T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 19, 2008, Vol. 12, No. 67 Headlines AAMES MORTGAGE: Eroding Performance Cues S&P to Junk Three Ratings AINSWORTH LUMBER: Exchange Offer Expires, Conditions not Satisfied ALLIANCE ONE: S&P Changes Outlook to Stable; Retains 'B+' Rating ALLIANCE STAFFING: Case Summary & 20 Largest Unsecured Creditors AMBAC FINANCIAL: CEO Asks Policyholders to Deal With Loss Issues AMERICAN AXLE: Work Stoppage Prompts S&P's Negative Watch Posting ATHERTON-NEWPORT: Case Summary & 20 Largest Unsecured Creditors ATLANTIC EXPRESS: Moody's Slashes Ratings to 'Caa2' From 'Caa1' AVALON INVESTMENTS: Case Summary & Four Largest Unsec. Creditors BABSON LOAN: S&P Attaches 'BB' Rating on $16.5 Mil. Class E Notes BARRERA CONSTRUCTION: Case Summary & Ten Largest Unsec. Creditors BEAR STEARNS: JP Morgan Acquisition Receives Various Comments BEAR STEARNS: Moody's Takes Various Rating Actions on Ten Classes BORCHARDT TRUCKING: Case Summary & 20 Largest Unsecured Creditors BOWNE & CO: Incurs Net Loss of $76,000 For 2007 Fourth Quarter CARIBBEAN RESTAURANTS: S&P Junks Rating on Expected Breach in Pact CHARLES OHEARN: Voluntary Chapter 11 Case Summary COMMERCIAL MORTGAGE: Moody's Confirms Junk Ratings on Two Classes CONSECO INC: Posts $210 Mil. Net Loss in Preliminary 2007 Report CONSECO INC: 2007 10-K Filing Delay Won't Affect S&P's 'B+' Rating CONSTAR INT'L: S&P Upgrades Issue-level Rating to 'B-' From 'CCC+' CSFB MORTGAGE: Moody's Junks Rating on Class O Certs. From 'B3' CSFB ABS: S&P Confirms 'BB' Rating on Class B-2 Asset-backed Notes CYBERCARE INC: Cast-Crete's Amended Disclosure Statement Denied CYBERCARE INC: Case Conversion Hearing Scheduled for Today DELTA AIR: To Cut Flights, 30,000 Jobs in Wake of Weakened Economy DIASTAR INC: Case Summary & Seven Largest Unsecured Creditors DLMR LLC: Involuntary Chapter 11 Case Summary DOMAIN INC: Four Landlords Oppose Auction of Store Leases DORIS CORTEZ: Case Summary & Three Largest Unsecured Creditors DURA AUTOMOTIVE: Files Amended First Revised Chapter 11 Plan DURA AUTOMOTIVE: Unveils Financial Projections Under Revised Plan DURA AUTOMOTIVE: Claims Treatment & Classification of Revised Plan ENRON CORP: Parties Want Trial Stayed to Avoid "Irreparable Harm" ENTERCOM COMMS: S&P Assigns 'BB-' Rating on CreditWatch Negative EVRAZ GROUP: Fitch Affirms 'BB' ID Rating on IPSCO Acquisition EXACT SCIENCES: Reports $162M Accumulated Deficit, Explores Option EXACT SCIENCES: Executive Chairman Patrick J. Zenner Resigns EXACT SCIENCES: Appoints Jeff Luber as President and CEO GALAXY ENERGY: Discloses Prepetition Loans from Bruner Family GENERAL MARITIME: S&P Changes Outlook to Negative; Holds BB Rating GENERAL MOTORS: Strike Cues S&P to List Ratings on Negative Watch GO CAPITAL: Temporarily Suspends Fund Redemption Over Market Woes HARMONY HEAVEN: Case Summary & Eight Largest Unsecured Creditors HARRAH'S ENTERTAINMENT: Reports $47.8M Net Loss for 4th Quarter HOMESTEAD HOLDINGS: Case Summary & Seven Largest Unsec. Creditors HSI ASSET: Eroding Credit Support Prompts S&P's Rating Downgrades IMPERIAL PETROLEUM: Jan. 31 Balance Sheet Upside-Down by $8.6 Mil. INNOPHOS HOLDINGS: Reports $3.9M Net Loss for 2007 4th Quarter INT'L PAPER: Moody's Gives Negative Outlook on Weyerhaeuser Deal IXIS REAL: S&P Junks Nine Ratings on Deteriorating Credit Support JL HAIR: Case Summary & Three Largest Unsecured Creditors KITTY HAWK: Court Moved Exclusive Plan Filing Period to March 28 LASALLE COMMERCIAL: Losses Prompts Moody's Four Rating Downgrades LATTICE INC: Obtains $2.4 Million Credit Line from Private Bank LEAR CORP: S&P Posts Ratings on Negative Watch on Extended Strike MASTR ABS TRUST: S&P's Rating on Class M-9 Drops to 'CCC' MAXJET AIRWAYS: To Sell Assets to MAAG for $1 Million MEDICALCV: January 31 Balance Sheet Upside-Down by $5,794,877 MERISANT COMPANY: Commences Marketing of Secured Credit Facility MERRILL LYNCH: Moody's Confirms Low-B Ratings on Six Cert. Classes MONEYGRAM INT'L: Inks Recapitalization Deal with Investment Group MONITOR OIL: U.S. Trustee & Panel Oppose Exclusivity Extension NATIONAL ENERGY: Shareholders OK Plan of Dissolution & Liquidation NEW 118TH: Court Approves Sale of The Ivy Project for $11.25MM NEWBURY STREET: Moody's Junks Rating on $48 Mil. Notes From 'A3' NATIONAL CENTURY: Ex-CEO Faces Trial on Witness Bribery NATIONAL CENTURY: Jury Convicts Five Former NCFE Executives NC POWER HOLDINGS: Involuntary Chapter 11 Case Summary NORTEL NETWORKS: Inks Settlement Agreement with Vonage NORTHWESTERN CORP: Settles Magten Asset Bankruptcy Claims for $23M ORIENTAL TRADING: Moody's Puts Negative Outlook; Holds All Ratings PACIFICNET INC: Kabani & Co. Raises Going Concern Doubt PALM HARBOR: Unit Extends Maturity of $42MM Facility to April 30 PFP HOLDINGS: Wants Court to OK Asset Sale and Bidding Procedures PIPER RESOURCES: Alberta Court Grants April 28 CCAA Extension PLASTECH ENGINEERED: Court OKs Additional $14MM Interim Financing PLASTECH ENGINEERED: Aims to Leave Bankruptcy in Six Months PLASTECH ENGINEERED: Roush Wants Stay Lifted to Recover Molds PLASTECH ENGINEERED: Wants Admin. Claims Bar Date Set to May 30 POPULAR ABS: Three Classes of Certs. Obtain S&P's Junk Ratings PORTOLA PACKAGING: S&P Retains 'B-' Rating on $60 Mil. Facility PRC LLC: Can Sell Real Property to Brett Houston for $2.2 Million PRC LLC: Wants to Reject Spirit Air Pact, Says It Has Little Value PRC LLC: Wants iEnergizer Settlement Agreement Approved PROTECTION ONE: Unit Secures $110 Mil. Senior Unsecured Term Loan PROTECTION ONE: Moody's Pares Default Probability Rating to 'B3' QWEST COMMUNICATIONS: Discloses Program Affecting 2% Workforce RADIO SYSTEMS: S&P Changes Outlook to Negative; Keeps All Ratings READER'S DIGEST: S&P Chips Rating to 'B-' on Higher Debt Levels RITE AID: Solicits Consents to Amend Terms of Credit Indentures SECURITY CAPITAL: Posts $1.1 Billion Net Loss in 4th Qtr. 2007 SEE WHY GERARD: Court Orders Mediation of Feud with Comedy Works SEQUIAM CORPORATION: Case Summary & 39 Largest Unsecured Creditors SHAPES/ARCH: Bankruptcy to be Aided by Versa's $25 Mil. DIP Fund SHARPER IMAGE: Court Approves Liquidation Deal with Hilco & Gordon SIGMA FINANCE: Pressures Spur S&P's Negative CreditWatch Listing SILVERWING ENERGY: Seeks Financing to Remedy Covenant Breach SPYRUS INC: Wants DLA Piper US as Bankruptcy Counsel STRADA 315: Files Schedules of Assets and Liabilities TC COMPUTER: Case Summary & 21 Largest Unsecured Creditors TENNECO INC: S&P Puts Ratings on Negative Watch on Work Stoppage THORNBURG MORTGAGE: May Issue Securities to Raise Funds TILLIM LLC: Has Until May 30 to File Plan and Disclosure Statement TILLIM LLC: Can Decide Until May 12 to Assume or Reject Lease TRIBUNE CO: 10% Expected Decline in Revenue Cues S&P's 'B-' Rating UNICO INC: Issues Convertible Debentures Totaling $300,000 VANGENT INC: Posts $1.99 Mil. Net Loss For The 2007 Fourth Quarter VICTORY MEMORIAL: Judge Craig Pushes Back Auction Date to March 31 VONAGE HOLDINGS: Inks Settlement Agreement with Nortel Networks WASHINGTON MUTUAL: 38 Classes Get Moody's Rating Confirmations WICKES FURNITURE: Committee Wants Sun Wickes Loans Investigated WILLIAM BOYD: Hearing on Plant Sale to Cass Hill is Today XERIUM TECHNOLOGIES: May File For Bankruptcy Protection ZIFF DAVIS: Gets Court Approval to Hire BMC as Claims Agent * February Downgrades Driven By Covenant Concerns, Moody's Says * S&P Reports Data on Leveraged Companies With High Default Risk * S&P Downgrades 47 Classes' Ratings From Five CDO Deals to 'D' * S&P Designates Ratings on 228 Classes of RMBS on Negative Watch * S&P Downgrades Ratings on 91 Classes From 23 RMBS Transactions * Fitch Says Credit Market Downturn Is Difficult for Underwriters * Fitch Says Weak Housing Environment Will Continue to Take a Toll * CorporateDefaults.com Reports Default Chances for Bear Stearns * CRG's Gray Named Fellow of American College of Bankruptcy * Beard Audio Presents "Understanding CDS Contract Risks" Seminar * Upcoming Meetings, Conferences and Seminars ********* AAMES MORTGAGE: Eroding Performance Cues S&P to Junk Three Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 11 classes from three Aames Mortgage Trust deals. S&P also affirmed its ratings on two classes from one of the downgraded deals. The other classes from these transactions are not affected by these rating actions. The downgrades reflect collateral performance that has eroded available credit support during recent months. As of the February 2008 remittance period, cumulative losses for series 2001-4 were 4.40%, or $10.33 million of the original pool balance. Losses for this series have outpaced excess interest for 11 out of 12 most recent months and overcollateralization (O/C) is currently 5.4x below its $1.4 million target. As of the February 2008 remittance period, cumulative losses for series 2005-1 and 2005-4 were $13.37 million and $19.16 million of the original pool balances, respectively, and serious delinquencies (90-plus days, foreclosures, and REOs) for these series were $58.47 million and $146.84 million of the current pool balances, respectively. O/C is currently below its target for both deals. Subordination, O/C, and excess spread provide credit support for these series. The collateral for these transactions consists of pools of conventional, first- and second-lien, adjustable- and fixed-rate, fully amortizing residential mortgage loans. Ratings Lowered Aames Mortgage Trust 2001-4 Rating ------ Class To From ----- -- ---- M-1 A AA+ M-2 B BB Aames Mortgage Investment Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-1 B1 BB BBB+ 2005-1 B2 B BB+ 2005-1 B3 CCC B 2005-4 M6 A AA- 2005-4 M7 BBB A+ 2005-4 M8 BB A 2005-4 M9 B BBB+ 2005-4 B1 CCC BB 2005-4 B2 CCC B Ratings Affirmed Aames Mortgage Trust 2001-4 Class Rating ----- ------ A4 AAA B CCC AINSWORTH LUMBER: Exchange Offer Expires, Conditions not Satisfied ------------------------------------------------------------------ Ainsworth Lumber Co. Ltd. disclosed that its exchange offer and consent solicitation relating to its outstanding senior unsecured notes has expired without the conditions to the offer being satisfied. "Although we are disappointed that the exchange offer was not successful as currently structured, it did provoke constructive dialogue with noteholders and we remain optimistic that we will find a refinancing structure that is mutually satisfactory. In the meantime, the company has a number of other alternatives that it will now pursue as well," Robert Allen, chief financial officer of the company, said. "The company and its supportive noteholders remain contractually committed notwithstanding the expiry of the offer, and we expect that will facilitate getting to a solution," Mr. Allen added. As reported in the Troubled Company Reporter on Feb. 19, 2008, Ainsworth Lumber commenced an exchange offer for any and all of its outstanding: * $153.5 million aggregate principal amount of senior unsecured floating rate notes due 2010, * $275 million aggregate principal amount of 7.25% senior unsecured notes due 2012, * $75 million aggregate principal amount of senior unsecured floating rate notes due 2013, * $210 million aggregate principal amount of 6.75% senior unsecured notes due 2014, and * $110 million aggregate principal amount of 6.75% senior unsecured notes due 2014. Pursuant to the exchange offer, holders of existing notes could exchange their existing notes for the company's 14% senior secured second lien notes due June 24, 2014, which would be issued in an aggregate principal amount of up to $596.0 million. When issued, the new notes would be the company's senior obligations and would be secured by a second priority lien on real property, plant and equipment, other than certain excluded assets, and a third priority lien on the inventory and accounts receivable currently pledged under the company's existing term loan credit facility. The new notes would be unconditionally guaranteed by the company's material subsidiaries. In connection with the exchange offer, the company solicited consents from holders of the existing notes to certain amendments to the indentures governing the existing notes, including the removal of substantially all of the restrictive covenants and certain events of default. The exchange offer was conditioned upon, among other things, the holders of at least 50.1% of the aggregate outstanding principal amount of existing notes tendering existing notes in the exchange offer and the holders of not less than a majority in the aggregate outstanding principal amount of each class of existing notes that vote together for purposes of effecting amendments delivering consents in the consent solicitation. Holders of approximately one third of the existing notes agreed with the company to tender their existing notes in the exchange offer and deliver consents in the consent solicitation. Concurrent with the exchange offer and consent solicitation, the company offered $50 million aggregate principal amount of its senior secured first lien notes due 2014 to "qualified institutional buyers" in the United States and "accredited investors" in Ontario, Canada. The net proceeds of the concurrent offering would be used for working capital and general corporate purposes. Certain holders of existing notes agreed to backstop the concurrent offering. As consideration for their agreement to backstop the concurrent offering, the holders would receive warrants to purchase up to 7,887,998 of the company's common shares, representing approximately 35% of the company's currently outstanding common shares assuming full exercise of the warrants, at an exercise price of CDN$0.01 per share. The number of common shares into which the warrants may be exercised would be adjusted proportionately if the company issues common shares or securities convertible into common shares at less than 95% of the then fair market value of the common shares on the Toronto Stock Exchange. The warrants would expire on June 24, 2014. The company has the right to redeem the warrants in full prior to the date that is five years following the date of issuance of the warrants. Barclays Capital Inc. is acting as a financial advisor to the company in connection with the exchange offer and consent solicitation, and Global Bondholder Services Corporation is acting as exchange agent and information agent in connection with the exchange offer and consent solicitation. Headquartered in Vancouver, British Columbia, Ainsworth Lumber Co. Ltd. (TSE:ANS) -- http://www.ainsworth.ca/-- manufactures structural-engineered wood products, including oriented strand board, and specialty overlaid plywood. The company owns and operates six OSB manufacturing facilities, three in Canada and three in northern Minnesota. It has a 50% ownership interest in an OSB facility, located in High Level, Alberta. Ainsworth is also a manufacturer of specialty overlaid concrete-form plywood products in North America. Ainsworth's business is focused on the structural wood panels sector. It offers value-added products, such as OSB webstock, rimboard, radiant barrier OSB panels, jumbo OSB panels, export-standard OSB and specialty overlaid plywood. * * * As reported in the Troubled Company Reporter on Nov. 15, 2007, Moody's Investors Service downgraded Ainsworth Lumber Co. Ltd.'s corporate family rating to Caa1 from B2. At the same time, the ratings on the senior unsecured notes were downgraded to Caa1 from B2 and the rating on the secured term loan was downgraded to B2 from Ba3. Standard & Poor's Ratings Services placed Ainsworth Lumber Co. Ltd.'s long-term foreign and local issuer credit ratings at 'CCC+' in March 2007. The outlook is negative. The ratings still hold to date. ALLIANCE ONE: S&P Changes Outlook to Stable; Retains 'B+' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Alliance One International Inc. and its wholly owned subsidiary, Intabex Netherlands B.V., to stable from negative. At the same time, the ratings on the Morrisville, North Carolina-based company, including the 'B+' corporate credit rating, were affirmed. "The outlook revision principally reflects steady reduction in debt leverage since the acquisition of Standard Commercial in May 2005, and improved liquidity," said Standard & Poor's credit analyst Kenneth Shea. The ratings on Alliance One reflect the challenging business environment in which the company operates, marked by global competition, political unrest in certain leaf-tobacco producing countries, the weak U.S. dollar, and declining cigarette consumption in most mature markets, including the U.S. and Western Europe. In addition, there is customer concentration risk and relatively high debt leverage. These concerns are tempered by the company's position as one of the two leading independent leaf tobacco merchants; its sourcing diversification; and solid customer relationships with the leading cigarette manufacturers. ALLIANCE STAFFING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Alliance Staffing Inc. 999 Remington Boulevard, Suite F Bolingbrook, IL 60440 Bankruptcy Case No.: 08-06100 Chapter 11 Petition Date: March 14, 2008 Court: Northern District of Illinois (Chicago) Judge: Bruce W. Black Debtor's Counsel: Beverly A. Berneman, Esq. bberneman@querrey.com Robert R. Benjamin. Esq. rbenjamin@querrey.com Querrey & Harrow Ltd. 175 West Jackson Boulevard Suite 1600 Chicago, IL 60604 Tel: 312-540-7000 Fax: (312)540-0578 Total Assets: $2,327,280 Total Debts: $3,716,512 Debtor's list of its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Department of the Treasury 941s for 2nd, $1,365,509 IRS 3rd, 4th quarter Cincinnati, OH 45999 2007 and year through March 14, 2008 Fifth Third Bank 2006 operating $380,000 P.O. Box 630337 loan Cincinnati, OH 45263 Alfred Garza loans to company $236,000 13245 Lake Shore Drive Plainfield, IL 60586 Illinois Dept. of Employment unemployment $216,006 September, 2006 through December, 2007 Alfred A. Garza loans to $175,000 corporation CIT Technology Services lessor of $147,662 personal property First Insurance Funding Corp. insurance $89,457 Eric Garza loans to $85,000 corporation ALAP Limited loans to $83,314 corporation Michael Pazur loans to $77,685 corporation American Express 37003 credit card $8,386 obligations Charter One $47,000 Eagle Personnel subcontracted $31,560 labor St. James Hospital & Health employee workers $26,489 Center compensation claims VIP Remington Lakes LLC lessor of non- $25,996 residential real estate Artex Risk Solutions Inc. insurance $22,369 Blue Cross Blue Shield insurance $18,225 ATI utilities $11,794 Pluymert, Piercey, MacDonald professional fees $10,301 & Amato Schwab Rehabilitation Hospital employee workers $4,360 compensation claims AMBAC FINANCIAL: CEO Asks Policyholders to Deal With Loss Issues ---------------------------------------------------------------- Michael A. Callen, Ambac Financial Group Inc.'s chairman and chief executive officer, in his letter, urged policyholders, clients, shareholders and friends, to deal with a lot of misinformation and self-serving agendas of others in the marketplace. Mr. Callen relates that (i) loss projections read and hear about are simply projections, based on limited data and the numbers on the headlines are stress case losses, not expected losses; (ii) Ambac never considered a "bailout;" and (iii) lost issues in Ambac's portfolio arise largely from four transactions, the "CDO- squareds," that account for the vast majority of our potential losses. "In this difficult environment, Ambac was able to achieve its immediate objectives of enhancing its capital position and improving its position with the rating agencies," Mr. Callen continued. "With the capital raise in place, Ambac, in our view, now has the resources from which to build its future, including the ability to capitalize on attractive, sound opportunities as they arise in the financial guarantee business." Along with the company's capital raising efforts, the company is undertaking an examination of all aspects of Ambac's business its organization, business focus, systems and processes. While the company's work in this regard is ongoing, it has implemented some important changes, Mr. Callen stated. "We have created a new risk management structure and we are refocusing our business, including the exiting of certain businesses, with the objective of improving the quality of our portfolio and reducing the volatility of our earnings," Mr. Callen concluded. "This process will take time, but will benefit all of our constituents." About Ambac Financial Based in New York City, Ambac Financial Group, Inc. is a holding company whose affiliates provide financial guarantees and financial services to clients in both the public and private sectors around the world. For the nine months ended Sept. 30, 2007, Ambac reported net income of $26 million. As of Sept. 30, 2007, Ambac had shareholders' equity of approximately $5.65 billion. * * * On Jan. 18, Fitch Ratings downgraded Ambac to double-A after the insurer put off plans to raise equity capital. As reported by the Troubled Company Reporter on Jan. 17, 2008, Moody's Investors Service placed the Aaa insurance financial strength ratings of Ambac Assurance Corporation and Ambac Assurance UK Limited on review for possible downgrade. In the same rating action, Moody's also placed the ratings of the holding company, Ambac Financial Group, Inc. (senior debt at Aa2), and related financing trusts on review for possible downgrade. Moody's stated that this rating action follows Ambac's announcement of record losses, a capital raising plan, and the retirement of its CEO. AMERICAN AXLE: Work Stoppage Prompts S&P's Negative Watch Posting ----------------------------------------------------------------- Standard & Poor's Ratings Services placed the ratings on General Motors Corp., American Axle & Manufacturing Holdings Inc., Lear Corp., and Tenneco Inc. on CreditWatch with negative implications. The CreditWatch placement reflects S&P's decision to review the ratings in light of the extended American Axle (BB/Watch Neg/--) strike. The work stoppage that began Feb. 25 at American Axle's U.S. United Auto Workers plants has forced closure of many GM (B/Watch Neg/--) plants, as well as plants of certain GM suppliers. The strike began after the expiration of the four-year master labor agreement with American Axle. Although S&P still expect American Axle and the UAW to reach an agreement that will reflect more competitive labor costs, the timing is unknown. The two sides resumed negotiations last week. "We believe the strike has gone on long enough to possibly begin to affect the financial resources of GM and those suppliers most exposed to the automaker," said Standard & Poor's credit analyst Robert Schulz. To resolve the CreditWatch listings, Standard & Poor's will assess the strike's impact on the companies' credit profiles, particularly liquidity, once production resumes. S&P could lower the ratings any time prior to a resolution of the Axle strike if the liquidity of the companies becomes compromised, although downgrades are not likely for another several weeks. ATHERTON-NEWPORT: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Atherton-Newport Fund 124, LLC 4 Park Plaza, Suite 1050 Irvine, CA 92614 Bankruptcy Case No.: 08-11280 Chapter 11 Petition Date: March 18, 2008 Court: Central District Of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Stephen R. Wade, Esq. (dp@srwadelaw.com) 400 North Mountain Avenue, Suite 214B Upland, CA 91786 Tel: (909) 985-6500 Fax: (909) 985-2865 http://www.srwadelaw.com/ Estimated Assets: $1 million to $50 million Estimated Debts: $1 million to $50 million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Legg Mason Real Estate real estate $11,443,122 Investors 10880 Wilshire Boulevard, Suite 1760 Los Angeles, CA 90024 Tempe Paint $22,349 6515 South Rural Road Tempe, AZ 85283 City of Henderson $19,065 P.O. Box 95011 Henderson, NV 89009 Gaia Tech, Inc. $16,218 Home Depot Supply $14,178 Escalera Landscaping $12,665 Wilmar $10,737 James Stevens & Daniels $9,793 For Rent Magazine $8,789 Cox Communication $6,769 Classic Design Group $6,227 The Glidden Co. $5,917 Lamb Asphalt Maintenance $5,909 Preferred Electric $5,685 Republic Services of South $5,554 Nevada Apartment Guide $5,175 Consumer Source $5,175 EZ Maintenance $4,860 Cherokee Blind & Door $4,354 Lange Plumbing $4,227 ATLANTIC EXPRESS: Moody's Slashes Ratings to 'Caa2' From 'Caa1' --------------------------------------------------------------- Moody's Investors Service downgraded the probability of default and corporate family ratings of Atlantic Express Transportation Corp. to Caa2 from Caa1. The rating on Atlantic Express' $185 million senior secured floating rate notes due April 2012 has been downgraded to Caa2 LGD 4, 53% from Caa1 LGD 4, 52%. The outlook is negative. The downgrades reflect the magnitude of Atlantic Express' debt service requirements relative to its expected earnings level and weakened liquidity profile. The company's earnings have declined significantly. A combination of high fuel prices that cannot be fully passed through to customers, and high labor costs combined with slight declines in bus route service requirements has caused last three months ended Dec. 31, 2007 EBITDA of $6.9 million versus last three months ended Dec. 31, 2006 EBITDA of $11.7 million; EBIT to interest declined to 0.3 times from 1.0 times. Moody's anticipates that the company will rely on its revolving credit facility in coming months to fund internal cash flow deficits while the potential for a credit facility covenant breach has risen with the weakened earnings. The negative outlook reflects Moody's view that fuel prices will likely remain elevated near term and, at the current earnings level, the company's ability to maintain access to its revolving credit facility over the seasonally low July-September period, and to meet its October 2008 interest payment of approximately $11.5 million, will be challenging. The Caa2 rating reflects Atlantic Express' small size, high leverage and weak liquidity profile. The ratings also acknowledge that school bus transportation is a basic service with stable demand. Should the company manage through the financially tight period upcoming, fuel prices may decline or enough customer contracts may be renewed at higher prices such that profit margins and debt service capability could improve. With minimal cash on hand, the company's liquidity needs are supported by a $35 million receivables-based revolving credit facility. The revolver has a $26 million minimum EBITDA test which springs if availability declines below certain levels. As of Dec. 31, 2007, last twelve month EBITDA, as defined, was $25.9 million. As of Jan. 31, 2008, the company had $0.7 million borrowed under the credit facility and had $21.1 million of borrowing availability. During the summer months bus route service requirements decline, and credit facility's borrowing base declines. Atlantic Express Transportation Corporation, headquartered in Staten Island, New York, is the third largest provider of outsourced school bus transportation in the United States. The company also provides para-transit services to public transit systems. AVALON INVESTMENTS: Case Summary & Four Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Avalon Investments LLC P.O. Box 313 North Hampton, NH 03833 Bankruptcy Case No.: 08-10663 Chapter 11 Petition Date: March 14, 2008 Court: District of New Hampshire Live Database (Manchester) Debtor's Counsel: William S. Gannon, Esq. William S. Gannon PLLC 889 Elm Street, 4th Floor Manchester, NH 03101 Tel: (603) 621-0833 Fax: (603) 621-0830 bgannon@gannonlawfirm.com Estimated Assets: less than $50,000 Estimated Debts: $1,000,001 to $10 million Debtor's list of its Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Town of Hampton taxes $21,549 100 Winnacunnet Road Hampton, NH 03842 Town of Exeter taxes $18,048 10 Front Street Exeter, NH 03833 Jones & Beach Eng. services $6,804 P.O. Box 219 Stratham, NH 03885 Northern Utilities Inc. utility $4,451 BABSON LOAN: S&P Attaches 'BB' Rating on $16.5 Mil. Class E Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Babson Loan Opportunity CLO Ltd. and Babson Loan Opportunity CLO Inc.'s $508.5 million floating-rate notes due 2018. The preliminary ratings are based on information as of March 17, 2008. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the rated notes and the subordinated notes junior to the respective classes; -- The cash flow structure, which was subjected to various stresses requested by Standard & Poor's; -- The collateral manager's experience; and -- The transaction's legal structure, including the issuer's bankruptcy remoteness. Preliminary Ratings Assigned Babson Loan Opportunity CLO Ltd. Babson Loan Opportunity CLO Inc. Class Rating Amount (million) ----- ------ ---------------- A AAA $421.0 B AA $24.5 C A $24.5 D BBB $22.0 E BB $16.5 Subordinated notes NR $41.5 NR Not rated. BARRERA CONSTRUCTION: Case Summary & Ten Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: Barrera Construction & Development Corp. 45 West 34th Street Suite 708 New York, NY 10105 Bankruptcy Case No.: 08-1092 Chapter 11 Petition Date: March 17, 2008 Court: Southern District of New York (Manhattan) Judge: Martin Glenn Debtor's Counsel: Bruce Weiner, Esq. Rosenberg, Musso & Weiner, LLP 26 Court Street Suite 2211 Brooklyn, NY 11242 Tel: (718) 855-6840 Fax: (718) 625-1966 rmwlaw@att.net Total Assets: $171,000 Total Debts: $2,234,602 Debtor's list of its Ten Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Olancho Construction Corp. $478,112 2343 Valentine Avenue, Suite 2B Bronx, NY 10458 The State Insurance Fund $430,000 199 Church Street Station New York, NY 10007 Sanruf Restoration Corp. $398,240 19 West 44th Street Suite 1500 New York, NY 10036 Bras_Al Construction Corp. $375,289 14 Cortland Street Newark, NJ 07105 JR Construction & Waterproofing $235,081 Worldwide Construction Corp. $175,103 Total Structural Concepts $84,777 Jeffrey S. Eisenberg, Esq. $33,000 Mendonca & Suarez LLC $7,000 Fifth Third Bank $3,000 BEAR STEARNS: JP Morgan Acquisition Receives Various Comments ------------------------------------------------------------- J.P. Morgan Chase & Co.'s planned acquisition of Bear Stearns Companies Inc. for $2 per share, or $236 million, received various comments from shareholders and analysts. The Wall Street Journal reported that shareholders are posed to object the deal saying JP Morgan's offer "is derisory" and that Bear Stearn's value hasn't dipped that much. At Monday's trading, Bear Stearns shares were priced at $4.81, more than twice JP Morgan's offer, WSJ related. According to the report, shareholders might shake up JP Morgan to raise its lowly offer. On Tuesday, WSJ said, speculators drove up the stock 23% to $5.91. WSJ said speculators are betting that JP Morgan will have to pay up to seal its deal to acquire Bear Stearns. Andrew Sorkin at The New York Times reported Sunday that Bear Stearns is prepared to file for chapter 11 protection if a deal fell through at that time. "If an agreement is not reached and Bear Stearns files for bankruptcy, it could cause an even deeper global scare over the fate of the financial system," Mr. Sorkin said. There could be more value for Bear Stearns' shareholders if the company files for chapter 11 protection. Bear Stearns disclosed total assets of $397,090,987,000 and total debts of $384,090,529,000 as of August 31, 2007, resulting in total shareholder equity of roughly $13,000,000,000. Bear Stearns recorded net income for the fiscal year ending Nov. 30, 2007, of $233,000,000 on net revenues of $5,900,000,000. Investor Joseph Lewis, who holds 9.4% interest at Bear Stearns, told WSJ in an interview that he is rejecting JP Morgan's buyout proposal since it's not representative of the company's "true value." Mr. Lewis told WSJ that he believes other shareholders will not approve the buyout either. Private Capital Management Inc. CEO Bruce Sherman also commented JP Morgan was well aware that Bear Stearns "is more valuable than" its $2 per share offer, WSJ says. According to WSJ's report, employees holding an aggregate of 30% stake in Bear Stearns intend to reject the transaction. However, some analysts stated that Bear Stearns may not have other options and that "a better deal is unlikely," WSJ reports. Based on the report, JP Morgan's promise to back up Bear Stearns' trading obligations for a year won't end even if the acquisition is not approved. Operating alone, Bear Stearns will continue to face other liquidity concerns and may go bankrupt, WSJ notes. Once bankrupt, WSJ relates, the ability of Bear Stearns' shareholders to recover their money will be very limited since they'll be last in the distribution line. JP Morgan has reserved $6 billion for future litigation and other costs involved in the Bear Stearns deal, WSJ adds. Bear Stearns shareholders have less than two months to vote on the deal. JP Morgan's $236 Million Buy Offer As reported in the Troubled Company Reporter on March 17, 2008, Bear Stearns has agreed to be bought by JP Morgan. The boards of directors of both companies have unanimously approved the transaction. The transaction will be a stock-for-stock exchange. JP Morgan will exchange 0.05473 shares of JP Morgan common stock per one share of Bear Stearns stock. Based on the closing price of March 15, 2008, the transaction would have a value of roughly $2 per share. JP Morgan's bid of $2 per share represents a 97.5% discount to Bear Stearns book value of $80.0 that the firm has reported. The transaction values Bear Stearns at just $236 million based on the number of shares outstanding as of Feb. 16. At the close on March 14, 2008, Bear Stearns' stock-market value was about $3.54 billion, and the company finished at $30 a share at 4 p.m. in the New York Stock Exchange composite trading. The Federal Reserve, the Office of the Comptroller of the Currency and other federal agencies have given all necessary approvals. In addition to the financing the Federal Reserve ordinarily provides through its discount window, the Fed will provide special financing in connection with the JP Morgan transaction. The Fed has agreed to fund up to $30 billion of Bear Stearns' less liquid assets. U.S. Treasury Secretary Pleased with JP Morgan-Bear Stearns Deal Reuters reports that the U.S. Treasury Secretary Henry Paulson is pleased with the JP Morgan's planned acquisition of Bear Stearns and with the Federal Reserve's move to stabilize the market. Mr. Paulson commented that market players "are addressing challenges," Reuters says. First Quarter 2008 Report Canceled Bear Stearns canceled its previously scheduled plan to announce first quarter 2008 financial results on Monday, March 17, 2008, "in light of entering into an agreement to merge with JP Morgan Chase." About Bear Stearns New York City-based The Bear Stearns Companies Inc. (NYSE: BSC) -- http://www.bearstearns.com/-- is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The company's core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. The company has approximately 14,000 employees worldwide. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings' affirmed its Negative Outlook for The Bear Stearns Companies Inc. following the announcement of the company's fiscal year earnings for 2007. On Nov. 14, 2007, Fitch affirmed Bear Stearns' long-term credit ratings, along with its subsidiaries. Fitch also downgraded the short-term rating to 'F1' from 'F1+', and Individual rating to 'B/C' from 'B'. BEAR STEARNS: Moody's Takes Various Rating Actions on Ten Classes ----------------------------------------------------------------- Moody's Investors Service upgraded the rating of two classes, downgraded the rating of one class and affirmed the ratings of seven classes of Bear Stearns Commercial Mortgage Securities Inc., Commercial Mortgage Pass-Through Certificates, Series 1999-C1: -- Class A-2, $270,234,986, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $23,900,199, affirmed at Aaa -- Class C, $17,925,149, affirmed at Aaa -- Class D, $21,510,179, upgraded to Aa2 from Aa3 -- Class E, $5,975,050, upgraded to A1 from A2 -- Class G, $4,780,040, affirmed at Ba3 -- Class H, $3,585,030, affirmed at B2 -- Class I, $9,560,080, downgraded to Caa3 from Caa2 -- Class J, $1,552,561, affirmed at C Moody's is upgrading Classes D and E due to increased subordination levels, improved overall pool performance and an increased percentage of defeased loans. Moody's is downgrading Class I due to realized losses on classes J and K. As of the Feb. 14, 2008 distribution date, the transaction's aggregate principal balance has decreased by approximately 22.1% to $372.2 million from $478.0 million at securitization. The Certificates are collateralized by 110 loans, ranging in size from less than 1.0% to 5.0% of the pool, with the top 10 loans representing 27.4% of the pool. Forty loans, representing 44.4% of the pool, have defeased and been replaced with U.S. Government securities. Three loans have been liquidated from the pool resulting in aggregate realized losses of approximately $5.6 million. There are no loans in special servicing at this time. Fourteen loans, representing 11.0% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2006 operating results for 91.2% of the performing loans and partial year 2007 operating results for 74.3% of the performing loans. Moody's weighted average loan to value ratio is 65.5% compared to 68.0% at Moody's last full review in May 2006 and compared to 76.0% at securitization. The top three non-defeased loans represent 7.9% of the outstanding pool balance. The largest loan is the Clemens Place Apartments Loan ($12.7 million - 3.4%), which is secured by a 583-unit multifamily property located in Hartford, Connecticut. The property was built between 1915 and 1971 and was renovated in the early 1980s. As of September 2007, occupancy was 97.0% compared to 93.0% at last review and 97.0% at securitization. The loan is due in February 2009 and has amortized 9.9% since securitization. Moody's LTV is 64.9%, compared to 66.9% at last review and compared to 85.0% at securitization. The second largest loan is the Washington Commons Loan ($8.4 million -- 2.3%), which is secured by a 54,752 square foot property consisting of a shopping center and a 26-unit apartment building located in Dumont, New Jersey. As of December 2006, occupancy was 96.0% compared to 100.0% at securitization. The largest tenant is Grand Union (80.8% of NRA, lease expiring October 2017). The loan is due in November 2008 and has amortized 10.6% since securitization. Moody's LTV is 93.3%, compared to 98.3% at last review and compared to 91.5% at securitization. The third loan is the Hamilton Station Apartments Loan ($8.2 million -- 2.2%), which is secured by 17 two and three-story apartment buildings with 284 units located in Columbus, Georgia. As of December 2007, occupancy was 93.0% compared to 95.1% at securitization. Property performance has improved since securitization due to increased rental income and amortization. The average monthly rent is $723 per month compared to $569 per month at securitization. The loan is due in October 2013 and has amortized 13.5% since securitization. Moody's LTV is 69.5%, compared to 74.5% at last review and compared to 80.7% at securitization. BORCHARDT TRUCKING: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Borchardt Trucking, Inc. N3231 Nymph Road Lake Geneva, WI 53147 Tel: (262) 249-0819 Bankruptcy Case No.: 08-22373 Type of Business: The Debtor offers trucking services. See http://borchardttrucking.com Chapter 11 Petition Date: March 17, 2008 Court: Eastern District of Wisconsin (Milwaukee) Judge: Pamela Pepper Debtor's Counsel: Leonard G. Leverson, Esq. Leverson & Metz S.C. 225 East Mason Street Suite 100 Milwaukee, WI 53202 Tel: (414) 271-8503 lgl@levmetz.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's list of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Couri Insurance Agency, Inc. $79,926 379 West main Street Waukesha, WI 53186 Fleet One $25,149 5042 Linbar Drive Nashville, TN 37211-5099 American International Co. $20,529 22427 Network Place Chicago, IL 60673-1224 The Illinois State Toll Highway Authority $14,928 Fuel Express South $14,593 American Express $13,712 Pete's Tire Service, Inc. $10,832 Discover $10,665 Carlson & Halpern CPA's, S.C. $10,083 Assurant Health $8,426 M&I Bank Credit Card $8,249 AFLAC Remittance Processing Services $6,589 Meier Bros. Tire Service $6,511 Kirk Tire Sales $6,270 Capitol One Bank $4,578 Registration Fee Trust $3,913 Midway Truck Parks $3,833 La Beau Bros., Inc. $2,969 Sprint $2,272 Bumper to Bumper $1,417 BOWNE & CO: Incurs Net Loss of $76,000 For 2007 Fourth Quarter -------------------------------------------------------------- Bowne & Co. Inc. reported net loss of $76,000 for the 2007 fourth quarter ended Dec. 31 compared to $2.234 million for the 2006 fourth quarter. For the full fiscal year ended Dec. 31, 2007, the company's net income was at $27.104 million compared to $1.768 million net loss in 2006. For the year ended Dec. 31, 2007, revenue was $850.6 million, up $16.9 million from $833.7 million in 2006. Gross margin improved to 37.5% from 34.8% and segment profit increased 29.7%, or $16.2 million, to $70.6 million in 2007 compared to 2006. Income from continuing operations increased to $27.3 million from $12.2 million in 2006. For the fourth quarter, revenue increased to $194.7 million from $191.4 million. Gross margin improved to 38.0% from 34.7% and segment profit increased 45.4%, or $3.6 million to $11.4 million in 2007 from $7.9 million in 2006. "2007 was a year of strong operating performance and we effectively positioned the company for future growth," David J. Shea, chairman and chief executive officer, said. "Since 2006, we have successfully implemented our strategic vision by introducing new products and services, completing several strategic acquisitions and continuing to grow our non-transactional revenue." "During this two-year period of growth, we have also streamlined and automated many processes thereby improving efficiencies while reducing costs," Mr. Shea continued. "Client demand for more of our services increasingly overlaps; the technology serving them and the marketing and channel requirements for reaching them are virtually identical," William P. Penders, president of Bowne, said. "Last year, we announced several significant changes to our organizational structure and manufacturing capabilities to consolidate our operations into a unified model that supports our ability to market and deliver our full range of services." For the year ended Dec. 31, 2007, cash and marketable securities increased $18.1 million from Dec. 31, 2006. The company had net cash provided by operating activities of $98.4 million for the year ending Dec. 31, 2007 as compared to $3.6 million for the year ending Dec. 31, 2006. This $95 million increase was primarily driven by the improvement in operating results and by the reduction in accounts receivable resulting from higher collections of receivables during 2007 and as a result of improved billing and collection efforts. Accounts receivable decreased approximately $18.7 million from December 2006 principally due to lower days sales outstanding. Days sales outstanding improved 10 days to 62 days in December 2007 from 72 days in December 2006. Financial Communications work-in-process inventory was $15.5 million at Dec. 31, 2007 compared to $18.7 million at Dec. 31, 2006. The company had no borrowings outstanding under its $150 million five-year senior, unsecured revolving credit facility as of Dec. 31, 2007. The share repurchase authorization was completed in 2007. From December 2004, the inception of the company's share repurchase program, through Dec. 31, 2007, Bowne spent $196.3 million to repurchase 12.9 million shares. In 2007, the company spent $51.7 million repurchasing 3.1 million shares at an average price per share of $16.52, of which approximately 700,000 shares were purchased in the fourth quarter. Total shares outstanding as of Feb. 29, 2008 were 26,307,627. As of Dec. 31, 2007, the company's balance sheet showed total assets of $509.417 million, total liabilities of $258.938 million and a total stockholders' equity of $250.479 million. About Bowne & Co. Inc. Headquartered in New York City, Bowne & Co. Inc. (NYSE: BNE) -- http://www.bowne.com/ -- provides financial, marketing and business communications services around the world. The company has 3,200 employees and 60 offices worldwide. * * * Bowne & Co. Inc. still carries Moody's 'Ba3' corporate family rating which was affirmed in January 2007. The outlook remains positive. CARIBBEAN RESTAURANTS: S&P Junks Rating on Expected Breach in Pact ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on San Juan, Puerto Rico-based Caribbean Restaurants LLC to 'CCC+' from 'B'. The outlook remains negative. "The downgrade reflects the distinct possibility that the company will breach financial covenants of its bank facility at its fiscal year-end," said Standard & Poor's credit analyst Jackie E. Oberoi. The company's fiscal year ends on April 30, 2008. Moreover, these covenants become increasingly restrictive at the end of July 2008. "The downgrade also reflects the company's continued weak performance, which has been driven by a soft Puerto Rican economy coupled with increased labor, utility, and commodity costs," added Ms. Oberoi. CHARLES OHEARN: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Charles John OHearn 140 South Moore Road Coppell, TX 75019 Bankruptcy Case No.: 08-31283 Chapter 11 Petition Date: March 16, 2008 Court: Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtor's Counsel: Edwin Paul Keiffer, Esq. (pkeiffer@wgblawfirm.com) Wright, Ginsberg, Brusilow, PC 1401 Elm Street, Suite 4750 Dallas, TX 75202 Tel: (214) 651-6517 Fax: (214) 744-2615 http://www.wgblawfirm.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. COMMERCIAL MORTGAGE: Moody's Confirms Junk Ratings on Two Classes ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Commercial Mortgage Acceptance Corp., Commercial Mortgage Pass-Through Certificates, Series 1998-C1: -- Class A-2, $15,709,857, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $59,611,000, affirmed at Aaa -- Class C, $59,612,000, affirmed at Aaa -- Class D, $62,593,000, affirmed at Aaa -- Class E, $20,862,000, affirmed at Aaa -- Class L, $11,924,000, affirmed at Caa2 -- Class M, $8,940,000, affirmed at C As of the Feb. 15, 2008 distribution date, the transaction's aggregate principal balance has decreased by approximately 71.7% to $337.6 million from $1.2 billion at closing. The Certificates are collateralized by 101 loans ranging in size from less than 1.0% to 10.9% of the pool, with the top 10 loans representing 38.0% of the pool. Nine loans have been liquidated from the pool, resulting in aggregate realized losses of approximately $11.8 million. Three loans, representing 2.9% of the pool, are in special servicing. Moody's has estimated aggregate losses of approximately $400,000 from the specially serviced loans. Forty-six loans, representing 39.2% of the pool, are on the master servicer's watchlist. The majority of the loans watchlisted, thirty-six loans representing 29.6% of the pool, are due to near-term maturity. Nine of these loans, representing 7.3% of the pool, also have low debt service coverage. Moody's was provided with year-end 2006 and partial year 2007 operating results for 96.3% and 77.7% of the performing loans in the pool, respectively. Moody's weighted average loan to value ratio is 73.4%, compared to 75.3% at Moody's last full review in May 2006 and 84.0% at securitization. Moody's is affirming all rated classes. The top three loans represent 19.3% of the outstanding pool balance. The largest loan is the Two Chatham Center Loan ($36.9 million -- 10.9%), which is secured by a leasehold mortgage on a 280,000 square foot office building located in downtown Pittsburgh, Pennsylvania. The property is located in a mixed-use complex which contains a 200-unit high-rise condominium, two office towers totaling 505,000 square feet and a 404-room hotel. The office component was 90.0% occupied as of June 2007, compared to 83.0% at last review. The largest tenants are Travelers Insurance Company (20.0% NRA; lease expiration September 2012) and UPMC Health Plan (16.0% NRA; lease expiration June 2010). The property's performance has improved since last review based on increased rental revenues and amortization. Moody's LTV is 89.5%, compared to 98.6% at last review. The second largest loan is the Piazza Carmel Shopping Center Loan ($15.9 million -- 4.7%), which is secured by a 138,000 square foot retail property located in San Diego, California. The property was 99.0% occupied as of November 2007, essentially the same as at last review. The center is anchored by Safeway, Inc., which occupies 36.1% of the premises through June 2011. Moody's LTV is 43.0%, compared to 54.7% at last review. The third largest loan is the Shrewsbury Plaza Loan ($12.2 million -- 3.6%), which is secured by a 225,000 square foot retail property located in Shrewsbury, New Jersey. The property was 96.0% leased as of November 2007, compared to 100.0% at last review. Major tenants include Marshall's (17.0% GLA; lease expiration January 2013), ACME (15.0% GLA; lease expiration February 2013) and Linens 'N Things (14.0% GLA; lease expiration January 2013). Moody's LTV is 53.9%, compared to 64.7% at last review. CONSECO INC: Posts $210 Mil. Net Loss in Preliminary 2007 Report ---------------------------------------------------------------- Conseco Inc. reported preliminary results for the fourth quarter and year ended Dec. 31, 2007. Preliminary Fourth Quarter 2007 Results -- Net operating income before valuation allowance for deferred tax assets: $18.8 million; -- Net operating income before valuation allowance for deferred tax assets per diluted share: 10 cents; -- Net loss applicable to common stock: $72.2 million (including $23.0 million of net realized investment losses and $68.0 million valuation allowance for deferred tax assets); -- Net loss per diluted share: 39 cents (including 12 cents of net realized investment losses and 37 cents of valuation allowance for deferred tax assets); -- Income before net realized investment losses, corporate interest and taxes: $51.6 million; and -- Sales: $87.3 million. Preliminary Full-Year 2007 Results -- Net operating loss before valuation allowance for deferred tax assets: $50.2 million; -- Net operating loss before valuation allowance for deferred tax assets per diluted share: 37 cents; -- Net loss applicable to common stock: $210.1 million (including $77.8 million of net realized investment losses and $68.0 million valuation allowance for deferred tax assets); -- Net loss per diluted share: $1.21 (including 45 cents of net realized investment losses and 39 cents of valuation allowance for deferred tax assets); -- EBIT (2): $(6.3) million; and -- Sales (3): $415.5 million Preliminary financial strength at Dec. 31, 2007, includes book value per diluted share, excluding accumulated other comprehensive income of $24.28 and debt-to-total capital ratio, excluding accumulated other comprehensive income of 21.0%. The company currently estimates that adjustments to reflect the SEC staff's view may have the effect of reducing the preliminary loss reported above for the fourth quarter of 2007 by up to $5 million, or 3 cents per share, and reducing the preliminary loss for the year ended Dec. 31, 2007 by up to $15 million, or 9 cents per share. The company said it is working diligently to complete its financial statements and Form 10-K for the year ended Dec. 31, 2007, as soon as possible. It expects to make the filing no later than March 28, 2008. Sales Results At Bankers Life, total sales in 4Q07 were $58.3 million, up 4% over 4Q06. For the year, Bankers' sales were up 10% from 2006, to $294.4 million. In addition to the sales of proprietary products, Bankers Life, through a partnership with Coventry Health Care, distributes risk-share Medicare prescription drug program and private-fee-for-service plan through their career agents. At Conseco Insurance Group, total sales, including sales of PDP through Coventry, in 4Q07 were $19.7 million, down 18% from 4Q06. For the year, sales fell 21% from 2006, to $78.8 million. This segment continues to focus sales efforts on higher-margin products. At Colonial Penn, total 4Q07 sales were $9.3 million, up 25% over 4Q06 as we continue to benefit from our investment in marketing. For the year, sales rose 27% over 2006, to $42.3 million. "Overall, we continue to make steady progress on our plans to position Conseco for future growth," CEO Jim Prieur said. "New business continues to be strong at Bankers and at Colonial Penn, and the expected future margins related to new business increased at Conseco Insurance Group despite declining sales. Asset quality has remained a high priority and our portfolio continues to perform within expectations. This is not to say that we are not without our challenges. We will continue to move forward with our strategies to further stabilize our long-term care closed block of business and fully remediate the material weakness in internal controls." Delay of Annual Report Filing As reported in the Troubled Company Reporter on March 6, 2008, Conseco Inc. extended the due date of its Annual Report on Form 10-K to March 17, 2008. In a Form 12b-25 filing, the company said it has not yet finalized its Dec. 31, 2007, financial statements and is completing several items, including its analysis to determine the possible need to increase the deferred income tax asset valuation allowance. At that time, Conseco estimated that its net income or loss for the three months ended Dec. 31, 2007, will be approximately breakeven, including estimated net realized investment losses, after related amortization and taxes, of $25 million, but before any adjustments which may result from finalizing the incomplete items. Preliminary Results Subject to Change The company has been consulting with the staff of the Securities and Exchange Commission's Office of the Chief Accountant regarding its accounting policy for long-term care premium rate increases, as described in the Summary of Significant Accounting Policies in Conseco's 2006 Form 10-K. Conseco has used a method which prospectively changes reserve assumptions for long-term care policies when premium rate increases differ from original assumptions. On Feb. 28, 2008, the SEC staff informed Conseco of their view that the use of this method is not consistent with the guidance of Statement of Financial Accounting Standards No. 60, "Accounting and Reporting by Insurance Enterprises." The company is continuing to evaluate the SEC staff's view, including its effects on the preliminary earnings reported and the possible effects in prior periods. Due to this ongoing evaluation, the company has not completed its financial statements for the year ended Dec. 31, 2007. As a result, Conseco said all financial results should be considered preliminary, and are subject to change to reflect any necessary adjustments that are identified before the company completes its financial statements and files its Form 10-K for the year ended Dec. 31, 2007. "The delay in completing our financial statements is as frustrating for management as it is for shareholders. There is no difference in the economics of the long-term care business arising from the SEC's position; no changes at all in the cash flows or capital requirements -- it is all about the timing of the recognition of earnings for a long term business," said Jim Prieur. Restatement of Past Financial Reports Conseco said on Feb. 25, 2008, that due to the significance of errors identified in completing its Dec. 31, 2007 financial statements, it would restate its financial statements for the years ended Dec. 31, 2006 and 2005, along with affected selected financial data for 2004 and 2003 and the first three quarters of 2007. The previously issued financial statements of the company for those periods should no longer be relied upon. In the fourth quarter of 2007, several items had noteworthy impacts on the company's results: -- Earnings in the Conseco Insurance Group segment were negatively affected by the adjustments it made to its estimates of future profits for certain interest-sensitive life blocks of business. These adjustments resulted in increases to amortization expense and policyholder benefits totaling approximately $17 million. -- Earnings in the Conseco Insurance Group segment were also negatively affected by $4.2 million of trading losses related to the termination of interest rate swap agreements held in the company's trading portfolio. -- Earnings in the Colonial Penn segment were negatively impacted by $8.4 million of expense related to the introduction of Medicare Advantage products through this distribution channel. -- Based on the company's evaluation of deferred tax assets, Conseco determined the need to increase the valuation allowance by $68.0 million (primarily related to tax benefits resulting from the losses recognized in 2007). -- Conseco recognized net realized investment losses of $23.0 million, including losses related to impairments of $16.1 million. About Conseco Inc. Headquartered in Carmel, Indiana, Conseco Inc. (NYSE: CNO) -- http://www.conseco.com/-- is the holding company for a group of insurance companies operating throughout the United States that develop, market and administer supplemental health insurance, annuity, individual life insurance and other insurance products. The company became the successor to Conseco Inc. (Old Conseco), in connection with its bankruptcy reorganization. CNO focuses on serving the senior and middle-income markets. The company sells its products through three distribution channels: career agents, professional independent producers and direct marketing. CNO operates through its segments, which includes Bankers Life, Conseco Insurance Group, Colonial Penn, other business in run-off and corporate operations. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings downgraded the Issuer Default Rating, senior debt, preferred stock, and insurer financial strength ratings of Conseco Inc. and its subsidiaries. The preferred stock rating is being withdrawn as there are no current outstanding issues and no plans for issuance. The rating action affects approximately $1.2 billion in outstanding debt. The outlook remains negative. CONSECO INC: 2007 10-K Filing Delay Won't Affect S&P's 'B+' Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services said that the announcement by Conseco Inc. (B+/Negative/--) that it will delay its 2007 Form 10-K filing with the SEC will not affect the ratings on the company. The filing delay is the result of the company's ongoing evaluation of the SEC staff's view regarding the appropriate accounting treatment for additional active life reserves that Conseco set up related to long-term care rate increases. S&P expects the 10-K to be filed by March 28. Based on unaudited results for the year, including an expected range for long-term care earnings, Standard & Poor's believes Conseco's performance in 2007 was consistent with the current rating. The negative outlook on Conseco continues to reflect S&P's concerns regarding the company's financial performance during the next six-12 months. Given a weak operating environment and lower operating results in the past two years in Conseco's core life companies, 2008 will be challenging. S&P expects that moderately lower profitability in the core operations will be offset by more stability in the run-off long-term care block. As previously noted, if significant losses in the long-term care run-off block continue, or if the company makes additional, significant reserve strengthenings in any other line of business, the ratings will likely be lowered by one notch. CONSTAR INT'L: S&P Upgrades Issue-level Rating to 'B-' From 'CCC+' ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its issue-level rating on Constar International Inc.'s senior secured notes to 'B-' (same as the corporate credit rating on the company) from 'CCC+' and assigned a recovery rating of '3' to the notes, indicating the expectation for meaningful recovery (50% to 70%) in the event of a payment default. S&P affirmed the 'B-' corporate credit rating on Constar. The outlook is negative. "The ratings on Constar reflect its highly leveraged financial profile, low cash flow generation, weak margins, and vulnerable business profile," said Standard & Poor's credit analyst Henry Fukuchi. Philadelphia, Pennsylvania-based Constar manufactures blow-molded containers, mainly producing polyethylene terephthalate containers for carbonated beverages and water. The company operates in the fragmented and highly competitive rigid plastic packaging industry. Constar's vulnerable business profile reflects its dependence on a narrow product line (containers for soft drinks and water account for 80% of its sales) and a high level of customer concentration. The largest customer--PepsiCo Inc.--accounts for about 35% of revenues, and the top 10 customers contribute about 75% of revenues, limiting pricing flexibility. The company's margins have been lower than those of its rated peers, because of a product mix emphasizing high-volume, commodity-type, lower-margin carbonated beverage containers. Operating margins before depreciation and amortization remain low. For the 12 months ended Sept. 30, 2007, the operating margin was approximately 7%. CSFB MORTGAGE: Moody's Junks Rating on Class O Certs. From 'B3' --------------------------------------------------------------- Moody's Investors Service downgraded the rating of one Class and affirmed the ratings 18 Classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2004-C1: -- Class A-2, $193,679,267, affirmed at Aaa -- Class A-3, $156,544,000, affirmed at Aaa -- Class A-4, $885,151,000, affirmed at Aaa -- Class A-SP, Notional, affirmed at Aaa -- Class A-X, Notional, affirmed at Aaa -- Class A-Y, Notional, affirmed at Aaa -- Class B, $44,586,000, affirmed at Aa1 -- Class C, $18,240,000, affirmed at Aa3 -- Class D, $36,480,000, affirmed at A2 -- Class E, $18,240,000, affirmed at A3 -- Class F, $22,293,000, affirmed at Baa1 -- Class G, $16,213,000, affirmed at Baa2 -- Class H, $18,240,000, affirmed at Baa3 -- Class J, $8,107,000, affirmed at Ba1 -- Class K, $8,106,000, affirmed at Ba2 -- Class L, $6,080,000, affirmed at Ba3 -- Class M, $10,134,000, affirmed at B1 -- Class N, $4,053,000, affirmed at B2 -- Class O, $4,053,000, downgraded to Caa1 from B3 As of the Feb. 15, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 9.4% to $1.47 billion from $1.62 billion at securitization. The Certificates are collateralized by 253 mortgage loans, ranging in size from less than 1.0% to 9.1% of the pool, with the top 10 loans representing 37.6% of the pool. Nineteen loans, representing 9.0% of the pool, have defeased and are collateralized with U.S. Government securities. The pool includes four shadow rated loans comprising 26.2% of the pool and 60 residential coop loans, representing 10.1% of the pool. One loan has been liquidated from the pool resulting in a $2.2 million realized loss. Currently there is one loan, representing 1.5% of the pool, in special servicing. Moody's is not anticipating a loss from this specially serviced loan. Thirty loans, representing 9.6% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2006 and partial-year 2007 operating results for 99.5% and 86.8% of the performing loans, respectively. Moody's loan to value ratio for the conduit component is 93.9% compared to 90.7% at Moody's last full review in January 2007 and 89.0% at securitization. Moody's is downgrading Class O due to realized losses and LTV dispersion. Based on Moody's analysis, 22.8% of the conduit component has an LTV greater than 100.0%, compared to 10.1% at last review and 5.0% at securitization. The largest shadow rated loan is the Bay Plaza Community Center Loan ($133.8 million -- 9.1%) which is secured by a mixed use development consisting of a 385,000 square foot retail component and a 125,000 square foot office component. The property is located in the Bronx, New York. The retail component is anchored by Pathmark, AMC Theatres, Linens-n-Things and Levitz Furniture. The center was 94.7% occupied as of September 2007 compared to 91.7% at last review. Moody's current shadow rating is Baa2, the same as at last review. The second largest shadow rated loan is the Beverly Center Loan ($97.3 million -- 6.6%) which represents a 32.6% participation interest in a $298.1 million first mortgage loan. The loan is secured by a leasehold interest in an 855,000 square foot regional mall located in Los Angeles, California. The mall is anchored by Bloomingdale's, Macy's, and Macy's Men. The mall's in-line space was 92.7% leased as of September 2007 compared to 98.9% at last review. Financial performance has improved since securitization due to increased revenues and stable expenses. Moody's current shadow rating is A2 compared to Baa2 at last review. The third largest shadow rated loan is the Stanford Shopping Center Loan ($90.0 million -- 6.1%) which represents a 54.4% participation interest in a $165.0 million first mortgage loan. The loan is secured by a leasehold interest in a 1.4 million square foot open-air regional mall located in Palo Alto, California. The mall is anchored by Bloomingdale's, Macy's, Nordstrom and Neiman Marcus. The mall's in-line space was 98.9% occupied as of October 2007, essentially the same as at last review. Financial performance has improved since securitization due to increased revenues and stable expenses. Moody's current shadow rating is A2 compared to A3 at last review. The fourth largest shadow rated loan is the Mayfair Mall Loan ($63.2 million - 4.3%) which represents a 35.0% participation interest in a $180.6 million first mortgage loan. The loan is secured by a 1.3 million square foot mixed-use property that consists of an 858,000 square foot regional mall and a 419,000 square foot office complex. The property is located approximately seven miles northwest of Milwaukee in Wauwatosa, Wisconsin. The mall is anchored by Macy's and the Boston Store and is the dominant mall in its trade area. The property was 97.1% occupied as of September 2007 compared to 98.0% at last review. Moody's current shadow rating is Aa2 compared to Aa3 at last review. The top three conduit loans represent 5.2% of the pool. The Northfield Square Mall Loan ($29.5 million -- 2.0%) is secured by the borrower's interest in a 558,000 square foot regional mall located in Bourbonnais, Illinois. The center is anchored by Carson Pirie Scoot, J.C. Penney and Sears. Performance has declined since last review principally due to higher expenses. Moody's LTV is 95.3% compared to 88.5% at last review. The West Coast Portfolio (Red Lion Hotel) Loan ($23.4 million -- 1.6%) is secured by four full service hotels totaling 1,013 rooms. The properties are located in Washington, Utah and California. Performance has improved since last review due to higher revenues. Moody's LTV is 90.5% compared to 99.0% at last review. The Encino Commons Loan ($23.3 million - 1.6%) is secured by a 324 unit multifamily property located in San Antonio, Texas. The property was 81.0% occupied as of January 2008. The property is on the master servicer's watchlist due to low debt service coverage. The loan sponsor is Michael Smuck, a major owner of multifamily properties in southwest U.S. Moody's LTV is in excess of 100.0%, the same as at last review. CSFB ABS: S&P Confirms 'BB' Rating on Class B-2 Asset-backed Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on three classes of asset-backed notes from CSFB ABS Trust 2002-HI23 and removed the rating on class B-2, one of the affirmed ratings, from CreditWatch with negative implications. Over the past year, realized losses for this transaction have moderated. Three-, six-, and 12-month average losses were $19,727, $31,293, and $55,681, respectively, as of the February 2008 remittance period. Overcollateralization for series 2002- HI23 is $712,370, or 3.23x the amount of severely delinquent loans (90-plus days, foreclosures, and REOs). As of the February 2008 remittance period, 5.66% of the original pool balance remained, and cumulative losses were $11,926,330, or 9.78% of the original pool balance. Subordination, overcollateralization, and excess interest cash flow provide credit support for these transactions. The collateral consists of closed-end, fixed- and adjustable-rate first-lien mortgage loans with original terms to maturity of no more than 30 years. Rating Affirmed and Removed From CreditWatch Negative CSFB ABS Trust 2002-HI23 Asset-backed notes Rating ------ Class To From ----- -- ---- B-2 BB BB/Watch Neg Ratings Affirmed CSFB ABS Trust 2002-HI23 Asset-backed notes Class Rating ----- ------ M-2 A+ B-1 BBB+ CYBERCARE INC: Cast-Crete's Amended Disclosure Statement Denied --------------------------------------------------------------- Cast-Crete Corporation, which expects to receive 100% of the equity interest in reorganized CyberCare Inc. and CyberCare Technologies Inc., failed to obtain approval of its First Amended Disclosure Statement dated Jan. 31, 2008, explaining its First Amended Joint Chapter 11 Plan of Reorganization. The Hon. Michael G. Williamson of the United States Bankruptcy Court for the Middle District of Florida was advised that Cast- Crete's Amended Disclosure Statement did not resolve Manford Investments LLC's objection. As reported in the Troubled Company Reporter on March 3, 2008, Manford Investments, which holds at least $25 million of claim against the Debtors, argued that its security interest securing its claim are not perfected and the claims may be unsecured. Judge Williamson gave Cast-Crete and Manford Investments enough time to reach an agreement and resolve any remaining issues. Otherwise, the Debtors' Chapter 11 cases may converted to a Chapter 7 liquidation proceeding or dismissed, he said. As reported in the Troubled Company Reporter on Feb. 12, 2008, Cast-Crete delivered to the Court an Amended Joint Plan for the Debtors and an Amended Joint Disclosure Statement explaining that plan. Under Cast-Crete's Plan, the Debtors' creditors will be paid from: -- exit funds; -- administrative claim funds; -- a judgment lien creditors settlement fund; -- recoveries of causes of action; and -- issuance of new stock in reorganized CyberCare. The primary distribution of Unsecured Claims against CyberTech is by the issuance of licensee stock in pro rata of the ownership interest of a newly formed entity that will receive ownership of all intellectual property and technology owned by CyberTech. Cast-Crete's proposed plan also contemplates the acquisition of 65% of the stock of reorganized CyberCare in exchange for: i) the funding of a "Cast-Crete Plan Fund" in the amount of $200,000 for payment of Judgment Lien Creditors and Allowed Administrative Expense Claims; ii) the agreement to provide "Exit Financing" of up to $500,000 to pay other Administrative Claims and providing working capital to reorganized CyberCare; and iii) the agreement by Cast-Crete to joint venture with Reorganized CyberCare for the development, manufacture and distribution of products. Cast-Crete's Plan further provides for the distribution of: i) 8% of the stock of reorganized CyberCare to holders of Allowed Equity Interests in CyberCare; and ii) 17% to the holders of Allowed Unsecured Claims. Under Cast-Crete's Plan, 10% of the new stock will be reserved for a management incentive program, and the acquisition of 100% of the stock of reorganized CyberTech by Cast-Crete in full of its prepetition loan to CyberCare. On the other hand, 100% of the new stock of CyberTech will be distributed to Cast-Crete in satisfaction of its prepetition claim. A full-text copy of Cast-Crete's First Amended Chapter 11 Plan of Reorganization is available for a free at: http://ResearchArchives.com/t/s?289f A full-text copy of its First Amended Disclosure Statement is available for a free at http://ResearchArchives.com/t/s?289e Headquartered in Tampa, Florida, CyberCare, Inc., fka Medical Industries of America, Inc. (PINKSHEETS: CYBR) is a holding company that owns service businesses, including a physical therapy and rehabilitation business, a pharmacy business, and a healthcare technology solutions business. The Company and its debtor- affiliate, CyberCare Technologies, Inc., filed for chapter 11 protection on Oct. 14, 2005 (Bankr. M.D. Fla. Case No. 05-27268). Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser represents the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' case. When the Debtors filed for protection from their creditors, they listed $5,058,955 in assets and $26,987,138 in debts. CYBERCARE INC: Case Conversion Hearing Scheduled for Today ---------------------------------------------------------- The Hon. Michael G. Williamson of the United States Bankruptcy Court for the Middle District of Florida will convene a hearing today at 10:30 a.m., whether to dismiss or convert CyberCare Inc. and CyberCare Technologies Inc.'s Chapter 11 cases to Chapter 7 liquidation proceedings. The hearing will be held in Courtroom 10B, Sam M. Gibbons Courthouse, 801 N. Florida Avenue in Tampa, Florida. About CyberCare Headquartered in Tampa, Florida, CyberCare, Inc., fka Medical Industries of America, Inc. (PINKSHEETS: CYBR) is a holding company that owns service businesses, including a physical therapy and rehabilitation business, a pharmacy business, and a healthcare technology solutions business. The Company and its debtor- affiliate, CyberCare Technologies, Inc., filed for chapter 11 protection on Oct. 14, 2005 (Bankr. M.D. Fla. Case No. 05-27268). Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser represents the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' case. When the Debtors filed for protection from their creditors, they listed $5,058,955 in assets and $26,987,138 in debts. DELTA AIR: To Cut Flights, 30,000 Jobs in Wake of Weakened Economy ------------------------------------------------------------------ Delta Air Lines Inc. chief executive officer, Richard Anderson, and president and chief financial officer, Edward H. Bastian, wrote a statement on March 18, 2008, to the company's global staff discussing the company's move to address record fuel prices and the weakening U.S. economy. In the statement, the executives said that despite the significant momentum at Delta, the rapid increase