T R O U B L E D C O M P A N Y R E P O R T E R Thursday, March 13, 2008, Vol. 12, No. 62 Headlines A&B CHECK CASHING: Trustee Says Bank Not Entitled to $5MM Claim ABITIBI-CONSOLIDATED: Fitch Chips ID Rating to CC from CCC ACURA PHARMACEUTICALS: Names Richard Markham as Board Chairman ALTIVITY PACKAGING: Closes $1.75 Bil. Deal With Graphic Packaging ALTIVITY PACKAGING: S&P Withdraws Ratings on Merger With Graphic AMERICAN AXLE: To Continue Labor Negotiations with UAW Today AMERICAN LAFRANCE: Court Enters Revised Order on Asset Sale AMERICAN LAFRANCE: Panel Wants to Hire FTI as Financial Advisor AMERICAN LAFRANCE: Panel Wants to Hire Pepper Hamilton as Counsel AMERICAN LAFRANCE: Seeks Approval of Premier Logistics Settlement AMERICHIP INT'L: Jewett Schwartz Expresses Going Concern Doubt APRIA HEALTHCARE: Earns $25 Million in 4th Quarter Ended Dec. 31 AQUATIC CELLULOSE: Peterson Sullivan Expresses Going Concern Doubt AQUILA INC: Posts $5.4 Million Net Loss in Year Ended Dec. 31 AVENSYS CORP: Inks Asset Purchase Deal with Willer Engineering AXCAN PHARMA: Completes Shares Buyout Deal with TPG Capital Unit BAYER PROTECTIVE: Case Summary & 20 Largest Unsecured Creditors BEAR STEARNS: Fitch Affirms 'B-' Rating on $2.7MM Class N Certs. BOISE CASCADE: S&P Chips Rating to 'BB-' on $1.63 Billion Sale BONTEN MEDIA: S&P Pares Rating on Bank Loan Facilities to 'B+' BOSTON HILL: Section 341(a) Meeting Scheduled for March 12 BOSTON HILL: Asks Court to Approve Munroe & Chew as Counsel CAMPBELL ROOFING: Case Summary & 20 Largest Unsecured Creditors CAPRI CONDOMINIUMS: Court Okays Use of Bank's Cash Collateral CAPRI CONDOMINIUMS: Gets Court Nod to Assume Executory Contracts CAPRI CONDOMINIUM: Taps GrayRobinson as Bankruptcy Counsel CARBON CAPITAL: S&P Puts Two Classes' Low-B Ratings on Neg. Watch CARLYLE CAPITAL: Lenders Snub Proposed Standstill Agreement CARLYLE CAPITAL: CEO Sees "Three-Leg" Downward Move in Market CATHOLIC CHURCH: Court OKs Special Arbitrator in Davenport's Case CATHOLIC CHURCH: Fairbanks' Creditors to Meet on April 9 CATHOLIC CHURCH: Court Approves Filing of Documents Under Seal CEMA CONSTRUCTION: NY Court Certifies Workers' Class Action CENTERSTAGING MUSICAL: Files for Bankruptcy in California CGP INC: Court Approves Hiring of Cohen, Pollock as Attorneys CHAMPION ENTERPRISES: Reorganization Cues Bobby Williams Departure CHARTER COMMUNICATIONS: Names Eloise Schmitz as Interim CFO CHASE COMMERCIAL: Fitch Affirms 'B' Rating on $5.9MM Certificates CHENIERE ENERGY: Dec. 31 Balance Sheet Upside-Down by $302 Million CHINA DIGITAL: Zhong Yi Expresses Going Concern Doubt CHRYSLER LLC: Increases Purchases from Minority Suppliers in 2007 CINEMARK HOLDINGS: Paying $0.18/Share Cash Dividend on March 14 COMMERCIAL CASUALTY: To Be Owned by Berkshire After Stake Swap COMMERCIAL CASUALTY: A.M. Best Puts 'bb-' IC Rating Under Review COMSTOCK HOMEBUILDING: Extends Discount Option on $30M Notes COMVERSE TECH: S&P Chips Corporate Credit Rating to 'B+' From BB- DANIEL WEBSTER: Moody's Retains 'B1' Rating on 1999 and 2001 Bonds DAVITA INC: Richard K. Whitney Returns as Chief Financial Officer DELPHI CORP: Closes Interiors & Closures Biz Sale to Renco Group DELTA AIR: Disbands Merger Advisers, Stresses "Stand-Alone Plan" DIABLO GRANDE: Blames Bankruptcy Filing on Housing Market Slump DOMINION HOMES: PwC Raises Substantial Going Concern Doubt DURA AUTOMOTIVE: Tax Advisor Seeks $962,541 in Fees for January FARIBAULT HOUSING: Moody's Cuts Rating on Refunding Bonds to 'Ba1' FOAMEX INTERNATIONAL: BoNY Can Collect Post-Maturity Interest FORTUNOFF: Closes Sale of Assets to NRDC Equity for $110,000,000 FORTUNOFF: Names Charles Chinni as New Chairman and CEO FRIPP GROUP: Case Summary & Two Largest Unsecured Creditors FULTON LAND: Voluntary Chapter 11 Case Summary GAP INC: Tom Wyatt Sits as Acting President of Old Navy Brand GENCORP INC: S&P Retains 'B+' Rating; Changes Outlook to Negative GENERAL MOTORS: Won't Meddle in AAM & UAW Labor Dispute, COO Says GEORGIA SOD: Seeks Court Approval to Hire Levine Block as Counsel GRAPHIC PACKAGING: Completes Merger Deal With Altivity Packaging GRAPHIC PACKAGING: S&P Assigns 'BB-' Rating on $1.2B Term Loan C GREYSTONE CUSTOM: Case Summary & 20 Largest Unsecured Creditors GS MORTGAGE: Fitch Holds Low-B Ratings on Five Certificate Classes GTC BIOTHERAPEUTICS: PwC Raises Going Concern Doubt HAMLIN PROPERTIES: Has Court Nod in Using PAMI's Cash Collateral HOVNANIAN ENTERPRISES: Has $169MM Pre-Tax Loss for 1st Qtr. 2008 HOVNANIAN ENTERPRISES: Lenders Reduce Loan Commitment to $900MM IL PICCO: Case Summary & 14 Largest Unsecured Creditors INDALEX HOLDING: Moody's Junks Corporate Family Rating INDYMAC BANCORP: Sees Lower than Expected First Quarter Results INFOUSA INC: Moody's to Review 'Ba3' Rating on 10K Filing Delay INFOUSA INC: 10K Filing Delay Prompts S&P's Negative Watch Listing INGEAR CORP: Gets Interim Court Nod on $10 Million DIP Financing INPHONIC INC: Wants Exclusive Plan Filing Period Moved to Sept. 3 INTERFACE INC: Earns $20.3 Million in Fourth Quarter Ended Dec. 30 ION MEDIA: Completes Reverse Stock Split for Class A & B Stock JEFFERSON COUNTY: SEC Investigates Former Finance Official KAYDON CORP: Earns $22.7 Million in Fourth Quarter Ended Dec. 31 KB HOME: Exits 3 Small Markets Due to Housing Slump KENDLE INT'L: Earns $6.4 Million in Fourth Quarter Ended Dec. 31 LA PALOMA: Moody's Reviews Low-B Ratings for Possible Downgrades LAKELAND COMMERCIAL: Files Schedules of Assets and Liabilities LEINER HEALTH: Gets Initial OK to Access $74 Million DIP Facility LEINER HEALTH: Chapter 11 Filing Spurs Moody's Rating Downgrades LIFEPOINT HOSPITALS: Names Gregory T. Bier as Board Director LILLIAN VERNON: U.S. Trustee Appoints Seven-Member Creditors Panel LILLIAN VERNON: Wants Until April 20 to File Schedules LOUISIANA RIVERBOAT: Files for Bankruptcy Amidst Contract Battle LOUISIANA RIVERBOAT: Voluntary Chapter 11 Case Summary LSP ENERGY: Moody's Holds 'B1' Rating; Changes Outlook to Negative MAGELLAN HEALTH: Earnings Rise to $31MM in Qtr. Ended December 31 MANCHESTER INC: Taps Wells Fargo Trumbull as Claims Agent MANITOWOC CO: Earns $99 Million in Quarter Ended December 31 MEDICAL SAVINGS: A.M. Best Cuts FS Rating to B-(Fair) from B(Fair) MUSICLAND HOLDING: Parties Seek to Pursue Action Against Best Buy MUSICLAND HOLDING: Truesdell Inks Pacts with Preference Defendants MUSICLAND HOLDING: Truesdell Intends to Lump Tax Claim Objections MUSICLAND HOLDING: Hob-Lob Wants $1.2 Million Admin. Claim Paid NASH FINCH: Must Pay $6.75 Million Class Action Settlement NATIONSLINK FUNDING: Fitch Holds 'BB' Rating on $6.6 Mil. Certs. NATIONWIDE INDEMNITY: A.M. Best Holds 'bb-' Issuer Credit Rating NETBANK INC: Wants Until March 20 to File Chapter 11 Plan NORTHWEST AIRLINES: Resumes Talks with Delta After Brief Impasse NRG ENERGY: S&P Gives Positive Outlook on 'B+' Corporate Rating NV BROADCASTING: S&P Changes Ratings on $215 Mil. Loan Facilities ON SEMICONDUCTOR: Board of Directors Elects Fran Barton as Member PARKIN BROADCASTING: S&P Alters Rating on $45 Mil. Loan Facilities PILGRIM'S PRIDE: To Close Chicken Processing Centers to Cut Losses PPM AMERICA: Moody's Slashes Rating on $17.85 Mil. Notes to 'Ca' PRINCETON SKI: Has Until May 2 to File Chapter 11 Plan PSYCHIATRIC SOLUTIONS: Earns $23 Million in Quarter Ended Dec. 31 PUNTO APARTE/CIMA: Case Summary & 19 Largest Unsecured Creditors QUEBECOR WORLD: Lindenmeyr Objects to Reclamation Procedures QUEBECOR WORLD: Catalyst Pulp Replaces IPC as Committee Member QUEBECOR WORLD: Suspends Payment of Preferred Dividends REAL MEX: S&P Junks Rating From B- on Possible Covenant Violations REGAL ENTERTAINMENT: Moody's Keeps 'Ba3' Ratings on Notes Offering SCOTTISH RE: Shift in Strategic Focus Prompts Moody's Rating Cuts SMITH HOTEL: Case Summary & Four Largest Unsecured Creditors SOUTHERN UNION: Elects Michal Barzuza to Board of Directors STONECAST WALLS: Voluntary Chapter 11 Case Summary SUMMIT GLOBAL: May Hire Holland as Independent Board's Counsel SUMMIT GLOBAL: Wants to Hire Gordian as Investment Bankers TERISA SYSTEMS: Bankruptcy Follows Pact on $2 Mil. Add'l Capital TERISA SYSTEMS: Voluntary Chapter 11 Case Summary THORNBURG MORTGAGE: Fitch Slashes Note Rating to C from F1+ UNIVISION COMMS: Fitch Publishes Review on Recovery Ratings VALERO ENERGY: U.S. Economic Slowdown Spurs Refineries Sale Plans WHITE MOUNTAINS: Signs Exchange Agreement with Berkshire Hathaway WHITE MOUNTAINS: A.M. Best Ratings Unchanged After Berkshire Deal WILLIAM FRANKLIN: Case Summary & 15 Largest Unsecured Creditors WILLOW PARK: Case Summary & 20 Largest Unsecured Creditors ZIFF DAVIS: Seeks Authority to Hire Winston & Strawn as Counsel * Moody's Discusses Outlook on 2008 Trust Preferred Securities * Moody's Includes Alt-A Sector in RMBS Transactions Review * S&P Slashes Ratings on 14 Tranches From Four Cash Flows and CDOs * S&P Places 76 Ratings From 10 REIT CDO Deals on Negative Watch * High Fuel Prices Prompt S&P's Review of Airline Rating Outlooks * Fitch Updates Global Rating Criteria on Catastrophe Bonds * Marty Dickens Named Board Chairman of Harpeth Companies Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* A&B CHECK CASHING: Trustee Says Bank Not Entitled to $5MM Claim --------------------------------------------------------------- Zvi Guttman, the trustee appointed in A&B Check Cashing's Chapter 11 liquidation case, will try to block a $5 million claim filed by Carrollton Bank, Rachel Sams of the Baltimore Business Journal reports. Mr. Guttman said that Carrollton Bank is not entitled to the amount, since the bank ceased honoring A&B's checks just before the Debtor filed for bankruptcy, relates the Journal. The trustee will file an adversary proceeding to recover the amount. Baltimore banks have alleged that they lost around $14 million from the Debtor's check kiting schemes. Baltimore, Maryland-based A&B Check Cashing filed for Chapter 11 protection in June 2006, and was ordered by state regulators to shut down its business amidst fraud allegations. Zvi Guttman was appointed as the Chapter 11 trustee by the Honorable Nancy Alquist of the U.S. Bankruptcy Court for the District of Maryland to overlook the liquidation of the Debtor's assets. Mr. Guttman since has sold several A&B locations to various buyers. Subsequent to the bankruptcy filing in June 2006, the Debtor's co- owner Alec Satisky committed suicide. ABITIBI-CONSOLIDATED: Fitch Chips ID Rating to CC from CCC ---------------------------------------------------------- Fitch Ratings has downgraded the debt of Abitibi-Consolidated Inc., a subsidiary of AbitibiBowater Inc., as: -- Issuer Default Rating to 'CC' from 'CCC'; -- Senior unsecured debt to 'CC/RR4 from 'CCC/RR4'; -- Secured revolver to 'CCC-/RR3' from 'CCC+/RR3'. The ratings remain on Rating Watch Negative. This rating action responds to the likelihood of a restricted default/default in one or more series of ACI's securities imminently approaching maturity and the likelihood that holders of those securities, in order to avoid default, will have to accept a package of notes carrying a 15% coupon and a cash payment, the combined value of which is less than the principal redemption of the securities. ACI has coming due $196 million of 6.95% notes on April 1, 2008, $150 million of 5.25% notes on June 20, 2008 and $150 million of 7.875% notes on Aug. 1, 2009. ACI is offering, as part of a broad refinancing plan, a package of cash and new senior unsecured notes due in 2010 to accepting bondholders in lieu of a cash redemption. Given the highly discounted market value of ACI's debt, it is unlikely that the value of the offered package equals the par value of the existing notes, resulting in a loss for bondholders that is tantamount to a partial default. Fitch notes that the exchange could ultimately benefit ACI and its parent, but Fitch also believes that a substantial sum of additional finance at the ACI level needs to be accomplished in what are still difficult financial markets. The ratings of parent AbitibiBowater Inc., Bowater Inc. and Bowater Canadian Forest Products Inc. remain unchanged and on Watch Negative: AbitibiBowater Inc. -- IDR 'CCC'. Bowater Incorporated -- IDR 'CCC'; -- Senior unsecured debt 'CCC/RR4'; -- Secured revolver 'B/RR1'. Bowater Canadian Forest Products Inc. -- IDR 'CCC'; -- Senior unsecured debt 'B-/RR2'; -- Secured revolver 'B/RR1'. AbitibiBowater Inc. is the largest newsprint producer in North America, around 5.7 million tonnes annually, and a major producer of supercalendered and specialty papers, light-weight coated papers, pulp and lumber. ACURA PHARMACEUTICALS: Names Richard Markham as Board Chairman -------------------------------------------------------------- Acura Pharmaceuticals Inc. appointed Richard Markham to serve as non-executive chairman of the the company's board of directors. Mr. Markham has been a member of the company's board since May 2006. The company disclosed that its president and chief executive officer Andy Reddick began a leave of absence for health reasons for an as-yet undetermined period. Mr. Reddick will continue to serve as a member of the company's board of directors. Since November 2004, Mr. Markham has served as a partner at Care Capital LLC, a venture capital firm that primarily invests in life sciences companies. From May 2002 until August 2004, Mr. Markham was the vice chairman of the management board and chief operating officer of Aventis S.A. From December, 1999 until May 2002, he was the chief executive officer of Aventis Pharma AG. He was the chief executive officer of Hoechst Marion Roussel, the president and chief operating officer of Marion Merrell Dow Inc. and a member of its board of directors. From 1973 to 1993 Mr. Markham was associated with Merck & Co. Inc., culminating in his position as President and chief operating officer. The company's board of directors, management and staff all wish Mr. Reddick a full and speedy recovery and look forward to his return as soon as possible. About Acura Pharmaceuticals Headquartered in Palatine, Illinois, Acura Pharmaceuticals Inc. (OTC BB: ACUR) -- http://www.acurapharm.com/-- is a specialty pharmaceutical company engaged in research, development and manufacture of innovative Aversion(R)(abuse deterrent) Technology and related product candidates. Going Concern Doubt BDO Seidman LLP in Chicago, expressed substantial doubt about Acura Pharmaceuticals Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and net capital deficiency. At Sept. 30, 2007, the company had cash and cash equivalents of $12.0 million, working capital of $13.1 million, and an accumulated deficit of $331.1 million. Historically, the company has incurred significant losses. ALTIVITY PACKAGING: Closes $1.75 Bil. Deal With Graphic Packaging ----------------------------------------------------------------- Graphic Packaging Holding Company completed its combination of Graphic Packaging Corporation and Altivity Packaging LLC. The common stock of Graphic Packaging Holding Corporation will trade on the New York stock exchange under the ticker symbol "GPK". The new company's headquarters are located in Marietta, Georgia but a significant presence will be retained in Chicago, where Altivity maintained its headquarters. "I am very excited to have closed the transaction that we announced in July 2007, and to begin the implementation of the integration plan which will enable us to achieve the $90 million in annual gross synergies we identified at the beginning of this process," David W. Scheible, president and chief executive officer of Graphic Packaging Holding Company, said. "The integration teams are already in place and at work." "Although we will be required to divest two coated-recycled board mills, we expect that these divestitures will have an immaterial impact on EBITDA and no impact on our ability to achieve the $90 million in synergies by 2012 with two-thirds of this being realized by 2010," Mr. Scheible added. The combination of Graphic Packaging and Altivity creates a company with pro-forma 2007 revenues of over $4.4 billion and pro- forma 2007 adjusted EBITDA of approximately $553 million. Such pro-forma 2007 adjusted EBITDA reflects an adjustment for one- time, non-recurring Altivity charges of approximately $30 million. Graphic Packaging achieved approximately $46 million of cost savings in 2007 with top line growth of approximately 4.3%. Altivity achieved over $50 million of standalone cost reductions, while growing its top line by almost 3%. The new company will be led by a combined management team with a strong track record of successfully integrating businesses and achieving performance targets. "I am very encouraged by the 2007 results of both companies as it gives us a solid base from which to build," Mr. Scheible stated. "We are confident that we can achieve not only the synergies arising from the combination, but also on-going operational cost reductions." "This transaction creates an attractive combination of our packaging strengths and high quality assets," Mr. Scheible continued. "It increases customer diversification, strengthens our market position, and achieves better operational and financial results through economies of scale and operating efficiencies." In their company profile found in google finance, it stated that the merger is valued at $1.75 billion. About Graphic Packaging Headquartered in Marietta, Georgia, Graphic Packaging Corporation (NYSE:GPK) -- http://www.graphicpackaging.com/-- is a provides paperboard packaging solutions for a variety of products to multinational and other consumer products companies. The company provides its customers paperboard, cartons and packaging machines, either as an integrated solution or separately. Its packaging products are made from a variety of grades of paperboard. GPC manufactures its packaging products from coated unbleached kraft paperboard and coated recycled paperboard that it produces at its mills, and a portion from paperboard purchased from external sources. The company operates in four geographic areas: the United States, Central and South America, Europe and Asia-Pacific. GPC conducts its business in two segments, paperboard packaging and containerboard/other. About Altivity Headquartered in Carol Stream, Illinois, Altivity Packaging -- http://www.altivity.com-- produces various products such as folding cartons, bag and plastic packaging, and decorative laminations. Altivity Packaging also provides gift boxes for department stores and other retail venues, as well contract packaging services and inks and coatings. The company, which operates about 60 manufacturing plants across the US, serves the food, medical, and electronic industries, among others. In 2006 Altivity Packaging was established after TPG Capital's purchase of Smurfit-Stone Container's consumer packaging unit. * * * As reported in the Troubled Company Reporter on July 12, 2007, Graphic Packaging Corporation and the owners of Altivity Packaging LLC signed a definitive agreement to combine the two companies. The transaction values Altivity Packaging at about $1.75 billion, based on Altivity Packaging's current net debt of $1.1 billion as of March 31, 2007, and Graphic Packaging's 30-trading day average stock price of $4.92 per share as of July 5, 2007. ALTIVITY PACKAGING: S&P Withdraws Ratings on Merger With Graphic ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew all of its ratings on Altivity Packaging LLC, including its 'B+' corporate credit rating, following the company's merger with Graphic Packaging International Inc. (B+/Stable/--) on March 10, 2008. Graphic Packaging used proceeds from a new $1.2 billion term loan to repay all of Altivity's debt, including amounts outstanding under its $1.315 billion secured credit facilities. AMERICAN AXLE: To Continue Labor Negotiations with UAW Today ------------------------------------------------------------ The formal negotiations between American Axle & Manufacturing Holdings Inc. and United Auto Workers union officials are scheduled to continue today, March 13, 2008. As reported in yesterday's Troubled Company Reporter, labor talks ceased on March 11 after a bargaining that lasted three days failed to produce results. Union officials weren't happy with the terms proposed by the auto parts company. The talks would have resolved a strike, which started Feb. 26, 2008, of the 3,650 employees at master-contract plants in Michigan and New York. As previously reported, American Axle, which earned $37 million on $3.25 billion sales in 2007, wants a deal like those UAW gave General Motors Corp., Ford Motor Co., Chrysler LLC, and parts makers Delphi Corp. and Dana Corp., insisting that cutting labor costs is essential to be competitive. The auto parts supplier is asking the union to approve $20 to $30 hourly wage cuts from $73 per hour to $27 per hour, arguing that its original U.S. locations incurred losses for three years. American Axle Statement According to the company, it is not, and never has been, an original equipment manufacturer. AAM is a Tier 1, Tier 2 and Tier 3 supplier to the automotive industry. Yet, 14 years after the company was founded, AAM continues to work under an uncompetitive OEM-style labor agreement with the UAW. The company disclosed that its "all-in labor costs" at the original U.S. locations covered by this agreement with the UAW are approximately 300% of the market rate of its competitors in the United States. AAM's UAW-represented facilities currently affected by the work stoppage are not profitable and have not been for years. In formal and informal discussions that have occurred for more than two years, AAM has presented the UAW with many alternatives to address the company's need to transition to a market competitive labor cost structure in the United States. AAM has proposed to make a significant financial commitment to fund retirement incentives, buy-outs and buy-downs to help associates make the transition to a market competitive labor cost structure. This is AAM's preferred approach. This approach would allow AAM to continue operating at the original U.S. locations and retain significant employment at these UAW-represented facilities. If a market competitive labor cost structure cannot be attained at the original U.S. locations, AAM has advised the UAW that it will consider additional capacity rationalization initiatives. "AAM remains totally committed to negotiating a fair and equitable agreement with the UAW," AAM Co-Founder, Chairman & CEO Richard E. Dauch, said. "AAM and the UAW have a long history of working together in an open, thoughtful and direct manner to resolve labor and economic issues. The parties have made progress in many areas. AAM is prepared to resume formal negotiations with the UAW at any time to find solutions to the critical issues we jointly face." Strike Impact on Automakers GM has about 29 facilities affected by the strike at Axle as the supplier attempts to negotiate with the union. GM president and COO Frederick Henderson said GM won't meddle in the labor dispute between AAM and the UAW. Chrysler LLC is temporarily closing its vehicle assembly facility in Newark, Delaware as the strike among UAW union members at AAM stretches. AAM supplies Chrysler components for the Dodge Durango and Chrysler Aspen sport utility vehicles in Newark and two versions of the Dodge Ram pickup made in Saltillo, Mexico. About American Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. * * * As reported in the Troubled Company Reporter on Nov. 27, 2007, Moody's Investors Service affirmed American Axle & Manufacturing Holdings, Inc.'s Corporate Family rating of Ba3 as well its senior unsecured rating of Ba3 to American Axle & Manufacturing Inc.'s notes and term loan. At the same time, the rating agency revised the rating outlook to stable from negative and renewed the Speculative Grade Liquidity rating of SGL-1. AMERICAN LAFRANCE: Court Enters Revised Order on Asset Sale ----------------------------------------------------------- Judge Brendan Linehan Shannon entered a revised bidding procedures order for the proposed sale of all of American LaFrance, LLC's assets. The U.S. Bankruptcy Court for the District of Delaware prohibits the Debtor from assuming and assigning or selling the Debtor's end user license agreements or any services agreements with INCAT, Dassault Systemes Americas Corp. without the prior written consent of INCAT and Dassault. As reported by the Troubled Company Reporter on Feb. 27, 2008, Judge Shannon approved on February 25, 2008, bid procedures for the sale of American LaFrance LLC's assets in the event that the company's plan of reorganization is not confirmed. American LaFrance previously noted that its main goal is to confirm a plan of reorganization. The company further noted that if its proposed plan is not confirmed, it aims to pursue the sale of substantially all of its assets. Qualified bidders are required to deliver written copies of its bid no later than April 14, 2008. If more than one bid is received, an auction will be held on April 18, 2008. Patriarch Partners Agency Services, LLC, is entitled to make a credit bid at the Auction, the Court ruled. Patriarch acts as agent for American LaFrance's DIP Lenders. In connection with the Sale Order, the Court has also established April 9 and 18, 2008 for hearings on plan confirmation. The Court has scheduled a hearing on April 28 to consider American LaFrance's request to sell all of its assets in the event its proposed Chapter 11 plan is not confirmed. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. American LaFrance LLC will pursue a sale of its business operations in the event that the company's plan of reorganization is not confirmed. The Debtor filed its plan of reorganization on Feb. 3. (American LaFrance Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Panel Wants to Hire FTI as Financial Advisor --------------------------------------------------------------- The Official Committee of Unsecured Creditors of American LaFrance LLC seeks permission from the U.S. Bankruptcy Court to retain FTI Consulting, Inc., as its financial advisors, nunc pro tunc to February 4, 2008. The Committee understands that FTI has a wealth of experience in providing financial advisory services in restructurings and reorganizations and enjoys an excellent reputation for services it has rendered in complex Chapter 11 cases on behalf of debtor and creditors throughout the United States, Stefan H. Kurschner, the Committee chairperson, says. FTI's services are necessary to enable the Committee to assess and monitor the efforts of the Debtor and its professional advisors to maximize the value of its estate and to reorganize successfully, Mr. Kurschner asserts. As financial advisors, FTI will assist the Committee in: 1. reviewing financial related disclosures as required by the Court, including the schedules of assets and liabilities, the statement of financial affairs and monthly operating reports; 2. analyzing information in the Debtor's DIP Financing, including preparing for hearings regarding the use of cash collateral and DIP Financing; 3. reviewing the Debtor's short-term management procedures; 4. advising with respect to the Debtor's identification of core business assets and the disposition of assets or liquidation of unprofitable operations; 5. reviewing the Debtor's cost/benefit analyses with respect to the affirmation or rejection of various executory contracts and leases; 6. identifying areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; 7. reviewing financial information distributed by the Debtor to creditors, including cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which Court approval is sought; 8. attending meetings and discussions with the Debtor and potential investors, banks, other secured lenders, the U.S. Trustee and other parties in interest; 9. reviewing and preparing information and analysis necessary for the confirmation of a plan in the Debtor's Chapter 11 case; and 10. evaluating and analyzing avoidance actions, including fraudulent conveyances and preferential transfers; 11. other general business consulting as the Committee may deem necessary. FTI will be paid for its services a monthly allowance of $75,000 for the first month and $50,000 per month thereafter. The firm will also be reimbursed of actual and necessary expenses it incurred or will incur. Samuel Star, senior managing director of FTI, asserts that his firm does not represent any other entity having an adverse interest in connection with the Debtor's case and therefore, is eligible to represent the Committee. Mr. Star assures the Court that his firm is a "disinterested person" as the term is used in Section 101(14) of the Bankruptcy Code. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. American LaFrance LLC will pursue a sale of its business operations in the event that the company's plan of reorganization is not confirmed. The Debtor filed its plan of reorganization on Feb. 3. (American LaFrance Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Panel Wants to Hire Pepper Hamilton as Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of American LaFrance LLC seeks authority from the U.S. Bankruptcy Court for the District of Delaware to retain Pepper Hamilton, LLP, as its counsel in the American LaFrance, LLC's Chapter 11 case, nunc pro tunc to February 4, 2008. Committee Chairman Stefan H. Kurschner relates that the Committee has selected Pepper Hamilton because of the firm's considerable experience in the bankruptcy and commercial law areas. David B. Stratton and David M. Fournier, partners at Pepper Hamilton, and Linda Casey and James C. Carignan, associates of Pepper Hamilton, are presently expected to do the primary work for the firm in the Debtor's case. As the Committee's counsel, Pepper Hamilton will: (1) represent the Committee; (2) advise the Committee on its rights, duties and powers in the Debtor's case; (3) assist and advise the Committee on consultations with the Debtor and all parties in interest; (4) assist the Committee in analyzing the claims of creditors and the Debtor's capital structure and negotiations with the holders of claims and equity interests; (5) assist the Committee's investigation of the acts, conduct, assets, liabilities and financial condition of the Debtor and other parties involved with the Debtor, and of the operation of the Debtor's businesses; (6) assist the Committee in analyzing intercompany transactions; (7) assist the Committee in the analysis of, and negotiations with, the Debtor and any other third party concerning the assumption or rejection of certain leases of non- residential real property and executory contracts, asset dispositions, financing of other transactions and the terms of the reorganization plan of the Debtor; (8) assist and advise the Committee as to its communications to the general creditor body regarding significant matters in the Debtor's case; (9) represent the Committee at all hearings and other proceedings; (10) review, analyze and advise the Committee with respect to all applications, orders, statements of operations and schedules filed with the Court; (11) assist the Committee in preparing pleadings and applications as may be necessary in furtherance of the Committee's interests and objectives; and (12) perform other services as may be required and are deemed to be in the interests of the Committee in accordance with the Committee's powers and duties as set forth in the Bankruptcy Code. Pepper Hamilton has agreed to cap its fees in the Debtor's case to the extent the total of the firm's fees, divided by the total amount of hours spent on the engagement, exceeds $435 per hour. The current hourly rates charged by Pepper Hamilton for its professionals are: Professional Hourly Rate ------------ ----------- Partners, Special Counsel, Counsel $450 to $695 Associates $250 to $400 Paraprofessionals $175 to $205 David B. Stratton, Esq., a partner at Pepper Hamilton, assures the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not hold any adverse interest to all parties involved. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. American LaFrance LLC will pursue a sale of its business operations in the event that the company's plan of reorganization is not confirmed. The Debtor filed its plan of reorganization on Feb. 3. (American LaFrance Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Seeks Approval of Premier Logistics Settlement ----------------------------------------------------------------- Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, American LaFrance, LLC, asks the U.S. Bankruptcy Court for the District of Delaware to approve its agreement with Premier Logistics Solutions Warehousing, LLC. The Debtor stores certain Inventory at Premier's warehouse near Hanahan, South Carolina. The Debtor is in the process of removing all of its Inventory from Premier's warehouse and moving it to a manufacturing facility in Summerville, South Carolina. The Debtor paid Premier $250,631 on January 7, 2008. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzenburg & Ellers, LLP, in Wilmington, Delaware, informs the Court that Premier asserts a warehouseman's lien on the Inventory and has limited the Debtor's ability to remove the Inventory absent payment of certain alleged outstanding and estimated future charges. The parties also disagree on whether Premier has a properly perfected warehouseman's lien under applicable state law and Premier is entitled to a termination fee. Thus, to resolve their dispute, the parties entered into a settlement agreement, whereby: (a) The Debtor will pay Premier $49,814 -- the February Settlement Sum -- in satisfaction of all outstanding warehousing and related services provided from before the Petition Date through February 29, 2008. About $35,809 will be for prepetition services rendered and $14,005 will be for postpetition services rendered; (b) The Debtor will pay Premier $63,273 -- the March Settlement Sum -- for estimated warehousing and related services provided from March 1, 2008 through March 31, 2008; (c) No later than April 10, 2008, the parties will reconcile the March Settlement Sum and the actual warehousing and related charges incurred during March 2008. Either the Debtor will remit to Premier the amount of any undisputed actual warehousing charges in excess of the March Settlement Sum or Premier will remit to the Debtor the amount of the difference between the March Settlement Sum and the amount of undisputed actual warehousing services for March 2008; (d) The Debtor will pay Premier $89,500 as termination fee; (e) The Debtor will escrow the Settlement Sums pending Court approval; (f) Once the Debtor fulfills the Settlement terms, it will be permitted to remove the Inventory from Premier's warehouse. All Inventory will be removed from Premier's warehouse before March 31, 2008; and (g) The parties will exchange mutual releases. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. The company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. American LaFrance LLC will pursue a sale of its business operations in the event that the company's plan of reorganization is not confirmed. The Debtor filed its plan of reorganization on Feb. 3. (American LaFrance Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICHIP INT'L: Jewett Schwartz Expresses Going Concern Doubt -------------------------------------------------------------- Jewett, Schwartz, Wolfe & Associates in Hollywood, Fla., raised substantial doubt about the ability of Americhip International, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Nov. 30, 2007. The auditor stated that the company has suffered recurring losses from operations. The company posted a net loss of $10,657,898 on total revenues of $2,655,848 for the year ended Nov. 30, 2007, as compared with a net loss of $10,986,583 on total revenues of $132,616 in the prior year. At Nov. 30, 2007, the company's balance sheet showed $7,615,336 in total assets, $7,238,953 in total liabilities, and $376,383 in stockholders' equity. The company's consolidated balance sheet at Nov. 30, 2007, also showed strained liquidity with $1,399,940 in total current assets available to pay $2,041,449 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?28fd About AmeriChip Headquartered in Plymouth, Mich., AmeriChip International Inc., (OTC BB: ACHI.OB) -- http://www.americhiplacc.com/ -- holds a patented technology known as Laser Assisted Chip Control, the implementation of which results in efficient chip control management in industrial metal machining applications. This technology provides substantial savings in machining costs of certain automobile parts providing much more competitive pricing and more aggressive sales approaches within the industry. APRIA HEALTHCARE: Earns $25 Million in 4th Quarter Ended Dec. 31 ---------------------------------------------------------------- Apria Healthcare Group Inc. reported net income of $25.0 million for the fourth quarter ended Dec. 31, 2007, compared to net income of $21.4 million in the fourth quarter of 2006. Excluding Coram Inc., whose acquisition was completed on Dec. 3, 2007, fourth quarter net income was $24.3 million, an increase of 13.6% over the fourth quarter of 2006. For the fourth quarter of 2007, revenues were $452.7 million, a 15.7% increase from revenues of $391.3 million in the fourth quarter of 2006. Excluding Coram, fourth quarter revenues were $410.6 million, a 4.9% increase compared to the fourth quarter of 2006. In the fourth quarter of 2007, both respiratory therapy and infusion therapy experienced revenue growth compared to the fourth quarter of 2006. Respiratory therapy grew by 5.1%. Including the impact of the Coram acquisition, infusion therapy revenues grew by 66.9% during the fourth quarter of 2007. Excluding Coram, infusion therapy revenues increased 8.2% during the fourth quarter of 2007. "Revenue grew in the second half of the year due to a heightened focus on sales force training, development and retention, as well as the expansion of the sales force," said Lawrence M. Higby, chief executive officer. "Additionally, the cost-reduction initiatives we implemented during the year contributed to our strong financial results. Strategically, with the fourth quarter acquisition of Coram, we also positioned the company for long-term success by diversifying our therapy and payor mix and significantly enhancing our position in the home infusion industry." Earnings before interest, taxes, depreciation and amortization (EBITDA) was $80.1 million in the fourth quarter of 2007, representing an 8.0% increase over EBITDA of $74.2 million in the fourth quarter of 2006. Excluding Coram, EBITDA was $77.7 million, up 4.7% over the fourth quarter of 2006. Full Year 2007 For the twelve months ended Dec. 31, 2007, revenues grew 7.6% to $1.63 billion from $1.52 billion in the twelve months ended Dec. 31, 2006. Excluding Coram, revenues for 2007 were $1.59 billion, a 4.8% increase over 2006. In 2007, respiratory therapy revenues grew by 5.3%. Including the Coram acquisition, infusion therapy revenues grew by 21.6% during 2007. Excluding Coram, infusion therapy revenues increased 6.3% during 2007. Net income for 2007 was $86.0 million, versus $74.3 million in 2006. These results include contributions from one-time positive tax benefits and the Coram acquisition. Excluding Coram, net income was $85.3 million, an increase of 14.9% over 2006. EBITDA was $293.3 million for the twelve months ended Dec. 31, 2007, compared to $285.7 million in the twelve months ended Dec. 31, 2006. Excluding Coram, EBITDA for 2007 was $290.9 million. Liquidity and Capital Free cash flow for 2007 was $165.2 million compared to $155.3 million for 2006. For the twelve months ended Dec. 31, 2007, total capital expenditures were 7.9% of revenues and 8.1% excluding Coram, compared to 8.3% of revenues in the twelve months ended Dec. 31, 2006. During the quarter, the company's outstanding balance on its $500.0 million revolving credit line had a net increase of $319.0 million. The increase in borrowings is primarily related to the acquisition of Coram. As of Dec. 31, 2007, the outstanding balance was $424.0 million. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $1.60 billion in total assets, $1.09 billion in total liabilities, and $512.0 million in total shareholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $457.3 million in total current assets available to pay $547.8 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?290b About Apria Healthcare Headquartered in Lake Forest, California, Apria Healthcare Group Inc. (NYSE: AHG) -- http://www.apria.com/-- provides home infusion therapy, home respiratory therapy and home medical equipment through approximately 550 locations serving patients in all 50 states. * * * As reported in the Troubled Company Reporter on Nov. 8, 2007, Moody's affirmed the Ba2 corporate family rating of Apria but changed the ratings outlook to negative from stable. Moody's also assigned a B1 rating to the proposed $265 million senior unsecured notes to be issued to partially fund the acquisition of Coram. AQUATIC CELLULOSE: Peterson Sullivan Expresses Going Concern Doubt ------------------------------------------------------------------ Peterson Sullivan PLLC raised substantial doubt on Aquatic Cellulose International Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended May 31, 2007 and 2006. The auditing firm reported that the company has not generated positive cash flows from operations and has an accumulated deficit at May 31, 2007. The company posted a net loss of $8,561,589 on total equity in earnings of lease of $250,224 for the year ended May 31, 2007, as compared with a net loss of $5,106,503 on total equity in earnings of lease of 457,243 in the prior year. At May 31, 2007, the company's balance sheet showed $1,051,630 in total assets and $18,676,379 in total liabilities, resulting in $17,624,749 of stockholders' deficit. The company's consolidated balance sheet at May 31, 2007, also showed strained liquidity with $42,951 in total current assets available to pay $18,676,379 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?2905 About Aquatic Cellulose Aquatic Cellulose International Corp. (PNK: AQCI) is a Nevada corporation originally organized as Aquatic Cellulose Ltd. and was incorporated in March of 1996. Aquatic acquires and develops crude oil and natural gas reserves and production principally in the state of Texas of the U.S. AQUILA INC: Posts $5.4 Million Net Loss in Year Ended Dec. 31 ------------------------------------------------------------- On a consolidated basis, Aquila Inc. reported a net loss of $5.4 million for the year ended Dec. 31, 2007, compared to net income of $23.9 million in 2006. Sales for the year were $1.47 billion in 2007 versus $1.37 billion in 2006. The company reported EBITDA of $239.0 million in 2007 compared to an EBITDA loss of $86.2 million in 2006. EBITDA for Aquila's electric and gas utilities was $260.5 million, up $74.4 million from $186.1 million reported in 2006. This improvement in utility results was offset by various non-operating gains recognized on the asset sales in 2006 and merger-related costs occurring in 2007. Results for the quarter ending Dec. 31, 2007, were a net loss of $6.9 million, compared to 2006 net income of $64.3 million. Fourth quarter sales were $366.0 million, an increase of $27.0 million over 2006 fourth quarter sales of $339.0 million. The company reported EBITDA of $57.4 million in the fourth quarter of 2007 compared to EBITDA of $45.8 million in the fourth quarter of 2006. Repositioning activities in 2006, including gains on the sale of gas utilities, offset by the loss on exiting the Elwood tolling contract, were additional causes for the decline in current year earnings. The one-time release of tax valuation allowance related to the gas utility sales that occurred last year were also causes for the decline in quarterly earnings. "This was a very successful and challenging year," said Richard C. Green, Aquila's chairman and chief executive officer. "In addition to our focus on serving the day-to-day energy needs of our customers, Aquila employees are working diligently to ensure our utility operations are transferred seamlessly to the buyers at the close of our transaction." In early 2007, Aquila announced that it will sell its natural gas assets in Iowa, Kansas, Nebraska and Colorado, and its electric assets in Colorado to Black Hills Corporation and then merge with a subsidiary of Great Plains Energy Incorporated. The transactions have passed anti-trust review and have been approved by the Federal Energy Regulatory Commission. The asset sales have been approved by the regulatory authorities in Colorado, Iowa and Nebraska. In Kansas, Black Hills and Great Plains Energy have each entered into and filed for commission approval a settlement agreement concerning the asset sale and the merger, respectively. In Missouri, Aquila and Great Plains Energy continue to work toward receiving commission approval for the merger. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $2.99 billion in total assets, $1.64 billion in total liabilities, and $1.35 billion in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?290d About Aquila Inc. Headquartered in Kansas City, Missouri, Aquila Inc. (NYSE: ILA) -- http://www.aquila.com/-- owns electric power generation and operates electric and natural gas transmission and distribution networks serving over 900,000 customers in Colorado, Iowa, Kansas, Missouri and Nebraska. * * * Aquila Inc. carries Moody's Investors Service's Ba2 corporate family, Ba3 Senior Unsecured Debt, and Ba3 probability-of-default ratings. AVENSYS CORP: Inks Asset Purchase Deal with Willer Engineering -------------------------------------------------------------- Avensys Inc. and a subsidiary of Avensys Corporation entered into an asset purchase agreement with Willer Engineering Limited. Upon the close of the acquisition, the assets of Willer Engineering will be merged with Avensys Inc.'s environmental instrumentation division, Avensys Environmental Solutions. The merger is expected to result in a business generating $15 million a year in revenues, in a market where players are significantly smaller. It will also result in significant cost synergies and the ability to expand product lines and services beyond current capabilities. As a result of this acquisition, Avensys Environmental Solutions will expand its value-added turn-key solutions capabilities and will be better positioned to respond to the needs of industrial customers requiring tighter integration of process and emission monitoring instrumentation and data acquisition. The combination of Willer's know-how in the industrial process industry combined with the strength of Avensys' Environmental monitoring solutions and its wider geographical coverage will position the merged entity to take advantage of the growth associated with control of industrial emissions and greenhouse effect gases. "We have identified significant new revenue growth opportunities resulting from the synergies derived from the combination of our respective expertise, market niches, product lines, sales skills and geographical coverage," Marie-Annick Riel, General Manager of Avensys Environmental Solutions, said. "Willer has been a solid company and carries an excellent reputation in its marketplace," Ed Allen, president of Willer Engineering Limited, added. "We bring the engineering credibility needed to take the new Avensys Environmental Solutions to new key industrial markets." About Willer Engineering Limited Headquartered in Toronto, Willer Engineering Limited -- http://www.willereng.com/-- is a privately-owned company that provides professional instrumentation solutions, products and service to the industrial, process and scientific markets in Eastern Canada. The company was established more than 45 years ago. About Avensys Corp. Avensys Corp. fka. Manaris Corp. -- http://www.manariscorp.com/-- operates through its wholly owned subsidiaries, Avensys Inc. and C-Chip Technologies Corp. Avensys Inc. develops optical components and sensors and provides environmental monitoring solutions. AVI sells its optical products and services primarily in North America, Asia and Europe to the telecommunications, aerospace, and oil and gas industries. Environmental monitoring services and solutions are primarily targeted at public sector organizations across Canada. Prior to the termination of the Technology License Agreement with its former supplier, C-Chip earned royalties with respect to the devices sold by the licensee to the credit management marketplace. Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 4, 2007, Montreal, Canada-based Raymond Chabot Grant Thornton LLP expressed substantial doubt about Manaris Corp. nka. Avensys Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditor pointed to the company's significant losses since inception and reliance on non-operational sources of financing to fund operations. AXCAN PHARMA: Completes Shares Buyout Deal with TPG Capital Unit ---------------------------------------------------------------- Axcan Pharma Inc. completed a transaction in which all of the common shares of Axcan would be acquired by an affiliate of TPG Capital. Under the terms of the agreement, Axcan shareholders are entitled to receive $23.35 in cash for each share of Axcan common stock held. As a result, Axcan common stock ceased trading on the NASDAQ Global Market and on the Toronto Stock Exchange at market close on Feb. 25, 2008, and would no longer be listed on these stock exchanges. Payment of the cash consideration will be made by Computershare Investor Services, which serves as paying agent. Axcan stockholders who possess physical stock certificates have received instructions and a letter of transmittal by mail from Computershare Investor Services concerning how and where to forward their certificates for payment. For shares held in "street name" by a broker, bank or other nominee, shareholders will not need to take any action to have shares converted into cash, as this will be carried out by the broker, bank or other nominee. Questions about the payment of merger proceeds should be directed to the appropriate broker, bank or other nominee. About TPG Capital Based in Fort Worth, Texas, TPG Capital -- http://www.tpg.com/-- is a leading private investment firm founded in 1992, with more than $35 billion of assets under management and offices in San Francisco, London, Hong Kong, New York, Minneapolis, Fort Worth, Melbourne, Menlo Park, Moscow, Mumbai, Beijing, Shanghai, Singapore and Tokyo. TPG has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, joint ventures and restructurings. About Axcan Pharma Based in Mont Saint-Halaire, Quebec, Axcan Pharma Inc. (TSX: AXP)(NASDAQ: AXCA) -- http://www.axcan.com -- is a specialty pharmaceutical company focused on gastroenterology. The company develops and markets a broad line of prescription products to treat a range of gastrointestinal diseases and disorders such as inflammatory bowel disease, irritable bowel syndrome, cholestatic liver diseases and complications related to pancreatic insufficiency. * * * As reported in the Troubled Company Reporter on Jan. 28, 2008, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Axcan Pharma Inc. BAYER PROTECTIVE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Bayer Protective Services Inc. 3436 American River Drive #10 Sacramento, CA 95864 Bankruptcy Case No.: 08-22725 Chapter 11 Petition Date: March 6, 2008 Court: Eastern District of California (Sacramento) Judge: Thomas Holman Debtor's Counsel: Walter R. Dahl, Esq. 2304 North Street Sacramento, CA 95816-5716 Tel: (916) 446-8800 Estimated Assets: $500,001 to $1 million Estimated Debts: $1,000,001 to $10 million Debtor's list of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ State Compensation Insurance Fund $42,112 P.O. Box 7980 San Francisco, CA 94120 Kaiser Permanente $20,448 P.O. Box 60000 San Francisco, CA 94160-3030 Progressive Insurance Company $18,036 Department 0586 Carol Stream, IL 60132 De Lage Landen $18,036 Sprint Nextel $9897 Ray Stone Inc. $7,364 Central Valley Towing $5,875 Smile Network Services $5,575 Budget Installment Corporation $4,451 Valiant Communications Inc. $1,865 Convergent Systems $1,097 Sprint A/C $875 AT & T $800 MP Holdings LLC $778 Inland Business Systems $692 Sutter General Hospital $607 DMV Renewal $567 Pacific Bell $488 Goodell, Porter & Fredericks LLP $423 T Mobile $360 BEAR STEARNS: Fitch Affirms 'B-' Rating on $2.7MM Class N Certs. ---------------------------------------------------------------- Fitch Ratings has upgraded Bear Stearns Commercial Mortgage Securities Inc.'s mortgage pass-through certificates, series 2003-PWR2, as: -- $28 million class C to 'AA+' from 'AA'; -- $9.3 million class D to 'AA' from 'AA-'. In addition, Fitch affirmed these classes: -- $49.5 million class A-2 at 'AAA'; -- $75 million class A-3 at 'AAA'; -- $608.3 million class A-4 at 'AAA'; -- Interest-only classes X-1 and X-2 at 'AAA'; -- $26.7 million class B at 'AAA'; -- $12 million class E at 'A'; -- $10.7 million class F at 'A-'; -- $9.3 million class G at 'BBB+'; -- $13.3 million class H at 'BBB-'; -- $5.3 million class J at 'BB+'; -- $5.3 million class K at 'BB'; -- $4 million class L at 'BB-'; -- $5.3 million class M at 'B'; -- $2.7 million class N at 'B-'. Class A-1 has paid in full. Fitch does not rate the $11 million class P. The upgrades are due to increased credit enhancement and 8.9% additional defeasance since Fitch's last rating action in January 2007. As of the February 2008 distribution date, the pool has paid down 17.9%, to $875.7 million from $1.07 billion at issuance. A total of 16 loans have defeased (21.5%). There are currently no specially serviced loans. The transaction contains three loans (13.1%) with Fitch investment-grade shadow ratings. The Royal SunAlliance Building (1.5%) has defeased. Fitch reviewed the most recent operating data available from the servicer for the two remaining non- defeased shadow rated loans. Three Times Square (9.8%) is secured by an 883,405 square feet office building located in Manhattan. September 2007 occupancy remains stable at 98.9%, up slightly since issuance. One of the three pari-passu notes totaling $89.1 million serves as collateral for this transaction. Dartmouth Towne Center (1.8%) is secured by a 303,198 sf retail power center in North Dartmouth, Massachusetts. June 2007 total occupancy was 98.3%, up from 87% at issuance. BOISE CASCADE: S&P Chips Rating to 'BB-' on $1.63 Billion Sale -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Boise Cascade LLC, including lowering its corporate credit rating to 'BB-' from 'BB', following the sale of the company's paper, packaging and newsprint businesses to Boise Inc. (BB-/Stable/--) for $1.63 billion on Feb. 22, 2008. At the same time, S&P withdrew the ratings on BC's $1.175 billion senior secured credit facilities, as amounts outstanding were fully repaid with the sale proceeds (about $720 million was outstanding at Dec. 31, 2007). The outlook is negative. All ratings were removed from CreditWatch where they were originally placed on Sept. 7, 2007, with developing implications when the company announced the planned sale. "The downgrade reflects our assessment that BC has a weaker business risk profile following the divestiture, as it is substantially less diversified," said Standard & Poor's credit analyst Pamela Rice. "Although BC is using the majority of the $1.25 billion of cash it received to pay down debt, its wood products manufacturing and building products distribution businesses will subject the company to much greater earnings and cash flow volatility, particularly during the current housing downturn. While the lower rating incorporates the 49% interest in Boise Inc. held by Boise Cascade Holdings LLC, BC's parent, we are not factoring in any cash distributions from Boise Inc. for at least the next few years." BC had debt, including debt-like obligations, of $1.3 billion at Dec. 31, 2007. BC, based in Boise, Idaho, is a leading national wholesale building products distributor. The company also manufactures wood products, including plywood, veneer, particleboard, lumber, and engineered wood products. Ms. Rice said, "Although BC has reduced debt substantially, we remain concerned about the length and duration of the downturn in housing. We could lower ratings if the company's financial results weaken further than we expect in 2008 or if liquidity narrows. We could revise the outlook to stable if housing markets begin to recover in the second half of 2008 and BC appears to be weathering the downturn with only modest deterioration in its financial risk profile." BONTEN MEDIA: S&P Pares Rating on Bank Loan Facilities to 'B+' -------------------------------------------------------------- Standard & Poor's Ratings Services revised its ratings on the $61 million bank loan facilities of Bonten Media Group Inc. "This rating action reflects a change in the EBITDA multiple that we applied in our simulated default scenario to 6x from 7x," explained Standard & Poor's credit analyst Debbie Kinzer. "This change brings Bonten's EBITDA multiple in line with those of its peers among small TV station groups." S&P lowered the rating on the bank loan facilities to 'B+' (one notch above the 'B' corporate credit rating on Bonten) from 'BB-'. S&P changed the recovery rating to '2', indicating its expectation of substantial (70%-90%) recovery in the event of a payment default, from '1'. The facilities consist of a $15 million revolving credit facility maturing in 2013, a $21.75 million term loan B maturing in 2014, and a $24.25 million delayed draw term loan maturing in 2014. BOSTON HILL: Section 341(a) Meeting Scheduled for March 12 ---------------------------------------------------------- The United States Trustee for Region 1 will convene a meeting of Boston Hill Realty Trust's creditors on March 12, 2008 at 1:00 p.m. at Room 1190, Office of the U.S. Trustee, 10 Causeway Street in Boston, Massachusetts. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Kingston, Massachusetts-based Boston Hill Realty Trust owns and develops real estate. The Debtor filed for Chapter 11 Petition on Dec. 5, 2007 (Bankr. D. Mass. Case No. 07-17770). Earl D. Munroe at Munroe & Chew represents the Debtor in its restructuring efforts. The Debtor listed assets and debts between $10 million and $50 million. BOSTON HILL: Asks Court to Approve Munroe & Chew as Counsel ----------------------------------------------------------- Boston Hill Realty Trust asks the United States Bankruptcy Court for the District of Massachusetts for authority to employ Munroe & Chew as counsel. The Debtor will pay Munroe & Chew at it standard hourly rates. The Debtor believes that the employment of Munroe & Chew 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. Kingston, Massachusetts-based Boston Hill Realty Trust owns and develops real estate. The Debtor filed for Chapter 11 Petition on Dec. 5, 2007 (Bankr. D. Mass. Case No. 07-17770). Earl D. Munroe at Munroe & Chew represents the Debtor in its restructuring efforts. The Debtor listed assets and debts between $10 million and $50 million. CAMPBELL ROOFING: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Campbell Roofing & Construction Inc. P.O. Box 2433 Warner Robins, GA 31099 Bankruptcy Case No.: 08-50605 Chapter 11 Petition Date: March 7, 2008 Court: Middle District of Georgia (Macon) Debtor's Counsel: Wesley J. Boyer, Esq. Katz, Flatau, Popson and Boyer LLP 355 Cotton Avenue Macon, GA 31201 Tel: 478-742-6481 wjboyer_2000@yahoo.com Estimated Assets: $500,001 to $1 million Estimated Debts: $1,000,001 to $10 million Debtor's list of its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Great American Insurance estimated claim $1,200,000 Companies amount Bond Claim Division 114315 Jarretsville Pike, Suite 102 Phoenix, MD 21131 Bank of America line of credit $1,000,000 Attn: Nicoletta Koratsis 50 N. Laura St., Suite 2307 Jacksonville, FL 3220 RSA Roofing Supply of $626,001 Atlanta 2500 Main Street Kennesaw, GA 30144 Joe Prince $500,000 ABC Supply Company Inc. $438,810 Bank of America 2004 Winnebago; $263,800 value of security: $175,000 ABC-Columbia $260,766 Vanmeter Surety $163,462 Camodata Corporation $150,823 Hertz Equipment Rental $122,249 Heely-Brown Company Inc. $105,786 Constangy, Brooks & Smith LLC fees $65,358 Sunbelt Rentals Inc $63,859 Gulfeasgle Supply $61,828 Hardy Services $61,453 Johns Manville Roofing $55,207 Action Labor & Staffing $52,794 Morris Insulation & $51,000 Environment American Express $40,388 Bowen, Phillips & Carmichael $33,057 CAPRI CONDOMINIUMS: Court Okays Use of Bank's Cash Collateral ------------------------------------------------------------ The Capri Condominiums L.P. obtained permission from the U.S. Bankruptcy Court for the Middle District of Florida to use the cash collateral of its lender, Red Mountain Bank, N.A. The Debtor related to the Court that its primary asset consists of its rights as owner and developer of a 48-unit residential subdivision known as the Capri on Caldwell, in Birmingham, Alabama. A total of 14 units have been sold to buyers before the Debtor's bankruptcy filing. Other than the development and the cash collateral account, the Debtor's primary assets include funds maintained at three deposit accounts located in Tampa, Florida; Birmingham, Alabama, and the Kingdom of the Netherlands. The aggregate balance of the three accounts -- which are in the process of being converted to a DIP Account -- is approximately $17,000. Red Mountain Bank had been unwilling to permit the Debtor to utilize the cash collateral account to fund operations of the Debtor. This, combined with the fact that the Bank requires all net proceeds from the sales of units in the Development to be paid to the Bank to reduce its debt, required the Debtor to initiate this reorganization. The Bank possesses a $16,380,023 claim against the Debtor, which is secured by a lien on all of the Debtor's remaining property in the development, which is roughly $27,123,120. In addition to its mortgage lien encumbering the development, the Bank possess a $3,937,112 lien on a segregated account owned by the Debtor. The Debtor told the Court that the development is sufficient to secure the claim of the Bank. In its order, the Court allowed the Debtor to use the cash collateral to fund its ongoing business operations and to pay its debt service to the Bank. In addition, the Court allowed the Debtor to provide the Bank with adequate protection in the form of replacement liens equal in extent, validity, and priority to the security interest in the cash collateral account on the bankruptcy filing. About Capri Condos Tampa, Florida-based The Capri Condominiums LP owns and manages condominiums. Capri is operated by Euro American Investors Group in The Netherlands, which runs an office in Tampa, Florida. Euro American Investors -- http://www.eaig.nl/-- is an international company that offers a complete package property with the focus on the United States and Europe. Since its launch in 1979, Euro American Investors built a diversified portfolio of properties, apartments, offices, commercial buildings, and shopping malls. Capri Condominiums sought protection under Chapter 11 on Feb. 6, 2008 (Bankr. M.D. Fla. Case No. 08-01553). Maureen A. Vitucci, Esq., at Gray Robinson PA represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets and debts between $10 million and $50 million. CAPRI CONDOMINIUMS: Gets Court Nod to Assume Executory Contracts ---------------------------------------------------------------- The Capri Condominiums L.P. obtained permission from the U.S. Bankruptcy Court for the Middle District of Florida to assume prepetition contracts related to the purchase and sale of certain residential units of the Debtor's development property. The Debtor's primary asset consists of its rights as owner and developer of 48-unit residential subdivision known as the Capri on Caldwell, in Birmingham, Alabama. A total of 14 units have been sold to buyers prepetition. The remaining 34 units in the development remain owned by the Debtor, and are almost ready to have certificates of occupancy issued, the Debtor said. All are property of the Debtor's estate pursuant to Bankruptcy Code Section 54l(a). Of this sum, six units are under contract with private individuals who are prepared or virtually prepared to advance to closing. The Debtor related that due to a nationwide slowdown of residential real property sales, the Debtor has experienced some delay in "absorption" with respect to the units that it owns. The executory contracts are all contracts that fall within the range of reasonableness as the Debtor projected, with purchase prices varying between $592,000 and $1,119,000, depending upon the size and other properties of the respective residential units. In the event that the Debtor is able to close on all of the executory contracts as planned, its secured lender, Red Mountain Bank N.A., will realize a significant reduction of its secured indebtedness, without losing its already very ample equity cushion. The Debtor has minimal unsecured trade debt at this time. The majority of the "trade debt" associated with the Debtor has been paid in the ordinary course of business by the Debtor or its general partner. As a practical matter, it is beneficial to the Debtor and to all of its creditors to sell the residential units, and thus receive and apply the cash proceeds from the contemplated conveyances, the Debtor told the Court. A group of investors from the Netherlands and Germany have lent approximately $4,000,000 to the Debtor, and they represent a discreet group of creditors of the Debtor at the time. Although they do not have a lien or security interest in the Debtor, they were in fact the any assets of source of capital to fund the Debtor's cash collateral account at the outset. In many respects, said the Debtor, this reorganization is being initiated to ensure that the entitlement of the investor creditors to their return of capital is realized. The sale of the residential units will assist in achieving this result, because the Bank's receipt of funds from the contemplated closings is intended to provide a form of adequate protection for the Debtor's use of some of the cash collateral account. In addition, the Court permitted the Debtor to: -- perform pursuant to the executory contracts; and -- pay an appropriate portion of the net sale proceeds from the sale of the residential units to the prospective purchasers directly to the Bank as a manner of adequate protection. About Capri Condos Tampa, Florida-based The Capri Condominiums LP owns and manages condominiums. Capri is operated by Euro American Investors Group in The Netherlands, which runs an office in Tampa, Florida. Euro American Investors -- http://www.eaig.nl/-- is an international company that offers a complete package property with the focus on the United States and Europe. Since its launch in 1979, Euro American Investors built a diversified portfolio of properties, apartments, offices, commercial buildings, and shopping malls. Capri Condominiums sought protection under Chapter 11 on Feb. 6, 2008 (Bankr. M.D. Fla. Case No. 08-01553). Maureen A. Vitucci, Esq., at Gray Robinson PA represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets and debts between $10 million and $50 million. CAPRI CONDOMINIUM: Taps GrayRobinson as Bankruptcy Counsel ---------------------------------------------------------- The Capri Condominium Limited Partnership asks the U.S. Bankruptcy Court for the Middle District of Florida for authority to employ John A. Anthony at GrayRobinson, P.A. as its counsel. Mr. Anthony is expected to: a) give advice to the Debtor with respect to its powers and duties as a debtor-in-possession and the continued management of its business operations; b) advise the Debtor with respect to its responsibilities in complying with the U.S. Trustee's Operating Guidelines and Reporting Requirements and with the rules of the Court; c) prepare motions, pleadings, orders, applications, adversary proceedings, and other legal documents necessary in the administration of this bankruptcy case; d) protect the interests of the Debtor in all matters pending before the Court; and e) represent the Debtor in negotiations with its creditors in the preparation of a plan of reorganization and in assessing and establishing confirmability of that plan. The firm's billing rate ranges from $80 to $350 per hour. However, specific professionals have these rates: Professional Hourly Rate ------------ ----------- John A. Anthony $350 Stephenie Biernacki $250 Cheryl Thompson $215 Maureen A. Vitucci $200 Prior to bankruptcy filing, the firm received from the Debtor a retainer of $50,000. The retainer was applied as a credit amounting $10,902.10 for pre-petition legal representation and counseling regarding certain legal and financial matters affecting the Debtor's business. The firm retains the balance of the retainer amount of $39,097.90, having also advanced the filing fee for this bankruptcy case. Mr. Anthony assures the Court, that the firm holds no interest adverse to the Debtor and its estates and is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: GrayRobinson, P.A. 201 North Franklin Street Suite 220 Tampa, FL 33602 Tel: (407) 843-8880 Fax: (407) 244-5690 http://www.gray-robinson.com Tampa, Florida-based The Capri Condominiums LP owns and manages condominiums. Capri is operated by Euro American Investors Group in The Netherlands, which runs an office in Tampa, Florida. Euro American Investors -- http://www.eaig.nl/-- is an international company that offers a complete package property with the focus on the United States and Europe. Since its launch in 1979, Euro American Investors built a diversified portfolio of properties, apartments, offices, commercial buildings, and shopping malls. Capri Condominiums sought protection under chapter 11 on Feb. 6, 2008 (Bankr. M.D. Fla. Case No. 08-01553). Maureen A. Vitucci, Esq., at Gray Robinson PA represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets and debts between US$10 million and US$50 million. CARBON CAPITAL: S&P Puts Two Classes' Low-B Ratings on Neg. Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on five commercial real estate collateralized debt obligation classes from Carbon Capital II Real Estate CDO 2005-1 Ltd. on CreditWatch with negative implications. The CreditWatch negative placements follow the failure of all three of the transaction's par value coverage tests. The failures were due to the impairment of a second asset in the transaction, the Macklowe EOP Manhattan Portfolio. The CreditWatch negative placements will remain in effect until Standard & Poor's receives more details on the Macklowe EOP Manhattan Portfolio asset and performs a full analysis of the transaction. In addition to the previous impairment of the commercial real estate loan on Bermuda Dunes ($12 million, 3%), the Macklowe EOP Manhattan Portfolio CREL asset ($17.7 million, 4%) was classified as impaired in the most recent trustee report. The impairment of the Macklowe EOP Manhattan Portfolio asset follows Macklowe Properties' default on approximately $7 billion of financing on Feb. 9, 2008. Standard & Poor's is aware of the continuing negotiations involving a possible extension, which may have a direct impact on the Macklowe EOP Manhattan Portfolio asset. According to the trustee report dated Feb. 29, 2008, and released on March 7, 2008, the collateral pool backing Carbon Capital II Real Estate CDO 2005-1 Ltd. consisted of 22 assets with an aggregate principal balance of $450.2 million. The assets included 21 CREL assets totaling $409.8 million (91%), one class of commercial mortgage-backed securities pass-through certificates ($25 million, 6%), and cash ($15.4 million, 3%). These assets exhibited credit characteristics consistent with 'CCC+' rated obligations. As part of its analysis to resolve the CreditWatch negative placements, Standard & Poor's will consider the transaction structure as well as the credit quality of the underlying assets. Continuing failures of par value coverage tests would result in a reallocation of trust cash flows to pay down the principal balances of the transaction's classes, beginning with the most senior class. The reallocation will result in a delevering of the transaction and could cause potential payment shortfalls to the subordinate classes. Ratings Placed on CreditWatch Negative Carbon Capital II Real Estate CDO 2005-1 Ltd. Collateralized debt obligations series 2005-1 Rating ------ Class To From ----- -- ---- F BBB+/Watch Neg BBB+ G BBB/Watch Neg BBB H BBB-/Watch Neg BBB- I BB+/Watch Neg BB+ J BB/Watch Neg BB CARLYLE CAPITAL: Lenders Snub Proposed Standstill Agreement ----------------------------------------------------------- Deutsche Bank AG and J.P. Morgan Chase & Co. rejected Carlyle Capital Corporation Limited's plea to enter into a standstill agreement with lenders to prevent liquidation of the hedge fund's $16 billion in securities, The Wall Street Journal relates, citing company document and sources knowledgeable with the matter. As reported in the Troubled Company Reporter on March 11, 2008, Carlyle Capital, with the assistance of The Carlyle Group, was in continuing discussions with its lenders, on various subjects, including the execution of standstill agreements, while evaluating all available options to maximize value for all interested parties. Although the company has not received executed standstill agreements from its lenders, the company remains in active discussions with lenders who hold approximately $16 billion in securities, and the company believes that the discussions progressed throughout the day in a constructive manner. WSJ commented that Carlyle Capital had a little advantage from Federal Reserve's decision "to shore up markets" raising prices of mortgages-backed securities. However, WSJ says, that the hedge fund continues to struggle pointing to Deutsche Bank's liquidation of $2 billion worth of Carlyle Capital assets, despite the hedge funds appeal. WSJ reports that as of March 10, 2008, about $5.7 billion out of Carlyle Capital's $21 billion assets held as collateral have been liquidated. Based on WSJ's sources, dealers who were liquidated Carlyle Capital's assets include Merrill Lynch & Co. and Bear Stearns Cos. Citigroup Inc. didn't liquidate, and some dealers hope that Carlyle Capital's financial troubles will be resolved, WSJ relates. According to WSJ's sources, Deutsche Bank liquidated part of Carlyle Capital's assets because of its slow response to the bank's demand to put up additional capital. Carlyle Capital chief executive officer John Stomber stated in a letter dated March 5, 2008, that he was frustrated about dealers becoming extra tight and cautious with their credit standards despite The Carlyle Group's support, WSJ says. Mr. Stomber disclosed in the letter that 97% of Carlyle Capital's holdings were borrowed and added that a lender wanted to reduce that borrowings value to 95%, WSJ reports. Also, another lender significantly decreased the value of Carlyle Capital's assets at "markedly lower levels." In his letter, Mr. Stomber called for a meeting with lenders last Monday to talk about getting financing, WSJ notes. In turn, WSJ says, Deutsche Bank sent a default notice to Carlyle Capital demanding a statement on its financial status. Bloomberg recounts that Carlyle raised $600 million through a private offering and $345 million through an initial public offering. Carlyle Capital then borrowed more than 20 times its pooled fund, making it highly leveraged. The Financial Times published a list of banks with exposure to Carlyle Capital on March 11, 2008: Banks Exposure ----- -------- Citigroup $4.72 billion Lehman Brothers $3.07 billion Banc of America $1.97 billion UBS $1.84 billion Deutsche Bank $1.74 billion Bear Stearns $1.65 billion ING $1.46 billion JP Morgan $1.37 billion Calyon $1.34 billion Merrill Lynch $760 million BNP Paribas $580 million Credit Suisse $480 million Trading in Amsterdam Resumes Carlyle Capital's shares resumed trading at Euronext Amsterdam Tuesday. According to WSJ, its shares dropped to 30%, making its total decline reach 70% for the past week. Missed Margin Calls and Receipt of Default Notice As reported in the Troubled Company Reporter on March 10, 2008, Carlyle Capital said that since filing its annual report on Feb. 28, 2008, the company has been subject to margin calls and additional collateral requirements totaling more than $60 million. It said that until March 5, the company had met all of the margin requirements imposed by its repo counterparties. However, on March 5, the company received additional margin calls from seven of its 13 repo counterparties totaling more than $37 million. The company has met margin calls from three of these financing counterparties that have indicated a willingness to work with the company during these tumultuous times, but did not meet the margin requirements of the four other repo financing counterparties. At that time, one notice of default was received by the company from the group of four counterparties, and management expects to receive at least one additional default notice. Financial Highlight As of Feb. 27, 2008, the company's $21.7 billion investment portfolio is comprised exclusively of AAA-rated floating rate capped residential mortgage backed securities issued by Fannie Mae and Freddie Mac, which are considered to have the implied guarantee of the U.S. government and are expected to pay at par at maturity. The Carlyle Group agreed to increase the $100 million unsecured revolving credit facility made available to the company to $150 million and extend the maturity to July 1, 2009. As of Feb. 27, 2008, the company had $80 million of availability under this credit facility. As of Feb. 27, 2008, the company had unused repo lines of $2.4 billion with 11 counterparties. Bankruptcy is Possible Several analysts, including those from Citigroup and J.P. Morgan Chase & Co., have commented that unless The Carlyle Group steps in to rescue Carlyle Capital, the hedge fund will likely go bankrupt. About Carlyle Capital Carlyle Capital Corporation Limited (Euronext Amsterdam: CCC; ISIN: GG00B1VYV826) -- http://www.carlylecapitalcorp.com/-- is a Guernsey investment company that was formed on Aug. 29, 2006. It is a closed-end investment fund domiciled and registered as a limited company under the laws of Guernsey, Channel Islands. The company invests in a diversified portfolio of fixed income assets including high-grade mortgages and credit products. The company's day-to-day activities and investment portfolio are managed by Carlyle Investment Management LLC, whose investment professionals have extensive experience in the areas of mortgage finance, leveraged finance, capital markets transaction structuring and risk/portfolio management. CIM manages the company pursuant to a management agreement. CIM is a registered investment adviser under the U.S. Investment Advisers Act of 1940 and is an affiliate of The Carlyle Group. CARLYLE CAPITAL: CEO Sees "Three-Leg" Downward Move in Market ------------------------------------------------------------- John C. Stomber, president, chief executive officer and chief investment officer of Carlyle Capital Corporation Limited, said in a shareholder statement accompanying the company's annual report for the year ended Dec. 31, 2007, that he saw a "three-leg" downward move occurring in the fixed income market. First: Asset-Backed Commercial Paper Asset-backed commercial paper produced the first down leg. He extracted a table from the Federal Reserve Board: Commercial Paper Rates & Outstandings, as published on Feb. 1, 2008, disclosing: Date ABCP Outstandings Change ---- ----------------- --------------- July 31 $1,186.6 billion Aug. 31 $981.2 billion (205.4 billion) Sept. 30 $928.5 billion (52.7 billion) Oct. 31 $890.1 billion (38.4 billion) Nov. 30 $827.8 billion (62.3 billion) Dec. 31 $779.9 billion (47.9 billion) Investors began to liquidate their holdings of ABCP beginning in August 2007. Mr. Stomber said that the liquidation of the massive amount of securities caused the value of Carlyle Capital's securities to fall. He added that Carlyle Capital's securities lost significant mark- to-market value during the third quarter of 2007. In recent weeks, ABCP has shown small increases, but Mr. Stomber expects any improvement in this market to be modest, and perhaps temporary. Second: Mark Downs and Write-Offs of Securities According to Mr. Stomber, major institutions marked down value of collateralized debt obligations, asset-backed securities, and non- agency residential mortgage backed securities during the fourth quarter of 2007. These write-offs produced the second of the three fixed income down legs that Mr. Stomber described. Several problems led to this wave of write-offs. Securitization separated lenders from ultimate borrowers, leaving investors dependent on ratings agencies for assessments of credit and collateral quality. Investors demanded increasingly complex securities. Originators took advantage of liquidity to collect fees and quickly move assets off their balance sheets. When it became clear that the resulting securities would not perform as well as originally hoped, financial institutions were forced to write-off assets and stabilize their balance sheets with expensive capital. These write-offs, which according to a Deutsche Bank research article (published on Jan. 24, 2008) totaled $144.5 billion at the end of 2007, will likely continue in 2008, Mr. Stomber said. Carlyle Capital, Mr. Stomber continued, responded to market conditions in the fourth quarter by continuing its short term strategy of holding AAA-rated U.S. Agency capped floating rate securities issued by Fannie Mae and Freddie Mac. Carlyle Capital held its securities and not sell them at distressed prices because of the actions it took to improve liquidity and increase access to repo lines. Mr. Stomber thinks this is the best way to protect long-term shareholder value while the company rebuilds its liquidity and enabled it to generate the returns on equity and NAV mentioned earlier. Third: Rise in Default Rates Mr. Stomber believes the third down leg began during the first quarter of 2008 and will last several quarters. He projects that this period will be characterized by a significant rise in default rates for corporate fixed income paper as deteriorating economic conditions continue to erode corporate balance sheets.&