreement were not disclosed. Without extensive cost-cutting, the city will be $6 million in debt and will have exhausted its $4 million in reserves by June 30, Vallejo Finance Director Rob Stout told the city council on Feb. 13. City Manager Joe Tanner had said the city faces a $10.1 million general fund operating deficit for the current fiscal year and a negative available fund balance of $5.9 million on June 30, 2008. "Based upon the updated financial projections, the current estimate for insolvency is late April 2008," Mr. Tanner had said. The city currently has a $135 million liability for the present value of retiree benefits already earned by active and retired employees and an additional $6 million a year as employees continue to vest and earn this future benefit, Mr. Tanner said. Public safety contracts for police and fire services make up 80 percent of the city's general fund. A possible bankruptcy filing of Vallejo will be the first for a California city. Vallejo is a city in Solano County. As of the 2000 census, the city had a total population of 116,760. It is located in the San Francisco Bay Area on the northern shore of San Pablo Bay. According to Vallejo's comprehensive annual report for the year ended June 30, 2007, the city has $983 million in assets and $358 million in debts. WELLS FARGO: Fitch Rates $1.35 Million Class B-5 Certificates at B ------------------------------------------------------------------ Fitch has rated Wells Fargo mortgage pass-through certificates, series 2008-AR1, as: -- $646,309,100 classes A-1, A-2, A-3, A-4, A-5, A-6 and A-R, 'AAA'; -- $11,818,000 class B-1 'AA'; -- $5,741,000 class B-2 'A'; -- $2,026,000 class B-3 'BBB'; -- $4,052,000 class B-4 'BB'; -- $1,350,000 class B-5 'B'. The 'AAA' rating on the senior certificates reflects the 4.30% subordination provided by the 1.75% class B-1, 0.85% class B-2, 0.30% class B-3, 0.60% privately offered class B-4, 0.20% privately offered class B-5, and 0.60% privately offered class B-6. The class B-6 is not rated by Fitch. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures, and the master and primary servicing capabilities of Wells Fargo Bank, N.A. (WFB; rated 'RMS1' and 'RPS1' by Fitch). This transaction contains certain classes designated as exchangeable certificates and others as regular certificates. The classes A-3, A-4, A-5 and A-6 certificates are exchangeable certificates. The remainder of the classes are regular certificates. The transaction is secured by a pool of 963 mortgage loans, which consists of fully amortizing, one- to four-family, adjustable-rate mortgage loans that provide for a fixed interest rate during an initial period of approximately five years. Thereafter, the interest rate will adjust on an annual basis. The interest rate of each mortgage loan will adjust to equal the sum of the index and a gross margin. Approximately 86.18% of the mortgage loans are interest-only loans, which require only payments of interest until the month following the first adjustment date. The mortgage loans have an aggregate principal balance of approximately $675,349,148 as of the cut-off date (Feb. 1, 2008), an average balance of $701,297, a weighted average remaining term to maturity of 357 months, a weighted average original loan-to- value ratio of 71.57%, and a weighted average coupon of 6.498%. Rate/Term and equity take-out refinances account for 23.92% and 13.94% of the loans, respectively. The weighted average original FICO credit score of the loans is 741. Owner-occupied properties and second homes comprise 83.65% and 14.71% of the loans, respectively. The states that represent the largest geographic concentration are California (28.04%), Florida (9.99%), New York (9.69%), and New Jersey (5.83%). All other states represent less than 5% of the aggregate pool balance as of the cut-off date. All of the mortgage loans were originated or purchased by WFB. WFB sold the loans to Wells Fargo Asset Securities Corporation, a special purpose corporation, which deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB will act as servicer, master servicer, paying agent, and custodian, and HSBC Bank USA, N.A. (rated 'AA/F1+' by Fitch) will act as trustee. For federal income tax purposes, elections will be made to treat the trust as two separate real estate mortgage investment conduits. WICKES FURNITURE: Liquidation Sale of All Stores Starts Tomorrow ---------------------------------------------------------------- By order of a U.S. Bankruptcy Court for the District of Delaware, store closing sales will begin Saturday, March 1, 2008, at all 38 Wickes Furniture Inc. stores in California, Illinois, Indiana and Nevada. Over $75 million of famous brand furniture and accessories will be liquidated. Sales at 5 Oregon locations are planned to commence later in March. Discounts from 25% to 50% will be offered on all merchandise in each of the 38 California, Illinois, Indiana and Nevada stores. Consumers will be able to benefit from very significant savings on Wickes' entire stock of furniture for the living room, dining room, bedroom, kids' room and home office. All mattress sets, home entertainment centers, Oriental rugs and decorative accessories will be deeply discounted, as well. Liquidation of all inventory and store fixtures will be managed by a joint venture comprised of Hilco Merchant Resources LLC, SB Capital Group LLC, Tiger Capital Group LLC and Planned Furniture Promotions, Inc. "This is a tremendous opportunity for every home owner and apartment renter to take advantage of truly compelling discounts on a huge selection of brand name furniture and accessories," Michael Keefe, President of Hilco Merchant Resources stated. "Anticipating that value conscious consumers will respond very positively to these outstanding savings on quality home furnishings, we expect this will be a short sale." A group of liquidators won the Feb. 25 auction for the assets of Wickes Furniture, according to Bill Rochelle of Bloomberg News citing the Chicago Sun Times. The 43-store furniture retailer had no binding contract in advance of the sale. Based in Wheeling, Illinois, Wickes Furniture Company, Inc. -- http://www.wickesfurniture.com/-- is one of the leading furniture retailers in the U.S. with 43 retail stores serving greater Chicago, Los Angeles, Las Vegas, and Portland. Founded in 1971, Wickes offers attractive room packages featuring complete living rooms, dining rooms, bedrooms as well as bedding, home entertainment, accessories and accent furniture. Wickes employs over 1,700 employees and offers products from leading furniture and bedding manufacturers. The company and two of its debtor-affiliates filed for Chapter 11 protection on Feb. 3, 2008 (Bankr. D. Del. Lead Case No. 08- 10213). Donald J. Detweiler, Esq., at Greenberg Traurig LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed consolidated estimated assets of $10 million to $50 million, and estimated debts of $50 million to $100 million. WOLVERINE TUBE: Credit & Receivables Sales Facilities Amended ------------------------------------------------------------- Wolverine Tube Inc. has executed amendments to its $35 million Secured Revolving Credit Facility and its $75 million Receivables Sales Facility which extend the maturity dates to April 28, 2009, and Feb. 19, 2009, and increase borrowing availability. The facilities were scheduled to mature in April 2008. "These extended credit facilities will support Wolverine's operating requirements for 2008 well as fund a portion of its overall liquidity requirements to refinance its debt maturities," David Owen, Wolverine's chief financial officer, commented. "This will be supplemented by Wolverine's strong cash position, which is primarily a result of equity investments in Preferred Stock, a common stock rights offering and working capital reductions." Headquartered in Huntsville, Alabama, Wolverine Tube Inc. (OTC:WLVT) -- http://www.wlv.com/ and http://www.silvaloy.com/ manufactures and distributes copper and copper alloy tubular products, fabricated and metal joining products, well as rod and bar products. The company focuses on developing and manufacturing tubular products with heat transfer capabilities used in engineered applications. The company's major customers' headquarters are in North America and include commercial and residential air conditioning and refrigeration equipment manufacturers, appliance manufacturers, industrial equipment manufacturers, utilities and other power generating companies, refining and chemical processing companies, and plumbing wholesalers. Wolverine classifies products as commercial products, wholesale products, and rod, bar and other products. * * * As reported in the Troubled Company Reporter on Nov. 22, 2007, Moody's Investors Service confirmed Wolverine Tube's Caa2 corporate family rating, Caa2 probability of default rating, and Caa3 senior unsecured rating (LGD4, 63%). The rating outlook was revised to negative from ratings under review. WOODCOCK ESTATE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Woodcock Estates, Inc. 1 Myrtle Avenue Cambridge, NY 12816 Bankruptcy Case No.: 08-10502 Type of Business: The Debtor provides health care services. Chapter 11 Petition Date: February 26, 2008 Court: Northern District of New York (Albany) Judge: Robert E. Littlefield Jr. Debtor's Counsel: Richard H. Weiskopf (rweiskopf@oalaw.com) O'Connell & Aronowitz 54 State Street, 9th Floor Albany, NY 12207 Tel: (518) 462-5601 Fax: (518) 462-2670 http://www.oalaw.com/ Total Assets: $2,709,100 Total Debts: $1,225,959 Consolidated Debtor's List of 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ National Grid $49,200 300 Erie Boulevard West Syracuse, NY 13202 GA Bove $37,642 76 Railroad Street Machanicville, NY 12118 Aqua Water $26,499 762 W. Lancaster Avenue Bryn Mawr, PA 19010 LaFlammes $14,000 Nolan & Heller $12,685 Quandt's Foodservice $10,557 Distributors Direct Supply $9,500 Lapans Precision $5,762 Eagle, The $5,327 Kone $5,238 Hill & Markes $4,953 NYS Unemployment Insurance $4,685 True Value $4,344 Doberts Dairy $3,983 Morning Star $3,327 Lapans $3,250 Jarret-Martin Engineers $2,893 Morning Star Excavating $2,701 Adirondack Medical Services $1,765 Napaul Publishers $1,570 YOUR RV WIZARD: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Your R.V. Wizard, L.L.C. P.O. Box 1848 Benson, AZ 85602 Bankruptcy Case No.: 08-01793 Type of Business: The Debtor is a recreational vehicles dealer. Chapter 11 Petition Date: February 27, 2008 Court: District of Arizona (Tucson) Judge: Eileen W. Hollowell Debtor's Counsel: Alan R. Solot, Esq. (arsolot@tiltonandsolot.com) Tilton & Solot 459 North Granada Avenue Tucson, AZ 85701 Tel: (520) 622-4622 Fax: (520) 882-9861 http://www.tiltonandsolot.com/ Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. ZALE CORP: Reduces Staffing on New Operational Efficiency Program ----------------------------------------------------------------- Zale Corporation has begun the implementation of a program designed to enhance the company's profitability and improve its overall effectiveness. The program, which seeks to generate $65 plus million in ongoing, annualized savings beginning in the company's fourth quarter of fiscal 2008, is the product of management's comprehensive review of operating and capital expenses in consultation with the board of directors. Key elements of the program include: * Estimated $65 plus million in ongoing, annualized savings a majority of which is overhead spending. Approximately $5 million of savings are expected to be realized in the fourth quarter of fiscal 2008; * Organizational streamlining, primarily involving a reduction of the company's headquarters staff by 225 filled and open positions or approximately 20%; * Anticipated total program cost, including severance-related benefits, of less than $4 million pre-tax, will be incurred largely in the company's fiscal third quarter ending April 30, 2008; * A reduction of planned capital spending from an expected $85 million in fiscal 2008 to approximately $45 million in fiscal 2009; * Continued optimization of company's store portfolio, including the closure of an additional 23 underperforming locations, bringing the total number of planned store closures to approximately 105 in fiscal 2008; and, * A $100 million reduction in inventory in fiscal 2008, which was announced previously. The decrease in inventory levels was based on a detailed review by category and item and the company's intends to make the reduction permanent. "In order to improve Zale's overall performance and provide our value-oriented customer with an exceptional experience, it is essential that we reduce the company's infrastructure costs, which have outpaced its sales growth since 2002," Neal Goldberg, Zale president and chief executive officer, said. "The program we are announcing follows an extensive review, and will enhance our operational effectiveness significantly." "It builds upon steps we have already taken to reduce redundancies, simplify processes and create a more agile company's, such as the realignment of our merchandise and sourcing organizations," Mr. Goldberg continued. "Creating a culture of cost discipline and financial rigor is vital to Zale's ongoing success," Mr. Goldberg stated. "While we recognize that expense saves will help drive efficiencies in the near-term, our ultimate success will come from optimizing the balance between top-line growth, margin expansion and expense control." "These actions are difficult for our entire organization but are important steps in order to connect us more closely to our customers," Mr. Goldberg concluded. "We thank our associates affected by these changes for their dedication, hard work and contributions." Operating Savings Details The company eliminated approximately 140 filled and 85 open positions, representing approximately 20% of its headquarters staff. As a result of this action, the company expects to reduce corporate staff payroll by approximately $15 million, or 20%, per year, and non-selling field payroll by approximately $8 million. In addition, approximately $40 million of non-compensation expenses such as consulting, marketing, and travel are planned to be eliminated, representing 20% of such expenses, as well as $2 million related to distribution. Reflecting this expense reduction, the company expects to reduce SG&A as a percent of sales by approximately 250 basis points for fiscal 2009, as compared to the current fiscal year. Capital Reduction and Store Closing Details The company's capital expenditures for fiscal 2009 are expected to be $45 million, a reduction of $40 million from the $85 million level the company expects for the current fiscal year. Capital expenditure reductions will be realized primarily from more effective spending on store remodels, slower store growth in the near-term and a deceleration of information technology initiatives. With the estimated $65 plus million in operating savings and $40 million in capital expenditure reductions, the company's expects a substantial increase in its free cash flow for fiscal 2009. The store optimization component of the program involves the closure in fiscal 2008 of approximately 105 locations, of which 95 are underperforming and 50 are kiosks. These locations will close primarily as leases mature; as such, the company's expects to incur minimal exit costs. Zale intends to maintain this financial rigor as it evaluates its store portfolio on an ongoing basis. Even as the company's makes these reductions, it will continue to commit to needed and profitable investments in the existing store base, as well as dedicate its capital expenditures to brands offering greater strategic opportunity and higher return on investment. Zale expects to exit its fiscal year 2008, which ends July 31, 2008, with approximately 2,145 retail locations. About Zale Corporation Headquartered in Irving, Texas, Zale Corporation (NYSE:ZLC) -- http://www.zalecorp.com-- is a specialty retailer of fine jewelry in North America. At July 31, 2007, the company's operated 1,471 specialty retail jewelry stores and 793 kiosks located mainly in shopping malls throughout the United States, Canada and Puerto Rico. Zale Corporation operates under three business segments: fine jewelry, kiosk jewelry and all other. The fine jewelry segment comprises six brands, each of which specializes in fine jewelry and watches, with merchandise and marketing emphasis focused on diamond products. The kiosk jewelry segment operates primarily under the brand names Piercing Pagoda, Plumb Gold, Silver and Gold Connection through mall-based kiosks. In all other, it provides insurance and reinsurance facilities for various types of insurance coverage through Zale Indemnity company's, Zale Life Insurance company's and Jewel Re-Insurance Ltd. During the fiscal year ended July 31, 2007, the Fine Jewelry segment generated approximately 89% of the company's net revenues. * S&P Says 418 ABS Ratings Affected by Bond Insurer Rating Actions ------------------------------------------------------------------ Standard & Poor's Ratings Services initiated various rating and CreditWatch actions on 418 U.S. asset-backed securities from 226 transactions as a result of recent rating and CreditWatch actions on bond insurers Financial Guaranty Insurance Co., XL Capital Assurance Inc., and MBIA Insurance Corp. On Feb. 26, 2008, S&P lowered its long-term ratings on 64 U.S. ABS classes to 'A' from 'AA'. These ratings remain on CreditWatch with developing implications. The rating and CreditWatch actions reflected the lowering of the financial enhancement ratings on FGIC and its related entities to 'A' from 'AA' and the remaining CreditWatch developing status of these ratings. In addition, seven U.S. ABS ratings were delinked from the rating on FGIC to reflect the ability of the underlying collateral to withstand stress scenarios consistent with a rating that is higher than the rating on the insurance provider. S&P lowered its ratings on 29 U.S. ABS classes to 'A-' from 'AAA'. These ratings also remain on CreditWatch with negative implications. These actions followed the lowering of the financial enhancement ratings on XLCA and its related entities to 'A-' from 'AAA' and the remaining CreditWatch negative status. Additionally, S&P delinked the ratings on 15 U.S. ABS classes from the rating on XLCA to reflect the ability of the underlying collateral to withstand stress scenarios consistent with a rating that is higher than the rating on the insurance provider. Furthermore, S&P affirmed its 'AAA' long-term ratings on 303 U.S. ABS transactions with exposure to MBIA and removed them from CreditWatch with negative implications. These actions reflected the affirmation of the ratings on MBIA and its related entities and their removal from CreditWatch negative. Standard & Poor's will continue to monitor the long-term ratings and the underlying ratings for all affected U.S. ABS classes. Future rating actions may be warranted as the CreditWatch status of the ratings on the monolines are resolved. The following list details the U.S. ABS asset types affected by the rating actions on the bond insurance providers. U.S. ABS Ratings Affected by Monoline Actions Asset Type MBIA XLCA FGIC ---------- ---- ---- ---- 12b-1 0 0 8 Aircraft 6 0 4 Auto - warehouse 2 0 0 Auto loan 51 20 25 Commercial - other 5 0 0 Consumer-other 1 1 0 Credit card 2 0 3 Equipment 0 3 1 Esoteric asset 12 3 4 Franchise loan 20 0 0 Manufactured housing 19 0 0 Marine 2 0 0 Railcar/container 3 0 2 Recreational vehicles 0 0 2 Rental cars 17 7 3 Single-issue synthetic 24 10 13 Small business 8 0 0 Structured settlement 24 0 0 Student loan 101 0 0 Timeshare 6 0 5 Trade receivables 0 0 1 ====================== === == == Total 303 44 71 * S&P Downgrades 85 Tranches' Ratings From 16 Cash Flows and CDOs ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 85 tranches from 16 U.S. cash flow and hybrid collateralized debt obligation transactions. S&P removed 79 of the lowered ratings from CreditWatch with negative implications. Additionally, S&P affirmed its 'AAA' ratings on five classes and removed them from CreditWatch negative. The downgraded tranches have a total issuance amount of $9.722 billion. All of the affected transactions are mezzanine structured finance CDOs of asset-backed securities, which are CDOs of ABS collateralized in large part by mezzanine tranches of residential mortgage-backed securities and other SF securities. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS securities. To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P has lowered its ratings on 2,027 tranches from 506 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 1,526 ratings from 357 transactions are currently on CreditWatch negative for the same reasons. In all, the affected CDO tranches represent an issuance amount of $348.805 billion. Standard & Poor's will continue to monitor the CDO transactions it rates and take rating actions, including CreditWatch placements, when appropriate. Rating and Creditwatch Actions Rating Transaction Class To From Alpha Mezz CDO 2007-1 Ltd II BB+ AAA/Watch Neg Alpha Mezz CDO 2007-1 Ltd III B+ AA/Watch Neg Alpha Mezz CDO 2007-1 Ltd IV B+ AA-/Watch Neg Alpha Mezz CDO 2007-1 Ltd SupSrSwap A+ AAA/Watch Neg Alpha Mezz CDO 2007-1 Ltd V CCC+ A/Watch Neg Alpha Mezz CDO 2007-1 Ltd VI CC BBB/Watch Neg Alpha Mezz CDO 2007-1 Ltd VII CC BB+/Watch Neg BFC Ajax CDO Ltd. B BBB+ AA-/Watch Neg BFC Ajax CDO Ltd. C BBB- BBB+/Watch Neg BFC Ajax CDO Ltd. D B BB+/Watch Neg BFC Ajax CDO Ltd. E CC B-/Watch Neg BFC Ajax CDO Ltd. X BBB+ A-/Watch Neg Bluegrass ABS CDO III Ltd. A-1 AAA AAA/Watch Neg Bluegrass ABS CDO III Ltd. A-2 A+ AAA/Watch Neg Bluegrass ABS CDO III Ltd. B BBB- AA/Watch Neg Bluegrass ABS CDO III Ltd. C BB A/Watch Neg Bluegrass ABS CDO III Ltd. D-1 CCC+ BBB/Watch Neg Bluegrass ABS CDO III Ltd. D-2 CCC+ BBB/Watch Neg Broadwick Funding Ltd A-1b A+ AAA Broadwick Funding Ltd A-2 A+ AAA/Watch Neg Broadwick Funding Ltd B BBB- AA/Watch Neg Broadwick Funding Ltd C BB A/Watch Neg Broadwick Funding Ltd D CCC+ BBB/Watch Neg Duke Funding V Ltd. II AA- AAA/Watch Neg Duke Funding V Ltd. III BB+ AA/Watch Neg Duke Funding V Ltd. IV-A CCC BBB/Watch Neg Duke Funding V Ltd. IV-B CCC BBB/Watch Neg Duke Funding XII Ltd. A1 BB+ AAA/Watch Neg Duke Funding XII Ltd. A2 BB AA/Watch Neg Duke Funding XII Ltd. A3 B- A/Watch Neg Duke Funding XII Ltd. A-S1VFA BBB+ AAA/Watch Neg Duke Funding XII Ltd. A-S1VFB BBB+ AAA/Watch Neg Duke Funding XII Ltd. B1 CCC+ BBB+/Watch Neg Duke Funding XII Ltd. B2 CCC- BBB/Watch Neg Duke Funding XII Ltd. B3 CC BBB-/Watch Neg Fort Point CDO II Ltd. A-2 AAA AAA/Watch Neg Fort Point CDO II Ltd. A-3 BBB+ AA/Watch Neg Fort Point CDO II Ltd. B BBB- A-/Watch Neg Fort Point CDO II Ltd. C CCC+ BBB/Watch Neg Kleros Real Estate CDO I Ltd A-1 B AAA/Watch Neg Kleros Real Estate CDO I Ltd A-2 CCC+ AA/Watch Neg Kleros Real Estate CDO I Ltd B CCC A+/Watch Neg Kleros Real Estate CDO I Ltd C CC BBB/Watch Neg Knollwood CDO Ltd A-1 AAA AAA/Watch Neg Knollwood CDO Ltd A-2 BB+ AA+/Watch Neg Knollwood CDO Ltd B CCC A-/Watch Neg Knollwood CDO Ltd C CC CCC+/Watch Neg Longport Funding II Ltd. A1J AA AAA/Watch Neg Longport Funding II Ltd. A2 A+ AA/Watch Neg Longport Funding II Ltd. A3 BBB A/Watch Neg Longport Funding II Ltd. B B+ BBB/Watch Neg Longport Funding II Ltd. Combo Sec BBB A/Watch Neg Longport Funding II Ltd. Incme Nts CC+ BB/Watch Neg MKP Vela CBO Ltd. A CCC- AAA/Watch Neg MKP Vela CBO Ltd. B CC AA/Watch Neg MKP Vela CBO Ltd. C CC A/Watch Neg MKP Vela CBO Ltd. D CC BBB/Watch Neg MKP Vela CBO Ltd. Super Sr B AAA/Watch Neg MKP Vela CBO Ltd. X-1 CC BBB-/Watch Neg MKP Vela CBO Ltd. X-2 CC BBB-/Watch Neg Montauk Point CDO Ltd A1 AA AAA Montauk Point CDO Ltd A2 A- AAA Montauk Point CDO Ltd B BBB- AA-/Watch Neg Montauk Point CDO Ltd C BB+ A/Watch Neg Montauk Point CDO Ltd D B+ BBB/Watch Neg Montauk Point CDO Ltd E CCC+ BB/Watch Neg Montauk Point CDO Ltd F CCC B+/Watch Neg Montauk Point CDO Ltd G CC CCC+/Watch Neg Pinetree CDO Ltd. A-1J A- AAA/Watch Neg Pinetree CDO Ltd. A-2 BBB- AA/Watch Neg Pinetree CDO Ltd. A-3 BB- A/Watch Neg Pinetree CDO Ltd. B CCC- BB/Watch Neg Pyxis ABS CDO 2006-1 LLC A-1 CCC+ AA/Watch Neg Pyxis ABS CDO 2006-1 LLC A-2 CCC- A+/Watch Neg Pyxis ABS CDO 2006-1 LLC B CC BBB/Watch Neg Pyxis ABS CDO 2006-1 LLC C CC B/Watch Neg Pyxis ABS CDO 2006-1 LLC D CC CCC-/Watch Neg Pyxis ABS CDO 2006-1 LLC UnfunSpr BB+ AAA/Watch Neg Tabs 2005-4 Ltd. A AA AAA Tabs 2005-4 Ltd. B BBB AAA Tabs 2005-4 Ltd. C BB+ AA Tabs 2005-4 Ltd. D BB A/Watch Neg Tabs 2005-4 Ltd. E CCC+ BBB-/Watch Neg Vertical ABS CDO 2006-1 Ltd A-1 BBB AAA/Watch Neg Vertical ABS CDO 2006-1 Ltd A-2 BB- AA/Watch Neg Vertical ABS CDO 2006-1 Ltd A-3 CCC+ A/Watch Neg Vertical ABS CDO 2006-1 Ltd A-S1VF A+ AAA/Watch Neg Vertical ABS CDO 2006-1 Ltd B CC BBB/Watch Neg Vertical ABS CDO 2006-1 Ltd Cl 1 Cmbo AAA AAA/Watch Neg Vertical ABS CDO 2006-1 Ltd Cl 2 Cmbo AAA AAA/Watch Neg Other Outstanding Ratings Transaction Class Rating ----------- ----- ------ BFC Ajax CDO Ltd. A A/Watch Dev Broadwick Funding Ltd S AAA Duke Funding V Ltd. 1-A2 AAA Duke Funding V Ltd. I-A1 AAA Duke Funding V Ltd. I-B AAA Duke Funding V Ltd. I-W AAA Fort Point CDO II Ltd. A-1 AAA Kleros Real Estate CDO I Ltd D CC Longport Funding II Ltd. A1S AAA Pinetree CDO Ltd. A-1S AAA Pyxis ABS CDO 2006-1 LLC X CC * Ropes & Gray Opens Chicago Office and Welcomes Three Partners --------------------------------------------------------------- Marking the latest step in its strategic expansion into key legal markets, Ropes & Gray, a national law firm, disclosed the opening of a new office in Chicago. Joining the firm as partners are James T. Lidbury, Esq., Jonathan M. Grandon, Esq. and Deborah A. Monson, Esq., all formerly partners at Mayer Brown in Chicago. Mssrs. Lidbury and Grandon's practices focus on mergers and acquisitions, private equity transactions, and corporate and securities matters. Ms. Monson's practice focuses on investment management, including hedge funds and commodities matters. "This is an exciting development for Ropes & Gray," R. Bradford Malt, chairman of Ropes & Gray, said. "We see in Chicago and the entire Midwest region a significant opportunity to continue our strategic growth into attractive markets. We expect that this office will grow rapidly in the near term. David Chapin and John Ayer, two Boston-based private equity partners, will be spending significant time in the Chicago office to facilitate integration and practice development." "Jim and Jon are widely recognized for the quality of their transaction work, and they have an outstanding reputation for client service, advising an array of clients on a broad range of M&A-related work, governance issues and strategic initiatives," Mr. Malt added. "We are also delighted that Debbie will be joining our preeminent investment management practice. They are all remarkably talented lawyers who will contribute substantially to our new office. We look forward to working with our new colleagues in this exciting new endeavor." "Jon, Debbie and I welcome the opportunity to join Ropes & Gray, and we look forward to capitalizing on the many opportunities to bring superior service to clients here in Chicago and across the country," Mr. Lidbury said. "Our initial focus will be on serving the needs of clients throughout the country and on building a full-service team of outstanding lawyers in Chicago in keeping with Ropes & Gray's culture of excellence, collegiality and unstinting client service." Before joining Mayer Brown in 1994, Mr. Lidbury was an attorney in the U.S. Securities & Exchange Commission's Division of Corporate Finance. He was named to the 2008 BTI Transactions "Super All- Star Team" as one of the top three M&A lawyers in the United States. The 2007 edition of the respected Chambers USA guide cited Jim's "fantastic disposition, intellect and judgment," and said "his peers appreciate his 'reasonable and cooperative' approach." He earned his undergraduate and law degrees from Northwestern University. He is admitted to practice in Illinois, New York and the District of Columbia. Mr. Grandon joined Mayer Brown in 2004. He earned his undergraduate degree from Columbia University and his law degree from the University of Michigan Law School. Before joining Mayer Brown, Grandon was an associate at Simpson Thacher in New York. He is admitted to practice in Illinois and New York. Ms. Monson joined Mayer Brown in 1994. She earned her undergraduate degree from Princeton University and law degree from the University of Michigan. Before joining Mayer Brown, Monson was an attorney at Schiff Hardin & Waite in Chicago. She is admitted to practice in Illinois. With the new Chicago office, Ropes & Gray now has seven locations in preeminent centers of business and finance. In October 2007, Ropes & Gray opened an office in Tokyo, Japan. About Ropes & Gray Headquartered in Boston, Massachusetts, Ropes & Gray LLP -- http://www.ropesgray.com/-- provides comprehensive legal services to businesses and individuals around the world. Clients benefit from expertise combined with unwavering standards for integrity, service, and responsiveness. With offices in preeminent centers of finance, technology and government, Ropes & Gray is ideally positioned to address most pressing legal and business issues. Capabilities include antitrust, bankruptcy and business restructuring, corporate mergers and acquisitions, employee benefits, environmental, health care, intellectual property and technology, international, investment management, labor and employment, life sciences, litigation, private equity and venture capital, private client services, real estate and tax. * BOOK REVIEW: Inside Investment Banking: Second Edition -------------------------------------------------------- Author: Ernest Bloch Publisher: Beard Books Softcover: 440 Pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1587982684/internetbankrupt Even though Bloch states that "no last word may ever be written about the investment banking industry," he nonetheless has written a definitive book on the subject. Bloch wrote Inside Investment Banking after discovering that no textbook on the subject was available when he began teaching a course on investment banking. Bloch's book is like a textbook, though one not meant to be limited to classroom use. It's a complete, knowledgeable study of the structure and operations of the field of investment banking. With a long career in the field, including work at the Federal Reserve Bank of New York, Bloch has the background for writing the book. He sought the input of many of his friends and contacts in investment banking for material as well as for critical guidance to put together a text that would stand the test of time. While giving a nod to today's heightened interest in the innovative securities that receive the most attention in the popular media, Inside Investment Banking concentrates for the most part on the unchanging elements of the field. The book takes a subject that can appear mystifying to the average person and makes it understandable by concentrating on its central processes, institutional forms, and permanent aims. The author shows how all aspects of the complex and ever-changing field of investment banking, including its most misunderstood topic of innovative securities, leads to a "financial ecology" which benefits business organizations, individual investors in general, and the economy as a whole. "[T]he marketplace for innovative securities becomes, because of its imitators, a systematic mechanism for spreading risk and improving efficiency for market makers and investors," says Bloch. For example, Bloch takes the reader through investment banking's "market making" which continually adapts to changing economic circumstances to attract the interest of investors. In doing so, he covers the technical subject of arbitrage, the role of the venture capitalist, and the purpose of initial public offerings, among other matters. In addition to describing and explaining the abiding basics of the field, Bloch also takes up issues regarding policy (for example, full disclosure and government regulation) that have arisen from the changes in the field and its enhanced visibility with the public. In dealing with these issues, which are to a large degree social issues, and similar topics which inherently have no final resolution, Bloch deals indirectly with criticisms the field has come under in recent years. Bloch cites the familiar refrain "the more things change, the more they remain the same" and then shows how this applies to investment banking. With deregulation in the banking industry, globalization, mergers among leading investment firms, and the growing number of individuals researching and trading stocks on their own, there is the appearance of sweeping change in investment banking. However, as Inside Investment Banking shows, underlying these surface changes is the efficiency of the market. Anyone looking for an authoritative work covering in depth the fundamentals of the field while reflecting both the interest and concerns about this central field in the contemporary economy should look to Bloch's Inside Investment Banking. After time as an economist with the Federal Reserve Bank of New York, Ernest Bloch was a Professor of Finance at the Stern School of Business at New York University. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Joseph Medel C. Martirez, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Philline P. Reluya, Shimero R. Jainga, Joel Anthony G. Lopez, Tara Marie A. Martin, Melanie C. Pador, Ronald C. Sy, Cecil R. Villacampa, Ma. Cristina I. Canson, Christopher G. Patalinghug, Frauline S. Abangan, and Peter A. Chapman, Editors. Copyright 2008. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***