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/raid1/www/Hosts/bankrupt/TCR_Public/080325.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, March 25, 2008, Vol. 12, No. 71 Headlines ABITIBIBOWATER INC: Inks $350MM Investment Deal with Fairfax ABITIBIBOWATER INC: Unit Amends Terms of $496 Mil. Exchange Offer ABITIBIBOWATER INC: S&P Puts 'B+' Rating on Unit's $415 Mil. Notes ADSTAR INC: Gets Nasdaq Closing Bid Price Non-Compliance Notice ALMONDELL PARK: Voluntary Chapter 11 Case Summary AMERICAN AIRLINES: S&P Changes Outlook to Negative on Weak Economy AMERICAN AXLE: CEO Receives $10.1 Million as 2007 Compensation AMERICAN HOME: Former Employees Amend Class Action Complaint AMERICAN NATURAL: Sept. 30 Balance Sheet Upside Down by $15.8 Mil. APOLLO DRILLING: Posts $572,917 Net Loss in 2007 Third Quarter AMR CORP: S&P Revises Outlook to Negative on Expected Loss AQUATIC CELLULOSE: Nov. 30 Balance Sheet Upside-Down by $9.9 Mil. AQUILA INC: Kan. Regulator Approves Black Hills, Great Plains Deal AQUILA INC: S&P Upgrades Rating to 'BB-' on Strong Credit Profile AUDATEX HOLDINGS: Moody's Lifts Ratings to Ba3 on Strong Revenues BEAR STEARNS: JPMorgan Ups Bid to $10 Per Share, Buys 39.5% Stock BEAR STEARNS: Stable Performance Cues Fitch to Affirm Ratings BEECHER LOAN: Fitch Withdraws Ratings After Loan Deal Windup BENNINGTON COLLEGE: Moody's Holds 'Ba1' Rating; Gives Neg. Outlook BLUE WATER: Parties Balk at Request to Assume Molding Contracts BLUE WATER: Wants to Hire Lambert Leser as Special Counsel BMB MARKETPLACE: Voluntary Chapter 11 Case Summary BRIGHTON PETROL: Voluntary Chapter 11 Case Summary BRISTOW GROUP: S&P Changes Outlook to Stable; Retains 'BB' Rating CAIRN HIGH: Eroding Credit Quality Cues Moody's Rating Downgrades CARLYLE CAPITAL: Has Very Limited Cash Assets, Liquidator Says CBA COMMERCIAL: Moody's Chips Rating on Class M-5 Certs. to 'B1' CHARMING SHOPPES: Weak Operating Trends Cue S&P's Rating Cut to B+ CHARTER COMMS: Dec. 31 Balance Sheet Upside-Down by $7.23 Billion CHL MORTGAGE: S&P Junks Ratings on Two Series 2005-HYB8 Classes CITATION HIGH: Poor Credit Quality Prompts S&P's Rating Downgrades CIT GROUP: Taps $7.3BB in Emergency Funding After Downgrade CITIGROUP COMMERCIAL: S&P Lowers Ratings on Class L Certificate CLARET TRUST: Moody's Maintains Low-B Ratings on Six Trust Classes CLAYTON HOLDINGS: S&P Pares Rating to 'B' on Subprime Loan Turmoil COMM 2005-C6: S&P Puts Three Low-B Ratings on Negative Watch CREDIT SUISSE: Moody's Confirms Junk Rating on $9.671 Mil. Trust DANA VILLAS: Court Approves Turner Reynolds as Counsel DAWN CDO: Moody's Reviews 'Caa1' Senior Note Rating for Likely Cut DANNY PRYOR: Case Summary & Ten Largest Unsecured Creditors DELPHI CORP: IUE-CWA Objects to Sale of Damper Biz for $18.8MM DELPHI CORP: Wants to Continue Key Employee Compensation Program DELPHI CORP: Settles Alps Auto et al. Assumption Objections DELTA AIR: Unable to Reach Pilot Integration Pact with Northwest DLJ COMMERCIAL: Loan Payoffs Prompt S&P to Upgrade Six Ratings DOLE FOOD: S&P Downgrades Corporate Credit Rating to 'B-' From 'B' DSLA MORTGAGE: Two Class B-5 Certs. Get S&P's Junk Ratings DURA AUTOMOTIVE: Reveals Liquidation Analysis Under Ch. 11 Plan DURA AUTOMOTIVE: Ad Hoc Committee Seek to Inspect Records EATON VANCE: Moody's Junks Rating on $209 Million Capital Notes ELECTRONIC DATA: Moody's Upgrades Sr. Unsecured Rating From 'Ba1' FINANCIAL GUARANTY: PMI Doubts Ability to Write New Guarantees FINANCIAL GUARANTY: S&P Changes CreditWatch Listing to Negative FIELDSTONE MORTGAGE: Wants Plan-Filing Exclusivity Date Extended FOURTH STREET: Moody's Junks Rating on $45 Mil. Notes FTI CONSULTING: S&P Upgrades Rating to 'BB' on Strong Performance GENESCO INC: Moody's Affirms B1 Ratings on Merger Suit Settlement GMAC LLC: Michael Rossi Resigns as ResCap Head Effective March 17 GOODYEAR TIRE: S&P Lifts Rating on Class A-1 and A-2 Certs. to BB- GRAND CIRCLE: Gets Moody's B2 Ratings After Sale to Court Square GREENPOINT MTA: S&P Junks Ratings on Two 2005-HYB8 Cert. Classes GRUSAF LLC: Case Summary & 126 Largest Unsecured Creditors GVC WINSTAR: Files for Chapter 11 Bankruptcy in Detroit GVC WINSTAR: Case Summary & 20 Largest Unsecured Creditors HALIFAX CORP: Has Until April 14 to Submit AMEX Compliance Plan HOUSTON PETROLEUM: Voluntary Chapter 11 Case Summary INDALEX HOLDING: Eroding Performance Cues S&P's Rating Cut to 'B-' INDYMAC ABS: Fitch Cuts Rating to 'CC/DR3' on Class B Certificates INDYMAC MANUFACTURED: Fitch Affirms 'B+' Ratings on Five Classes INGRESS CBO: Moody's Maintains 'Ba1' Rating on $54 Mil. 2040 Notes INTERNATIONAL RECTIFIER: Covenant Defaults Waived Until July 31 JOE SALAZAR: Case Summary & Eight Largest Unsecured Creditors JOHN HENRY HOLDINGS: Moody's Holds Corporate Family Rating at 'B2' JOHN HENRY: S&P Keeps 'B+' Rating on $10MM Planned Loan Increase JP MORGAN: Minimal Collateral Reduction Cues Fitch to Hold Ratings JRR LLC: Case Summary & 19 Largest Unsecured Creditors KERASOTES SHOWPLACE: Moody's Keeps Ratings on Sale Leaseback Deal KOSAN BIOSCIENCES: Warns of Non-Profitability; Needs Financing KOSAN BIOSCIENCES: Plans to Cut 37% Jobs and Suspends Research KOSAN BIOSCIENCES: Promotes Helen Kim as Chief Executive Officer KRISTINA PLISIK: Case Summary & 15 Largest Unsecured Creditors LASALLE COMMERCIAL: Moody's Cuts Rating on $1.2 Mil. Notes to 'B3' LEHMAN BROTHERS: Moody's Cuts Rating on $25.4 Mil. Certs. to 'B3' LOCAL INSIGHT: S&P Chips Rating to 'B' on Projected Reorganization METRO ONE: Submits Restated Report for Quarter Ended September 30 METRO ONE: To Exit Telecom Assistance Biz by May 5; Cuts 500 Jobs MINNESOTA SURETY: A.M. Best Cuts Issuer Credit Rating to bb MORGAN STANLEY: Three Classes of Notes Get S&P's Rating Upgrades MORGAN STANLEY: Fitch Holds 'B' Rating on $2MM Class N Certs. MULBERRY STREET: Moody's Slashes Rating on $30 Mil. Notes to 'Ca' NEWMARKET CORP: S&P Changes Outlook to Positive; Keeps 'BB' Rating NORMA CDO: Moody's Junks Rating on $150 Mil. Sr. Notes From 'Aaa' NORTHWEST AIRLINES: Unable to Reach Pact for Pilots with Delta NOVASTAR MORTGAGE: Inks Pact Dismissing Involuntary Ch. 11 Case PACIFIC GOLD: Completes Share Restructuring of Pilot Mountain PACIFIC LUMBER: Scopac Gets Final OK to Use Cash Collateral PACIFIC LUMBER: Scopac Drops Request to Borrow $51MM from BofA PACIFIC LUMBER: Files Supplements to Second Amended Plan PACIFIC LUMBER: Marathon Supplements to 1st Amended Joint Plan PACIFIC LUMBER: BoNY Files Supplements to Amended Plan for Scopac PALM INC: S&P Puts 'B' Rating on Negative Watch After Revenue Dive PASCACK VALLEY: Court OKs $45MM Asset Sale to HUMC/Touro College PERKINS & MARIE: S&P Lifts Rating to 'B-' on Amended Credit Deal PHI INC: Weak Credit Measures Prompts S&P To Chip Ratings to 'B+' QMED INC: Secures $750K Funding for Strategic Alternative Venture QMED INC: Unit to Pay $750,000 as Settlement to DAKOTACARE Claims RIVIERA HOLDINGS: Mark Lefever Resigns as Chief Financial Officer ROBECO CDO: S&P Puts 'BB' Rating on Class B-2 on Negative Watch RUNNING DEER: Case Summary & 14 Largest Unsecured Creditors SALONE HOLDINGS: Voluntary Chapter 11 Case Summary SECURITY CAPITAL: Board Suspends Declaration of Quarterly Dividend SECURITY CAPITAL: S&P Junks Preference Shares' Rating From 'BB-' SENTINEL MANAGEMENT: Auditor Sued by Chapter 11 Trustee for $550MM SIRIUS SATELLITE: Merger With XM is Not Anti-Competitive, DOJ Says SHARPER IMAGE: Resumes Merchandise Gift Card Policy SHARPER IMAGE: TomTom Demands Segregation of Portable GPS Systems SHARPER IMAGE: Wells Fargo Objects to Garmin Administrative Claim SIMPLON BALLPARK: Cisterra Wants to Foreclose on Condo Project SIRVA INC: Reports $412.7M Net Loss for Year Ended December SIRVA INC: Former Senior VP Wants Stay Lifted to Pursue Labor Case SPANSION TECHNOLOGY: Moody's Junks Unit's Liquidity Ratings SPECTRUM BRANDS: Sets 2008 Annual Shareholders Meeting on April 29 ST MARY LAND: S&P Lifts Rating to 'BB' on Satisfactory Results SYNAGRO TECHNOLOGIES: Moody's Cuts Corporate Family Rating to 'B3' SYNOVICS PHARMA: Jan. 31 Balance Sheet Upside-Down by $10.3 Mil. TAHERA DIAMOND: Won't File Annual Report for 2007 on March 31 TENNECO INC: IUE-CWA Objects to Delphi Sale of Damper Business TERWIN MORTGAGE: High Delinquency Rates Prompt Moody's Rating Cuts TRUMILLA HINNANT: Case Summary & 12 Largest Unsecured Creditors UAL CORPORATION: Vanguard Windsor Discloses 3.36% Stake Ownership UBS MORTGAGE: Fitch Cuts Ratings to 'BB-' on Two Cert. Classes UTGR INC: S&P Junks Rating From 'B-' on Likely Bankruptcy Filing WALKER DADE: S&P Changes Outlook to Negative; Holds 'BB+' Rating WASHINGTON MUTUAL: Moody's Upgrades Rating on Class K to 'Ba1' WEIGHT WATCHERS: S&P Changes Outlook to Stable on Debt Repayment WESTMORELAND COAL: Sept. 30 Balance Sheet Upside-Down by $184.3MM WILTON SERVICES: Files for Chapter 7 Liquidation in Illinois XERIUM TECHNOLOGIES: Moody's Cuts Ratings on High Default Risk XM SATELLITE: Merger with Sirius is Not Anti-Competitive, DOJ Says * Moody's Says Economic Slowdown Takes Toll on U.S. Gaming Sector * Moody's Assesses Student Loan-backed Auction Rate Securities * S&P Downgrades Ratings on 39 Classes From 17 RMBS Transactions * Business Bankruptcies Up More Than Twofolds in Washington Region * Large Companies with Insolvent Balance Sheets ********* ABITIBIBOWATER INC: Inks $350MM Investment Deal with Fairfax ------------------------------------------------------------ AbitibiBowater Inc. has entered into a definitive agreement with Fairfax Financial Holdings Limited for an investment by Fairfax and its designated subsidiaries in AbitibiBowater of US$350 million in the form of unregistered convertible debentures. The transaction, which is part of the Company's previously announced US$1.4 billion refinancing plan, is expected to address upcoming debt maturities and general liquidity needs of its Abitibi- Consolidated Inc. subsidiary. There is no financing condition to the obligations of Fairfax to fund the transaction. The US$350 million of convertible debentures is convertible into AbitibiBowater common shares at US$10.00 per share, carries an 8% cash coupon, has an ability for the Company to pay interest in the form of additional "pay-in-kind" debentures at a rate of 10%, and has a subsidiary guarantee. The debentures have a maturity of 5 years and are non-callable. The transaction, which is scheduled to close on March 31, 2008, is subject to certain conditions, including the receipt of various lender consents and the closing of the other components of the Company's US$1.4 billion refinancing plan. Under the Fairfax Purchase Agreement, Fairfax will have the right to appoint two directors to the Board of Directors of the Company. In connection with the approval of the Fairfax transaction by the Board of Directors of AbitibiBowater, and pursuant to an exception provided by the New York Stock Exchange stockholder approval policy, the Audit Committee of AbitibiBowater determined that a delay in the transaction in order to secure stockholder approval of the issuance of the convertible debentures, given the pending maturities of Abitibi-Consolidated's April 1 and June 20, 2008 senior notes, as well as the current state of the credit and capital markets, could seriously jeopardize the financial viability of AbitibiBowater. Accordingly, AbitibiBowater's Board of Directors and Audit Committee expressly approved the Company's decision not to seek stockholder approval of the issuance of the convertible debentures to Fairfax. The New York Stock Exchange has accepted AbitibiBowater's reliance on the exception and the Company, in reliance upon this exception, is mailing a letter to all stockholders notifying them of its intention to issue the convertible debentures without their prior approval. For AbitibiBowater, Troutman Sanders LLP acted as legal advisor to the Company and Cravath, Swaine & Moore LLP acted as legal advisor to the Company's independent directors. On behalf of Fairfax, Shearman & Sterling LLP and Torys LLP acted as co-legal advisors. About Fairfax Fairfax Financial Holdings Limited (TSX and NYSE: FFH) is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management. About AbitibiBowater Headquartered in Montreal, Canada, AbitibiBowater Inc. (NYSE:ABH) -- http://www.abitibibowater.com/-- was formed as a result of the combination of Abitibi-Consolidated Inc. and Bowater Incorporated. Pursuant to the transaction, Abitibi-Consolidated Inc. and Bowater Incorporated became subsidiaries of AbitibiBowater. The company produces a range of forest products marketed in more than 80 countries around the world. The company's customers include many publishers, commercial printers, retailers, consumer products companies and building supply outlets. AbitibiBowater is also a recycler of newspapers and magazines. The company owns or operates 32 pulp and paper mills and 35 wood products facilities in North America and offshore. The company manages its business in five segments: coated papers, specialty paperBs, newsprint, market pulp and lumber. * * * As reported in the Troubled Company Reporter on March 12, 2008, Standard & Poor's Ratings Services assigned its 'B-' long-term corporate credit rating to AbitibiBowater Inc. The outlook is negative. ABITIBIBOWATER INC: Unit Amends Terms of $496 Mil. Exchange Offer ----------------------------------------------------------------- AbitibiBowater Inc.'s indirect subsidiary Abitibi-Consolidated Company of Canada amended certain terms of its private exchange offers with respect to an aggregate of approximately $496 million of outstanding debt securities issued by ACCC, Abitibi- Consolidated Inc. or Abitibi-Consolidated Finance L.P., a subsidiary of Abitibi. An informal group of noteholders holding both 2008 notes and 2009 notes, representing approximately $324 million in aggregate principal amount of the total $496 million, negotiated and supports the terms of the revised exchange offer. ACCC is offering as consideration, in exchange for the tender of the ACI Notes, a combination of cash and new 15.5% unsecured senior notes due 2010 of ACCC. ACCC instituted a withdrawal deadline of 5:00 p.m., New York City time, on March 26, 2008, unless otherwise extended, and extended the consent payment deadline for the exchange offers for the ACI Notes and the concurrent consent solicitations. As a result, holders of such notes who wish to receive the total consideration offered pursuant to the exchange offers must validly tender and not validly withdraw their ACI Notes on or prior to 5:00 p.m., New York City time, on March 31, 2008, unless extended or earlier terminated. The ACI Notes consist of $195.612 million principal amount of 6.95% Senior Notes due April 1, 2008, issued by Abitibi; $150 million principal amount of 5.25% Senior Notes due June 20, 2008, issued by ACCC; and $150 million principal amount of 7.875% Senior Notes due Aug. 1, 2009, issued by ACF. ACCC disclosed that, in addition to the extension of the Consent Payment Deadline, the terms of the exchange offers have been amended to: -- increase the consideration to be paid for the exchange of the ACI Notes on or prior to the Consent Payment Deadline; -- provide that the indenture for the Exchange Notes will include covenants substantially similar to those contained in the indenture for the new Senior Secured Notes being offered by ACCC in a concurrent private offering; and -- reduce the minimum tender condition with respect to the ACI Notes due in 2009 to 75% from 90%. The consideration offered by ACCC for each $1,000 Principal Amount Exchanged: a) ACI Notes to be Exchanged: 6.95% Senior Notes due 2008 Outstanding Principal Amount: $195.612 million If Tendered By the Consent Payment Deadline Principal Amount of New Senior Notes Due 2010: $550 Cash:$550 If Tendered After the Consent Payment Deadline Principal Amount of Senior Notes due 2010: $600 Cash: $400 b) ACI Notes to be Exchanged: 5.25% Senior Notes due 2008 Outstanding Principal Amount: $150 million If Tendered By the Consent Payment Deadline Principal Amount of New Senior Notes Due 2010: $550 Cash: $550 If Tendered After the Consent Payment Deadline Principal Amount of Senior Notes due 2010: $600 Cash: $400 c) ACI Notes to be Exchanged: 7.875% Senior Notes due 2009 Outstanding Principal Amount: $150 million If Tendered By the Consent Payment Deadline Principal Amount of New Senior Notes Due 2010: $850 Cash: $250 If Tendered After the Consent Payment Deadline Principal Amount of Senior Notes due 2010: $850 Cash: $150 About AbitibiBowater Headquartered in Montreal, Canada, AbitibiBowater Inc. (NYSE:ABH) -- http://www.abitibibowater.com/-- was formed as a result of the combination of Abitibi-Consolidated Inc. and Bowater Incorporated. Pursuant to the transaction, Abitibi-Consolidated Inc. and Bowater Incorporated became subsidiaries of AbitibiBowater. The company produces a range of forest products marketed in more than 80 countries around the world. The company's customers include many publishers, commercial printers, retailers, consumer products companies and building supply outlets. AbitibiBowater is also a recycler of newspapers and magazines. The company owns or operates 32 pulp and paper mills and 35 wood products facilities in North America and offshore. The company manages its business in five segments: coated papers, specialty paperBs, newsprint, market pulp and lumber. * * * As reported in the Troubled Company Reporter on March 12, 2008, Standard & Poor's Ratings Services assigned its 'B-' long-term corporate credit rating to AbitibiBowater Inc. The outlook is negative. ABITIBIBOWATER INC: S&P Puts 'B+' Rating on Unit's $415 Mil. Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its issue and recovery ratings to Abitibi-Consolidated Co. of Canada's proposed $415 million senior secured notes. ACCC is a subsidiary of Abitibi-Consolidated Inc. (B-/Watch Neg/--). S&P assigned a 'B+' issue-level rating to the notes (two notches above the corporate credit rating on Abitibi-Consolidated), with a recovery rating of '1', indicating the expectation for a very high (90%-100%) recovery in the event of a payment default. "The senior secured notes are part of the $1.1 billion proposed refinancing at Abitibi-Consolidated Inc.," said Standard & Poor's credit analyst Jatinder Mall. This refinancing is conditional on all three transactions taking place. "Based on an enterprise gross value of $1.5 billion in a default scenario, there are very high recovery prospects for the senior secured noteholders," Mr. Mall added. Abitibi-Consolidated is the subsidiary of AbitibiBowater Inc. (B-/Negative/--) and is engaged in the production of newsprint, commercial printing paper, and wood products. The ratings on Abitibi-Consolidated were place on CreditWatch negative on March 10, 2008, due to the uncertainty of refinancing given current credit market conditions. S&P could lower the ratings on Abitibi-Consolidated if the company is unable to meet its maturing debt obligations. ADSTAR INC: Gets Nasdaq Closing Bid Price Non-Compliance Notice --------------------------------------------------------------- AdStar Inc. received a staff determination notice from the NASDAQ Stock Market indicating that the company failed to regain compliance with the $1 minimum closing bid price per share requirement for continued listing or to demonstrate that it meets the criteria for initial listing, during the compliance period of 180 calendar days, expiring on March 17, 2008, afforded to the company on Sept. 17, 2007, pursuant to NASDAQ Marketplace Rules 4310(c)(8)(D) and 4310(c)(4). According to the notice, the company's securities will be subject to suspension and delisting from the Nasdaq Capital Market at the opening of business on March 27, 2008, unless the company requests a hearing to appeal this determination by 4:00 p.m. Eastern Time on March 25, 2008, pursuant to the procedures set forth under the applicable NASDAQ Marketplace Rule. At this time, the company does not plan on appealing this determination and expects its securities to continue trading on the OTC Bulletin Board beginning March 27, 2008. About AdStar Inc. Headquartered in Marina del Rey, California, AdStar Inc. (Nasdaq: ADST) -- http://www.adstar.com/-- is a provider of e-commerce transaction software and services for the advertising and publishing industries. AdStar's e-commerce services includes remote ad entry software and web-based ad transaction services. AdStar is also a supplier of automated payment processing services. AdStar's ad transaction infrastructure powers classified ad sales for more than 40 of the newspapers in the United States, CareerBuilder, and a growing number of other online and print media companies. EdgCapture, AdStar's automated payment process solution, is employed by call centers at more than 100 of the newspaper and magazines. ALMONDELL PARK: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Almondell Park, LLC 3507 West Stetson Avenue, Suite 104 Hemet, CA 92545 Bankruptcy Case No.: 08-12897 Chapter 11 Petition Date: March 19, 2008 Court: Central District Of California (Riverside) Judge: Peter Carroll Debtor's Counsel: Thomas E. Cummings, Esq. 32295 Mission Trail, Suite 280 Lake Elsinore, CA 92530 Tel: (951) 579-3210 Estimated Assets: $1 million to $100 million Estimated Debts: $1 million to $100 million The Debtor does not have any creditors who are not insiders. AMERICAN AIRLINES: S&P Changes Outlook to Negative on Weak Economy ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on the long-term ratings on AMR Corp. (B/Negative/B-3) and subsidiary American Airlines Inc. (B/Negative/--) to negative from positive. S&P also lowered its short-term rating on AMR to 'B-3' from 'B-2' and affirmed all other ratings on AMR and American. "The outlook revision and short-term rating downgrade are based on the expected impact of much higher jet fuel prices and a weakening U.S. economy, which we believe will cause AMR to report a loss this year," said Standard & Poor's credit analyst Philip Baggaley. "AMR's earnings, cash flow, and credit protection measures are likely to be materially lower in 2008 than last year, though the company continues to have adequate liquidity and projects $4.4 billion of unrestricted cash and short-term investments at March 31, 2008," the credit analyst continued. Ratings on Fort Worth, Texas-based AMR and subsidiary American Airlines reflect participation in the competitive, cyclical, and capital-intensive airline industry; a heavy debt and pension burden; and substantial capital spending needs to modernize the airline's fleet. Satisfactory liquidity, with $4.5 billion of unrestricted cash and short-term investments at Dec. 31, 2007, and substantial market positions in the U.S. domestic, trans-Atlantic, and Latin American markets (though a minimal presence in the Pacific) are positives. American, like other large U.S. airlines, reported much improved earnings in 2006 and 2007, benefiting from cost-cutting and a more favorable balance of supply and demand, particularly on international routes. Fully adjusted EBITDA interest coverage improved to 2.0x and funds flow to debt to 11%, compared with 1.8x and 8% in 2006. However, the recent surge in fuel prices and rapidly weakening U.S. economy (which Standard & Poor's economists believe is already in a recession) are likely to result in materially worse results in 2008. If crude oil averages about $97 per barrel, as S&P currently forecasts, and further fare increases become progressively more difficult to achieve because of the weak economy, AMR could lose more than $1 billion this year. AMR currently has adequate liquidity, with unrestricted cash and short-term investments of $4.5 billion (none of which is invested in auction-rate securities) at Dec. 31, 2007, and $4.4 billion forecast (by the company) for March 31, 2008. American has access to an undrawn $255 million revolving credit that matures June 17, 2009, part of a credit facility that includes also a $440 million term loan due June 17, 2010. Key financial covenants under that facility include a quarterly cash flow coverage test (AMR consolidated EBITDAR divided by interest and rentals, on a 12- month rolling basis), of 1.4 to 1, stepping up to 1.5 to 1 in the second quarter of 2009. S&P estimates that a pretax loss that exceeds about $450 million to $500 million would trip the coverage covenant. Accordingly, if high fuel prices persist, the company may seek to amend or obtain a waiver of that covenant. Alternatively, American could borrow against unencumbered aircraft or use cash to pay down the remaining $440 million term loan. Very high fuel prices and a weak economy could cause material losses and a potential covenant problem this year. S&P could lower ratings if it appears that a deep or prolonged downturn will erode liquidity or the company's financial profile. AMERICAN AXLE: CEO Receives $10.1 Million as 2007 Compensation -------------------------------------------------------------- American Axle & Manufacturing Holdings Inc. disclosed in a Securities and Exchange Commission filing that its co-founder, Chairman and Chief Executive Officer, Richard E. Dauch, received a total of $10.1 million in compensation, which includes $3.9 million bonuses, for 2007. The regulatory filing indicated that a total of $30 million was paid, in 2007, to four other senior executives, who contribute to the long-term growth and profitability of the company and who are in a position to make significant contributions to the company and its subsidiaries. The executive payment disclosure came as 3,650 union workers continue their month-long strike asking for wage hikes and more benefits. As reported in the Troubled Company Reporter on March 12, 2008, United Auto Workers union representatives weren't happy with the terms proposed by the auto parts company. 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 Associated Press relates. 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. 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 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 March 19, 2008, 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. 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 HOME: Former Employees Amend Class Action Complaint ------------------------------------------------------------ Kathy S. Koch, Jarrett Perry, Gina Pulliam, Michael S. Surowiec, Kathleen Wielgus, and Patricia Williams, on their own behalf and on behalf of all other former employees of American Home Mortgage Investment Corp. and its debtor-affiliates, revised their complaint to indicate additional or amended requests: (a) The Former Employees ask the Court to provide them with an administrative priority claim, pursuant to Section 503(b)(a)(A) of the Bankruptcy Code, in favor of each of the Former Employees and the Class Members equal to the sum of unpaid wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions and other ERISA benefits, for 60 days that would have been covered and paid under applicable employee benefit plans; (b) Alternatively, the Former Employees ask the Court to determine that the first $10,950 of their claims pursuant to the Workers Adjustment and Restraining Notification Act is entitled to priority status, under Section 507(a)(4), and the remainder is entitled a general unsecured claim status; and (c) The Former Employees ask the Court to allow them an administrative priority claim under Section 503 for reasonable attorneys' fees and costs incurred in prosecuting the Adversary Proceeding. * * * Judge Christopher S. Sontchi certified the class consisting of (i) all employees of the Debtors who were terminated without cause or within 30 days of August 3, 2007, at one of the Debtors' Affected Facilities; or (ii) any employee who was terminated without cause and who could have reasonably expected to experience an employment loss as a consequence of a plant closing or mass lay- off at one of the Affected Facilities; or (iii) affected employees within the meaning of Section 2101(a)(5) of the Judiciary and Judicial Procedure. The certified Class excludes any employees who voluntarily resigned, retired, or who were terminated for cause. Affected Facilities refers to any single site of employment within the meaning of Section 639.3(i) of the Code of Federal Regulations, in which 50 or more employees and at least 33% of the employees were terminated from employment on or within 30 days of August 3, 2007, excluding any part-time employees. Judge Sontchi also authorizes the certified Class to retain James Huggett, The Gardner Firm, P.C., Lankenau & Miller, LLP, and Outten & Golden, LLP, as class counsel. Judge Sontchi further appoints Kathy Koch, Jarrett Perry, Gina Pullium, Chan Nguyen, Michael S. Surowiec, Kathleen Wielgus, and Patricia Williams as class representatives. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. American Home is currently seeking an extension of its exclusive period to file a plan of reorganization through June 2, 2008; and its exclusive period to solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) AMERICAN NATURAL: Sept. 30 Balance Sheet Upside Down by $15.8 Mil. ------------------------------------------------------------------ American Natural Energy Corp.'s consolidated balance sheet at Sept. 30, 2007, showed $4,138,041 in total assets and $19,954,163 in total liabilities, resulting in a $15,816,122 total stockholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $782,185 in total current assets available to pay $18,172,123 in total current liabilities. The company reported a net loss of $363,943 on revenues of $314,544 for the third quarter ended Sept. 30, 2007, compared with a net loss of $765,676 on revenues of $361,305 in the corresponding period of 2006. Results for the three months ended Sept. 30, 2007, included a non- cash gain on settlement of debt of $836,660. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2967 Going Concern Doubt Malone & Bailey PC, in Houston, expressed substantial doubt about American Natural Energy Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm reported that the company has incurred substantial losses during 2006, has a working capital deficiency and an accumulated deficit at Dec. 31, 2006, and is in default with respect to certain debenture obligations. About American Natural Based in Tulsa, Oklahoma, American Natural Energy Corporation (TSX Venture: ANR.U) -- http://www.annrg.com/-- was formed in January 2001 to focus on the acquisition, development and exploitation of oil and natural gas reserves. ANEC's objective is to grow an oil and natural gas reserve base through development, exploitation and exploration drilling within the current and future boundaries of its St. Charles Parish, Louisiana properties, including its ExxonMobil Joint Development area. APOLLO DRILLING: Posts $572,917 Net Loss in 2007 Third Quarter -------------------------------------------------------------- Apollo Drilling Inc. reported a net loss of $572,917 for the third quarter ended Sept. 30, 2007, compared with a net loss of $675,133 in the same period in 2006. The company reported zero revenues in both periods. At Sept. 30, 2007, the company's consolidated balance sheet showed $1,787,914 in total assets, $1,660,419 in total liabilities, and $127,495 in total stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007 showed strained liquidity with $649,242 in total current assets available to pay $660,419 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2966 Going Concern Disclaimer De Joya Griffith & Company LLC, in Henderson, Nevada, expressed substantial doubt about Apollo Drilling Inc.'s ability to continue as a going concern following its audit of the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's losses from operations. About Apollo Drilling Headquartered in Dallas, Apollo Drilling Inc. (OTC: APDR) -- http://www.apollodrillinginc.com/-- is engaged in oil and natural gas exploration and production. The company derives its revenue primarily from providing oil and natural gas exploration drilling services. AMR CORP: S&P Revises Outlook to Negative on Expected Loss ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on the long-term ratings on AMR Corp. (B/Negative/B-3) and subsidiary American Airlines Inc. (B/Negative/--) to negative from positive. S&P also lowered its short-term rating on AMR to 'B-3' from 'B-2' and affirmed all other ratings on AMR and American. "The outlook revision and short-term rating downgrade are based on the expected impact of much higher jet fuel prices and a weakening U.S. economy, which we believe will cause AMR to report a loss this year," said Standard & Poor's credit analyst Philip Baggaley. "AMR's earnings, cash flow, and credit protection measures are likely to be materially lower in 2008 than last year, though the company continues to have adequate liquidity and projects $4.4 billion of unrestricted cash and short-term investments at March 31, 2008," the credit analyst continued. Ratings on Fort Worth, Texas-based AMR and subsidiary American Airlines reflect participation in the competitive, cyclical, and capital-intensive airline industry; a heavy debt and pension burden; and substantial capital spending needs to modernize the airline's fleet. Satisfactory liquidity, with $4.5 billion of unrestricted cash and short-term investments at Dec. 31, 2007, and substantial market positions in the U.S. domestic, trans-Atlantic, and Latin American markets (though a minimal presence in the Pacific) are positives. American, like other large U.S. airlines, reported much improved earnings in 2006 and 2007, benefiting from cost-cutting and a more favorable balance of supply and demand, particularly on international routes. Fully adjusted EBITDA interest coverage improved to 2.0x and funds flow to debt to 11%, compared with 1.8x and 8% in 2006. However, the recent surge in fuel prices and rapidly weakening U.S. economy (which Standard & Poor's economists believe is already in a recession) are likely to result in materially worse results in 2008. If crude oil averages about $97 per barrel, as S&P currently forecasts, and further fare increases become progressively more difficult to achieve because of the weak economy, AMR could lose more than $1 billion this year. AMR currently has adequate liquidity, with unrestricted cash and short-term investments of $4.5 billion (none of which is invested in auction-rate securities) at Dec. 31, 2007, and $4.4 billion forecast (by the company) for March 31, 2008. American has access to an undrawn $255 million revolving credit that matures June 17, 2009, part of a credit facility that includes also a $440 million term loan due June 17, 2010. Key financial covenants under that facility include a quarterly cash flow coverage test (AMR consolidated EBITDAR divided by interest and rentals, on a 12- month rolling basis), of 1.4 to 1, stepping up to 1.5 to 1 in the second quarter of 2009. S&P estimates that a pretax loss that exceeds about $450 million to $500 million would trip the coverage covenant. Accordingly, if high fuel prices persist, the company may seek to amend or obtain a waiver of that covenant. Alternatively, American could borrow against unencumbered aircraft or use cash to pay down the remaining $440 million term loan. Very high fuel prices and a weak economy could cause material losses and a potential covenant problem this year. S&P could lower ratings if it appears that a deep or prolonged downturn will erode liquidity or the company's financial profile. AQUATIC CELLULOSE: Nov. 30 Balance Sheet Upside-Down by $9.9 Mil. ----------------------------------------------------------------- Aquatic Cellulose International Corp.'s consolidated balance sheet at Nov. 30, 2007, showed $1,271,661 in total assets and $11,198,238 in total liabilities, resulting in a $9,926,577 total stockholders' deficit. At Nov. 30, 2008, the company's consolidated balance sheet showed strained liquidity with $233,071 in total current assets available to pay $11,198,238 in total current liabilities. The company reported a net loss of $4,373,955 for the second quarter ended Nov. 30, 2007, compared with net income of $959,677 in the corresponding period ended Nov. 30, 2006. The company recognized its equity interest in Sargent South lease in the amount of $21,713 for the three months ended Nov. 30, 2007, compared with $72,379 for the three months ended Nov. 30, 2006. The decrease in equity interest is primarily due to decreased production and the overall reductions in the selling price of the company's natural gas. Full-text copies of the company's consolidated financial statements for the quarter ended Nov. 30, 2007, are available for free at http://researcharchives.com/t/s?2969 Going Concern Disclaimer As reported in the Troubled Company Reporter on March 13, 2008, Peterson Sullivan PLLC expressed substantial doubt about Aquatic Cellulose International Corp.'s ability to continue as a going concern after auditing the company's financial statements for the years 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. About Aquatic Cellulose Aquatic Cellulose International Corp. (PNK: AQCI) owns a 20.0% working interest and a 16.0% net revenue interest in the Sargent South Field, Hamill & Hamill lease, a 3,645-acre natural gas producing property located in Matagorda County, Texas. AQUILA INC: Kan. Regulator Approves Black Hills, Great Plains Deal ------------------------------------------------------------------ Black Hills Corporation, Great Plains Energy Inc. and Aquila Inc. reported that the Kansas Corporation Commission has approved the proposed acquisition by Black Hills of Aquila's natural gas utility assets and related operations in the state of Kansas. The Kansas Corporation Commission also approved the proposed acquisition by Great Plains Energy of Aquila. "We are pleased to have the approval of our transaction in Kansas," David R. Emery, chairman, president and chief executive officer of Black Hills Corporation, said. "We appreciate the substantial efforts of the commissioners, the commission staff and the Citizens Utility Rate Board during the regulatory review process leading to our purchase of Aquila's Kansas natural gas utility assets." "We are excited to join with the employees of Aquila in providing quality service to customers in Kansas," Mr. Emery continued. "We are pleased to have received transaction approval in Kansas and look forward to receiving our final approval in Missouri," Mike Chesser, chairman and chief executive officer of Great Plains Energy, said. "We are one step closer to forming a strong, regional utility that will provide numerous benefits for customers, the communities, and our shareholders." With the approvals in Kansas, Black Hills and Aquila have obtained all the necessary regulatory approvals pertaining to the Black Hills purchase of Aquila's utility properties in Iowa, Nebraska, Kansas and Colorado. To close the proposed transaction, Great Plains Energy and Aquila need to obtain regulatory approval from the Missouri Public Service Commission. The Troubled Company Reporter reported on Feb. 28, 2008 that the Colorado Public Utilities Commission had approved Black Hills Corporation and Aquila Inc.'s proposed acquisition of natural gas and electric utility assets and related operations in the State of Colorado. Under the terms of the Great Plains Energy and Aquila transaction, which was approved by the boards of directors of both companies, Great Plains Energy will acquire Aquila and its Missouri-based utilities, Missouri Public Service Company, and St. Joseph Light & Power, expanding Great Plains Energy's utility service territory around the Kansas City metro area. Under the terms of the Black Hills and Aquila asset purchase and sale agreement, which was approved by the board of directors of both companies, Black Hills will acquire one regulated electric utility owned by Aquila in Colorado, where Black Hills currently has various independent power generation, oil and gas, and other non-regulated operations, and Aquila's regulated gas utilities in Colorado, Kansas, Nebraska, and Iowa. About Great Plains Energy Headquartered in Kansas City, Mo., Great Plains Energy Incorporated (NYSE: GXP) -- http://www.greatplainsenergy.com/-- is the holding company for Kansas City Power & Light, a regulated provider of electricity in the Midwest, and Strategic Energy LLC, a competitive electricity supplier. About Black Hills Black Hills Corporation (NYSE: BKH) -- http://www.blackhillscorp.com/-- is an integrated energy company. Its utility businesses are Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Cheyenne Light, Fuel & Power, an electric and gas distribution utility serving the Cheyenne, Wyo., vicinity. Black Hills Energy, its wholesale energy business unit, generates electricity, produces natural gas, oil and coal, and markets energy. 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: S&P Upgrades Rating to 'BB-' on Strong Credit Profile ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit rating on integrated electric and natural gas utility Aquila Inc. to 'BB-' from 'B+'. The company remains on CreditWatch with positive implications. The upgrade reflects Aquila's strengthening credit profile due to improving financial measures from asset sales, deleveraging, and increasing cash flow. "As mostly a regulated electric and natural gas utility company, cash flow should begin to be stronger and more stable," said Standard & Poor's credit analyst Gerrit Jepsen. In addition, the ability of the company's Missouri utility to recover fuel and purchased power costs through a fuel-adjustment clause enhances cash flow stability during times of rising purchased power, coal, and natural gas prices. The Colorado utility also has an adjustment mechanism through which incremental fuel and purchased power costs can be recovered. Kansas City, Missouri-based Aquila had $1.06 billion in total debt outstanding as of Dec. 31, 2007. The CreditWatch listing is due to the pending sale of 100% of the common stock of Aquila to Great Plains Energy Inc. Immediately before Great Plains acquires the Aquila stock, Black Hills Corp. will acquire Aquila's non-Missouri utility assets for $940 million. Included in these assets will be the Colorado electric utility and five gas utilities in Colorado, Iowa, Kansas, and Nebraska. If the Great Plains transaction closes, Standard & Poor's will raise its corporate credit rating on Aquila to the corporate credit rating of its new parent, Great Plains. If the Great Plains transaction fails to close, S&P will remove the rating from CreditWatch, affirm the 'BB-' corporate credit rating on Aquila and assign an outlook. Improvements to the rating would likely be hindered by:A high interest rate (14.9%) on a portion of Aquila's long-term debt that is not fully recovered through rates; and Capital spending of $1.2 billion for the 2008- 2010 period due to construction of the Iatan II coal-fired unit and other environmental investments. The company does not earn a cash return on construction work in progress and it does not have access to any form of accelerated amortization. This capital spending will therefore pressure cash flows as financing costs are paid and recovery of investment is delayed until after the post- Construction period. AUDATEX HOLDINGS: Moody's Lifts Ratings to Ba3 on Strong Revenues ----------------------------------------------------------------- Moody's Investors Service upgraded all the credit ratings of Audatex Holdings, LLC. The Corporate Family Rating, Probability of Default Rating and the senior secured credit facility were each raised to Ba3 from B1. The rating outlook is stable. "The upgrade of the CFR reflects strong revenue and profitability growth over the last year and improving credit metrics. Projected leverage, interest coverage and cash flow metrics for fiscal 2008 position the company solidly in the Ba3 rating category," stated Lenny Ajzenman, Senior Credit Officer. The ratings continue to be supported by the company's strong market position in Europe, significant growth opportunities in developing and emerging markets and high barriers to entry. The ratings are constrained by a relatively small revenue base for the rating category, pricing pressures and a highly competitive and mature US market. Moody's upgraded these ratings of Audatex Holdings, LLC: -- Corporate Family Rating, to Ba3 from B1 -- Probability of Default Rating, to Ba3 from B1 Moody's upgraded these ratings of Audatex Holdings IV B.V. (an indirect wholly owned subsidiary of Audatex and a holding company for operating subsidiaries outside of North America): -- $25 million equivalent Euro First Lien Revolving Credit Facility due 2012, to Ba3 (LGD 3- 47%) from B1 (LGD 3- 49%) -- $406.3 million equivalent Euro First Lien Term Loan due 2013, to Ba3(LGD 3- 47%) from B1 (LGD 3- 49%) Business Services Group Holdings B.V., a holding company for the Netherlands operations, is a co-borrower under these facilities. Moody's upgraded these ratings of Audatex North America, Inc. (an indirect wholly owned subsidiary of Audatex and a holding company for the North American operating subsidiaries): -- $25 million First Lien Revolving Credit Facility due 2012, to Ba3(LGD 3- 47%) from B1 (LGD 3- 49%) -- $219.8 million First Lien Term Loan due 2013, to Ba3(LGD 3- 47%) from B1 (LGD 3- 49%) Headquartered in San Ramon, California, Audatex Holdings, LLC is the largest global provider of software and services to the automobile insurance claims processing industry. The company is active in over 49 countries and derives most of its revenues from its estimating and workflow software. Products and services are provided to over 900 automobile insurance companies, 33,000 collision repair facilities, 7,000 independent assessors and 3,000 automotive recyclers. Reported revenue for the twelve month period ended Dec. 31, 2007 was $501 million. BEAR STEARNS: JPMorgan Ups Bid to $10 Per Share, Buys 39.5% Stock ----------------------------------------------------------------- JPMorgan Chase & Co. and The Bear Stearns Companies Inc. disclosed an amended merger agreement regarding JPMorgan Chase's acquisition of Bear Stearns. Under the revised terms, each share of Bear Stearns common stock would be exchanged for 0.21753 shares of JPMorgan Chase common stock -- up from 0.05473 shares -- reflecting an implied value of approximately $10 per share of Bear Stearns common stock based on the closing price of JPMorgan Chase common stock on the New York Stock Exchange on March 20, 2008. In addition, JPMorgan Chase and Bear Stearns entered into a share purchase agreement under which JPMorgan Chase will purchase 95 million newly issued shares of Bear Stearns common stock, or 39.5% of the outstanding Bear Stearns common stock after giving effect to the issuance, at the same price as provided in the amended merger agreement. The purchase of the 95 million shares is expected to be completed on or about April 8, 2008. According to The Wall Street Journal, the amended deal values Bear Stearns at about $1.2 billion. WSJ, citing data from Sanford C. Bernstein firm, says the breakup value of Bear Stearns' continuing business could be roughly $7.7 billion: Prime Brokerage $3 billion Merchant Banking $1.3 billion Asset Management $1.3 billion High-Net-Worth Brokerage $1 billion Servicing $0.6 billion Energy Assets $0.5 billion ------------- $7.7 billion The Boards of Directors of both companies have approved the amended agreement and the purchase agreement. All of the members of the Bear Stearns Board of Directors have indicated that they intend to vote their shares held as of the record date in favor of the merger. The JPMorgan Chase guaranty of Bear Stearns' trading obligations has also been significantly clarified and expanded. A full-text copy of the guaranty agreement is available for free at http://ResearchArchives.com/t/s?297e JPMorgan Chase has also agreed to guarantee Bear Stearns' borrowings from the Federal Reserve Bank of New York. A full-text copy of the Fed Guaranty is available for free at http://ResearchArchives.com/t/s?297f The Federal Reserve Bank of New York's $30 billion special financing associated with the transaction has also been amended so that JPMorgan Chase will bear the first $1 billion of any losses associated with the Bear Stearns assets being financed and the Fed will fund the remaining $29 billion on a non-recourse basis to JPMorgan Chase. "We believe the amended terms are fair to all sides and reflect the value and risks of the Bear Stearns franchise," Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase, said, "and bring more certainty for our respective shareholders, clients, and the marketplace. We look forward to a prompt closing and being able to operate as one company." "Our Board of Directors believes that the amended terms provide both significantly greater value to our shareholders, many of whom are Bear Stearns employees, and enhanced coverage and certainty for our customers, counterparties, and lenders," Alan Schwartz, President and Chief Executive Officer of Bear Stearns, said. "The substantial share issuance to JPMorgan Chase was a necessary condition to obtain the full set of amended terms, which in turn, were essential to maintaining Bear Stearns' financial stability." While the rules of the New York Stock Exchange generally require shareholder approval prior to the issuance of securities that are convertible into more than 20% of the outstanding shares of a listed company, the NYSE's Shareholder Approval Policy provides an exception in cases where the delay involved in securing shareholder approval for the issuance would seriously jeopardize the financial viability of the listed company. In accordance with the NYSE rule providing that exception, the Audit Committee of Bear Stearns' Board of Directors has expressly approved, and the full Board of Directors has unanimously concurred with, Bear Stearns' intended use of the exception. The Wall Street Journal says the new bid comes close to sealing the deal because it gives JP Morgan a 39.5% stake in Bear Stearns right away, before the transaction is complete. That means Mr. Dimon needs support from only a few other shareholders to win approval, barring any legal challenge, according to WSJ's Robin Sidel and Kate Kelly. The closing of the sale of the 95 million shares is expected to be completed upon the conclusion of a shareholder notice period required by the NYSE, which is expected to occur by April 8, 2008. A full-text copy of the Amended Plan of Merger is available for free at http://ResearchArchives.com/t/s?2980 About JPMorgan JPMorgan Chase & Co. (NYSE: JPM) -- http://www.jpmorganchase.com/ -- is a global financial services firm with operations in more than 60 countries. The firm does investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management, and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients under its JPMorgan and Chase brands. About Bear Stearn Companies 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: Stable Performance Cues Fitch to Affirm Ratings ------------------------------------------------------------- Fitch Ratings affirmed the ratings of Bear Stearns Commercial Mortgage Securities Commercial Mortgage pass-through certificates series 2005-PWR10 as: -- $77.6 million class A-1 at 'AAA'; -- $139.4 million class A-2 at 'AAA'; -- $59.4 million class A-3 at 'AAA'; -- $171 million class A-AB at 'AAA'; -- $1.05 billion class A-4 at 'AAA'; -- $293.1 million class A-1A at 'AAA'; -- $263.4 million class A-M at 'AAA'; -- $210.7 million class A-J at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $19.8 million class B at 'AA+'; -- $29.6 million class C at 'AA'; -- $23.0 million class D at 'AA-'; -- $16.5 million class E at 'A+'; -- $26.3 million class F at 'A'; -- $26.3 million class G at 'A-'; -- $29.6 million class H at 'BBB+'; -- $26.3 million class J at 'BBB'; -- $36.2 million class K at 'BBB-'; -- $3.3 million class L at 'BB+'; -- $9.9 million class M at 'BB'; -- $13.2 million class N at 'BB-'; -- $6.6 million class O at 'B+'; -- $6.6 million class P at 'B'; -- $9.9 million class Q at 'B-' Fitch does not rate the $32.9 million class S. The rating affirmations reflect stable transaction performance and minimal paydown since issuance. As of the March 2008 distribution date, the pool's aggregate certificate balance has decreased 2.1% to $2.580 billion from $2.634 billion at issuance. There have been no delinquent loans or loans in special servicing since issuance. At issuance, Fitch shadow rated these twelve loans (9.2%): The Promenade; Sully Place Shopping Center; Muirwood Apartments; Tennant Station; Pacheco Pass; Sand Canyon Medical; Todd Center; Eastgate Village; Spring Creek Apartments; Quakertown Shopping Center; Holiday Spa Phoenix; and, Pavillion Estates. With the exception of Pavillion Estates, these loans maintain their investment grade shadow ratings based on stable performance and occupancy levels since issuance. The largest three shadow rated loans (5.9%), The Promenade (2.2%), Sully Place (2.0%), and Muirwood Apartments (1.7%), reported occupancies of 97% (YE2007), 96.4% (September 2007), and 95% (September 2007), respectively. Pavillion Estates (0.2%) is a manufactured housing community located in Kalamazoo, Michigan, that has had declining performance. The primary reason for the decline in performance is a sustained increase in expenses. This loan has been downgraded from investment grade and will be included in the conduit analysis of the pool. BEECHER LOAN: Fitch Withdraws Ratings After Loan Deal Windup ------------------------------------------------------------ Fitch Ratings withdraws its ratings on these Beecher Loan Fund effective immediately: -- $66,800,000 class A 'C'; -- $44,000,000 class B 'C/DR6'. The withdrawals are due to the completion of a restructuring and windup of the existing total rate of return collateralized loan obligation transaction into a new cash flow CLO. While precise terms of the debt exchange are not available, it is Fitch's understanding that the debt holders in Beecher received equity in the new cash flow CLO. BENNINGTON COLLEGE: Moody's Holds 'Ba1' Rating; Gives Neg. Outlook ------------------------------------------------------------------ Moody's Investors Service affirmed the Ba1 underlying bond rating on Bennington College's $7.5 million outstanding Series 1999 bonds that were issued through the Vermont Educational and Health Buildings Financing Agency. The outlook has been revised to negative from stable based on limited liquidity, plans for additional debt ($25 million expected within the next 1-2 years), and pressure on operating performance as a result of recent enrollment volatility. The Series 1999 bonds are fixed rate. In addition, the College has outstanding $3.7 million in two series of bonds sold through private placement that are not rated by Moody's and are also fixed rate. Legal security: Payments under the Loan Agreement are a general obligation of the College. The Series 1999 Bonds are further secured by a debt service reserve fund, a mortgage pledge on most campus property, and a security interest in the College's gross receipts. Interest rate derivatives: None. Strengths * Rebound in enrollment for small liberal arts college. Following a decline of 9%, or 67, full-time equivalent students in the fall of 2006, the College's FTE enrollment increased in 2007 to 714. This level brings the total enrollment back to the 2005 figure, although it remains below the recent high of 754 in 2004. Bennington's selectivity rate has declined fairly steadily to 63%, while the matriculation rate has returned to previous levels and stood at 32% for the current freshman class. According to the College, existing facilities limit the size of the undergraduate population to 650. Currently, undergraduates total 582 on an FTE basis. * Investment in plant to address capital needs. In recent years, Bennington has invested significantly in its facilities, with capital spending totaling over $14 million in the past four years and reaching up to five times depreciation expense annually. As a result of this investment, the College's age of plant decreased from a high of 19.3 years in 2005 to 14.9 years in 2007. The focus on capital spending comes after the College accumulated a backlog of deferred maintenance needs for a period in the 1990s extending into the early part of the 2000s. Moody's expects that this investment will bolster the attractiveness of the College to prospective students. Challenges * Modest levels of liquid financial resources limit financial flexibility. Although total financial resources grew by 76% from 2002 to 2007 to $28.0 million, unrestricted financial resources were just $2.5 million at the end of 2007. For 2007, unrestricted resources cushioned comprehensive debt by 0.22 times and operations by 0.09 times. This position reflects both a reduced operating result in 2007 and the investment made in facilities in recent years. While expendable financial resources provide higher levels of coverage (1.32 times coverage of direct debt and 0.56 times coverage of operations) and an unrestricted pledge of $20 million made last fall will add cash as it is received over the next 10 years, Moody's is concerned that the low level of liquidity limits the College's ability to respond to unbudgeted needs particularly if investment returns become less robust. In 2007, the College's investment return was 13.0%, and the return year to date is slightly negative. * Plans for additional borrowing. The College reports that it may borrow up to $25 million in additional debt in 2009 to construct a $20 million new facility called the Dialogue Center that would support new academic initiatives and to address $5 million in additional deferred maintenance. The $20 million unrestricted gift made this year will boost unrestricted reserves. In Moody's opinion, substantial new resources and cash flow available for debt service would be needed to minimize the impact of the new debt on Bennington's financial position. * Operating performance may continue to be pressured with additional debt service on planned borrowing. Bennington's operating performance has fluctuated in recent years based on variations in gift revenue and student charges. From 2002 through 2006, Bennington produced operating surpluses as measured by Moody's, resulting in operating margins ranging from 3% in 2004 to 34% in 2005. Gifts accounted for a significant portion of the strong results, particularly in 2005 and 2006. In 2007, however, the operating margin was -5.9%, as lower gift revenue failed to offset net tuition and fees that have been essentially flat in the last several years. Operating cash flow margin dropped to 2.4% from 25.2% in 2006, providing only 0.6 times debt service coverage. Although the College implemented annual increases of 5% to 8% in student charges since 2004, net tuition and fees in 2007 were just 4% higher than those collected in 2004 and declined nearly $500,000 from 2006. Student charges represented 68% of operating revenues as calculated by Moody's in 2007. The College reports that net tuition and fees have grown more than $2 million in the current year due to higher enrollment and it expects continued improvement in fiscal year 2009. Nevertheless, Moody's is concerned that the additional debt service associated with the borrowing planned for 2009 could counteract and potentially outweigh the impact of additional revenue from student charges. Outlook The negative outlook is based on the College's limited financial flexibility and plans for additional debt. The recent restoration of enrollment levels after a period of volatility highlights the student market vulnerability, a concern as the College considers increasing debt significantly. Should future debt service expenses outpace growth in revenues and financial resources fail to grow commensurately with new borrowing, credit quality would likely suffer. What could change the rating - Up Stabilized or increased enrollment that results in growth of net tuition and fees above the level of new debt service expense; significant additional liquid financial resources to minimize the impact of future borrowing. What could change the rating - Down Additional debt service expense not offset by increased revenue and additional borrowing without commensurate growth of liquid financial resources. Key Indicators (FY 2007 financial data and fall 2007 enrollment data): -- Full-time equivalent (FTE) enrollment: 714 FTEs -- Freshman selectivity: 62.5% -- Freshman matriculation: 32.3% -- Total financial resources: $28.0 million -- Unrestricted financial resources: $2.47 million -- Direct debt: $11.2 million -- Unrestricted financial resources-to-direct debt: 0.22 times -- Unrestricted financial resources-to-operations: 0.09 times -- Reliance on student charges: 68.3% Rated Debt -- Series 1999 Bonds: Ba1 BLUE WATER: Parties Balk at Request to Assume Molding Contracts --------------------------------------------------------------- Several parties filed objections to the request of Blue Water Automotive and its debtor-affiliates to assume molding contracts. As reported in the Troubled Company Reporter on March 7, 2008, the Debtors sought permission from the U.S. Bankruptcy Court for the Eastern District of Michigan to assume molding contracts and contracts for the design or testing services necessary to the fabrication and approval of the molds. In the ordinary course of their businesses, the Debtors issue purchase orders with various molding contractors that provide the terms and conditions of, among other things, manufacture, payment and delivery. The Debtors need molds to launch new programs or continue existing programs, and they must obtain them in a timely manner to meet their production schedule with the original equipment manufacturers. If the molds are not produced or are delivered late, the Debtors could be in breach of their obligations to the OEMs, Judy A. O'Neill, Esq., at Foley & Lardner LLP, in Detroit, Michigan, said. In that event, the OEMs could be forced to shut down production lines or miss launch dates because the Debtors were not able to timely deliver component parts, leading to significant damage claims from the OEMs, Ms. O'Neill added. The Debtors stand to lose considerable business and loss of reputation if any OEM production lines are shut down, Ms. O'Neill said. A. Creditors Committee The Official Committee of Unsecured Creditors avers that: (a) the assumption of the molding contracts will add enormous administrative expenses to the Debtors' estates without any clear plan how to pay these expenses; (b) the Debtors have not shown that the proposed assumption is beneficial to the Debtors' estates or creditors; and (c) the Debtors' proposed order has authorize the customer to pay for the molds by set-off or against before and after Petition Date receivables of the Debtors without any determination of whether those offsets or recoupment are valid under Section 553 of the Bankruptcy Code. Ryan D. Heilman, Esq., at Schafer and Weiner, PLLC, in Bloomfield Hills, Michigan, posits that the Debtors' proposed order would permit their customers to exercise rights of set-off or recoupment to pay for the molds without any oversight by the Court or by the Committee. Aside from the fact that a set-off of a prepetition debt is a violation of the automatic stay, the proposed order would authorize the Debtors to reach agreements with the customers for relief from the automatic stay, Mr. Heilman adds. Further, the Committee asks the Court to (i) adjourn the hearing on the Assumption Motion on a date after the final hearing on the Debtors' DIP Financing Motion; (ii) require complete transparency in the Debtors' agreements and negotiations with their customers; and (iii) require the Debtors or customers to file a motion with appropriate notice before exercising any purported setoff or recoupment. B. Molding Contractors Eight molding contractors assert that the Debtors' assumption motion failed to address proper cure amounts in any manner other than by payment of cash in the proper cure amounts and did not provide specific details regarding adequate assurances of payments and future performance of the molding contracts: (a) H.S.Die & Engineering, Inc., (b) Superior Mold Services, Inc., (c) Radiance Mold & Engineering, Inc., (d) Innovate Mold, Inc., (e) PME Companies, Inc., (f) Kimastle Corporation, (g) Mold-Tech, Inc., and (h) St. Clair Packaging, Inc. Representing H.S. Die, Patrick E. Mears, Esq., at Barnes & Thornburg LLP, in Grand Rapids, Michigan asserts that the Debtors owe H.S. Die $147,550 under their contracts. On behalf of Superior Mold, Steven F. Alexsy, Esq., at Seyburn, Kahn, Ginn, Bess and Serlin, P.C. in Southfield, Michigan, relates that the Debtors did not propose sufficient payment to cure the default owed to Superior Mold of $501,601. Radiance Mold, Mold-Tech, and Kimastle require the Debtors to pay in full the due amounts as of the effective date of assumption and establish feasible, clear and enforceable procedures for adequate assurance of future performance. Innovate Mold and PME aver that the Assumption Motion contains inaccurate cure amounts and information about their contracts and that the Debtors should modify the proposed order to clarify the effectuation of a set-off or recoupment by the customers. St. Clair Packaging, Inc., maintains that the proposed assumption of molding contracts sacrifices its administrative claim in preference to the Debtors' payment of other postpetition obligations, evidencing the Debtors' inability to reorganize. In response to Superior Mold's objection, the Debtors proposed to pay $113,145, to cure their defaults under contracts with Superior Mold. * * * The Court authorizes the Debtors to assume the molding contracts. The Court rules that the amount to cure the Debtors' defaults under the Superior Mold contracts is $113,145, unless Superior Mold timely object to the Cure Amount. With respect to the tooling used for products supplied to the Debtors' major customers, Chrysler LLC, General Motors Corporation and Visteon Corporation, the Major Customers, in the event they dispute a Cure Amount or future amount owed under the Mold Contracts, the funding of which will be provided by the Major Customers, as applicable. In that event, the Debtors will notify the respective Contractors of the different Cure Amount or future amount owed under the Mold Contracts as indicated by the Debtors and, if not resolved by agreement of the Contractor, the Debtors and their applicable customer, that dispute will be heard by the Court. Superior Mold Wants Correct Cure Amount According to Superior Mold's books and records, the Debtors' cure amount of $113,145 does not include $81,055 in outstanding invoices. The total Cure Amount that must be paid to Superior under the Order, therefore, should be $194,200, Mr. Alexsy asserts. Because the Debtors' cure amount is smaller than the cure amount calculated by Superior Mold based on its own books and records, Superior Mold objects to the current Cure Amount of $113,145 as alleged by Debtors. Before the objection was filed, representatives of Superior Mold and the Debtors conferred to discuss their differences in the calculation of the Cure Amount. Superior Mold has also sought written confirmation from the Debtors that the OEMs would be making direct payments or escrowed payments promptly to Superior Mold for the Cure Amount and all future amounts, including payments for molds currently in possession of Superior Mold. The parties were not able to reach a final resolution of these issues before the five-day objection deadline in the Order. BLUE WATER: Wants to Hire Lambert Leser as Special Counsel ---------------------------------------------------------- Pursuant to Section 327(a) of the Bankruptcy Code, Blue Water Automotive and its debtor-affiliates seek authority from the the United States Bankruptcy Court Eastern District of Michigan to employ Lambert, Leser, Isackson, Cook & Giunta, P.C., as special bankruptcy counsel for purposes of representing them in matters that would potentially be of conflict to the matters already handled by Foley & Lardner, LLP, their primary bankruptcy counsel. The Debtors believe that Lambert Leser's extensive experience in bankruptcy matters will play an integral and crucial role in their Chapter 11 case. As the Debtors' special purpose counsel, Lambert Leser will represent the Debtors in conflict matters including: (a) preparation of pleadings and other papers only at the direction of the Debtors; (b) appearance at hearings at the request of and direction of the Debtors to implement strategy they devised; (c) performance of other tasks at the specific request of the Debtors, but only at the direction of and under the supervision of the Debtors' general counsel; and (d) non-formulation of strategy in the Chapter 11 proceedings as that task will be performed solely by Foley & Lardner. The Debtors will pay these Lambert Leser professionals according to their customary hourly rates: Professional Hourly Rate ------------ ----------- Susan M. Cook $350 Rozanne M. Giunta $350 Keith A. Schofner $300 Winnifred P. Boylan $250 John E. Gannon $250 Adam D. Bruski $175 Susan M. Cook, a member at Lambert Leser, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, and the firm does not hold any interest adverse to all parties-in-interest. About Blue Water Automotive Blue Water Automotive Systems, Inc. designs and manufactures engineered thermoplastic components and assemblies for the automotive industry. The company's product categories include airflow management, full interior trim/sub-systems, functional plastic components, and value-added assemblies. They are supported by full-service design, program management, manufacturing and tooling capabilities. With more than 1,400 employees, Blue Water operates eight manufacturing and product development facilities and has annual revenues of approximately US$200 million. The company's headquarters and technology center is located in Marysville, Mich. The company has operation in Mexico. In 2005, KPS Special Situations Fund II, L.P., and KPS Special Situations Fund II(A), L.P., acquired Blue Water Automotive through a stock purchase transaction. In 2006, the company acquired the automotive assets and operations of Injectronics, Inc., a manufacturer of thermoplastic injection molded components and assemblies. KPS then set about reorganizing the company. The company implemented a program to improve operating performance and address its liquidity issues. During 2007, the company replaced senior management, closed two facilities, and reduced overhead spending by one third. Blue Water Automotive and four affiliates filed for chapter 11 bankruptcy protection Feb. 12, 2008, before the United States Bankruptcy Court Eastern District of Michigan (Detroit) (Case No. 08-43196). Judy O'Neill, Esq., and Frank DiCastri, Esq., at Foley & Lardner, LLP, serves as the Debtors' bankruptcy counsel. Administar Services Group LLC acts as the Debtors' claims, noticing, and balloting agent. Blue Water's bankruptcy petition lists assets and liabilities each in the range of US$100 million to US$500 million. (Blue Water Automotive Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000) BMB MARKETPLACE: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: BMB Marketplace, LLC 7879 East Beck Lane Scottsdale, AZ 85260 Bankruptcy Case No.: 08-02945 Chapter 11 Petition Date: March 21, 2008 Court: District of Arizona (Phoenix) Judge: Charles G. Case II Debtor's Counsel: Lyndon B. Steimel, Esq. (lyndon@steimellaw.com) 14614 North Kierland Boulevard, Suite N-135 Scottsdale, AZ 85254 Tel: (480) 367-1188 Fax: (480) 367-1174 http://www.steimellaw.com/ Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor did not file a list of its largest unsecured creditors. BRIGHTON PETROL: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Brighton Petrol, LLC 2513 31st Street Southwest Birmingham, AL 35221 Bankruptcy Case No.: 08-01392 Chapter 11 Petition Date: March 21, 2008 Court: Northern District of Alabama (Birmingham) Debtor's Counsel: Thomas C. Fernekes, Esq. (tfernekes@bcattys.com) Benton & Centeno, LLP 2019 3rd Avenue North Birmingham, AL 35203 Tel: (205) 278-8000 Fax: (205) 278-8008 http://www.bcattys.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. BRISTOW GROUP: S&P Changes Outlook to Stable; Retains 'BB' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on helicopter services provider Bristow Group Inc. to stable from negative. At the same time, S&P affirmed all ratings, including the 'BB' corporate credit rating, on the company. As of Dec. 31, 2007, Bristow had approximately $779 million in debt, adjusted for guarantees, operating leases, and postretirement benefit obligations. "The outlook revision reflects the improvement in Bristow's operating performance and financial leverage, and expectations that its new fleet additions in the currently robust market should allow it to continue to deleverage," said Standard & Poor's credit analyst Aniki Saha-Yannopoulos. The ratings reflect Bristow's participation in the highly cyclical and volatile oil and gas industry, exposure to weather and seasonal fluctuations that might limit flight hours, large capital spending program, and lack of free cash flow. These weaknesses are partially mitigated by the oligopolistic industry structure, Bristow's significant market share, and its geographic diversity. CAIRN HIGH: Eroding Credit Quality Cues Moody's Rating Downgrades ----------------------------------------------------------------- Moody's Investors Service downgraded ratings of five classes of notes issued by Cairn High Grade ABS CDO II Limited and left on review for possible downgrade the rating of one of these classes of notes. The classes affected by this rating actions are: Class Description: $70,000,000 Class A-S First Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: Ba2, on review for possible downgrade Class Description: $48,000,000 Class A-J Second Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ca Class Description: $36,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Ca Class Description: $9,000,000 Class C Fourth Priority Secured Floating Rate Deferrable Interest Notes Due 2047 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: C Class Description: $9,000,000 Class D Fifth Priority Secured Floating Rate Deferrable Interest Notes Due 2047 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence on Feb. 29, 2008, as reported by the Trustee, of an event of default caused by a failure of the Class AB Overcollateralization Test Percentage to be greater than or equal to 95%, as described in Section 5.1(h) of the Indenture dated Sept. 14, 2006. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with the tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued following the event of default by certain Noteholders. Because of this uncertainty, the rating assigned to the Class A-S Notes remains on review for possible further action. Cairn High Grade ABS CDO II Limited is a collateralized debt obligation backed primarily by a portfolio of synthetic securities in the form of total return swaps and credit default swaps. Reference obligations for the swaps are RMBS and CDO securities. CARLYLE CAPITAL: Has Very Limited Cash Assets, Liquidator Says -------------------------------------------------------------- Begbies Traynor (Jersey) Limited, liquidator, conducted a preliminary assessment of the financial position of Carlyle Capital Corporation Limited. While it has not been possible to examine all transactions and obligations of CCC in the brief period since the order for compulsory liquidation on March 17, 2008, the preliminary assessment of the current CCC financial position are: 1) CCC invested primarily in Residential Mortgage-Backed Securities, which were provided as security for substantial borrowing from a number of investment banks; 2) Substantially all of the RMBS assets of CCC have been subject to enforcement by lending banks following default on the terms of facilities provided to CCC and CCC therefore has limited investment assets which can be liquidated to meet liabilities; 3) CCC has extremely limited cash assets; 4) CCC has substantial liabilities (as yet undetermined) which are likely to exceed its remaining assets and therefore CCC is considered by the liquidator to be insolvent. According to the liquidator, as CCC is currently considered to have insufficient assets to match its liabilities, shareholders are unlikely to receive any distribution upon final winding up of the company's affairs and due regard should be given to this fact by any person seeking to purchase shares on Euronext Amsterdam. The liquidator wishes to further repeat the information provided on March 18, 2008, that there is legal uncertainty regarding the title to any shares transferred after the placing of CCC into compulsory liquidation on March 17, 2008, and that the transfers may be considered void. Persons transferring or wishing to transfer shares in CCC should obtain legal advice before effecting any purchase or sale of CCC shares on Euronext Amsterdam. The legal advisers to the company are Mark Helyar, Esq., and Chris Anderson, Esq., can be contacted through e-mail: cccliquidators@bedellgroup.com Inquiries for the Liquidators and claims should be submitted to: Begbies Traynor (Jersey) Limited Charles House, Charles Street, St Helier Jersey, JE2 4SF, Channel Islands Tel: +44 (0) 1534 610144 Fax: +44 (0) 1534 630440 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. The company was put into compulsory liquidation on March 17, 2008, under the Companies Law in Guernsey after failing to meet margin calls and receiving default notices from lenders. CBA COMMERCIAL: Moody's Chips Rating on Class M-5 Certs. to 'B1' ---------------------------------------------------------------- Moody's Investors Service downgraded the rating of one class and affirmed the ratings of seven classes of CBA Commercial Assets, Small Balance Commercial Mortgage Pass-Through Certificates, Series 2004-1: -- Class A-1, $25,096,183, affirmed at Aaa -- Class A-2, $10,967,031, affirmed at Aaa -- Class A-3, $5,927,718, affirmed at Aaa -- Class IO, Notional, affirmed at Aaa -- Class M-1, $2,930,000, affirmed at Aa1 -- Class M-2, $3,570,000, affirmed at A2 -- Class M-3, $3,700,000, affirmed at Baa2 -- Class M-5, $770,000, downgraded to B1 from Ba2 Moody's is downgrading Class M-5 due to realized losses and projected losses from specially serviced loans. As of the Feb. 25, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 41.2% to $60.0 million from $102.0 million at securitization. The Certificates are collateralized by 165 mortgage loans with an average loan balance of approximately $364,003. The top 10 loans represent 16.8% of the pool. Five loans have been liquidated from the trust resulting in a realized loss of approximately $383,000. Currently 13 loans, representing 9.4% of the pool, are in special servicing. Moody's has estimated an aggregate loss of approximately $1,700,000 for the specially serviced loans. Moody's was provided with limited current financial information for the pool and accordingly has not estimated a loan to value ratio for the pool. CHARMING SHOPPES: Weak Operating Trends Cue S&P's Rating Cut to B+ ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered the corporate credit rating on Bensalem, Pennsylvania-based Charming Shoppes Inc. to 'B+' from 'BB-.' The outlook remains negative. "The downgrade is based on recent very weak operating trends, which have resulted in sharp deterioration of credit metrics," said Standard & Poor's credit analyst Jackie E. Oberoi, "and our belief that these trends will not be substantially reversed in the near term." Same-store sales remained weak in the fourth quarter, declining 9% for the quarter and down 5% for the year due to poor traffic trends. Furthermore, margins were down significantly in 2007 compared with 2006. CHARTER COMMS: Dec. 31 Balance Sheet Upside-Down by $7.23 Billion ----------------------------------------------------------------- Charter Communications Holdings LLC's consolidated balance sheet at Dec. 31, 2007, showed $14.54 billion in total assets, $21.57 billion in total liabilities, and $199.0 million in minority interest, resulting in a $7.23 billion total member's deficit. At Dec. 31, 2007, the company's consolidated balance sheet showed strained liquidity with $257.0 million in total current assets available to pay $1.38 billion in total current liabilities. The company reported a net loss of $1.37 billion on revenues of $6.00 billion for the year ended Dec. 31, 2007, compared with a net loss of $1.11 billion on revenues of $5.50 billion for the year ended Dec. 31, 2006. The revenue increase in 2007 primarily reflects increases in the number of customers, price increases, and incremental video revenues from OnDemand, DVR and high-definition television services. Operating income from continuing operations increased to $548.0 million for the year ended Dec. 31, 2007, from $367.0 million for the year ended Dec. 31, 2006. The improvement in operating income from continuing operations is principally due to an increase in revenue over expenses as a result of increased customers for high-speed Internet, digital video, and telephone customers, as well as overall rate increases. Asset impairment charges, impairment of franchises, extinguishment of debt, and gain on sale of discontinued operations, net of related tax effects, increased net loss by approximately $267.0 million in 2007. Long-Term Debt The company and its indirect subsidiaries have significant amounts of debt. Charter Communications Holdings LLC's, its indirect subsidaries CCH II LLC'S, and CCO Holdings LLC's long-term debt as of Dec. 31, 2007, totaled $19.5 billion, $12.3 billion, and $9.9 billion, respectively. 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?296b About Charter Communications Holdings LLC Based on St. Louis, Missouri, Charter Communications Holdings LLC -- http://www.charter.com/-- including its indirect subsidiaries, CCH II and CCO Holdings, through their operating subsidiary, Charter Communications Operating, operate broadband communications businesses in the United States, with approximately 5.6 million customers at Dec. 31, 2007. CHL MORTGAGE: S&P Junks Ratings on Two Series 2005-HYB8 Classes --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 13 classes of mortgage pass-through certificates from five series issued by CHL Mortgage Pass-Through Trust, DSLA Mortgage Loan Trust, and GreenPoint MTA Trust. All of the downgraded series were issued in 2005 and are backed by U.S. Alternative-A mortgage loan collateral. In addition, S&P affirmed its ratings on 69 other certificates from these three Alt-A transactions. The lowered ratings reflect current or projected credit enhancements levels that are not sufficient to support the certificates at their previous rating levels as of the February 2008 remittance period. Based on the current collateral performance of these transactions, future credit enhancement is projected to be significantly lower than the original credit support. All of these transactions were reviewed within the past 12 months and they continue to perform adversely. As of the February 2008 remittance period, total delinquencies for these transactions ranged from 7.25% (CHL Mortgage Pass-Through Trust 2005-HYB8, structure group 5) to 20.94% (GreenPoint MTA Trust 2005-AR3), while severe delinquencies (90-plus days, foreclosures, and REOs) ranged from 2.55% (CHL Mortgage Pass- Through Trust 2005-HYB8, structure group 5) to 10.99% (GreenPoint MTA Trust 2005-AR3) of the current pool balances. Cumulative losses for these transactions ranged from 0.02% (DSLA Mortgage Loan Trust 2005-AR1) to 0.26% (GreenPoint MTA Trust 2005-AR3) of the original pool balances. These deals have all been seasoned between 28 (CHL Mortgage Pass-Through Trust 2005-HYB8) and 36 months (DSLA Mortgage Loan Trust 2005-AR1). The affirmations reflect sufficient credit support percentages to support the current ratings as of the February 2008 remittance period. Credit enhancement for these transactions is derived from subordination. The underlying collateral for all of the affected transactions in this review consists of U.S. Alt-A mortgage loans. Ratings Lowered CHL Mortgage Pass-Through Trust 2005-HYB8 Rating ------ Series Class To From ------ ----- -- ---- 2005-HYB8 II-B-2 BB BBB 2005-HYB8 II-B-3 CCC BB 2005-HYB8 II-B-4 CCC B DSLA Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-AR1 B-4 B BB 2005-AR1 B-5 CCC B 2005-AR2 B-4 B BB 2005-AR2 B-5 CCC B GreenPoint MTA Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-AR2. B-3 BB+ BBB 2005-AR2 B-4 B BB 2005-AR2 B-5 CCC B 2005-AR3 B-3 BB+ BBB 2005-AR3 B-4 B BB 2005-AR3 B-5 CCC B Ratings Affirmed CHL Mortgage Pass-Through Trust 2005-HYB8 Series Class Rating ------ ----- ------ 2005-HYB8 1-A-1, 1-A-2, 2-A-1, 2-A-2, AAA 2005-HYB8 2-A-IO, 3-A-1, 3-A-2, 4-A-1, 4-A-2 AAA 2005-HYB8 I-M, II-M AA 2005-HYB8 I-B-1, II-B-1 A 2005-HYB8 I-B-2, BB 2005-HYB8 I-B-3 CCC 2005-HYB8 I-B-4 CCC DSLA Mortgage Loan Trust Series Class Rating ------ ----- ------ 2005-AR1 1-A, 2-A-1A, 2-A2B, 2-A2, X-1 AAA 2005-AR1 X-2, A-R AAA 2005-AR1 B-1 AA 2005-AR1 B-2 A 2005-AR1 B-3 BBB 2005-AR2 1-A, 2-A1A, 2-A1B, 2-A1C, 2-A2 AAA 2005-AR2 X-1, X-2, PO, A-R AAA 2005-AR2 B-1 AA 2005-AR2 B-2 A 2005-AR2 B-3 BBB GreenPoint MTA Trust Series Class Rating ------ ----- ------ 2005-AR2 A-1, A-2, A-3, X-1, M-X, R AAA 2005-AR2 M-1, M-2, M-3, M-4 AA+ 2005-AR2 M-5, M-6 AA 2005-AR2 M-7 AA- 2005-AR2 B-1 A 2005-AR2 B-2 A- 2005-AR3 I-A-1, I-A-2, I-A-3, II-A-1 AAA 2005-AR3 II-A-2, X-1, R AAA 2005-AR3 M-X, M-1, M-2 AA+ 2005-AR3 M-3, M-4 AA 2005-AR3 M-5 A+ 2005-AR3 M-6 A 2005-AR3 B-1 A- 2005-AR3 B-2 BBB+ CITATION HIGH: Poor Credit Quality Prompts S&P's Rating Downgrades ------------------------------------------------------------------ Moody's Investors Service downgraded the ratings of six classes of notes issued by Citation High Grade ABS CDO I, Ltd. and left on review for possible further downgrade the ratings of four of these classes. The notes affected by this rating action are: (1) Class Description: $940,500,000 Class A-1 Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade (2) Class Description: $105,500,000 Class A-2 Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade (3) Class Description: $23,000,000 Class B-1 Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade (4) Class Description: $12,000,000 Class B-2 Senior Secured Floating Rate Notes due 2051 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade (5) Class Description: $4,500,000 Class C Mezzanine Secured Deferrable Floating Rate Notes due 2051 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: C (6) Class Description: $11,000,000 Class D Mezzanine Secured Deferrable Secured Floating Rate Notes due 2051 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence as reported by the Trustee on March 13, 2008, of an event of default caused by the Class A Overcollateralization Ratio being less than 100 per cent, as described in Section 5.01(i) of the Indenture dated Jan. 11, 2007. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating actions taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of further remedies to be pursued by the Controlling Class. Because of this uncertainty, the ratings assigned to Class A-1 Notes, Class A-2 Notes, Class B-1 Notes and Class B-2 Notes remain on review for possible further action. Citation High Grade ABS CDO I, Ltd. is a collateralized debt obligation mainly backed by a portfolio of RMBS and CDO securities. CIT GROUP: Taps $7.3BB in Emergency Funding After Downgrade ----------------------------------------------------------- CIT Group Inc. is drawing upon its $7.3 billion in unsecured U.S. bank credit facilities, and will use the proceeds to repay debt maturing in 2008, including commercial paper, and provide financing to its core commercial franchises. According to various sources, the company failed to draw from its normal operational funding after ratings firms downgraded the bank's debt. A Stifel Nicolaus analyst last week downgraded its shares from "Hold" to "Buy", Market Intelligence Center says. WSJ says CIT had to drain a $7.3 billion backup credit line, igniting fears that the company was headed for bankruptcy court. Over the near term, the company said it will continue to actively seek additional funding sources, as well as explore and execute on the sale of non-strategic assets and business lines. CIT is also negotiating with foreign banks, relates The Wall Street Journal, citing sources who know about the matter. "Our decision today is a result of the protracted disruption in the capital markets as well as recent actions by the rating agencies," said Jeffrey M. Peek, Chairman and CEO. "It provides us with added flexibility and ensures that our clients have the financing they need to operate and grow their businesses successfully. We are actively positioning CIT to maximize value by optimizing our business portfolio and sizing our company to market conditions." About CIT Group CIT Group Inc. (NYSE: CIT) -- http://www.cit.com/-- is a global commercial finance company that provides financial products and advisory services to more than one million customers in over 50 countries across 30 industries. A leader in middle market financing, CIT has more than $80 billion in managed assets and provides financial solutions for more than half of the Fortune 1000. A member of the S&P 500 and Fortune 500, it maintains leading positions in asset-based, cash flow and Small Business Administration lending, equipment leasing, vendor financing and factoring. The CIT brand platform, Capital Redefined, articulates its value proposition of providing its customers with the relationship, intellectual and financial capital to yield infinite possibilities. CITIGROUP COMMERCIAL: S&P Lowers Ratings on Class L Certificate --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on eight classes of commercial mortgage pass-through certificates from Citigroup Commercial Mortgage Trust Series 2006-FL2. Concurrently, S&P lowered its ratings on the class L pooled certificate and the RAM-1 and RAM-2 raked certificates. In addition, S&P affirmed its ratings on 13 other classes from this series. The upgrades and affirmations reflect Standard & Poor's analysis of the remaining loans in the pool. In addition, classes B through F benefit from increased credit enhancement levels resulting from loan payoffs. The lowered ratings on the class L pooled certificate and the raked RAM-1 and RAM-2 certificates are due primarily to the decline in performance of the Radisson Ambassador Plaza Hotel & Casino loan since issuance. As of the Feb. 15, 2008, remittance report, the trust collateral consisted of the senior participation interests in five floating- rate, interest-only mortgage loans; one floating-rate, interest- only whole-mortgage loan; and three interest-only, floating-rate pari passu split structure mortgage loans. All of the loans are indexed to one-month LIBOR. The pool balance has declined 53% to $562.2 million since issuance. All of the loans have maturities in 2008, with two or three one- year extension options remaining. To date, the trust has experienced no losses. Five of the loans, which constitute 83% of the pool balance, provide 100% of the cash flow to various raked classes in the trust. Details of these loans are: -- The largest loan in the pool, the City National Plaza loan, has a pooled trust balance of $319.4 million and a whole-loan balance of $355.3 million. The subordinate nonpooled component, totaling $35.9 million, is raked to the CNP-1, CNP-2, and CNP-3 certificates and derives 100% of its cash flow from the City National Plaza loan. In addition to the first mortgage, there is $224.7 million in mezzanine financing secured by the equity interests of the borrower. The loan is secured by a first mortgage encumbering two twin 51- story office towers, a three-story, class A office building, and an off-site parking structure in the Bunker Hill section of the Los Angeles central business district, which together encompass 2,400,347 sq. ft. Wachovia, the master servicer, reported that the property was 80.4% leased as of Sept. 30, 2007, up from 63.4% at issuance. As of September 2007, the reported net cash flow was $15.80 million, compared with $15.39 million at issuance. Standard & Poor's employed a stabilized approach to value the asset, utilizing the borrower's 2007 year-end financial data and taking into consideration current market rent and occupancy. The resulting valuation was comparable to Standard & Poor's valuation at issuance. -- The second-largest loan in the pool, Radisson Ambassador Plaza Hotel & Casino, has a pooled trust balance of $50 million and a whole-loan balance of $54.4 million. The subordinate nonpooled component, totaling $4.4 million, is raked to the RAM-1 and RAM-2 certificates and derives 100% of its cash flow from the Radisson Ambassador Plaza Hotel & Casino loan. In addition to the first mortgage, there is $35.6 million in mezzanine financing secured by the equity interests of the borrower. The loan is secured by a fee-simple interest in a 233-room, full- service resort lodging facility in the Condado section of San Juan, Puerto Rico. The property was constructed in 1967 and renovated between 2003 and 2006. It contains 146 standard rooms and 87 suites. Since acquiring the property in 2005, the current sponsor has invested $4.6 million in capital improvements, which included expanding the casino area and renovating the guest rooms. As a result of the softer-than-expected market conditions in Puerto Rico, casino revenue fell short of expectations at issuance. Increases in operating expenses that exceeded S&P's expectations at issuance negatively affected the property's performance. For the six months ended June 30, 2006, the reported NCF was $4.44 million. For the trailing 12 months ended September 2007, the revenue per available room was $122.2 and average occupancy was 81.7%, which is comparable to Standard & Poor's expectation at issuance. Standard & Poor's derived a valuation of 32% below the level at issuance. The loan matures in July 2008 and has two 12-month extension options remaining. -- The sixth-largest loan in the pool, the Mervyn's Portfolio loan, has a trust balance of $20.9 million (4.0% of the pooled trust balance) and a whole-loan balance of $90.3 million. The whole loan consists of a $73.2 million senior participation interest and a $15.7 million junior participation interest that was held outside of the trust. The senior participation interest is split into three pari passu notes: the $26.1 million A-1 note was included in the GSFL 2006-VIII transaction; the $22.4 million A-2 note was contributed to the subject transaction; and the $26.1 million A-3 note was included in GCCFC 2006-FL4. Of the $22.4 million trust balance, a $20.9 million component is pooled with other trust assets, while a subordinate $1.5 million component is raked to the MVP certificate and derives 100% of its cash flow from the Mervyn's Portfolio loan. The junior participation interest is split into four pari passu notes, all of which were held outside of the trust. In addition, there is a $58.9 million mezzanine loan secured by a pledge of the equity interests of the borrower. The trust balance reflects a paydown of $562.1 million since issuance due to collateral releases. The collateral securing the sixth-largest loan includes fee and leasehold interests in 32 properties; pledges of equity interests in subsidiaries of the Mervyn's Portfolio borrowers, which own 13 properties; and indirect contract interests in rents and proceeds of sales or transfers related to 41 properties. Standard & Poor's revalued the remaining assets and concluded an aggregate value was comparable to its level at issuance. The upgrade of the raked certificate was due to deleveraging of the asset. The loan matures in January 2009 and has two one-year extension options remaining. -- The seventh-largest loan in the pool, the Doubletree Hospitality & Centre Plaza Office loan, has a pooled trust balance of $17 million (3.6% of the pooled trust balance) and a whole-loan balance of $27.6 million. The subordinate nonpooled component, totaling $3.2 million, is raked to the DHC-1, DHC-2, and DHC-3 certificates and derives 100% of its cash flow from this loan. The whole loan consists of a $20.2 million senior participation interest and a $7.4 million junior participation interest that was held outside of the trust. The loan is secured by a fee-simple interest in a 258-room, full- service lodging facility and 58,445 sq. ft of a class-A office space in Modesto, California. In addition, the property includes a leasehold interest in 465 parking spaces in an adjacent parking structure from the City of Modesto. Based primarily on the borrower's operating statement for the trailing 12 months ended September 2007, Standard & Poor's derived a valuation comparable to its level at issuance. For the six months ended June 30, 2007, Wachovia reported an NCF of $2.0 million, which is comparable to its level at issuance. -- The ninth-largest loan in the pool, CarrAmerica CARP Pool Portfolio, has a whole-loan balance of $82.0 million, which consists of a $59.2 million senior participation that is split into three pari passu pieces and a $22.8 million junior participation that is held outside the trust. The senior participation is further divided into two portions: a senior pooled component totaling $50.7 million, and a subordinate nonpooled component with a balance of $8.5 million. The trust's portion of the pooled balance is $3.8 million (1%), and its portion of the nonpooled balance is $639,438, which is raked to the CAC-1, CAC-2, and CAC-3 certificates and derives 100% of its cash flow from this loan. In addition, the borrower's equity interests in the properties secure a $21.6 million mezzanine loan. The trust balance reflects a paydown of $66.2 million since issuance due to collateral releases. The collateral securing the ninth-largest loan includes fee interests in four suburban office properties in Austin, Texas, and Mountain View and San Mateo, California. The master servicer reported a DSC of 2.13x for the six months ended June 30, 2007, and 89% occupancy for the year ended Dec. 31, 2007. Standard & Poor's adjusted NCF for the remaining properties has decreased 19% since issuance. The loan matures in August 2008 and has three one-year extension options remaining. This resulting valuation decline was offset by the deleveraging of the loan, as releases occurred at a premium to the allocated loan amount ranging from 110% to 115%. Standard & Poor's analysis included a revaluation of the properties securing each loan in the pool. The resulting valuations support the raised, lowered, and affirmed ratings. Ratings Raised Citigroup Commercial Mortgage Trust Series 2006-FL2 Commercial mortgage pass-through certificates Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ B AAA AA+ 44.57% C AAA AA+ 40.47% D AA+ AA 32.84% E AA AA- 27.57% F AA- A+ 22.29% MVP AA+ AA- N/A CAC-1 BBB BBB- N/A CAC-2 BBB- BB+ N/A Ratings Lowered Citigroup Commercial Mortgage Trust Series 2006-FL2 Commercial mortgage pass-through certificates Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ L BB- BBB- N/A RAM-1 B+ BBB- N/A RAM-2 B- BB+ N/A Ratings Affirmed Citigroup Commercial Mortgage Trust Series 2006-FL2 Commercial mortgage pass-through certificates Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 94.72% A-2 AAA 48.09% G A 17.59% H A- 13.49% J BBB+ 9.09% K BBB 4.69% CAC-3 BB+ N/A CNP-1 BBB- N/A CNP-3 BB+ N/A DHC-1 BBB N/A DHC-2 BBB- N/A DHC-3 BBB- N/A X-3 AAA N/A N/A Not applicable. CLARET TRUST: Moody's Maintains Low-B Ratings on Six Trust Classes ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of one class and affirmed the ratings of 11 classes of Claret Trust 2006-1: -- Class A, $276,335,815, affirmed at Aaa -- Class B, $5,693,000, upgraded to Aa1 from Aa2 -- Class C, $6,168,000, affirmed at A2 -- Class D, $6,168,000, affirmed at Baa2 -- Class E, $1,898,000, affirmed at Baa3 -- Class F, $2,372,000, affirmed at Ba1 -- Class G, $1,423,000, affirmed at Ba2 -- Class H, $949,000, affirmed at Ba3 -- Class J, $949,000, affirmed at B1 -- Class K, $1,423,000, affirmed at B2 -- Class L, $949,000, affirmed at B3 -- Class X, Notional, affirmed at Aaa Moody's is upgrading Class B due to increased credit support from loan pay offs. As of the March 17, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 18.8% to $308.1 million from $379.6 million at securitization. The Certificates are collateralized by 95 mortgage loans ranging in size from less than 1.0% to 4.2% of the pool, with the top 10 loans representing 28.9% of the pool. Three loans, representing 4.0% of the pool, have defeased and are collateralized by U.S. Government securities. The pool has not experienced any losses since securitization and currently there are no loans in special servicing. Twelve loans, representing 10.8% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2006 operating results for 92.1% of the pool. Moody's loan to value ratio for the pool is 58.8%, compared to 66.0% at securitization. The top three conduit loans represent 11.4% of the outstanding pool balance. The largest conduit loan is the Control Number 1 Loan ($13.0 million -- 4.2%), which is secured by a 144,743 square foot neighborhood strip center located Surrey, British Columbia. The property consists of approximately 76% retail space spread out over five retail pads and 24% office space in a two story building located on the site. A major grocery store was recently constructed on the property immediately adjacent, acting as a shadow anchor for the property. As of October 2007, the office building was 100% occupied by Public Works & Government Services (Moody's senior unsecured rating Aaa -- stable outlook; lease expiration October 2008). The retail component is 100% occupied by a mix of local and national retailers compared to a 79% occupancy rate at securitization. The loan has a 25 year amortization schedule and has paid down 3.8% since securitization. Moody's LTV is 61.9% compared to 68.3% at securitization. The second largest conduit loan is the Control Number 2 Loan ($12.3 million -- 4.0%), which is secured by two multi-tenant industrial buildings totaling 305,267 square feet in the southeast industrial area of Calgary, Alberta. As of March 2007, the property was 100.0% leased, the same as at securitization. The loan has a 25 year amortization schedule and has paid down 3.5% since securitization. Moody's LTV is 66.2% compared to 70.2% at securitization. The third largest conduit loan is the Control Number 4 Loan ($9.8 million -- 3.2%), which is secured by a 217,446 square foot community shopping center located in Gloucester, Ontario. The property consists of two distinct retail plazas located on two corners of a major intersection in Gloucester. As of January 2008, occupancy was 98.3% compared to 100% at securitization. The loan is on the master servicer's watchlist due to the March 2008 lease expiration of the property's second largest tenant (Winners; 13.6% of NRA). The loan has a 19 year amortization schedule and has paid down 6.8% since securitization. The loan matures July 1, 2008. Moody's LTV is 68.3% compared to 65.2% at securitization. CLAYTON HOLDINGS: S&P Pares Rating to 'B' on Subprime Loan Turmoil ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Shelton, Connecticut-based Clayton Holdings Inc. to 'B' from 'B+'. The outlook was revised to stable from negative. At the same time, Standard & Poor's lowered its senior secured debt rating to 'B' (the same as the corporate credit rating) from 'B+'. The recovery rating on this debt has been revised to '3', reflecting S&P's expectation for meaningful (50% to 70%) recovery in the event of a payment default, from '4'. "The rating actions reflect the continued turmoil in the subprime mortgage loan and securitization markets, the uncertainty of the securitization activity rebound, and significantly reduced near- term profitability, which will substantially increase leverage measures," said Standard & Poor's credit analyst David Tsui. Clayton is a service provider to buyers and sellers of, and investors in, nonconforming loans and nonagency mortgage-backed securities. COMM 2005-C6: S&P Puts Three Low-B Ratings on Negative Watch ------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on three classes of commercial mortgage pass-through certificates from COMM 2005-C6 on CreditWatch with negative implications. The CreditWatch negative placements reflect the pending resolution of two assets in the transaction that are with the special servicer, Capmark Finance Inc. Based on Standard & Poor's preliminary analysis, credit support for classes M, N, and O may be insufficient to support the current ratings upon the resolution of these assets. Appraisal reduction amounts totaling $4.3 million are in effect against these assets. The CreditWatch placements also reflect S&P's concerns regarding the recent transfer of the then-largest loan ($50 million), Communities at Southwood, to the special servicer on Feb. 8, 2008, which was not reflected on the March 10, 2008, remittance report. The Communities at Southwood loan was transferred due to imminent default. S&P will resolve or update the status of the CreditWatch placements following S&P's evaluation of the assets with the special servicer. As of the March 10, 2008, remittance report, three assets totaling $39 million were with the special servicer. The assets with the special servicer include two that are real estate owned. ARAs related to the two REO assets totaling $4.3 million are in effect. All three assets are sponsored by MBS Management Services Inc. On Nov. 5, 2007, MBS and its affiliates filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Court. Details are: -- The assets with ARAs in effect relate to two adjacent properties that were originally encumbered by two separate mortgage Loans. The Oaks of Ashford Apartment Homes I and Oaks of Ashford Apartment Homes II assets are located in Houston, Texas, and were built in 1983. The properties are operated as one property, but the loan exposures are not cross-collateralized or cross-defaulted. Both assets were transferred to the special servicer in October 2007 due to payment default and are now REO. Oaks of Ashford Apartment Homes I has a total exposure of $8.8 million and is secured by a 199-unit multifamily complex. A $3.4 million ARA is in effect for this asset. Oaks of Ashford Apartment Homes II has a total of exposure of $2.6 million and is secured by a 56-unit multifamily complex. A $967,046 ARA is in effect for this asset. An inspection provided by the special servicer characterized both properties as being in poor condition. Standard & Poor's is in the process of determining the magnitude of losses it expects upon the resolution of each asset. -- The 10th-largest loan, Communities at Southwood, has a total exposure of $50.2 million. In addition, the borrower's equity interest in the property secures a $4.0 million mezzanine loan. The loan is secured by a 1,286-unit multifamily complex in Richmond, Virginia. The property was built in 1979 and renovated in 2004. The loan was recently transferred to the special servicer due to payment default. The special servicer has ordered an appraisal. The borrower indicated a desire to market the collateral for sale or execute a deed-in-lieu of foreclosure, but the special servicer has initiated the foreclosure process. Year-end 2007 debt service coverage for the property was 0.62x and occupancy was 76%. A March 11, 2008, inspection characterized the property to be in good condition with deferred maintenance. The inspection states that 15 units are not usable due to various reason including fire, mold, and vandalism. In addition, given the recent transfer S&P is in the process of gathering information and evaluating the asset for potential losses. -- The remaining MBS exposure with the special servicer is The Villas of Bristol Heights Apartment, which has a total exposure of $28.4 million and is secured by a 351-unit apartment complex in Austin, Texas, built in 2003. The special servicer inspected the collateral property in November 2007 and found the property to be in good condition. As of Jan. 9, 2008, the property was 78.6% occupied. S&P will resolve or update the status of the CreditWatch placements as more details concerning the workout process and property status become available with regard to the above- referenced assets. Ratings Placed on CreditWatch Negative COMM 2005-C6 Commercial mortgage pass-through certificates series 2005-C6 Rating Class To From Credit enhancement M B+/Watch Neg B+ 1.52% N B/Watch Neg B 1.39% O B-/Watch Neg B- 1.14% CREDIT SUISSE: Moody's Confirms Junk Rating on $9.671 Mil. Trust ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Credit Suisse Commercial Mortgage Trust Series 2006-C3: -- Class A-1, $35,395,026, affirmed at Aaa -- Class A-2, $30,000,000, affirmed at Aaa -- Class A-AB, $64,000,000, affirmed at Aaa -- Class A-3, $826, affirmed at Aaa -- Class A-1-A, $387,666,487, affirmed at Aaa -- Class A-M, $193,494,000, affirmed at Aaa -- Class A-J, $137,802,000, affirmed at Aaa -- Class A-X, Notional, affirmed at Aaa -- Class B, $43,517,000, affirmed at Aa2 -- Class C, $16,923,000, affirmed at Aa3 -- Class D, $31,429,000, affirmed at A2 -- Class E, $19,340,000, affirmed at A3 -- Class F, $24,176,000, affirmed at Baa1 -- Class G, $24,176,000, affirmed at Baa2 -- Class H, $21,758,000, affirmed at Baa3 -- Class J, $7,253,000, affirmed at Ba1 -- Class K, $7,253,000, affirmed at Ba2 -- Class L, $7,253,000, affirmed at Ba3 -- Class M, $4,835,000, affirmed at B1 -- Class N, $7,253,000, affirmed at B2 -- Class O, $7,252,000, affirmed at B3 -- Class P, $9,671,000, affirmed at Caa2 As of the March 11, 2008 distribution date, the transaction's aggregate certificate balance has decreased by less than 1.0% to $1.923 billion from $1.934 billion at securitization. The Certificates are collateralized by 157 loans, ranging in size from less than 1.0% to 18.3% of the pool, with the top ten loans representing 54.4% of the pool. The pool has not experienced any losses to date and currently there are no loans in special servicing. Twenty-one loans, representing 15.7% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2006 and partial year 2007 operating results for 99.2% and 93.5% of the pool, respectively. Moody's weighted average loan to value ratio is 105.7% compared to 103.9% at securitization. Moody's is affirming all classes due to overall stable pool performance. The top three loans represent 37.9% of the pool. The largest loan is the 770 Broadway Loan ($353.0 million -- 18.3%), which is secured by a 1.0 million square foot Class A office building located in New York City. The property is 100.0% occupied, essentially the same as at securitization. Major tenants include VNU Inc. (49.2% of NRA, lease expiration May 2015), J. Crew Corp (17.9%, lease expiration May 2012) and Viacom International Inc. (14.1%, lease expiration May 2010). Moody's LTV is 107.4%, the same as at securitization. The second largest loan is the Babcock & Brown Multifamily Portfolio Loan ($198.6 million -- 10.3%), which is secured by a portfolio of 17 multifamily properties located in six states. The portfolio totals 5,145 units and was 89.0% occupied as of September 2007, the same as at securitization. Financial performance has declined since securitization due to increased operating expenses and fire damage at one of the properties. The loan is on the servicer's watchlist because of the fire damaged property. Moody's LTV is 117.1% compared to 111.7% at securitization. The third largest loan is the 535 and 545 Fifth Avenue Loan ($177.0 million -- 9.2%), which is secured by two adjacent office/retail buildings totaling 498,000 square feet. The properties are located in New York City. The overall occupancy was 98.0% as of June 2007 compared to 94.0% at securitization. The tenant base is extremely diverse with no tenant occupying more than 8.0% of the premises. Moody's LTV is 113.6%, the same as at securitization. DANA VILLAS: Court Approves Turner Reynolds as Counsel ------------------------------------------------------ The United States Bankruptcy Court for the Central District of California approved the application of Dana Villas Associates, LLC for authority to employ Turner, Reynolds, Greco & O'Hara as its counsel. Turner, Reynolds is expected to assist the Debtor in all of its general bankruptcy administrative matters, including complying with the Office of the United States Trustee guidelines, and handling adversary matters. The Debtor will pay the firm its standard hourly rate. Professional Designation Rate ------------ ----------- ---- Richard J. Reynolds, Esq. Professional US$300 To the best of the Debtor's knowledge, the firm does not hold any adverse interest in the Debtor's estates. It believes that the employment of the firm is necessary and in the best interest of its estates. The firm can be reached at: Richard J. Reynolds, Esq. (rreynolds@trlawyers.com) Turner, Reynolds, Greco & O'Hara 16485 Laguna Canyon Road, Suite 250 Irvine, CA 92618 Tel: (949) 474-6900 Fax: (949) 474-6907 http://trlawyers.com/ Headquartered in Mission Viejo, California, Dana Villas Associates L.L.C. filed for Chapter 11 protection on Dec. 11, 2007 (Bankr. C.D. Calif. Case No. 07-14228). Richard J. Reynolds, Esq., at Turner, Reynolds, Greco & O'Hara, represents the Debtor in its restructuring efforts. When the Debtor filed for protection against its creditors, it listed total assets of $40,850,000 and total debts of $27,500,000. DAWN CDO: Moody's Reviews 'Caa1' Senior Note Rating for Likely Cut ------------------------------------------------------------------ Moody's Investors Service placed these notes issued by Dawn CDO I, Ltd. on review for possible downgrade: Class Description: $28,700,000 Class B Second Priority Senior Secured Floating Rate Notes due 2037 -- Prior Rating: Caa1 -- Current Rating: Caa1, on review for possible downgrade According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. DANNY PRYOR: Case Summary & Ten Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Danny Wayne Pryor 5042 Wilshire Blvd Ste 136 Los Angeles, CA 90036 Bankruptcy Case No.: 08-1370 Chapter 11 Petition Date: March 21, 2008 Court: Central District Of California (Los Angeles) Judge: Barry Russell Debtor's Counsel: Todd B. Becker, Esq. Law Offices of Todd B. Becker 3750 E Anaheim Street, Suite 100 Long Beach, CA 90804 Tel: (562) 495-1500 Fax: (562) 494-8904 veloz@toddbeckerlaw.com Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million Debtor's list of its Ten Largest Unsecured Creditors: Entity Claim Amount ------ ------------ John F. Riley, Jr. $783,000 c/o Seth Goldberg 23890 Copper Hill Drive, Suite 145 Valencia, CA 91354 Opsec Specialized $80,000 Bill J. Thompson 25375 Orchard Village Road, Suite 106 Valencia, CA 91355 Chase $11,236 800 Brooks Edge Boulevard Westerville, OH 43081 Sears $8,226 Angelus Block $8,000 Metro Adjust Bureau $6,843 Angelo Ramon, Jr. $5,160 THD/SBSD $2,353 Verizon Wireless $1,111 Plumbing Specialists, Inc. $1,000 DELPHI CORP: IUE-CWA Objects to Sale of Damper Biz for $18.8MM -------------------------------------------------------------- The International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers-Communications Workers of America opposes the sale of Delphi Corp. and its debtor-affiliates' damper business located in Kettering, Ohio, to the extent that the purchaser does not have a fully completed collective bargaining agreement with the IUE-CWA and it Local 755 prior to the Sale. As reported in the Troubled Company Reporter on March 11, 2008, Delphi Automotive Systems LLC entered into a purchase agreement with Tenneco Inc. for the sale of certain ride control assets and inventory at Delphi's facility in Kettering, Ohio. The sale is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York. As part of the purchase agreement, Tenneco would pay approximately $10 million for existing ride control components inventory and approximately $9 million for certain machinery and equipment. Tenneco would also lease a portion of the Kettering facility from Delphi. In connection with the purchase agreement, Tenneco has entered into an agreement with the International Union of Electrical Workers, which represents the Delphi workforce at the Kettering plant. The agreement was ratified by the IUEA's rank and file in August 2007. Tenneco has also entered into a long-term supply agreement with General Motors Corp. to continue to supply passenger car shock and strut business to General Motors from the Kettering facility. Representing the union, Susan M. Jennik, Esq., at Kennedy, Jennik & Murray, P.C., in New York, clarified that the Aug. 5, 2007 collective bargaining agreement between the IUE-CWA and stalking horse bidder Tenneco Automotive Operating Company Inc. is expressly subject to additional negotiations. The IUE-CWA and Tenneco have not been able to reach an agreement that will enable the IUE-CWA to waive the non-sale provisions of its agreement with Delphi for the Kettering Facility, Ms. Jennik informs the U.S. Bankruptcy Court for the Southern District of New York. "The August 5, 2007 Tenneco and IUE-CWA agreement was and is incomplete," she emphasized. Accordingly, it is inappropriate for the Court to create sales procedures that contemplate an eventual sale of the Kettering Damper Business at this time, she said. The IUE-CWA asked the Court to postpone the hearing regarding the Sale until it reaches an agreement with Delphi Corp., General Motors Corp., and Tenneco on the terms of a successor collective bargaining agreement for the Kettering Facility and on an effects memorandum concerning the impact of the Sale on Kettering Union members. Debtors React The IUE-CWA's objection is premature, the Debtors contend. The IUE-CWA's concern can be resolved at any time between now and the closing of the Sale, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, asserted. To the extent the IUE-CWA has an issue with respect to the completion of a collective bargaining agreement with the purchaser, this issue can and should be addressed at the Sale hearing, he argues. Any remaining issues between the IUE- CWA and the purchaser in connection with the Sale can be resolved even after closing, he adds. Mr. Butler pointed out that pursuant to the Court-approved memorandum of understanding between the Debtors and the IUE-CWA, the IUE-CWA already waived its right to enforce the "non-sale" provision of its national collective bargaining agreement with respect to the Kettering Facility to the extent necessary to complete the proposed Sale. The Debtors therefore had asked the Court to overrule IUE-CWA's objection. Beginning the Sale process now is imperative and will not adversely affect the IUE-CWA's rights or abilities to resolve its concerns, Mr. Butler maintained. About Tenneco Based in Lake Forest, Illinois, Tenneco Inc., (NYSE: TEN) -- http://www.tenneco.com/-- manufactures automotive ride and emissions control products and systems for both the original equipment market and aftermarket. Brands include Monroe(R), Rancho(R), and Fric Rot ride control products and Walker(R) and Gillet emission control products. The company has operations in Argentina, Japan, and Germany, with its European operations headquartered in Brussels, Belgium. The company has approximately 19,000 employees worldwide. * * * As reported in the Troubled Company Reporter-Latin America on Nov. 6, 2007, Fitch Ratings assigned a rating of 'BB-' to Tenneco Inc.'s new senior unsecured notes due 2015. The new notes replace a portion of the company's existing US$475 million in 10.25% senior secured second-lien notes for which the company is tendering. Fitch said the rating outlook is positive. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on March 17, 2008, Standard & Poor's Ratings Services still expects to assign a 'B' corporate credit rating to Delphi Corp. if the company emerges from bankruptcy in early April. S&P has revised its expected issue-level ratings because changes to the structure of the proposed financings have affected relative recovery prospects among the various term loans. S&P's expected ratings are: -- The $1.7 billion "first out" first-lien term loan B-1 is expected to be rated 'BB-' (two notches higher than the expected corporate credit rating on Delphi), with a '1' recovery rating, indicating the expectation of very high (90%-100%) recovery in the event of payment default. -- The $2 billion "second out" first-lien term loan B-2 is expected to be rated 'B' (equal to the corporate credit rating), with a '4' recovery rating, indicating the expectation of average (30%-50%) recovery in the event of payment default. -- The $825 million second-lien term loan is expected to be rated 'B-' (one notch lower than the corporate credit rating), with a '5' recovery rating, indicating the expectation of modest (10%-30%) recovery in the event of payment default. As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection as: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. DELPHI CORP: Wants to Continue Key Employee Compensation Program ---------------------------------------------------------------- Delphi Corp. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to continue implementing their short-term, at-risk performance-based compensation program -- the Annual Incentive Plan -- for the period Jan. 1, 2008, through June 30, 2008. The AIP is a market-competitive program that provides at-risk incentive compensation opportunities linked to corporate- and division-level financial targets derived from the Debtors' current budget business plan, and to each eligible employee's individual performance. The design of the AIP for the first half of 2008 is essentially the same as those previously approved by the Court, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates. The principal terms and conditions of the AIP for the first half of 2008 are: (a) Covered Employees The AIP applies to all of the Debtors' employees holding executive positions in the United States during the first half of 2008, including the executive chairman of Delphi's Board of Directors. As of February 22, 2008, there were approximately 442 Covered Employees, including 21 members of the Delphi Strategy Board, Delphi's top policymaking group. (b) Financial Targets The AIP will not generate incentive compensation opportunities unless the Debtors meet or exceed established corporate- or division-level financial targets that were derived from the BBP and that were reviewed and approved by the Executive Development and Compensation Committee of Delphi's Board of Directors. Delphi's corporate-level target is measured in earnings before interest, taxes, depreciation, amortization, and restructuring items, and is set at $871,700,000. The targets at the division level, which are measured in operating income before depreciation, amortization, and restructuring items, are: Division Target -------- ------ Powertrain $180,200,000 Steering 43,600,000 Thermal 91,100,000 Electronics and Safety 232,000,000 Electrical & Electronic Architecture 262,600,000 Product and Service Solutions 23,700,000 Automotive Holdings Group 11,700,000 (c) Target Mix If a Covered Employee's responsibilities are limited to the corporate level, 100% of his or her incentive- compensation opportunity will be determined based on Delphi's corporate-level EBITDAR performance. For all other Covered Employees, 50% of the opportunity will be determined based on Delphi's corporate-level EBITDAR performance and 50% will be determined based on the relevant division's OIBDAR performance. (d) Incentive-Compensation Opportunities A Covered Employee's target incentive-compensation opportunity, including that associated with financial performance equal to 100% of the applicable target or targets, is based on the Covered Employee's level of responsibility. Opportunities increase as the Debtors' financial performance increases until they reach a cap of 150% of the target opportunity for DSB members and 200% of the target opportunity for all other Covered Employees. The aggregate target opportunities under the AIP for the first half of 2008 are approximately $21,200,000 and the aggregate maximum opportunities are approximately $39,100,000. (e) Payout Curves Under the payout curves for the first half of 2008, the maximum incentive-compensation opportunities are associated with corporate-level EBITDAR performance of at least $1,292,700,000 billion and these division-level OIBDAR performance: Division Minimum Target -------- -------------- Powertrain $273,100,000 Steering 90,300,000 Thermal 131,800,000 Electronics and Safety 321,400,000 Electrical & Electronic Architecture 368,400,000 Product and Service Solutions 49,300,000 Automotive Holdings Group 48,300,000 (f) Adjustment Protocol The BBP and the AIP financial targets incorporate assumptions concerning the financial impact of several items, including the Debtors' agreements with their labor unions and General Motors Corp. To ensure that incentive compensation is not affected in a positive or negative manner based on those agreements, the Debtors will make adjustments on a dollar-for-dollar basis to the extent the actual financial impact of the agreements differs from the assumptions. Thus, consistent with prior periods, the Covered Employees will not receive incentive compensation based on cost savings achieved through those agreements. The adjustment methodologies are set forth in an adjustment protocol that will also govern any adjustments arising from (i) the Debtors' divestiture of substantially all of the assets comprising their cockpits and interior systems and integrated closure systems businesses and their steering and halfshaft business, or (ii) adjustments to the BBP for the period from Jan. 1, 2008 through the date of emergence as a result of the Debtors' continued operation in Chapter 11 reorganization during that period. (g) Individual Performance The actual amount of incentive compensation paid to a Covered Employee will depend on his or her individual performance during the first half of 2008. A Covered Employee's incentive compensation can be adjusted downward to a minimum of zero or upward to a maximum of the applicable cap of 150% or 200% of the Covered Employee's target opportunity. The net impact of the adjustments cannot result in aggregate payments that exceed the aggregate earned opportunities, and an adjustment to a DSB member's incentive compensation cannot be funded by or fund an adjustment to the incentive compensation of a Covered Employee who is not a DSB member. (h) Prophylactic Measures The AIP includes a prophylactic measure that prevents Covered Employees who engage in misconduct from benefiting under the AIP, including Covered Employees who fail to act in good faith and in a manner consistent with the Debtors' best interests. If the Debtors do not emerge from Chapter 11 on or before Aug. 15, 2008, the Official Committee of Unsecured Creditors may review and raise objections to EBITDAR performance adjustments related to the Debtors' agreements with their labor unions and General Motors Corp., the timing of the Debtors' emergence from Chapter 11, and other adjustments. If the Debtors are unable to resolve the Creditors Committee's objections, the Creditors Committee may adjust by up to $150,000,000 the Debtors' EBITDAR performance for purposes of the AIP. In no event, however, can the adjustment be used to decrease EBITDAR performance below the EBITDAR target. If the Debtors do not emerge from Chapter 11 on or before Aug. 15, 2008, and the Compensation Committee determines that it is in Delphi's best interests to make further adjustments to the AIP, the Debtors will review those adjustments with the Creditors Committee. If the Creditors Committee does not object to the adjustments, the Debtors may implement the adjustments without further Court order. If the Creditors Committee objects to the adjustments, the adjustments will not become effective unless approved by the Court. At-risk short-term incentive-compensation opportunities, along with salary, benefits, and at-risk long-term incentive- compensation opportunities, were an essential element of the Covered Employees' total compensation from the time of Delphi's separation from GM in 1999 until the Debtors filed their voluntary petitions for reorganization relief in October 2005. During the Debtors' bankruptcy cases, at-risk short-term incentive-compensation opportunities -- but not at-risk long-term incentive-compensation opportunities -- have continued as an essential element of total compensation through the AIP from Jan. 1, 2006, through Dec. 31, 2007. The design of the AIP is in line with market practice, Mr. Butler avers. If the Court will disapprove the Fourth AIP Supplement, the total compensation of the Covered Employees will include only salary and benefits, with no at-risk incentive-compensation elements whatsoever, he points out. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on March 17, 2008, Standard & Poor's Ratings Services still expects to assign a 'B' corporate credit rating to Delphi Corp. if the company emerges from bankruptcy in early April. S&P has revised its expected issue-level ratings because changes to the structure of the proposed financings have affected relative recovery prospects among the various term loans. S&P's expected ratings are: -- The $1.7 billion "first out" first-lien term loan B-1 is expected to be rated 'BB-' (two notches higher than the expected corporate credit rating on Delphi), with a '1' recovery rating, indicating the expectation of very high (90%-100%) recovery in the event of payment default. -- The $2 billion "second out" first-lien term loan B-2 is expected to be rated 'B' (equal to the corporate credit rating), with a '4' recovery rating, indicating the expectation of average (30%-50%) recovery in the event of payment default. -- The $825 million second-lien term loan is expected to be rated 'B-' (one notch lower than the corporate credit rating), with a '5' recovery rating, indicating the expectation of modest (10%-30%) recovery in the event of payment default. As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection as: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. DELPHI CORP: Settles Alps Auto et al. Assumption Objections ------------------------------------------------------------------ Parties to various contracts with Delphi Corp. or its debtor- affiliates, including Alps Automotive, Inc., withdrew their objections on the Debtors' proposal to assume and assign executory contracts and purchase orders in connection with the sale of the Debtors' steering and halfshaft business to Steering Solutions Corp. The Debtors have asked the U.S. Bankruptcy Court for the Southern District of New York to adjourn the hearing on the remaining Assumption Objections to April 4, 2008, or April 30, 2008. After meeting and conferring with the Objecting Counterparties, the Debtors agreed to: -- pay six counterparties cure amounts: Counterparty Cure Amount ------------ ----------- Alps Automotive, Inc. $2,873,130 BT Technologies Corp. 167,743 F&G Multi-Slide, Inc. 9,913 Metal-Matic Inc. 43,080 Robin Industries, Inc. 12,820 SKF USA Inc. 83,147 -- pay, in full and in the ordinary course of business, all liabilities related to the assumed purchase orders with S&Z Metalworks, Ltd., within the closing of the Sale; and -- incorporate the terms of an April 2007 letter agreement with Intermet Corp., as applicable, in the parties' assumed purchase orders. The Debtors and Steering Solutions also agreed to pay in full and in the ordinary course of business, all liabilities related to assumed purchase orders with The Timken Company and Timken U.S. Corp. Steering Solutions avers it will (i) assume and satisfy in the ordinary course of business any and all of the Debtors' outstanding obligations under the assumed contracts with Nissan North America, Inc.; and (ii) maintain the confidential nature of information received by the Debtors pursuant to those contracts. Negotiations are ongoing with the counterparties to the remaining Assumption Objections, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, informed the Hon. Robert Drain. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on March 17, 2008, Standard & Poor's Ratings Services still expects to assign a 'B' corporate credit rating to Delphi Corp. if the company emerges from bankruptcy in early April. S&P has revised its expected issue-level ratings because changes to the structure of the proposed financings have affected relative recovery prospects among the various term loans. S&P's expected ratings are: -- The $1.7 billion "first out" first-lien term loan B-1 is expected to be rated 'BB-' (two notches higher than the expected corporate credit rating on Delphi), with a '1' recovery rating, indicating the expectation of very high (90%-100%) recovery in the event of payment default. -- The $2 billion "second out" first-lien term loan B-2 is expected to be rated 'B' (equal to the corporate credit rating), with a '4' recovery rating, indicating the expectation of average (30%-50%) recovery in the event of payment default. -- The $825 million second-lien term loan is expected to be rated 'B-' (one notch lower than the corporate credit rating), with a '5' recovery rating, indicating the expectation of modest (10%-30%) recovery in the event of payment default. As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection as: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. DELTA AIR: Unable to Reach Pilot Integration Pact with Northwest ---------------------------------------------------------------- Delta Air Lines Inc. and Northwest Airlines Corporation were unable to reach an agreement on an acceptable seniority list integration, Delta's Pilot Union Chairman Lee Moak disclosed in a letter addressed to rank-and-file Delta pilots, The Associated Press reports. AP says Mr. Moak's letter referred to discussions with the "other carrier" in the past tense, which suggests there won't be further talks -- at least for now. The "other carrier" is presumed to be Northwest, officials close to the talks have said, says the report. Mr. Moak confirmed in his letter that the other carrier was only willing to discuss its latest proposal, to which he declined, believing it would "jeopardize the seniority and career expectations of Delta pilots." Delta executives previously stated they would not move forward with any combination unless the seniority of their employees was protected, according to AP. Delta pilot leaders are frustrated that "the results of their efforts will never be actualized," Mr. Moak said. Northwest spokesman Greg Rizzuto, said that his union "still values any deal to help better the careers of all pilots involved in any type of future merger or acquisition with any pilot group and due to the rising cost of oil it is imperative that a fair integration of seniority lists be found between any group." A full-text copy of Moak's letter is available for free at: http://crewroom.alpa.org/dal/DesktopDefault.aspx?tabid=2421 Talks Resume After Brief Impasse As reported in the Troubled Company Reporter on March 13, 2008, Delta and Northwest Airlines pilot leaders resumed talks on March 4, 2008, to reach an agreement on how to "mesh" their unions. The meetings have involved a handful of senior pilots and are not formal negotiations. As widely reported, the pilot negotiators of both carriers had an impasse over the combination of seniority rankings for 12,000 pilots. A pilots' agreement is the last major step needed for the carriers to merge. "Nothing can be accomplished if they're not talking, so just getting them back together in the same room is a big step," Kit Darby, a retired United Airlines pilot who now runs Air Inc., an Atlanta-based career-counseling firm for pilots, said. "Pilots get their rewards from a contract that's governed by seniority. This is everything to them." About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. DLJ COMMERCIAL: Loan Payoffs Prompt S&P to Upgrade Six Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on six classes of commercial mortgage pass-through certificates from DLJ Commercial Mortgage Corp.'s series 1998-CF1. Concurrently, S&P affirmed its ratings on two other classes from the same transaction. The raised ratings reflect increased credit enhancement due to loan payoffs and seasoning of the remaining loan collateral. As of the March 17, 2008, remittance report, the collateral pool consisted of 30 loans with an aggregate principal balance of $112.0 million, down from 168 loans with a balance of $838.8 million at issuance. The master servicer, KeyBank Real Estate Capital, reported primarily full-year 2006 financial information for 100% of the nondefeased loans. Using this information, Standard & Poor's calculated a weighted average debt service coverage of 1.47x. The ninth-largest asset is with the special servicer, Capmark Finance Inc., and is classified as real estate owned. KeyBank reported a single loan with an outstanding balance of $1.0 million (1%) on its watchlist. To date, the trust has experienced six losses totaling $6.0 million. The top 10 exposures have an aggregate outstanding balance of $81.9 million (73%). The weighted average DSC for the top 10 exposures is 1.51x, up from 1.41x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for the properties securing the top 10 exposures, and all were characterized as "good." The fifth-largest asset, Hampton Inn Houston Galleria ($8.1 million, 7%), is secured by a 176-unit lodging property in Houston, Texas. The seventh-largest asset, AMC Theater Complex ($5.8 million, 5%), is secured by a 35,000- sq.ft. retail property in Santa Monica, California. These two assets have effective maturity dates of Jan. 1, 2008, and Dec. 1, 2007, respectively. According to KeyBank, the AMC Theater Complex asset is expected to pay off very shortly. The payoff date for the Hampton Inn Houston Galleria asset is less certain. The REO asset is Wesley Chapel Square ($9.0 million, 8%). The related property is a 215,096-sq.ft. retail property in Decatur, Georgia. The loan was transferred to the special servicer in May 2007 after the borrower informed the master servicer that it would no longer subsidize the debt service payments. The DSC was 0.74x as of year-end 2006. Standard & Poor's valuation of this REO asset indicates that a loss upon disposition is likely. Standard & Poor's stressed the specially serviced loans and those on the watchlist, as well as any other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised DLJ Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 1998-CF1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ B-1 AAA AA+ 87.75% B-2 AA+ AA 74.63% B-3 AA- A+ 65.71% B-4 BBB+ BBB 41.52% B-5 BB+ BB 28.13% B-6 B+ B 14.75% Ratings Affirmed DLJ Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 1998-CF1 Class Rating Credit enhancement ----- ------ ------------------ CP AAA N/A S AAA N/A N/A Not applicable. DOLE FOOD: S&P Downgrades Corporate Credit Rating to 'B-' From 'B' ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Westlake Village, California-based Dole Food Co. Inc. and Dole Holding Co. LLC, to 'B-' from 'B'. The corporate credit ratings were removed from CreditWatch, where they were placed along with the company's issue-level ratings on Nov. 27, 2007, with negative implications, following third-quarter operating results and credit measures that did not meet Standard & Poor's prior expectations. At the same time, Standard & Poor's lowered the rating on Dole's unsecured debt issues to 'CCC+' (one notch lower than the corporate credit rating, from 'B-') and lowered the ratings on Dole's senior secured term loans to 'B+' (two notches above the corporate credit rating) from 'BB-'. These issues remain on CreditWatch with negative implications pending finalized recovery ratings. The outlook is negative. "The downgrade reflects Dole's fourth-quarter operating results and credit measures below our prior expectations, as well as our concerns about refinancing risk over the next year," said Standard & Poor's credit analyst Alison Sullivan. Leverage was 9.1x at fiscal 2007 year-end, versus Standard & Poor's expectation of closer to 7.0x-7.5x. "We expect EBITDA improvement in 2008, and assume assets held for sale will be applied to debt reduction," said Ms. Sullivan. "However, credit measures are likely to still be very weak." While liquidity is currently adequate, Dole has moderate refinancing requirements in each of the next three years. The ratings on Dole reflect its highly leveraged financial profile and participation in the competitive, commodity-oriented, and volatile fresh produce industry, which is subject to seasonality, political and economic risks. DSLA MORTGAGE: Two Class B-5 Certs. Get S&P's Junk Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 13 classes of mortgage pass-through certificates from five series issued by CHL Mortgage Pass-Through Trust, DSLA Mortgage Loan Trust, and GreenPoint MTA Trust. All of the downgraded series were issued in 2005 and are backed by U.S. Alternative-A mortgage loan collateral. In addition, S&P affirmed its ratings on 69 other certificates from these three Alt-A transactions. The lowered ratings reflect current or projected credit enhancements levels that are not sufficient to support the certificates at their previous rating levels as of the February 2008 remittance period. Based on the current collateral performance of these transactions, future credit enhancement is projected to be significantly lower than the original credit support. All of these transactions were reviewed within the past 12 months and they continue to perform adversely. As of the February 2008 remittance period, total delinquencies for these transactions ranged from 7.25% (CHL Mortgage Pass-Through Trust 2005-HYB8, structure group 5) to 20.94% (GreenPoint MTA Trust 2005-AR3), while severe delinquencies (90-plus days, foreclosures, and REOs) ranged from 2.55% (CHL Mortgage Pass- Through Trust 2005-HYB8, structure group 5) to 10.99% (GreenPoint MTA Trust 2005-AR3) of the current pool balances. Cumulative losses for these transactions ranged from 0.02% (DSLA Mortgage Loan Trust 2005-AR1) to 0.26% (GreenPoint MTA Trust 2005-AR3) of the original pool balances. These deals have all been seasoned between 28 (CHL Mortgage Pass-Through Trust 2005-HYB8) and 36 months (DSLA Mortgage Loan Trust 2005-AR1). The affirmations reflect sufficient credit support percentages to support the current ratings as of the February 2008 remittance period. Credit enhancement for these transactions is derived from subordination. The underlying collateral for all of the affected transactions in this review consists of U.S. Alt-A mortgage loans. Ratings Lowered CHL Mortgage Pass-Through Trust 2005-HYB8 Rating ------ Series Class To From ------ ----- -- ---- 2005-HYB8 II-B-2 BB BBB 2005-HYB8 II-B-3 CCC BB 2005-HYB8 II-B-4 CCC B DSLA Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-AR1 B-4 B BB 2005-AR1 B-5 CCC B 2005-AR2 B-4 B BB 2005-AR2 B-5 CCC B GreenPoint MTA Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-AR2. B-3 BB+ BBB 2005-AR2 B-4 B BB 2005-AR2 B-5 CCC B 2005-AR3 B-3 BB+ BBB 2005-AR3 B-4 B BB 2005-AR3 B-5 CCC B Ratings Affirmed CHL Mortgage Pass-Through Trust 2005-HYB8 Series Class Rating ------ ----- ------ 2005-HYB8 1-A-1, 1-A-2, 2-A-1, 2-A-2, AAA 2005-HYB8 2-A-IO, 3-A-1, 3-A-2, 4-A-1, 4-A-2 AAA 2005-HYB8 I-M, II-M AA 2005-HYB8 I-B-1, II-B-1 A 2005-HYB8 I-B-2, BB 2005-HYB8 I-B-3 CCC 2005-HYB8 I-B-4 CCC DSLA Mortgage Loan Trust Series Class Rating ------ ----- ------ 2005-AR1 1-A, 2-A-1A, 2-A2B, 2-A2, X-1 AAA 2005-AR1 X-2, A-R AAA 2005-AR1 B-1 AA 2005-AR1 B-2 A 2005-AR1 B-3 BBB 2005-AR2 1-A, 2-A1A, 2-A1B, 2-A1C, 2-A2 AAA 2005-AR2 X-1, X-2, PO, A-R AAA 2005-AR2 B-1 AA 2005-AR2 B-2 A 2005-AR2 B-3 BBB GreenPoint MTA Trust Series Class Rating ------ ----- ------ 2005-AR2 A-1, A-2, A-3, X-1, M-X, R AAA 2005-AR2 M-1, M-2, M-3, M-4 AA+ 2005-AR2 M-5, M-6 AA 2005-AR2 M-7 AA- 2005-AR2 B-1 A 2005-AR2 B-2 A- 2005-AR3 I-A-1, I-A-2, I-A-3, II-A-1 AAA 2005-AR3 II-A-2, X-1, R AAA 2005-AR3 M-X, M-1, M-2 AA+ 2005-AR3 M-3, M-4 AA 2005-AR3 M-5 A+ 2005-AR3 M-6 A 2005-AR3 B-1 A- 2005-AR3 B-2 BBB+ DURA AUTOMOTIVE: Reveals Liquidation Analysis Under Ch. 11 Plan --------------------------------------------------------------- DURA Automotive Systems, Inc., and its debtor affiliates prepared a liquidation analysis to create a reasonable good-faith estimate of the proceeds that might be generated if their estates were liquidated under Chapter 7 of the Bankruptcy Code. As reported in the Troubled Company Reporter on March 19, 2008, the Debtors filed an amended First Revised Joint Plan of Reorganization and Disclosure Statement explaining the Plan on March 13, 2008. The Hon. Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware will convene a hearing on April 3, 2008, to determine whether the Disclosure Statement contains adequate information. Disclosure Statement Objections must be filed by March 28. The Debtors will begin soliciting votes on the Revised Plan upon approval of the Disclosure Statement. Pursuant to the liquidation analysis, if no Chapter 11 Plan is confirmed, the Debtors' Chapter 11 cases would be converted to cases under Chapter 7. In this event, a trustee will be appointed to liquidate the Debtors' assets. The Liquidation Analysis assumes that each of the Debtors' cases will convert to Chapter 7 on June 1, 2008. Liquidation Analysis Dura Automotive Systems, Inc. & affiliates As of June 1, 2007 (in thousands) Hypothetical Recovery Amount ---------------------------- Low High Midpoint -------- -------- -------- Cash and Cash Equivalents 8,339 8,339 8,339 Accounts Receivable 64,980 74,939 69,960 Inventory 29,203 35,920 32,562 Plant, Property and Equipment, net 49,973 58,018 53,995 Other Assets 2,843 3,056 2,949 Preference Analysis 8,900 21,800 15,350 Intercompany Receivables 179,869 186,829 183,349 -------- -------- -------- Equity Value - Non-Debtors 200,030 211,871 205,951 -------- -------- -------- Total Proceeds from Assets 544,137 600,772 572,455 Costs Associated With Liquidation: Chapter 7 Trustee Fees 16,290 17,815 17,052 Other Professionals 7,200 5,400 6,300 Wind -Down Costs 15,960 15,420 15,690 -------- -------- -------- Total 39,450 38,635 39,042 Estimated Net Proceeds Available for Distribution $504,687 $562,138 $533,412 DIP Facility Claims: DIP Revolver 44,680 44,680 44,680 DIP Term 151,500 151,500 151,500 Professional Fee Carve Out 13,000 13,000 13,000 -------- -------- -------- Total 209,180 209,180 209,180 Recovery Rate 100% 100% 100% -------- -------- -------- Estimated Net Proceeds Available for Distribution 295,507 352,958 324,232 Prepetition Secured Debt 228,589 228,589 228,589 Recovery Rate 100% 100% 100% -------- -------- -------- Estimated Net Proceeds Available for Distribution 66,919 124,369 95,644 Administrative Claims: Lease Rejection Claims 1,311 1,463 1,387 Post-Petition Trade Payables 30,839 34,413 32,626 Other Postpetition Liabilities 30,776 34,342 32,559 503(b)(9) 1,461 1,631 1,546 Intercompany Payables/Notes 2,471 2,757 2,614 Other 61 68 64 -------- -------- -------- Total 66,919 74,674 70,797 Recovery Rate 90% 100% 95% -------- -------- -------- Estimated Net Proceeds Available for Distribution - 49,695 24,847 Priority Prepetition Unsecured Claims: Tax obligations - 5,433 2,716 Other - 8 4 -------- -------- -------- Total - 5,441 2,721 Recovery Rate 0% 100% 50% -------- -------- -------- Estimated Net Proceeds Available for Distribution - 44,254 22,127 General Unsecured Claims: Rejection Damage Claims - 241 121 Prepetition Trade Payables - 1,099 550 Prepetition Intercompany Payables/Notes - 621 310 Pension Claims - 1,129 565 Senior Unsecured Notes - 15,761 7,881 Senior Subordinated Notes - 21,108 10,554 Convertible Trust Securities - 2,196 1,098 Employee Benefits - 1,364 682 Other - 734 367 -------- -------- -------- Total - 44,254 22,127 Recovery Rate 0.0% 3.8% 1.9% Senior Unsecured Notes - Including Subordinated Debt - 39,066 19,533 Proceeds 0.0% 9.3% 4.7% A full-text copy of the Liquidation Analysis is available for free at http://bankrupt.com/misc/DURALiquidationAnalysis.pdf About DURA Rochester Hills, Michigan-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. It has locations in Europe and Latin-America, particularly in Mexico, Germany and the United Kingdom. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Del. Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors have asked the Court to extend their plan filing period to April 30, 2008. (Dura Automotive Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DURA AUTOMOTIVE: Ad Hoc Committee Seek to Inspect Records --------------------------------------------------------- James W. Korth -- managing partner at J.W. Korth & Company, on behalf of an ad hoc committee of holders of more than $100,000,000 of 8-5/8% Senior Bonds and 9.0% Subordinated Bonds issued by DURA Automotive Systems, Inc. -- seeks permission from the U.S. Bankruptcy Court for the District of Delaware to examine the books and records of DURA under Rule 2004 of the Federal Rules of Bankruptcy Procedure to independently assess the value of the Debtors. Under DURA's Plan of Reorganization, noteholders are going to receive either 19.0% value of their investments or nothing depending on whether they own the senior or junior bonds. The Ad Hoc Committee also asks the Court to extend the time for parties-in-interest to file objections to the Plan and the Disclosure Statement explaining the Plan until April 10, 2008. The Ad Hoc Committee wants to examine and retain copies of certain DURA documents, including: * the monthly income statements and balance sheets of each subsidiary of DURA, or subsidiaries of subsidiaries, and subsidiaries of subsidiaries of subsidiaries, of DURA for the past two years until the end of February 2008; * the general ledger for each subsidiary for the past two years up until the end of February 2008; * the detail of the analysis of the goodwill of each subsidiary whereby the Debtor last certified that goodwill and then wrote off that goodwill in November 2006; * the notes and aggregation statements that form the basis for all Monthly Operating Reports filed in the Court; * a specific written statement line by line from the Debtor on how the planned Fresh Start balance sheet will differ from the balance sheet included in the Monthly Operating Reports and justification for the differences; * the contracts and any amendments with the Debtors and Alix Partners and Miller Buckfire and Kirkland & Ellis LLP; * the background notes and compilations that went into creating the latest Disclosure Statement; * copies of the presentation to potential lenders for the failed Exit Financing in December 2007; * the original underwriting files for the bonds including all notes regarding the creation of each issue's indenture and the original proposals by the underwriters for those issues along with the underwriting agreements; * detailed analysis behind the income projections for the next three years as stated in the Disclosure Statement; and * invoices and notes from the trustees for the senior or subordinated bonds. About DURA Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. It has locations in Europe and Latin-America, particularly in Mexico, Germany and the United Kingdom. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Del. Case No. 06-11202). Marc Kieselstein, P.C., Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., at Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., at Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of Jan. 31, 2008, the Debtor had $1,503,682, 000 in total assets and $1,623,632,000 in total liabilities. The Debtors have asked the Court to extend their plan filing period to April 30, 2008. (Dura Automotive Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). EATON VANCE: Moody's Junks Rating on $209 Million Capital Notes --------------------------------------------------------------- Moody's Investors Service has taken these negative rating actions on capital notes and medium term notes issued by Eaton Vance Variable Leverage Fund Ltd.: Medium-Term Notes Program ($505,000,000 currently outstanding) -- Current Ratings: Aa3, on review for downgrade and Prime-1, on review for downgrade -- Prior Ratings: Aaa, on review for downgrade and Prime-1 Commercial Paper Program (No commercial paper is currently outstanding) -- Current Rating: Prime-1, on review for downgrade -- Prior Rating: Prime-1 Capital Notes ($209,000,000 outstanding) -- Current Rating: Caa3 -- Prior Rating: Ba3, on review for downgrade EVVLF is a structured investment vehicle that invests primarily in the leveraged bank loan market where the obligors are typically corporations with non-investment grade ratings. EVVLF is managed by Eaton Vance Management. Despite recent deleveraging, the risk of an Enforcement Event remains high because of the deteriorated market value of the vehicle's asset portfolio. An Enforcement Event may lead to the liquidation of the portfolio over a six-month period. As a result, Moody's believes that the expected losses associated with the Capital Notes and the Medium Term Notes are no longer consistent with their prior ratings. In addition, Moody's has put on review for downgrade the short- term Prime-1 ratings assigned to both the commercial paper program and to medium term notes with a maturity of less than 365 days. There are currently no such short maturity medium term notes or commercial paper outstanding. This rating action was prompted by concerns about EVVLF's ability to continue making timely payments if the vehicle were to enter Enforcement. Moody's will continue to monitor the situation and evaluate any alternative restructuring proposals that may be presented by EVVLF's management. ELECTRONIC DATA: Moody's Upgrades Sr. Unsecured Rating From 'Ba1' ----------------------------------------------------------------- Moody's Investors Service raised the senior unsecured rating of Electronic Data Systems to Baa3 from Ba1, concluding a review for possible upgrade initiated on Dec. 11, 2007. Concurrent with this action, Moody's is withdrawing the Corporate Family Rating of Ba1. The outlook is stable. The rating upgrade reflects the company's improved business execution, financial performance, and good market position in the IT outsourcing sector. The action incorporates expectations that the company will maintain its franchise breadth as one of the largest IT services providers worldwide, supported by its investments in lower cost geographies, expansion of its higher margin and faster growing applications services business, and ongoing cost reduction and productivity measures. The upgrade also reflects the company's low financial leverage and solid liquidity position. The stable rating outlook reflects Moody's expectation that EDS will be able to sustain its financial performance and that over the intermediate term, contingent upon consistent execution, it appears reasonably positioned to improve upon current performance levels. The outlook also reflects the expectation that management will maintain its currently modest financial leverage and solid liquidity as it focuses on improving the consistent delivery of its business services and that it will not undertake material acquisitions that could inject an element of instability or integration challenges. The rating also considers the periodic technical challenges faced by EDS and its competitors in consistently executing increasingly complex integrated IT solutions as well as strong competition from established and fast emerging players. EDS also faces competitive challenges from the industry's ongoing migration to offshore geographies, which, while providing lower labor costs and potentially improved service offerings and delivery, adds a deflationary element to revenue. This underscores the need to further streamline costs and enhance automation capabilities in order to offer competitive, higher value added services that can expand profit margins. While EDS has made progress in these areas, it, like other IT companies, has additional work ahead of it in order to offer a more integrated set of cost effective and value added IT solutions. Finally, the rating incorporates the expectation that over time the company will use some of currently strong financial flexibility by either returning cash to shareholders and increasing financial leverage to affect acquisitions that may engender some operational integration challenges. Ratings upgraded include these: -- Senior Unsecured Rating to Baa3 from Ba1 -- Senior unsecured shelf registration to (P) Baa3 from (P) Ba1 -- Subordinated shelf registration to (P) Ba1 from (P) Ba2 Rating confirmed: -- Preferred shelf registration rated (P) Ba2 Concurrently, Moody's has withdrawn these ratings for EDS, which are applicable to non investment grade issuers including: -- Corporate Family Rating: Ba1 -- Speculative Grade Liquidity Rating: SGL-1 Headquartered in Plano, Texas, Electronic Data Systems Corporation, with $22.1 billion in revenue and $1.49 billion in EBIT for the year ended December 2007, provides a range of information technology (IT) outsourcing and project services. FINANCIAL GUARANTY: PMI Doubts Ability to Write New Guarantees -------------------------------------------------------------- The PMI Group, who is the lead investor in FGIC Corporation, indicated in its latest 10-K filing with the Securities and Exchange Commission that as a result of the deterioration of the credit and capital markets in 2007 and the downgrades of FGIC in 2008 to "A" by Standard & Poor's, "AA" by Fitch and "A3" by Moody's, FGIC has ceased writing new business, and the company believes it is unlikely that FGIC will be able to write new financial guaranty business at its current ratings. FGIC Corporation has proposed a significant restructuring of its insurance operations to the New York Insurance Department, including the organization of a new financial guaranty insurer to be domiciled in New York to provide support for the global public finance and infrastructure obligations previously insured by FGIC and to write new business to serve those markets. The PMI Group expresses that it does not know what form such restructuring, if any, will ultimately take. At Dec. 31, 2007, FGIC had total shareholders' equity of $584.4 million compared to $2.4 billion at Dec. 31, 2006. PMI says that this significant decline in shareholders'equity was due to FGIC's $1.9 billion of unrealized mark-to-market losses in 2007 related to derivative contracts issued by FGIC on mortgage-related collateralized debt obligations and loss reserve increases of $1.2 billion in 2007. FGIC's loss reserve increases in 2007 were driven by the credit deterioration of insured collateralized debt obligations backed by sub-prime residential mortgage-backed securities as well as direct exposure to RMBS. FGIC's 2007 mark- to market losses and additions to loss reserves reflect the significant weakening of the U.S. residential mortgage, housing, credit and capital markets. As a result of these downgrades, FGIC has ceased writing new financial guaranty business. A downgrade of FGIC's financial strength ratings below specified levels may allow certain issuers and counterparties, subject to the terms of their contractual arrangements with FGIC, to terminate those agreements, which could result in the loss of future revenues. About FGIC Financial Guaranty Insurance Co. -- http://www.fgic.com/-- has enjoyed a reputation for financial strength, underwriting discipline and superior client service. As a leading financial guaranty insurance company, FGIC provides credit enhancement on infrastructure finance and structured finance securities worldwide, enabling bond issuers to obtain capital cost effectively and enhancing their access to the capital markets. FINANCIAL GUARANTY: S&P Changes CreditWatch Listing to Negative --------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch on Financial Guaranty Insurance Co. (FGIC, rated 'A') and holding company FGIC Corp. (rated 'BBB') to CreditWatch with negative implications from CreditWatch with developing implications. FGIC's principal owner, The PMI Group, has said it no longer views FGIC as a strategic investment and will not be contributing capital as part of any recapitalization plan. In addition, while FGIC's ability to write new business was already severely constrained, PMI formally announced a suspension of new business writings by FGIC in order to preserve capital. In S&P's opinion, the announcements negatively affect the company's ability to implement plans to raise additional capital and resume writing business in the future. With respect to business position and the company's ability to write new business, in February 2008, FGIC applied to the New York State Insurance Department for a new license. FGIC has said that this new license could be used in connection with the establishment of an affiliated new company that would principally be involved in the insurance of municipal business. According to FGIC's plan, structured finance business and possibly some other sectors would remain as insured obligations of FGIC. Management believes that the creation of this municipally focused company is central to its ability to raise capital to generate new business. The revision to CreditWatch Negative reflects S&P's belief that, in terms of both capitalization and ability to write new business, prospects for the currently existing legal entity under this split-company plan are negative. Should the split- company plan not succeed, FGIC's ability to raise capital and resume writing new business would be less likely, in S&P's view. Under either scenario, prospects for a rating upgrade for FGIC are difficult to envision. Standard & Poor's will monitor developments as this plan moves ahead and update its ratings accordingly. FIELDSTONE MORTGAGE: Wants Plan-Filing Exclusivity Date Extended ---------------------------------------------------------------- Fieldstone Mortgage Co. asked the U.S. Bankruptcy Court for the District of Maryland to extend its exclusive right to file a Chapter 11 plan, Bill Rochelle of Bloomberg News reports. The Debtor tells the Court that it is still in talks with unnamed investors relating to the formulation of a plan, Mr. Rochelle relates. The Debtor says that due to economic woes, a plan might be inevitable. Headquartered in Columbia, Maryland, Fieldstone Mortgage Co. -- http://www.fieldstonemortgage.com/-- is a direct lender that offers mortgage loans for multiple credit situations in the United States. In September 2007, Fieldstone was the target of a lawsuit by Morgan Stanley over 72 mortgages worth $26.5 million that had no, or late, payments. The company filed for chapter 11 bankruptcy on Nov. 23, 2007 (Bankr. D. Md. Case No. 07-21814) citing loan payment lapses and credit market woes. Joel I. Sher, Esq., at Shapiro, Sher, Guinot & Sandler represents the Debtor in its restructuring efforts. The U.S. Trustee for Region 4 has yet to appoint creditors to serve on an Official Committee of Unsecured Creditors in this case. According to its Schedules, total assets were $14,465,348 and total debts were $121,342,790. As reported in the Troubled Company Reporter on Dec. 19, 2007 the Debtor obtained up to $3.8 million in postpetition financing from its parent, Credit-Based Asset Servicing and Securitization LLC. FOURTH STREET: Moody's Junks Rating on $45 Mil. Notes ----------------------------------------------------- Moody's Investors Service downgraded ratings of eight classes of notes issued by Fourth Street Funding, Ltd., and left on review for possible further downgrade the rating of two of these classes. The notes affected by this rating action are: Class Description: $200,000,000 Class A-1 First Priority Senior Secured Floating Rate Delayed Draw Notes Due 2050 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $125,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2050 -- Prior Rating: Aaa -- Current Rating: Caa3, on review for possible downgrade Class Description: $45,000,000 Class A-3 Third Priority Senior Secured Floating Rate Notes Due 2050 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ca Class Description: $37,500,000 Class B Fourth Priority Senior Secured Floating Rate Notes Due 2050 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Ca Class Description: $17,500,000 Class C Fifth Priority Senior Secured Floating Rate Notes Due 2050 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: Ca Class Description: $20,000,000 Class D Sixth Priority Senior Secured Deferrable Floating Rate Notes Due 2050 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: C Class Description: $20,500,000 Class E Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2050 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: C Class Description: $15,000,000 Class F Eighth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2050 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: C The rating downgrade actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence on March 12, 2008, as reported by the Trustee, of an event of default caused by the failure of the Class A Overcollateralization to be at least 100 per cent, as described in Section 5.1(j) of the Indenture dated April 26, 2007. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. In this regard, Moody's has received notice from the Trustee that a majority of the Controlling Class directed the Trustee to acceleration of the maturity consistent with the applicable provisions of the Indenture. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of other event of default remedies by certain Noteholders. Because of this uncertainty, the ratings assigned to Class A-1 Notes and to the Class A-2 remain on review for possible further action. Fourth Street Funding, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities and CDO securities. FTI CONSULTING: S&P Upgrades Rating to 'BB' on Strong Performance ----------------------------------------------------------------- Standard & Poor's Ratings Services raised the corporate credit rating on Baltimore, Maryland-based FTI Consulting Inc. to 'BB' from 'BB-', and removed the ratings on FTI from CreditWatch, where S&P had originally placed them, with positive implications, on Dec. 18, 2007 based on strong earnings performance and talent retention. The outlook is stable. "The upgrade is based on FTI's continuing strong operating performance, successful integration of FD International, and increased business diversity," explained Standard & Poor's credit analyst Andy Liu. At the same time, Standard & Poor's raised the issue-level ratings on and assigned recovery ratings to FTI's senior unsecured securities. The issue-level ratings on the $215 million 7.75% senior notes due 2016 and $200 million 7.625% senior notes due 2013 were raised to 'BB-' (one notch below the 'BB' corporate credit rating on FTI) from 'B+', and a recovery rating of '5' was assigned, indicating S&P's expectation for modest (10%-30%) recovery in the event of a payment default. The issue-level rating on the $150 million 3.75% senior subordinated convertible notes due 2012 was raised to ' B+' (two notches below the corporate credit rating), and a recovery rating of '6' was assigned, indicating S&P's expectation for negligible (0%-10%) recovery in the event of a payment default. FTI has five primary practice areas: forensics and litigation, corporate finance or restructuring, technology, economic consulting, and strategic communications. Its total debt outstanding as of Dec. 31, 2007 was $573 million. The ratings reflect FTI's dependence on highly mobile and sought- after senior staff, high acquisition activity, and its position in a competitive marketplace. Its modest business diversity, solid growth rate, and discretionary cash flow partially offset these factors. FTI's performance is highly dependent on a group of managing directors. These senior consulting professionals possess the expertise sought by clients, and retaining this group of senior staff is important to the company's success. The loss of any of these senior professionals could result in the loss of some existing engagements and some smaller client relationships. The company has been able to stabilize retention rates over the past two years through its incentive program implemented in 2006. Although the company has been successful in retaining most of these professionals, this will remain a key ratings factor that S&P will continue to monitor. Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection as: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. GENESCO INC: Moody's Affirms B1 Ratings on Merger Suit Settlement ----------------------------------------------------------------- Moody's Investors Service confirmed Genesco Inc.'s corporate family and probability of default ratings at B1. The rating outlook is stable. The confirmation reflects that the company's credit profile is unchanged by the successful settlement between Genesco, Finish Line, and UBS of the lawsuits surrounding the disputed plan of merger between Genesco and Finish Line. While the settlement agreement results in Genesco receiving $175 million in cash, all of the after tax proceeds will be distributed to shareholders and therefore has no impact on the company's financial metrics. This action concludes the review for possible downgrade that was initiated on April 20, 2007. These ratings are confirmed: -- Corporate family rating at B1; -- Probability of default rating at B1; -- $86 million convertible senior subordinated debentures at B2 (LGD5; 72%). Moody's does not rate Genesco's $200 million asset-based revolving credit facility. The B1 corporate family rating reflects the company's moderately weak credit metrics, as well as Moody's expectation for a further modest weakening in credit metrics over the next twelve months as a result of an overall soft retail sales environment. The rating is also constrained by both the company's very high business risk given its very narrow product niches and its high seasonality. The rating also incorporates the company's national geographic presence, its reasonable level of profitability, its average size and scale, its moderate financial policies and its adequate liquidity. The stable outlook reflects Moody's expectation that the company will maintain adequate liquidity and that its current rating level incorporates the expectation for a modest level of additional deterioration in credit metrics given the current weak retail sales environment. Genesco Inc., headquartered in Nashville, Tennessee, operates more than 2,150 footwear and headwear stores throughout the United States and in Puerto Rico and Canada. In addition, Genesco also is a wholesaler of branded footwear. For the fiscal year ended Feb. 2, 2008 revenues were approximately $1.5 billion. GMAC LLC: Michael Rossi Resigns as ResCap Head Effective March 17 ----------------------------------------------------------------- GMAC LLC said in a regulatory filing with the Securities and Exchange Commission Friday that Michael Rossi, chairman of Residential Capital LLC, has resigned for medical reasons effective March 17, 2008. No immediate replacement has been appointed. James Jones will continue to serve as ResCap chief executive officer. Mr. Rossi was chairman of ResCap since September 2007. In 1993, Mr. Rossi was named Bank of America's vice chairman and senior credit officer. He served as vice chairman until his retirement in 1997. Mr. Rossi later became an adviser for Cerberus Capital Management and a senior member of the firm's operations team. In 2004, he was named a director of Japan-based Aozora Bank. In early 2005, Mr. Rossi was appointed chairman and chief executive officer at Aozora Bank and held that post until February 2007. About Residential Capital Headquartered in Minneapolis, Minnesota, Residential Capital LLC - - http://www.rescapholdings.com/-- is the home mortgage unit of GMAC Financial Services, which is in turn wholly owned by GMAC LLC. * * * As reported in the Troubled Company Reporter on March 5, 2008, Fitch Ratings downgraded Residential Capital LLC's long-term Issuer Default Rating to 'BB-' from 'BB+'. In addition, the ratings remain on Rating Watch Negative by Fitch. About GMAC LLC GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a global, diversified financial services company that operates in approximately 40 countries in automotive finance, real estate finance, insurance and other commercial businesses. GMAC was established in 1919 and employs approximately 26,700 people worldwide. Cerberus Capital Management LP bought 51% GMAC LLC stake from General Motors Corp. on December 2006. * * * As reported in the Troubled Company Reporter on March 5, 2008, Fitch Ratings downgraded and removed from Rating Watch Negative the long-term Issuer Default Rating of GMAC LLC and related subsidiaries to 'BB' from 'BB+'. Fitch has also affirmed the 'B' short-term ratings. Fitch originally placed GMAC on Rating Watch Negative on Nov. 14, 2007. The Rating Outlook is Negative. GOODYEAR TIRE: S&P Lifts Rating on Class A-1 and A-2 Certs. to BB- ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on the class A-1 and A-2 certificates from the $46 million Corporate Backed Trust Certificates Goodyear Tire & Rubber Note-Backed Series 2001- 34 Trust to 'BB-' from 'B'. The upgrades reflect the March 19, 2008, raising of the rating on the 7% notes due March 15, 2028, issued by Goodyear Tire & Rubber Co. to 'BB-' from 'B'. Corporate Backed Trust Certificates Goodyear Tire & Rubber Note- Backed Series 2001-34 Trust is a pass-through transaction, the ratings on which are based solely on the rating assigned to the underlying collateral, Goodyear Tire & Rubber Co.'s 7% notes due March 15, 2028 ('BB-'). GRAND CIRCLE: Gets Moody's B2 Ratings After Sale to Court Square ---------------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating as well as a B2 Probability of Default Rating to Grand Circle Holdings, LLC. Moody's also assigned a B2 rating to Grand Circle's second lien credit facilities due 2014. The rating outlook is stable. The ratings are being assigned in connection with the acquisition of Grand Circle by Court Square Capital Partners for $780 million. The acquisition will be financed with $170 million first lien credit facilities, $170 million second lien facilities, $125 million junior subordinated secured notes, $25 million junior subordinated unsecured notes, $85 million senior preferred PIK equity, $200 million junior preferred PIK equity, and $25 million common equity. Upon consummation of the transaction Court Square Capital Partners will retain 62% ownership interest in the company, while the current owner and CEO, Alan Lewis, will retain a 27% ownership. The B2 rating reflects Grand Circle's high pro-forma leverage and a growth strategy dependent upon passenger growth and higher prices in the face of a weakening economy. Pro forma for the acquisition, Grand Circle's debt to EBITDA (incorporating Moody's standard analytic adjustments) will be approximately 6.8 times. Grand Circle's ratings benefit from its strong market position in the fragmented riverboat segment, demographic trends that support a stable demand outlook, modest capital needs, and track record of positive growth. Moody's expects the company's debt EBITDA to remain above 6.0 times over the next 12-24 months. The assigned B2 CFR is in line with the company's methodology implied rating. The stable outlook reflects modest demand prospects despite macro- economic weakness that is expected to result in positive earning growth and a slight improvement in credit metrics. Ratings assigned are: Grand Circle Holdings, LLC -- Corporate family rating of B2 -- Probability of default rating of B2 -- $170 million senior secured second lien facilities rated B2 consising of: Grand Circle River Cruise Lines, LLC - $145 million senior secured second lien term loan guaranteed by Grand Circle Holdings, LLC at B2 (LGD 4, 52%) GC Cayman Holdings, LTD - $25 million senior secured second lien term loan guaranteed by Grand Circle Holdings, LLC and Grand Circle River Cruise Lines, LLC at B2 (LGD 4, 52%) Moody's does not rate the company's revolving credit, first lien term loan, or subordinated notes. Headquartered in Boston, Massachusetts, and through its brands Grand Circle Cruise Line, Grand Circle Travel and Overseas Adventure Travel, the company offers more than 100 river cruise tours, river barge tours, small-ship ocean tours, extended stay vacations, safaris, and adventure vacations. Pro-Forma revenues for the twelve-month period ended Dec. 31, 2007 was approximately $729 million. GREENPOINT MTA: S&P Junks Ratings on Two 2005-HYB8 Cert. Classes ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 13 classes of mortgage pass-through certificates from five series issued by CHL Mortgage Pass-Through Trust, DSLA Mortgage Loan Trust, and GreenPoint MTA Trust. All of the downgraded series were issued in 2005 and are backed by U.S. Alternative-A mortgage loan collateral. In addition, S&P affirmed its ratings on 69 other certificates from these three Alt-A transactions. The lowered ratings reflect current or projected credit enhancements levels that are not sufficient to support the certificates at their previous rating levels as of the February 2008 remittance period. Based on the current collateral performance of these transactions, future credit enhancement is projected to be significantly lower than the original credit support. All of these transactions were reviewed within the past 12 months and they continue to perform adversely. As of the February 2008 remittance period, total delinquencies for these transactions ranged from 7.25% (CHL Mortgage Pass-Through Trust 2005-HYB8, structure group 5) to 20.94% (GreenPoint MTA Trust 2005-AR3), while severe delinquencies (90-plus days, foreclosures, and REOs) ranged from 2.55% (CHL Mortgage Pass- Through Trust 2005-HYB8, structure group 5) to 10.99% (GreenPoint MTA Trust 2005-AR3) of the current pool balances. Cumulative losses for these transactions ranged from 0.02% (DSLA Mortgage Loan Trust 2005-AR1) to 0.26% (GreenPoint MTA Trust 2005-AR3) of the original pool balances. These deals have all been seasoned between 28 (CHL Mortgage Pass-Through Trust 2005-HYB8) and 36 months (DSLA Mortgage Loan Trust 2005-AR1). The affirmations reflect sufficient credit support percentages to support the current ratings as of the February 2008 remittance period. Credit enhancement for these transactions is derived from subordination. The underlying collateral for all of the affected transactions in this review consists of U.S. Alt-A mortgage loans. Ratings Lowered CHL Mortgage Pass-Through Trust 2005-HYB8 Rating ------ Series Class To From ------ ----- -- ---- 2005-HYB8 II-B-2 BB BBB 2005-HYB8 II-B-3 CCC BB 2005-HYB8 II-B-4 CCC B DSLA Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-AR1 B-4 B BB 2005-AR1 B-5 CCC B 2005-AR2 B-4 B BB 2005-AR2 B-5 CCC B GreenPoint MTA Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-AR2. B-3 BB+ BBB 2005-AR2 B-4 B BB 2005-AR2 B-5 CCC B 2005-AR3 B-3 BB+ BBB 2005-AR3 B-4 B BB 2005-AR3 B-5 CCC B Ratings Affirmed CHL Mortgage Pass-Through Trust 2005-HYB8 Series Class Rating ------ ----- ------ 2005-HYB8 1-A-1, 1-A-2, 2-A-1, 2-A-2, AAA 2005-HYB8 2-A-IO, 3-A-1, 3-A-2, 4-A-1, 4-A-2 AAA 2005-HYB8 I-M, II-M AA 2005-HYB8 I-B-1, II-B-1 A 2005-HYB8 I-B-2, BB 2005-HYB8 I-B-3 CCC 2005-HYB8 I-B-4 CCC DSLA Mortgage Loan Trust Series Class Rating ------ ----- ------ 2005-AR1 1-A, 2-A-1A, 2-A2B, 2-A2, X-1 AAA 2005-AR1 X-2, A-R AAA 2005-AR1 B-1 AA 2005-AR1 B-2 A 2005-AR1 B-3 BBB 2005-AR2 1-A, 2-A1A, 2-A1B, 2-A1C, 2-A2 AAA 2005-AR2 X-1, X-2, PO, A-R AAA 2005-AR2 B-1 AA 2005-AR2 B-2 A 2005-AR2 B-3 BBB GreenPoint MTA Trust Series Class Rating ------ ----- ------ 2005-AR2 A-1, A-2, A-3, X-1, M-X, R AAA 2005-AR2 M-1, M-2, M-3, M-4 AA+ 2005-AR2 M-5, M-6 AA 2005-AR2 M-7 AA- 2005-AR2 B-1 A 2005-AR2 B-2 A- 2005-AR3 I-A-1, I-A-2, I-A-3, II-A-1 AAA 2005-AR3 II-A-2, X-1, R AAA 2005-AR3 M-X, M-1, M-2 AA+ 2005-AR3 M-3, M-4 AA 2005-AR3 M-5 A+ 2005-AR3 M-6 A 2005-AR3 B-1 A- 2005-AR3 B-2 BBB+ GRUSAF LLC: Case Summary & 126 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Grusaf, L.L.C. 211 East International Boulevard Daytona Beach, FL 32118 Bankruptcy Case No.: 07-12701 Debtor-affiliate filing a separate Chapter 11 petition on March 19, 2008: Entity Case No. ------ -------- Tampa Condo 2, LLC 08-03596 Debtor-affiliate filing a separate Chapter 11 petition on March 12, 2008: Entity Case No. ------ -------- Ursula Amon & Felix Amon 08-03209 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- R.X. Realty, Inc. 07-08444 F.E.M.I. International, Inc. 07-10904 C.W.C. Construction Group, L.L.C. 07-11943 Madeira South, L.L.C. 07-12104 Type of Business: The Debtors develop condominiums. Chapter 11 Petition Date: December 21, 2007 Court: Middle District of Florida (Tampa) Judge: Michael G. Williamson Debtors' Counsel: Buddy D. Ford, Esq. (Buddy@tampaesq.com) 115 North MacDill Avenue Tampa, FL 33609 Tel: (813) 877-4669 Fax: (813) 877-5543 Grusaf, LLC's Financial Condition: Total Assets: $8,597,605 Total Debts: $11,215,902 A. Grusaf, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carter Electric Co. Lien $86,510 231 Jean Street Daytona Beach, FL 32114 General Electric Appliances Lien $80,314 P.O. Box 281865 Atlanta, GA 30384-1865 Tri-County Reinforcing Lien $65,463 95 port Royal Drive Palm Coast, FL 32164 Fashion Tile Services $49,570 Exotic Marble Lien Litigation $49,349 East Coast Underground Lien $47,242 Workers Temporary Staffing $38,840 Koontz Heating & Air Lien $32,039 Wiginton Fire Systems Lien $28,773 I.C.I. Paints Lien Litigation $25,488 Plummer, Inc. Lien $24,637 United Construction $20,746 A.A.A. Welding & Security Lien $20,704 Rental Service Corp Service $17,290 Volusia County Tax Col. Property Taxes $15,986 Lloyd's Exercise Equipment Purchases $12,567 Valiant Products $12,281 D.E.V.M.A.X., L.L.C. Project Management, $11,886 Acetg.,Legal Mark Dowst & Associates Lien $10,983 Planson, III Lien $10,086 B. F.E.M.I. International, Inc's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carter Electric Co. Lien $86,510 231 Jean Street Daytona Beach, FL 32114 General Electric Appliances Lien $80,314 P.O. Box 281865 Atlanta, GA 30384-1865 Tri-County Reinforcing Lien $65,463 95 port Royal Drive Palm Coast, FL 32164 Fashion Tile Services $49,570 Exotic Marble Lien Litigation $49,349 East Coast Underground Lien $47,242 Workers Temporary Staffing $38,840 Koontz Heating & Air Lien $32,039 Wiginton Fire Systems Lien $28,773 I.C.I. Paints Lien Litigation $25,488 Plummer, Inc. Lien $24,637 United Construction $20,746 A.A.A. Welding & Security Lien $20,704 Rental Service Corp Service $17,290 Volusia County Tax Col. Property Taxes $15,986 Lloyd's Exercise Equipment Purchases $12,567 Valiant Products $12,281 D.E.V.M.A.X., L.L.C. Project Management, $11,886 Acetg.,Legal Mark Dowst & Associates Lien $10,983 Planson, III Lien $10,086 B. R.X. Realty, Inc's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carter Electric Co. Lien $86,510 231 Jean Street Daytona Beach, FL 32114 General Electric Appliances Lien $80,314 P.O. Box 281865 Atlanta, GA 30384-1865 Tri-County Reinforcing Lien $65,463 95 port Royal Drive Palm Coast, FL 32164 Fashion Tile Services $49,570 Exotic Marble Lien Litigation $49,349 East Coast Underground Lien $47,242 Workers Temporary Staffing $38,840 Koontz Heating & Air Lien $32,039 Wiginton Fire Systems Lien $28,773 I.C.I. Paints Lien Litigation $25,488 Plummer, Inc. Lien $24,637 United Construction $20,746 A.A.A. Welding & Security Lien $20,704 Rental Service Corp Service $17,290 Volusia County Tax Col. Property Taxes $15,986 Lloyd's Exercise Equipment Purchases $12,567 Valiant Products $12,281 D.E.V.M.A.X., L.L.C. Project Management, $11,886 Acetg.,Legal Mark Dowst & Associates Lien $10,983 Planson, III Lien $10,086 C. F.E.M.I. International, Inc's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carter Electric Co. Lien $86,510 231 Jean Street Daytona Beach, FL 32114 General Electric Appliances Lien $80,314 P.O. Box 281865 Atlanta, GA 30384-1865 Tri-County Reinforcing Lien $65,463 95 port Royal Drive Palm Coast, FL 32164 Fashion Tile Services $49,570 Exotic Marble Lien Litigation $49,349 East Coast Underground Lien $47,242 Workers Temporary Staffing $38,840 Koontz Heating & Air Lien $32,039 Wiginton Fire Systems Lien $28,773 I.C.I. Paints Lien Litigation $25,488 Plummer, Inc. Lien $24,637 United Construction $20,746 A.A.A. Welding & Security Lien $20,704 Rental Service Corp Service $17,290 Volusia County Tax Col. Property Taxes $15,986 Lloyd's Exercise Equipment Purchases $12,567 Valiant Products $12,281 D.E.V.M.A.X., L.L.C. Project Management, $11,886 Acetg.,Legal Mark Dowst & Associates Lien $10,983 Planson, III Lien $10,086 D. C.W.C. Construction Group, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carter Electric Co. Lien $86,510 231 Jean Street Daytona Beach, FL 32114 General Electric Appliances Lien $80,314 P.O. Box 281865 Atlanta, GA 30384-1865 Tri-County Reinforcing Lien $65,463 95 port Royal Drive Palm Coast, FL 32164 Fashion Tile Services $49,570 Exotic Marble Lien Litigation $49,349 East Coast Underground Lien $47,242 Workers Temporary Staffing $38,840 Koontz Heating & Air Lien $32,039 Wiginton Fire Systems Lien $28,773 I.C.I. Paints Lien Litigation $25,488 Plummer, Inc. Lien $24,637 United Construction $20,746 A.A.A. Welding & Security Lien $20,704 Rental Service Corp Service $17,290 Volusia County Tax Col. Property Taxes $15,986 Lloyd's Exercise Equipment Purchases $12,567 Valiant Products $12,281 D.E.V.M.A.X., L.L.C. Project Management, $11,886 Acetg.,Legal Mark Dowst & Associates Lien $10,983 Planson, III Lien $10,086 E. Madeira South, LLC's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carter Electric Co. Lien $86,510 231 Jean Street Daytona Beach, FL 32114 General Electric Appliances Lien $80,314 P.O. Box 281865 Atlanta, GA 30384-1865 Tri-County Reinforcing Lien $65,463 95 port Royal Drive Palm Coast, FL 32164 Fashion Tile Services $49,570 Exotic Marble Lien Litigation $49,349 East Coast Underground Lien $47,242 Workers Temporary Staffing $38,840 Koontz Heating & Air Lien $32,039 Wiginton Fire Systems Lien $28,773 I.C.I. Paints Lien Litigation $25,488 Plummer, Inc. Lien $24,637 United Construction $20,746 A.A.A. Welding & Security Lien $20,704 Rental Service Corp Service $17,290 Volusia County Tax Col. Property Taxes $15,986 Lloyd's Exercise Equipment Purchases $12,567 Valiant Products $12,281 D.E.V.M.A.X., L.L.C. Project Management, $11,886 Acetg.,Legal Mark Dowst & Associates Lien $10,983 Planson, III Lien $10,086 F. Ursula Amon & Felix Amon's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ IStar Financial Personal guarantee $19,232,669 P.O. Box 3040 Garden Grove, CA 92842 Fifth Third Bank Personal guarantee $8,826,226 P.O. Box 630337 Cincinnati, OH 45263 Transatlantic Bank Personal guarantee $7,280,000 Attn: Michael Rosen, Esq. 48 East Flagler Street Miami, FL 33131 Madeira Recovery, LLC Judgment & attorney's $7,171,186 Roetzel & Andress, LPA fees 420 South Orange Avenue CNL Center II, 7th Floor Tallahassee, FL 32302-6507 Downtown Tampa Investments Personal guarantee $5,097,000 Stephen Szabo, Esq. 100 North Tampa Street, Suite 2700 Tampa, FL 33602-5810 Prosperity Bank Personal guarantee $2,722,198 Attn: Katherine G. Jones, Esq. P.O. Drawer 3007 Saint Augustine, FL 32085-3007 Mark Nagrani Promissory note $2,000,000 612 South Palmetto Avenue New Smyrna Beach, FL Florida Community Bank $1,717,012 155 North Bridge Street Labelle, FL 33935 Black & White Investment Co. Personal guarantee $1,549,680 1124 Waverly Drive Daytona Beach, FL 32118-3621 Internal Revenue Service 2005 1040 taxes $1,332,107 Special Procedures Staff 400 West Bay Street, Stop 5720 Jacksonville, FL 32202 First National Bank of Personal guarantee $1,300,000 Pennsylvania 4140 East State Street Hermitage, PA 16148 Eric Greve & Kiftsgate Trust, personal guarantee $940,000 "Berg en Vaart" Cannenburgerweg 17-19, 1244 RE's Graveland, Netherlands Woodlea Investment Co., LLC Personal guarantee $803,806 P.O. Box 10506 Daytona Beach, FL 32120 Green Point Mortgage $607,482 P.O. Box 1093 Branford, CT 06405 Woodlea Investment Co., LLC Personal guarantee $540,894 P.O. Box 10506 Daytona Beach, FL 32120 National City $491,612 P.O. Box 856176 Louisville, KY 40285 Sunshine State Commercial Personal guarantee $490,836 Bank Robert Kit Korey, Esq. 595 W. Granada Boulevard, Suite A Ormond Beach, FL 32174 G. Tampa Condo 2, LLC's Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Downtown Tampa Investments Pledge on interest $5,159,051 Attn: Stephen Szabo, Esq. in Debtor 100 North Tampa Street, Suite 2700 Tampa, FL 33602-5810 Amon Investments Note payable $445,581 211 East International Speedway Daytona Beach, FL 32118 Tampa 4, LLC Notes payable $339,295 211 East International Speedwy Daytona Beach, FL 32118 Lady Godiva 2, LLC $331,762 Attn: Mark Nagrani 622 Palmetto Street New Smyrna Beach, FL 32168 Mark Nagrani Note payable $294,825 612 South Palmetto Avenue New Smyrna Beach, FL Doug Belden, Tax Collector Property ID: $38,354 3421162 Property ID: $35,973 3421165 Property ID: $35,953 3421164 Property ID: $35,592 3421163 Stillwaters, LLC $7,532 Stearns, Weaver Legal services $5,139 Devmax, LLC $3,694 GVC WINSTAR: Files for Chapter 11 Bankruptcy in Detroit ------------------------------------------------------- Winstar Communications, LLC, also known as GVC Winstar, LLC, filed for chapter 11 bankruptcy protection last week before the U.S. Bankruptcy Court for the Eastern District of Michigan in Detroit. In papers filed with the Bankruptcy Court, GVC Winstar indicated that, after any exempt property, is excluded and administrative expenses are paid, there will be no funds available for distribution to unsecured creditors. The Debtor estimates owing money to at least 50 creditors. GVC Winstar provides businesses with broadband business solutions. Its range of business solutions includes local and long distance telephone, as well as high-speed Internet access, data and information services. These solutions are delivered over its broadband network. GVC Winstar products and services include Winstar Business Essentials, Winstar Premier Access, high speed Internet and other data services, conferencing services, Web hosting solutions, government solutions, service provider and carrier programs, Office.com and services for building owners and managers. The Debtor is the operating subsidiary of Winstar Holdings, LLC, which was created by IDT Corp. to acquire substantially all the assets of Winstar Communications, Inc. in 2002. Winstar Communications, Inc. is currently undergoing liquidation under Chapter 7 of the Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware. The first meeting of creditors pursuant to Section 3419a) of the Bankruptcy Code in GVC Winstar's case has been scheduled for April 16, 2008, at 10:00 a.m. at room 315 E, 211 W. Fort St. Bldg. Detroit 341. Creditors are invited, but may not attend. A representative of the Debtor will attend the meeting and creditors will be given the opportunity to question that representative under oath regarding the Debtor's business. Creditors initially have until July 15, 2008, to file proofs of claim against the bankruptcy estate. GVC WINSTAR: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Winstar Communications, LLC aka GVC Winstar, LLC 333 West Fort Street Suite 1600 Detroit, MI 48226 Bankruptcy Case No.: 08-46694 Chapter 11 Petition Date: March 18, 2008 Court: Eastern District of Michigan (Detroit) Judge: Thomas J. Tucker Debtor's Counsel: James R. Harris, Esq. (j.harris_esq@sbcglobal.net) 400 Monroe, Suite 410 Detroit, MI 48021 Tel: (313) 586-0001 Total Assets: $3,200,000 Total Debts: $27,253,120 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cullen Allen Holdings, LP Trade Debt $2,000,000 Attn: David Trasher, Esq. 1200 Smith Street, Suite 1200 Houston, Texas, 77002 Tel: (713) 425-7400 Internal Revenue Service Payroll Taxes $1,237,782 Tel: (800) 829-0115 VAF II Trade Debt $900,000 Attn: Gerald Thrasher 101 North Wacker LP, Suite 101 Chicago, Illinois 60606 Tel: (312) 853-2068 Winstar Communications Payroll & Expenses $574,785 Employees Glenborough Acquistion, LLC, Trade Debt $550,000 as Attorney David Reiser successor in interest to GLB Summers 800 Boylston, Boston MA Tel: (617) 973-6145 700 South Flower, LLC Trade Debt $378,511 Dept 9542 700 Los Angeles, CA 90084-9542 Attn: Sandy Nam Jamison Services, Inc., acting as Agent for 700 South Flower, LLC Tel: (213) 624-2891 Fax: (213) 688-0176 700 South Flower Street, Suite 1100 Los Angeles, CA 90017 Verisign Trade Debt $256,947 Attn: Scott Miller Tel: (913) 814-6302 Digital- Bryan Street Trade Debt $223,732 Partnership, L.P. AT&T Trade Debt $218,444 Verizon Business Services Trade Debt $175,229 Lexington Charles, LP Trade Debt $126,457 Sprint Communications Trade Debt $114,562 URS Tower, LLC Trade Debt $97,298 Qwest 75118581 Trade Debt $78,550 Peachtree Financial Trade Debt $58,480 Association, LLC Central Business Park RE3, LLC Trade Debt $49,056 PCCP NNN Northstar, LLC Trade Debt $44,675 Level(3) Communications $40,277 Seagate Properties Trade Debt $27,183 Lackland Business Park, LLC Trade Debt $22,400 HALIFAX CORP: Has Until April 14 to Submit AMEX Compliance Plan --------------------------------------------------------------- Halifax Corporation received a letter from the American Stock Exchange indicating that the company does not meet certain continued listing standards. The company must achieve compliance by Sept. 14, 2008, and must provide the American Stock Exchange with a specific plan to achieve and sustain compliance with the listing standards by April 14, 2008. Specifically, the company is not in compliance because its stockholders equity is less than $4 million and the company have had losses from continuing operations or a net loss in three out of four of the company's most recent fiscal years. If the company either fail to submit a plan or if the company submit a plan and the staff of the American Stock Exchange determines that it does not adequately address these issues, the company may be subject to delisting proceedings. Furthermore, if its plan is accepted but the company are not in compliance with the continued listing standards at the conclusion of the plan period or if the company do not make progress consistent with the plan during the plan period, the staff of the American Stock Exchange will initiate delisting proceedings as appropriate. The company may appeal the staff determination to initiate delisting proceedings. The company expects to submit a plan to the American Stock Exchange to regain compliance with the continued listing standards on or before April 14, 2008. About Halifax Corporation Headquartered in Alexandria, Virginia, Halifax Corporation (AMEX:HX) -- http://www.hxcorp.com/-- is an enterprise logistics and maintenance solutions company providing a wide range of technology services to commercial and government customers throughout the United States. Founded in 1967, the company's principal products are enterprise logistics solutions and high availability hardware maintenance services. HOUSTON PETROLEUM: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Houston Petroleum Co. 3100 Timmons Lane, Suite 200 Houston, TX 77027 Tel: (713) 521-7040 Bankruptcy Case No.: 08-31769 Type of Business: The Debtor is an oil field contractor. Chapter 11 Petition Date: March 19, 2008 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Thomas S Henderson, III, Esq. (thenderson@tsh-atty.com) 711 Louisiana, Suite 3100 Houston, TX 77002 Tel: (713) 227-9500 Fax: (713) 620-3023 http://www.tsh-atty.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. INDALEX HOLDING: Eroding Performance Cues S&P's Rating Cut to 'B-' ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings for aluminum extruder Indalex Holding Corp. S&P lowered the corporate credit rating to 'B-' from 'B'. At the same time, S&P placed all the ratings on CreditWatch with negative implications. "The downgrade and CreditWatch listing reflect deteriorating operating performance due mainly to weak end-market demand, a trend we expect to continue in 2008," said Standard & Poor's credit analyst Anna Alemani. "As a result, the company's cash flow generation remains poor and its credit measures are very weak, with total debt to EBITDA of about 8x at Sept. 30, 2007. In addition, we expect leverage to increase and liquidity to deteriorate further in the near term, as continued weakness is likely in Indalex's key construction and transportation markets." In resolving the CreditWatch listing, S&P will review the company's near-term liquidity position in light of the difficult operating conditions and expectations for cash flow generation. INDYMAC ABS: Fitch Cuts Rating to 'CC/DR3' on Class B Certificates ------------------------------------------------------------------ Fitch has taken rating actions on these IndyMac ABS, Inc. home equity issues: Series SPMD 2001-C -- Classes A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'BBB-'; -- Class B downgraded to 'CC/DR3' from 'CCC/DR1'. Series SPMD 2004-B -- Classes A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'A'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class M-9 affirmed at 'BBB-'; -- Class M-10 downgraded to 'BB+' from 'BBB-'. The affirmations reflect a stable relationship between credit enhancement and expected loss and affect approximately $200.2 million in outstanding certificates. The negative rating actions are due to deterioration in the relationship between CE and expected losses and affect approximately $4.9 million in outstanding certificates. The mortgage loans in these transactions were originated or acquired by IndyMac Bank, F.S.B., which is also the master servicer for these loans. Series 2001-C and 2004-B are seasoned 76 and 41 months, respectively. Their pool factors are 4% and 19%, respectively. For series 2001-C, the 60+ delinquency is 36.15% of the current collateral balance, while the CE for the affected B class is 2.62%. For series 2004-B, the 60+ DQ is 19.54%, while the CE for the affected M-10 class is 5.94%. For both transactions, the overcollateralization levels are below their respective targets. INDYMAC MANUFACTURED: Fitch Affirms 'B+' Ratings on Five Classes ---------------------------------------------------------------- Fitch Ratings has taken rating actions on the three IndyMac Manufactured Housing Contract pass-through certificates listed below: Series 1997-1 -- Class A-2 affirmed at 'B+'; -- Class A-3 affirmed at 'B+'; -- Class A-4 affirmed at 'B+'; -- Class A-5 affirmed at 'B+'; -- Class A-6 affirmed at 'B+'; -- Class M remains at 'C/DR4'. Series 1998-1 -- Class A-3 affirmed at 'B'; -- Class A-4 affirmed at 'B'; -- Class A-5 affirmed at 'B'; -- Class M remains at 'C/DR5'. Series 1998-2 -- Class A-2 affirmed at 'BB'; -- Class A-3 affirmed at 'BB'; -- Class A-4 affirmed at 'BB'; -- Class M-1 downgraded to 'C/DR4' from 'CC/DR3'; -- Class M-2 remains at 'C/DR6'. The affirmations reflect a stable relationship between credit enhancement and expected loss and affect approximately $53.3 million in outstanding certificates. The downgrade is due to deterioration in the relationship between CE and expected losses and affects approximately $17.3 million in outstanding certificates. When estimating future collateral losses for the aforementioned transactions, Fitch assumed default rates, prepayment rates and loss severities to remain relatively consistent with current levels. The collateral in the aforementioned transactions consists of fixed-rate manufactured housing installment sales contracts and installment loan agreements secured by security interests in the manufactured homes and by liens on the real estate on which the manufactured homes are located. As of the February 2008 distribution date, series 1997-1, 1998-1 and 1998-2 are seasoned 128, 120 and 116 months, respectively, and the pool factors are approximately 15%, 19% and 16%, respectively. IndyMac Bank, FSB continues to service all of the loans with its Alt-A and subprime portfolio in Pasadena, California. INGRESS CBO: Moody's Maintains 'Ba1' Rating on $54 Mil. 2040 Notes ------------------------------------------------------------------ Moody's Investors Service confirmed the rating of these notes issued by Ingress CBO I, Ltd.: Class Description: $54,000,000 Class B Second Priority Fixed Rate Term Notes due 2040 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ba1 INTERNATIONAL RECTIFIER: Covenant Defaults Waived Until July 31 --------------------------------------------------------------- International Rectifier Corp. said in a regulatory filing with the Securities and Exchange Commission Friday, that on Dec. 14, 2007, the company, certain lenders and JPMorgan Chase Bank National Association, entered into Amendment No. 4 to their revolving credit agreement dated as of Nov. 6, 2006. Amendment No. 4 provides for the Revolver Banks' agreement that, in light of the ongoing investigation on accounting irregularities at the company's Japan subsidiary, conducted at the request of the Audit Committee of its Board of Directors by independent investigators hired by outside legal counsel, the company will not be deemed in default in respect of certain representations, warranties, covenants and reporting requirements during a period ending not later than March 31, 2008 (the "Amendment Period"). In addition, the Fourth Amendment provides that the Revolver Banks shall have no obligation to make any extensions of credit under the Revolver Agreement (other than the renewal of currently outstanding letters of credit in existing amount) until (i) the company's investigation has been concluded, (ii) the Revolver Banks have received a report of the results thereof and revised audited consolidated financial statements of the company, reasonably satisfactory to the Revolver Banks, and (iii) no other Default exists. On March 17, 2008, the company and the Revolver Banks entered into Amendment No. 5 to the Revolving Agreement, pursuant to which the term of the Amendment Period was extended (on substantially identical terms as the Fourth Amendment) through July 31, 2008. The Revolver Agreement, dated as of Nov. 6, 2006, provides for, among other things, a revolving credit facility with total commitments in the principal amount of $150,000,000. At March 17, 2008, the company had no borrowings and approximately $4.3 million in letters of credit outstanding under the Revolver Agreement. A full-text copy of Amendment No. 5 to the Revolving Agreement, executed and delivered as of March 17, 2008, is available for free at http://researcharchives.com/t/s?2968 About International Rectifier Based in El Segundo, California, International Rectifier Corporation (NYSE:IRF) -- http://www.irf.com/-- is a designer, manufacturer and marketer of power management product devices, which use power semiconductors. The company's products are used in a variety of end applications, including computers, communications networking, consumer electronics, energy-efficient appliances, lighting, satellites, launch vehicles, aircraft and automotive diesel injection. Its products consist of Power Management Integrated Circuits (Power Management ICs), Power Components and Power Systems. It summarizes its segments in two groups: Focus Products and Non-Focus Products. The company has manufacturing facilities in the U.S., Mexico, United Kingdom, Germany and Italy; and has subsidiaries in Japan and Singapore. * * * International Rectifier Corporation continues to carry Standard & Poor's 'BB' long term foreign and local issuer credit ratings, which were placed in April 2007. JOE SALAZAR: Case Summary & Eight Largest Unsecured Creditors ------------------------------------------------------------- Debtors: Jose Salazar Berta F. Salazar 629 Main Street, Suite 168 Watsonville, CA 95076 Bankruptcy Case No.: 08-51281 Chapter 11 Petition Date: March 19, 2008 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Debtors' Counsel: Judson T. Farley, Esq. Law Offices of Judson T. Farley 830 Bay Avenue, Suite B Capitola, CA 95010-2173 Tel: (831) 476-1766 judsonfarley@sbcglobal.net Total Assets: $1,087,600 Total Debts: $3,025,239 Debtors' list of their Eight Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service $2,617,000 P.O. Box 21126 ($900,000) Philadelphia, PA 19114-0326 State of California Tax Lien $140,763 Employment Development Department P.O. Box 826880 Sacramento, CA 94280-0001 Paul J. Beck Contractors 1996 Judgment $123,254 c/o Noland, Hammerly, Etiene & Ross P.O. Box 2510 Salinas, CA 93905-2510 North Montery Heights Corp. 1998 Judgment $55,527 Chanchal M. Singh 2000 Judgment $36,646 International Credit Recovery 1997 Judgment $21,179 Monetary County Tax Real Property Taxes $4,000 Dougherty Pump & Drill, Inc. 1999 Mechanic's Lien $870 JOHN HENRY HOLDINGS: Moody's Holds Corporate Family Rating at 'B2' ------------------------------------------------------------------ Moody's affirmed the B2 Corporate Family and Probability of Default Ratings of John Henry Holdings, Inc., a wholly-owned subsidiary of Multi Packaging Solutions, Inc. Concurrently, Moody's upgraded the first lien senior secured credit facility rating to B1 from B2 and upgraded the second lien senior secured term loan rating to B3 from Caa1. This action was prompted by the addition of $40 million in subordinated notes to MPS's capital structure, which effectively adds support to the company's first and second lien bank debt. The subordinated notes, along with additional equity, were used to acquire Innovative Creative Packaging Solutions, a manufacturer of folded carton packaging based in South Plainfield, New Jersey. JHH's B2 Corporate Family Rating reflects its pro forma revenue base of approximately $375 million, moderate levels of free cash flow and interest coverage, acquisitive nature and attendant integration risks. The ratings benefit from recent operating results that have mostly met or exceeded expectations, improved margins, long-term customer relationships and diversity within the end markets the company serves. Liquidity is expected to be adequate over the next twelve months, although covenant cushions on the senior secured credit facility will tighten. Besides the current transaction, the company added another $15 million in debt to its capital structure and drew down about $12 million on its revolver to acquire Great Western Industries, Inc in February 2008. The resulting higher debt levels, combined with scheduled step-downs in the leverage covenant in 2008, could limit effective availability on the revolver. Moody's took these rating actions on John Henry Holdings, Inc.: -- $30 million first lien senior secured revolver due 2011, upgraded to B1 (LGD3, 36%) from B2 (LGD3, 45%); -- $99 million first lien senior secured term loan due 2012, upgraded to B1 (LGD3, 36%) from B2 (LGD3, 45%); -- $22 million second lien senior secured term loan due 2012, upgraded to B3 (LGD5, 76%) from Caa1 (LGD6, 92%); -- Corporate Family Rating, affirmed B2; -- Probability of Default Rating, affirmed B2. The stable outlook anticipates that JHH will improve its liquidity position meaningfully over the near-term while maintaining pro forma revenue and operating profits at levels flat to slightly higher than recent results. John Henry Holdings, Inc. is a leading print and packaging company for the healthcare, horticultural, media, and value-added consumer markets. Products include folding cartons, blister cards, labels, inserts or outserts, pixie tags and flexible packaging. Headquartered in New York City, the company is privately held and had revenues of about $300 million for the twelve months ended Dec. 31, 2007. JOHN HENRY: S&P Keeps 'B+' Rating on $10MM Planned Loan Increase ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its issue-level ratings on John Henry Holdings Inc.'s first-lien bank facility and left the recovery rating on this debt unchanged, following the planned $10 million increase in the term loan. S&P affirmed the issue-level ratings on the company's first-lien facilities at 'B+', one notch above parent Multi Packaging Solutions Inc.'s corporate credit rating, and the recovery rating on this debt remains at '2', indicating the expectation of substantial (70% to 90%) recovery in the event of a payment default. S&P affirmed the issue-level rating on the $22 million second-lien term loan at 'CCC+', two notches below the corporate credit rating, and the recovery rating on this debt remains at '6', indicating expectations of negligible (0% to 10%) recovery in the event of a payment default. On a pro forma basis, the first-lien bank facility will consist of a $30 million revolving credit facility and $101.5 million in term loans. The company will use the incremental term loan, revolving credit borrowings, and some unrated unsecured debt to help finance two small-size acquisitions. The corporate credit rating on Multi Packaging is 'B' and the outlook is stable. "The ratings on Multi Packaging reflect the relatively narrow scope of its operations, a modest sales base, and the risks associated with an acquisitive growth strategy," said Standard & Poor's credit analyst Anna Alemani. "These negative factors are partially offset by the company's manageable debt maturity schedule, efficient business model, and a senior management team with experience in acquisitions and integration." JP MORGAN: Minimal Collateral Reduction Cues Fitch to Hold Ratings ------------------------------------------------------------------ Fitch Ratings affirmed J.P. Morgan Chase Commercial Mortgage Securities Corp., commercial mortgage pass-through certificates, series 2004-PNC1, as: -- $7.2 million class A-1 at 'AAA'; -- $235.3 million class A-1A at 'AAA'; -- $128.3 million class A-2 at 'AAA'; -- $98.0 million class A-3 at 'AAA'; -- $426.2 million class A-4 at 'AAA'; -- Interest-only class X at 'AAA'; -- $28.8 million class B at 'AA'; -- $13.7 million class C at 'AA-'; -- $17.8 million class D at 'A'; -- $11.0 million class E at 'A-'; -- $16.5 million class F at 'BBB+'; -- $11.0 million class G at 'BBB'; -- $20.6 million class H at 'BBB-'; -- $2.7 million class J at 'BB+'; -- $6.9 million class K at 'BB'; -- $4.1 million class L at 'BB-'; -- $5.5 million class M at 'B+'; -- $2.7 million class N at 'B'; -- $2.7 million class P at 'B-'. Fitch does not rate the $15.1 million class NR certificates. The rating affirmations are the result of minimal reduction of the pool collateral balance and stable performance. As of the March 2008 distribution date, the pool has paid down 3.8%, to $1.05 billion from $1.10 billion at issuance. Sixteen loans (16.6%) have defeased since issuance. Four loans (5%) are currently in special servicing. In total, 11.7% of the pool is considered a Fitch loan of concern. The largest specially serviced loan, (2.4%), is secured by an 182,322 sf office in Melville, New York. The principal of the borrower, which is also a major tenant at the property (American Home Mortgage, 41.1% of NRA), filed for Chapter 11 bankruptcy. The borrowing entity has not filed Chapter 11 and has not been consolidated into the bankruptcy filing. The borrower is keeping the loan payments current. The special servicer is currently evaluating workout options, including a potential loan assumption. Losses are not expected at this time. The second largest specially serviced loan (1.7%) transferred to special servicing in October 2007 after the owner/operator, MBS Cos., defaulted on debt service. The loan is secured by a 312-unit multifamily property located in San Antonio, Texas. Approval has been granted on the assumption of this loan which is scheduled to close within 60 days. Additional terms of the assumption require a six-month DSCR reserve and $241,000 escrowed for immediate repairs. The loan is to be brought current along with repayment of advances as a condition of the assumption. Fitch does not anticipate any losses on this loan. The third largest specially serviced loan is secured by a 216-unit multifamily complex located in Houston, Texas also owned and operated by MBS Cos. The special servicer is pursuing workout strategies, including disposition of the asset. Losses are possible. The last specially serviced loan, collateralized by a multifamily property in Evansville, Indiana, is expected to return to the master servicer. The largest loan in the pool, Centro Retail Portfolio (12.8%), maintains its investment grade shadow rating. The loan is secured by seven anchored retail properties, 54.1 % located in Southern CA, and 45.9 % in Northern, Califronia. Occupancy as of June 30, 2007 was 93%, consistent with occupancy at issuance (95%). JRR LLC: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------ Debtor: JRR LLC dba Justright Restaurants dba Capitola Grill 5045 Hilo Street Fremont, CA 94538 Bankruptcy Case No.: 08-41254 Chapter 11 Petition Date: March 17, 2008 Court: Northern District of California (Oakland) Judge: Randall J. Newsome Debtor's Counsel: Eric A. Nyberg, Esq. Kornfield, Paul, Nyberg and Kuhner 1999 Harrison Street #2675 Oakland, CA 94612 Tel: (510) 763-1000 e.nyberg@kornfieldlaw.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10 million Debtor's list of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ GE Financial value of $1,041,993 8377 E. Hartford Drive, security: Scottsdale, AZ 85255-5401 $25,000 Cadle Rock Joint Venture II pleasant hill; $429,593 100 North Center Street, value of Newton Falls, OH 44444 security: $10,000 Advance Restaurant Finance, LLC $406,301 3 Waters Park Drive, Suite 231 San Mateo, CA 94403 Lyon's of California $281,615 PMB391 1420 E. Roseville Parkway #140 Roseville, CA 95661 US Foodservice $162,855 Network Rewards $131,752 Sysco Foodservice $80,206 Internal Revenue Service $58,827 Emeryville Hotel Development $31,398 Shapell Industries $26,771 C.R. Dean $21,939 EPR Enterprises $18,964 Employment Development $10,100 Department ADP $8,572 McSweeny, Galssberg, Pollak $7,189 & Association Jassi Dhillon $6,879 PG & E $6,505 Buchalter Neimer $5,895 BLR Sign Systems $5,670 KERASOTES SHOWPLACE: Moody's Keeps Ratings on Sale Leaseback Deal ----------------------------------------------------------------- Moody's Investors Service affirmed the B2 corporate family rating and B1 senior secured bank rating of Kerasotes Showplace Theaters LLC following the close of another sale leaseback transaction, the company's third such transaction since late 2005. Additionally, Moody's changed the enterprise wide recovery assumption to 50% from 65%, reflecting expectations for lower recovery due to the continued sale leaseback transactions. Kerasotes' percentage of owned theaters has declined to less than 30% from over 60% in 2005, and the remaining real estate consists mostly of smaller, less valuable theaters. Commensurate with this change, Moody's raised the probability of default rating to B2 from B3 and lowered the Loss Given Default Assessment on the secured bank debt to LGD3, 37% from LGD2, 29%. The affirmation and stable outlook assume that the company's debt- to-EBITDA (as per Moody's standard adjustments, including rent expense) will remain in the high 5 to low 6 times range and that operating cash flow will continue to cover maintenance capital expenditures over the next several years. Moody's does not expect Kerasotes to become free cash flow positive until capital expenditures moderate after 2009, but its $75 million revolving credit facility (slightly less than $10 million outstanding currently) provides adequate liquidity for this expansion. Kerasotes Showplace Theatres, LLC -- Corporate Family Rating, Affirmed B2 -- Senior Secured Bank Credit Facility, Affirmed B1, LGD3, 37% -- Probability of Default Rating, Upgraded to B2 from B3 The B2 corporate family rating for Kerasotes Showplace Theatres LLC continues to reflect high financial risk, sensitivity to product from movie studios, lack of scale, a weak industry growth profile, and concerns that the company's aggressive expansion will not yield desired returns. Attractive concession margins, a strong competitive position in its targeted smaller markets, and an improving asset base support the rating. Kerasotes is expected to maintain adequate liquidity to fund its expansion plan through internally generated cash flow and borrowings under its $75 million revolving credit facility. Kerasotes Showplace Theatres, LLC, operates motion picture theaters in the Midwestern and upper Midwestern regions of the United States, including Colorado, Illinois, Indiana, Iowa, Ohio, Missouri, Minnesota and Wisconsin. The company currently operates 944 screens in 100 locations. Revenue for the 12 months ended Sept. 30, 2007 was approximately $242 million. KOSAN BIOSCIENCES: Warns of Non-Profitability; Needs Financing -------------------------------------------------------------- Kosan Biosciences Incorporated reported a net loss of $28,658,000 on total revenues of $22,707,000 for the year ended Dec. 31, 2007, as compared with a net loss of $29,469,000 on total revenues of $13,506,000. The company also had a net loss of $29,637,000 on total revenues of $13,410,000 in 2005. As of Dec. 31, 2008, the company's balance sheet showed total assets of $77,867,000, total liabilities of $18,307,000, and total stockholders' equity of $59,560,000. Profitability Warning In its annual report for 2007 submitted to the Securities and Exchange Commission, the company admitted that it has a history of net losses and may never become profitable. Kosan commenced operations in 1996 and is still developing its product candidates. It has not commercialized any products, and has incurred net losses since inception. As of Dec. 31, 2007, it had an accumulated deficit of approximately $188,964,000. To date, the company's revenues have been primarily from partnering arrangements and government grant awards. Its expenses have consisted principally of costs incurred in research and development and from general and administrative costs associated with operations. It expects expenses to increase and to continue to incur operating losses for at least the next several years as the company continues its research and development efforts for product candidates and research programs. The amount of time necessary to successfully commercialize any of the company's product candidates is long and uncertain, and successful commercialization may not occur at all. Kosan expects that additional financing will be required, and an inability to obtain the capital necessary to fund its operations on acceptable terms or at all would threaten the continued operation of its business. The company further expects that additional financing will be required to fund operations. Kosan said it does not know whether additional financing will be available when needed, or that, if available, the company will obtain financing on favorable terms. The company has consumed substantial amounts of cash to date and expect to incur significant operating expenditures over the next several years as it continue to advance its product candidates into and through clinical trials. The company said it currently has no commitments from third parties for external funding of its product development efforts (other than limited clinical trial cost reimbursements from Roche). According to Kosan, absent any new partnering arrangements with third parties, the company will be required to independently to fund any development and clinical trial activities that it may undertake. The company said that if it is unable to raise sufficient funds when needed, it may be required to delay, scale back or eliminate some or all of research or development programs; lose rights under existing licenses; or relinquish greater or all rights to product candidates at an earlier stage of development or on less favorable terms than Kosan would otherwise choose. Insufficient funds may adversely affect its ability to operate as a going concern, and an inability to obtain the capital necessary to fund operations on acceptable terms or at all would threaten the continued operation of its business. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?296a About Kosan Kosan Biosciences Incorporated (Nasdaq: KOSN) -- http://www.kosan.com/-- is a biotechnology company advancing two new classes of anticancer agents through clinical development -- a Hsp90 (heat shock protein 90) inhibitor and an epothilone. Hsp90 inhibitors have a novel mechanism of action targeting multiple pathways involved in cancer cell growth and survival. Tanespimycin (KOS-953) is being tested in combination with Velcade(R) (bortezomib) in patients with multiple myeloma in a clinical program called TIME. Tanespimycin is also being studied in HER2-positive metastatic breast cancer in combination with Herceptin(R) (trastuzumab). Epothilones inhibit cell division with a mechanism of action similar to taxanes, one of the most successful classes of anti-tumor agents. KOS-1584 is in Phase trials in solid tumors. Kosan's motilin agonist compound, KOS- 2187, licensed to Pfizer, is in a Phase 1 trial in gastroesophageal reflux disease (GERD). KOSAN BIOSCIENCES: Plans to Cut 37% Jobs and Suspends Research -------------------------------------------------------------- Kosan Biosciences Incorporated will reduce its workforce by approximately 37% to focus resources on supporting advancement of its lead clinical programs, tanespimycin in multiple myeloma and in metastatic breast cancer, and epothilone KOS-1584 in non-small lung cancer. The restructuring will primarily affect the company's research and administrative functions. As a result of the restructuring, most research programs will be placed on hold. The company may seek to partner these assets with companies looking for early-stage programs. "Restructuring our workforce to focus resources on development of our lead clinical programs completes the strategic reprioritization of Kosan's development portfolio that we recently announced. This represents an important step in Kosan's evolution to a product-oriented company," said Helen S. Kim, Kosan's chief executive officer. "We appreciate the efforts of all our employees as their contributions have helped to build our company's reputation as a leader in polyketide technology as well as Hsp90 and epothilone drug discovery. We believe that this restructuring will strengthen our ability to effectively manage our resources, execute on our development goals and advance our high-value, near-term commercial opportunities." Kosan anticipates incurring restructuring charges of approximately $700,000 in the first quarter of 2008, primarily associated with personnel-related termination costs. As a result of the restructuring, Kosan is reducing its 2008 guidance for cash used in operating activities by $3 million, from $40 million to $50 million to $37 million to $47 million. About Kosan Kosan Biosciences Incorporated (Nasdaq: KOSN) -- http://www.kosan.com/-- is a biotechnology company advancing two new classes of anticancer agents through clinical development -- a Hsp90 (heat shock protein 90) inhibitor and an epothilone. Hsp90 inhibitors have a novel mechanism of action targeting multiple pathways involved in cancer cell growth and survival. Tanespimycin (KOS-953) is being tested in combination with Velcade(R) (bortezomib) in patients with multiple myeloma in a clinical program called TIME. Tanespimycin is also being studied in HER2-positive metastatic breast cancer in combination with Herceptin(R) (trastuzumab). Epothilones inhibit cell division with a mechanism of action similar to taxanes, one of the most successful classes of anti-tumor agents. KOS-1584 is in Phase trials in solid tumors. Kosan's motilin agonist compound, KOS- 2187, licensed to Pfizer, is in a Phase 1 trial in gastroesophageal reflux disease (GERD). KOSAN BIOSCIENCES: Promotes Helen Kim as Chief Executive Officer ---------------------------------------------------------------- Kosan Biosciences Incorporated said that its board of directors has appointed Helen S. Kim as chief executive officer, effectively immediately. Ms. Kim joined Kosan in January 2008 as senior vice president and chief business officer, and was appointed president in late February 2008. Peter Davis, PhD., Kosan's chairman of the board, commented: "We believe that Helen possesses the breadth of business management and commercial experience, demonstrated leadership and commitment to Kosan to ensure that our company can operate at the highest levels of efficiency, productivity and teamwork and advance our key products toward the market. [Ms. Kim] has the full support of the board and the senior management team, and we are confident that under her direction, Kosan can realize its potential as a product-focused, market-driven organization." In addition to her extensive experience in business and corporate development, Ms. Kim's biotechnology expertise also includes corporate finance and strategic marketing. Ms. Kim's industry credentials include senior positions at Affymax, Onyx Pharmaceuticals, Protein Design Labs and Chiron Corporation. At Affymax, she served as chief business officer where she created and implemented a new business model and was responsible for portfolio prioritization, licensing and capital formation. At Onyx, Ms. Kim established and managed corporate collaborations and had oversight for project management, strategic marketing and investor relations. At Protein Design Labs, she originated the company's marketing and research and development project management functions and was responsible for strategic marketing. At Chiron, she led the global strategic marketing function for Chiron's therapeutics and vaccines businesses including new product launches and established multiple external collaborations including licensing, co-development and joint venture transactions. Ms. Kim most recently served as chief program officer for the Gordon and Betty Moore Foundation where she successfully developed initiatives to transform healthcare delivery practices in acute care hospitals. Ms. Kim received a B.S. in Chemical Engineering from Northwestern University and a M.B.A. from the University of Chicago. About Kosan Kosan Biosciences Incorporated (Nasdaq: KOSN) -- http://www.kosan.com/-- is a biotechnology company advancing two new classes of anticancer agents through clinical development -- a Hsp90 (heat shock protein 90) inhibitor and an epothilone. Hsp90 inhibitors have a novel mechanism of action targeting multiple pathways involved in cancer cell growth and survival. Tanespimycin (KOS-953) is being tested in combination with Velcade(R) (bortezomib) in patients with multiple myeloma in a clinical program called TIME. Tanespimycin is also being studied in HER2-positive metastatic breast cancer in combination with Herceptin(R) (trastuzumab). Epothilones inhibit cell division with a mechanism of action similar to taxanes, one of the most successful classes of anti-tumor agents. KOS-1584 is in Phase trials in solid tumors. Kosan's motilin agonist compound, KOS- 2187, licensed to Pfizer, is in a Phase 1 trial in gastroesophageal reflux disease (GERD). KRISTINA PLISIK: Case Summary & 15 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Kristina Plisik dba Advanguard Funding fdba Prime Rate Mortgage 332 Grotto Street Eureka, CA 95501-4351 Bankruptcy Case No.: 08-10462 Chapter 11 Petition Date: March 17, 2008 Court: Northern District of California (Santa Rosa) Judge: Alan Jaroslovsky Debtor's Counsel: David N. Chandler, Esq. Law Offices of David N. Chandler 1747 4th Street Santa Rosa, CA 95404 Tel: (707) 528-4331 DChandler1747@yahoo.com Total Assets: $2,754,150 Total Debts: $2,727,158 Debtor's list of its 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Irwin Home Equities real estate; $124,000 P.O. Box 5029 value of San Ramon, CA 94583 security: $400,000; value of senior lien: $286,441 Polling Services real estate; $100,000 Equity Trust value of P.O. Box 1529 security: Elyria, OH 44035 $397,500; value of senior lien: $425,000 Advanta Credit $23,000 P.O. Box 8088 Philadelphia, PA 19101-8088 Jim Lachowsky real estate; $20,000 value of security: $277,000; value of senior lien: $271,200 American Express $14,019 Chase Manhattan $5,000 Citicard $3,823 CBC Innovis $1,900 US Bank $1,880 IRS 2006 taxes $1,700 The Good Guys $1,367 AT&T $1,000 Credit Technologies $693 AT&T Yellow Pages Advert. $660 Edge Wireless $191 LASALLE COMMERCIAL: Moody's Cuts Rating on $1.2 Mil. Notes to 'B3' ------------------------------------------------------------------ Moody's Investors Service downgraded the ratings of two classes and affirmed the ratings of eleven classes of Lasalle Commercial Mortgage Securities, Inc., Commercial Mortgage Pass-Through Certificates, Series 2007-MF5 as: -- Class A, $421,151,668, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $9,155,000, affirmed at Aa2 -- Class C, $13,428,000, affirmed at A2 -- Class D, $8,545,000, affirmed at Baa1 -- Class E, $3,052,000, affirmed at Baa2 -- Class F, $4,882,000, affirmed at Baa3 -- Class G, $7,325,000, affirmed at Ba1 -- Class H, $2,441,000, affirmed at Ba2 -- Class J, $1,831,000, affirmed at Ba3 -- Class K, $1,831,000, affirmed at B1 -- Class L, $1,221,000, downgraded to B3 from B2 -- Class M, $610,000, downgraded to Caa1 from B3 Moody's is downgrading Classes L and M due to projected losses on specially serviced loans. This deal is approximately 0.05% of the $840 billion in outstanding commercial mortgage backed securities. Moody's classifies this deal as a small balance commercial loan securitization. Small balance deals represent approximately 0.5% of the outstanding CMBS universe. As of the Feb. 20, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 1.2% to $482.2 million from $488.3 million at securitization. The Certificates are collateralized by 388 mortgage loans with the top 10 loans representing 9.2% of the pool. No loans were defeased or liquidated from the trust. Fourteen loans, representing 4.9% of the pool, are in special servicing. Moody's is estimating $2.1 million of losses from all the specially serviced loans. Forty- four loans, representing 11.1% of the pool, are on the master servicer's watchlist. LEHMAN BROTHERS: Moody's Cuts Rating on $25.4 Mil. Certs. to 'B3' ----------------------------------------------------------------- Moody's Investors Service upgraded the rating of one rake class, downgraded the rating of one pooled class and affirmed the ratings of 10 pooled classes of Lehman Brothers Floating Rate Commercial Mortgage Trust Commercial Pass Through Certificates, Series 2005- LLF C4 as: -- Class A2, $32,078,602, Floating, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $24,328,000, Floating, affirmed at Aaa -- Class C, $22,117,000, Floating, affirmed at Aaa -- Class D, $13,270,000, Floating, affirmed at Aaa -- Class E, $13,270,000, Floating, affirmed at Aaa -- Class F, $13,270,000, Floating, affirmed at Aaa -- Class G, $13,270,000, Floating, affirmed at Aaa -- Class H, $15,482,000, Floating, affirmed at Aa1 -- Class J, $14,376,000, Floating, affirmed at Baa3 -- Class K, $25,438,398, Floating, downgraded to B3 from Ba2 -- Class WFV, $4,900,000, Floating, upgraded to A2 from A3 Moody's is upgrading Class WFV due to the improved performance of the Westfield Shoppingtown Valencia Loan. Moody's is downgrading Class K due to performance issues related to the IMT Central Florida Portfolio Loan and the 321-329 Riverside Avenue Loan. The Westfield Shoppingtown Valencia Loan ($105.1 Million -- 56.2% of the pooled balance) is secured by a 465,279 square foot portion of an 858,198 square foot regional mall located in Valencia, California. Anchor tenants include J.C. Penney, Macy's and Sears. Collateral occupancy was 97.4% as of December 2007, compared to 87.3% at securitization. The borrower is an affiliate of The Westfield Group, Inc. Comparable tenant sales were $436 per square foot for the 12-month period ending January 2008, compared to $432 per square foot at securitization. The floating rate loan matured in February 2008 and is in the first of two 12-month extension option periods. There is a junior rake component in the amount of $4.9 million. Based on Moody's adjusted net cash flow of $15.9 million the loan to value ratio is 54.5%, compared to 57.5% at Moody's last review in June 2007 and compared to 67.0% at securitization. Moody's current shadow rating is Aa3, compared to A2 at last review and Baa2 at securitization. The IMT Florida Portfolio Loan ($73.4 million -- 39.3%) is secured by six multifamily properties (2,008 units) located in Tampa, Clearwater, Orlando and Jacksonville, Florida. The properties were built between 1969 and 2003. Moody's Red-Yellow-Green(R) Update for the fourth quarter of 2007 classifies Tampa - Green (74), Orlando -- Yellow (62) and Jacksonville -- Yellow (36). Actual net operating income for calendar year 2007 was significantly below Moody's expectations, primarily due to increased operating expenses, in part caused by high tenant turnover rates. The borrower is an affiliate of Investors Management Trust and Lehman Brothers Real Estate Partners. The floating rate loan matured in November 2006 and is in the second of three 12-month extension option periods. There is a junior rake component in the amount of $5.6 million that Moody's does not rate and mezzanine debt in the amount of $11.1 million. Based on Moody's adjusted net cash flow of $7.5 million, the LTV is 85.3%, compared to 77.5% at Moody's last review and compared to 64.7% at securitization. Moody's current shadow rating is B2, compared to Ba3 at last review and Baa2 at securitization. The 321-329 Riverside Avenue Office Loan ($8.4 million - 4.5%) is secured by five two-story office buildings totaling 49,690 square feet located in Westport, Connecticut. The loan collateral is part of a seven building complex totaling 145,726 square feet. The loan sponsor is Investcorp. Investcorp, which owns all seven buildings, had intended to convert the property from office to residential use. Leases had been allowed to expire without a re- leasing effort. The borrower has since abandoned its residential conversion plan and now intends to lease up the buildings to office tenants. As of December 2007, the property was 30.5% leased to two tenants with lease expirations in May, 2008 and June, 2008, respectively. The remaining five buildings in the complex are 94.0% leased. According to Torto-Wheaton Research, the Westport market vacancy rate for Class A office space was 4.0% in the 4th Quarter of 2007. The floating rate loan has a final maturity date of April 9, 2008. The loan has been transferred to special servicing due to the impending loan maturity. A source of loan repayment has not yet been identified. Additional mortgage debt includes $5.7 million in non-trust junior debt. Moody's LTV is 97.0%. Moody's current shadow rating is B3, compared to Ba2 at last review. The loan was not shadow rated at securitization. LOCAL INSIGHT: S&P Chips Rating to 'B' on Projected Reorganization ------------------------------------------------------------------ Standard & Poor's Ratings Services downgraded Local Insight Regatta Holdings Inc. to 'B' from 'B+'. The rating outlook is stable. "The one-notch downgrade of LIRH reflects our expectation that the owners (Welsh, Carson, Anderson & Stowe; Spectrum Equity Investors; and certain members of management) intend to reorganize the Local Insight Media family of companies such that through a two-step process, LIRH will become a direct subsidiary of Local Insight Media Holdings Inc., which will be a newly created holding company," explained Standard & Poor's credit analyst Ariel Silverberg. S&P expects that transactions that effect the reorganization will be completed within several months. Other direct or indirect subsidiaries of LIMH will include Caribe Media Inc. and Local Insight Media Inc., which, in turn, owns CBD Media, ACS Media, and HYP Media. S&P's ratings on LIRH and Caribe reflect a forward- looking consolidated view of LIMH given the strategic relationship between these companies, underscored by common management and contractual intercompany consulting services. This strategic relationship also reflects LIRH's extensive business relationships with CBD Media, ACS Media, and HYP Media through its ownership of ILOB, and S&P's expectation that the value of LIMH to its owners will substantially benefit from the scale that will exist at the consolidated LIMH level. In addition, as LIRH and Caribe will be direct subsidiaries of LIMH, S&P believes there is a high likelihood that a bankruptcy at the LIMH level (possibly caused by weakness at another subsidiary) would cause the bankruptcy of its other subsidiaries. S&P also assigned issue-level and recovery ratings to LIRH's proposed $365 million senior secured credit facilities, which consist of a $30 million revolver and a $335 million term loan. The issue-level rating on these facilities is 'BB-' (two notches higher than the 'B' corporate credit rating), with a recovery rating of '1', indicating that lenders can expect very high (90% to 100%) recovery in the event of a payment default. Proceeds will be used to refinance LIRH's existing credit facilities and to fund the planned acquisition of The Berry Co.'s Independent Line of Business. In addition, S&P lowered the issue-level rating on LIRH's existing $86 million senior secured credit facilities to 'BB-' (two notches higher than the 'B' corporate credit rating) from 'BB'. The recovery rating on these loans remains '1', indicating that lenders can expect very high (90% to 100%) recovery in the event of a payment default. The issue-level rating was lowered in conjunction with the downgrade of LIRH to 'B' from 'B+'. S&P expects to withdraw this issue-level rating when the proposed bank facility closes. At the same time, Standard & Poor's raised its issue-level rating on Regatta's subordinated notes to 'B' (the same as the corporate credit rating) from 'B-'. A recovery rating of '3' was assigned to these securities, indicating that lenders can expect meaningful (50% to 70%) recovery in the event of a payment default. The higher issue-level rating reflects the extension of S&P's recovery rating scale and issue-level rating framework to speculative-grade unsecured debt issues. METRO ONE: Submits Restated Report for Quarter Ended September 30 ----------------------------------------------------------------- Metro One Telecommunications Inc. filed its amended financial report for the quarter ended Sept. 30, 2007, on March 19, 2008. As reported in the Troubled Company Reporter on Feb. 27, 2008, Metro One said it will be restating its financial statements for the third quarter ended Sept. 30, 2007, to correct errors in its accounting treatment of certain securities pursuant to a private securities purchase agreement dated June 5, 2007. In the company's restated report, it generated revenues of $4,198,000 and incurred a net loss of $3,983,000 for the quarter ended Sept. 30, 2007, as compared with revenues of $5,205,000 and a net loss of $4,001,000 for the previous comparable quarter. The company's restated report showed total assets of $23,617,000, total liabilities of $6,014,000, and total shareholders' equity of $8,996,000 as of Sept. 30, 2007. Liquidity and Capital Resources As of Sept. 30, 2007, the company had approximately $14,267,000 in cash and cash equivalents and restricted cash, including $3,000,000 of restricted cash, compared to approximately $16,706,000, including $4,741,000 of restricted cash, at Dec. 31, 2006. During the second and third quarters of 2007, the company received net proceeds of approximately $9,100,000 from its convertible preferred stock sale. In addition, during the third quarter of 2007, it received a release of $1,700,000 from the restricted cash account that secures our letter of credit for its formerly self- insured workers' compensation program. Cash and cash equivalents and restricted cash are recorded at cost which approximates their fair market value. Metro One has no outstanding debt, but must pay a 4% cumulative dividend on the outstanding convertible preferred stock on June 5th of each year beginning in 2008. The uses of the company's capital in the near future are expected to be primarily for working capital. It expects to adjust personnel, call centers and network capacities in order to address varying business circumstances, including changes in volume and pricing and other provisions of customer contracts. Going Concern Issues Metro One said that it experienced net losses in each of the quarterly and annual periods beginning with the second quarter of 2003. Excluding non-recurring events described above, its operations consumed approximately $11,500,000 of cash in the first nine months of 2007 primarily from net operating losses and restructuring costs. The company's independent registered public accounting firm, BDO Seidman LLP, in Seattle, included a going concern explanatory paragraph in its report on its consolidated financial statements as of and for the year ended Dec. 31, 2006. The high ratio of cash used in operations compared to Metro One's current cash resources will likely result in a similar going concern explanatory paragraph from its auditors in its report on its consolidated financial statements as of and for the year ended Dec. 31, 2007. The company said that its management is working to aggressively pursue new and additional sources of revenues to support its reduced cost structure, further reduce the direct cost of delivering services and reduce general and administrative overhead, and develop and grow data services business. However, the company warned that there can be no assurance that management's plans will be successful. The company said that it may need additional cash to fund its operations and pursue business initiatives during 2008. It may attempt to establish borrowing arrangements or otherwise raise additional funds in order to maintain adequate liquidity. Metro One admitted that it cannot provide assurance that borrowing or other funding will be available in amounts or on terms acceptable to the company. If the company is unable to execute operations as planned or obtain additional financing, Metro One said it may be forced to cease operations. A full-text copy of the company's amended financial report for the quarter ended Sept. 30, 2007, is available for free at http://ResearchArchives.com/t/s?2978 The company has not filed its annual report for the year 2007. About Metro One Based in Portland, Oregon, Metro One Telecommunications Inc. (Nasdaq: INFO) -- http://www.metro1.com/-- is a developer and provider of Enhanced Directory Assistance(R) and other information services. The company operates call centers located in the United States. METRO ONE: To Exit Telecom Assistance Biz by May 5; Cuts 500 Jobs ----------------------------------------------------------------- Metro One Telecommunications Inc. plans to cease operations at its wholesale directory assistance business by May 5, 2008, and as a result, will close call centers and lay off 600 workers, The Associated Press reports. The affected call centers handle incoming information calls for telecommunication firms based in Minneapolis; Charlotte, N.C.; Orlando, Fla.; and Honolulu in addition to its recently closed call centers in Long Island, N.Y., and Portland, AP says. Among those who will lose their jobs are Metro One's corporate employees at its Portland head office, according to the report. Metro One stated last week that laid off workers will get severance packages, AP relates. Metro One projects to incur at least $3.6 million in restructuring costs, according to AP. Following the restructuring, the company will hire around 70 workers at its headquarters to render contact services and leverage databases and proprietary information systems required by marketers, says AP. Metro One intends to find alternative solutions to its affected clients, AP adds. About Metro One Based in Portland, Oregon, Metro One Telecommunications Inc. (Nasdaq: INFO) -- http://www.metro1.com/-- is a developer and provider of Enhanced Directory Assistance(R) and other information services. The company operates call centers located in the United States. Going Concern Doubt BDO Seidman LLP, in Seattle, expressed substantial doubt about Metro One Telecommunications Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's recurring losses from operations and loss of significant customers. The company has not filed its annual report for the year 2007. MINNESOTA SURETY: A.M. Best Cuts Issuer Credit Rating to bb ----------------------------------------------------------- A.M. Best Co. downgraded the financial strength rating to B(Fair) from B++(Good) and issuer credit rating to "bb" from "bbb" of Minnesota Surety & Trust Company. The outlook for both ratings has been revised to negative from stable. These rating actions reflect MST's considerable decline in surplus in 2007 due to a sizable surety loss incurred in late 2007 when an insured contractor became unable to complete work in progress. Additional losses were incurred due to an insolvent bail bond agent. MST is pursuing assets of the contractor. Adding to MST's exposure to further surplus erosion is the cancellation of the company's quota share reinsurance arrangement at the beginning of February 2008. As a result, MST remains substantially exposed to potentially large losses in the future. MORGAN STANLEY: Three Classes of Notes Get S&P's Rating Upgrades ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on three classes of secured fixed-rate notes from Morgan Stanley ACES SPC's series 2006-8. The upgrades reflect the March 19, 2008, raising of the ratings on the referenced senior unsecured notes issued by Reliant Energy Inc., Goodyear Tire & Rubber Co., and Dynegy Holdings Inc. Morgan Stanley ACES SPC's series 2006-8 is a credit-linked note transaction. The rating on each class of notes is based on the lowest of: (i) the ratings on the respective reference obligations for each class (with respect to class A-1, the senior unsecured notes issued by Reliant Energy Inc. {'B'}; with respect to class A-4, the senior unsecured notes issued by Goodyear Tire & Rubber Co. (The) {'BB-'}; and with respect to class A-8, the senior unsecured notes issued by Dynegy Holdings Inc. {'B'}); (ii) the rating on the guarantor of the counterparty to the credit default swap, the interest rate swap, and the contingent forward agreement (in each instance, Morgan Stanley {'AA-'}); and (iii) the rating on the underlying securities, the class A certificates due 2013 from BA Master Credit Card Trust II's series 2001-B ('AAA'). Ratings Raised Morgan Stanley ACES SPC Series 2006-8 secured fixed-rate notes Rating ------ Class To From ----- -- ---- A-1 B B- A-4 BB- B A-8 B B- MORGAN STANLEY: Fitch Holds 'B' Rating on $2MM Class N Certs. ------------------------------------------------------------- Fitch Ratings affirmed the Morgan Stanley Capital 1 Trust series 2007-IQ13 commercial mortgage pass-through certificates as: -- $38.8 million class A-1 at 'AAA'; -- $474.6 million class A-1A at 'AAA'; -- $114.8 million class A-2 at 'AAA'; -- $64 million class A-3 at 'AAA'; -- $448.8 million class A-4 at 'AAA'; -- $163.9 million class A-M at 'AAA'; -- $149.6 million class A-J at 'AAA''; -- $1,632.9 million class X at 'AAA'; -- $130.1 million class X-Y at 'AAA'; -- $32.8 million class B at 'AA'; -- $16.4 million class C at 'AA-' -- $16.4 million class D at 'A'; -- $14.3 million class E at 'A-'; -- $18.4 million class F at 'BBB+' -- $14.3 million class G at 'BBB'; -- $18.4 million class H at 'BBB-' -- $8.2 million class J at 'BB+' -- $2 million class K at 'BB'; -- $4.1 million class L at 'BB-'; -- $6.1 million class M at 'B+'; -- $2 million class N at 'B'. Fitch does not rate classes O and P. The affirmations are the result of stable performance since issuance. The transaction has paid down 0.4% since issuance to $1.63 billion from $1.64 billion. The collateral consists of 174 loans on multifamily and commercial real estate properties in 32 states, with no state concentration exceeding 12.8%. Thirty-eight loans on co-op apartment buildings (8%) have investment grade shadow ratings. As of Feb. 15, 2007, there were six loans on the servicer's watch list. One of the watch list loans is the largest loan in the transaction, 75-101 Federal St (12.8 %), an office property in Boston. The servicer reports a 5% decline in occupancy since issuance to 86% and third-quarter debt service coverage ratio below that at issuance. The borrower reported that expense reimbursements were not fully recognized at that time in the financial statements. Fitch expects that when the financial reporting for 12 months is complete, the property will be reported as performing as anticipated. The Gateway I collateral (5.8 %) in Newark, the third largest loan, is on the watch list because it experienced a substantial electrical fire which resulted in approximately $5.5 million in damages and $2.5 million in lost rents. The property is currently reoccupied and insurance proceeds are expected to cover all losses. The four other watch list loans (3.7%) are reporting discrepancies between information provided at issuance and third-quarter 2007 operating information. Fitch believes that in most cases, the issues are the result of incomplete year-end 2007 income and expense data, and expects those problems will be resolved once 12 consecutive months of operating history are reported. There are two reported loans of concern totaling 0.12% of the transaction. Both are 30 days delinquent. The note rates on loans in this transaction range from 5.44% through 6.61%, with all but two loans maturing after 2015. MULBERRY STREET: Moody's Slashes Rating on $30 Mil. Notes to 'Ca' ----------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible downgrade these notes issued by Mulberry Street CDO, Ltd.: Class Description: $40,000,000 Class A-1B Floating Rate Notes due December 12, 2037 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Aa2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $30,000,000 Class B Floating Rate Notes due December 12, 2037 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. NEWMARKET CORP: S&P Changes Outlook to Positive; Keeps 'BB' Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on NewMarket Corp. to positive from stable. S&P also affirmed NewMarket's 'BB' corporate credit rating and the 'BB-' senior unsecured rating. The 'BB-' issue level rating (one notch lower than the corporate credit rating) on the notes and '5' recovery rating indicate S&P's expectation for modest (10% to 30%) recovery in the event of a payment default. The outlook revision reflects the potential that the company will maintain its cash flow protection measures and other key ratios at levels that exceed S&P's expectations for the existing ratings. "The company's near-term earnings prospects and business fundamentals are positives for credit quality, although potential debt-funded acquisition activity remains a risk factor," said Standard & Poor's credit analyst Wesley E. Chinn. The ratings on Richmond, Virginia-based NewMarket reflect the company's focus on the highly competitive, mature global petroleum additives industry, exposure to volatile raw material costs, and slightly aggressive financial policies. Tempering these negative factors are well-entrenched market positions in niche product areas, satisfactory liquidity, and strong cash flow protection measures for the ratings. NORMA CDO: Moody's Junks Rating on $150 Mil. Sr. Notes From 'Aaa' ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings of nine classes of notes issued by Norma CDO I Ltd., and left on review for possible further downgrade the rating of one of these classes of notes. The notes affected by this rating action are: Class Description: $975,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2049 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Class Description: $150,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2049 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ca Class Description: $86,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2049 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ca Class Description: $50,000,000 Class C Fourth Priority Senior Secured Floating Rate Notes Due 2049 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Ca Class Description: $74,000,000 Class D Fifth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2049 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ca Class Description: $65,000,000 Class E Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2049 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: Ca Class Description: $12,000,000 Class F Seventh Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2049 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca Class Description: $15,000,000 Class G Eighth Priority Junior Secured Deferrable Floating Rate Notes Due 2049 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: C Class Description: $23,000,000 Class H Ninth Priority Junior Secured Deferrable Floating Rate Notes Due 2049 -- Prior Rating: Ca -- Current Rating: C The rating actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence on March 10, 2008, as reported by the Trustee, of an event of default caused by the Class A Overcollateralization Ratio falling below 100%, as described in Section 5.1(j) of the Indenture dated March 1, 2007. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, certain parties to the transaction may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued following the event of default. Because of this uncertainty, the rating assigned to the Class A-1 Notes remains on review for possible further action. Norma CDO I Ltd. is a collateralized debt obligation backed primarily by a portfolio of credit default swaps referencing RMBS securities and CDO securities. NORTHWEST AIRLINES: Unable to Reach Pact for Pilots with Delta -------------------------------------------------------------- Northwest Airlines Corporation and Delta Air Lines Inc. were unable to reach an agreement on an acceptable seniority list integration, Delta's Pilot Union Chairman Lee Moak disclosed in a letter addressed to rank-and-file Delta pilots, The Associated Press reports. AP says Mr. Moak's letter referred to discussions with the "other carrier" in the past tense, which suggests there won't be further talks -- at least for now. The "other carrier" is presumed to be Northwest, officials close to the talks have said, says the report. Mr. Moak confirmed in his letter that the other carrier was only willing to discuss its latest proposal, to which he declined, believing it would "jeopardize the seniority and career expectations of Delta pilots." Delta executives previously stated they would not move forward with any combination unless the seniority of their employees was protected, according to AP. Delta pilot leaders are frustrated that "the results of their efforts will never be actualized," Mr. Moak said. Northwest spokesman Greg Rizzuto, said that his union "still values any deal to help better the careers of all pilots involved in any type of future merger or acquisition with any pilot group and due to the rising cost of oil it is imperative that a fair integration of seniority lists be found between any group." A full-text copy of Moak's letter is available for free at: http://crewroom.alpa.org/dal/DesktopDefault.aspx?tabid=2421 Talks Resume After Brief Impasse As reported in the Troubled Company Reporter on March 13, 2008, Delta and Northwest Airlines pilot leaders resumed talks on March 4, 2008, to reach an agreement on how to "mesh" their unions. The meetings have involved a handful of senior pilots and are not formal negotiations. As widely reported, the pilot negotiators of both carriers had an impasse over the combination of seniority rankings for 12,000 pilots. A pilots' agreement is the last major step needed for the carriers to merge. "Nothing can be accomplished if they're not talking, so just getting them back together in the same room is a big step," Kit Darby, a retired United Airlines pilot who now runs Air Inc., an Atlanta-based career-counseling firm for pilots, said. "Pilots get their rewards from a contract that's governed by seniority. This is everything to them." About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. NOVASTAR MORTGAGE: Inks Pact Dismissing Involuntary Ch. 11 Case --------------------------------------------------------------- In a Form 8-K filing with the U.S. Securities and Exchange Commission, NovaStar Financial, Inc., NovaStar Mortgage, Inc., NFI Holding Corp., and NovaStar Home Mortgage Inc. disclosed that they have entered into a settlement agreement with American Interbanc Mortgage LLC that dismisses the involuntary Chapter 11 case filed against NHMI. In return, NovaStar agreed to pay American Interbanc $2 million. Prior Actions In March 2002, American Interbanc filed an action against NHMI in the Superior Court of Orange County, California, entitled American Interbanc Mortgage LLC v. NovaStar Home Mortgage, Inc., et al. In the California Action, the plaintiff alleged that NHMI and two other mortgage companies engaged in false advertising and unfair competition under certain California statutes and interfered intentionally with the plaintiff's prospective economic relations. On May 4, 2007, a jury returned a verdict by a 9-3 vote awarding the plaintiff $15.9 million. The court trebled the award, made adjustments for amounts paid by settling defendants, and entered a $46.1 million judgment against defendants on June 27, 2007. The award is joint and several against the defendants, including NHMI. NovaStar said it is unknown if the other two defendants, one of which has filed a bankruptcy petition, have the financial ability to pay any of the award. NHMI asked the trial court to overturn or reduce the verdict. However, the plea was denied on Aug. 20, 2007, and NHMI appealed that decision. Pending the Appeal, the plaintiff commenced enforcement actions in the states of Missouri and Delaware, and obtained an enforcement judgment in Delaware. On Jan. 23, 2008, the plaintiff filed an involuntary petition for bankruptcy against NHMI with the U.S. Bankruptcy Court for the Western District of Missouri. The plaintiff was joined by two individuals alleging claims totaling $150 in the Involuntary filing. NHMI filed an answer and contested the standing of the plaintiff and the individuals to be petitioning creditors in bankruptcy. On March 17, 2008, the NovaStar Entities and the plaintiff entered into a Confidential Settlement Term Sheet Agreement with respect to the California Action, the Judgment, the Kansas City Action, the Delaware Judgment, the Involuntary, and all related claims. The parties agreed to negotiate a longer-form definitive settlement agreement to replace the Settlement Terms but, absent execution of such an agreement by March 24, 2008, the Settlement Terms become the final, binding settlement agreement between the parties. Settlement Terms Under the Settlement Agreement, the parties agreed to move to dismiss the Involuntary bankruptcy cases. Within 10 business days after notice of entry of the dismissal of the Involuntary, the NovaStar Entities will pay the plaintiff $2,000,000 plus the balance in an account established by order of the Bankruptcy Court in an amount no less than $50,000 -- but not anticipated to be greater than $65,000 at the time of payment -- with NHMI obligated to otherwise satisfy obligations to its identified creditors up to $48,000. The parties also agreed to extend the Appeal briefing period pending finalization of the settlement of the other actions, judgments and claims. The Settlement Terms also provide that, subject to settlement payments and satisfaction of certain other conditions, the parties will dismiss the California Action as to NHMI and the Kansas City Action and Delaware Judgment, effect notice of satisfaction of the Judgment, and effect a mutual release of all claims that were or could have been raised, upon the earliest of: i) July 1, 2010; ii) a waiver by Wachovia of Wachovia's right to file an involuntary bankruptcy proceeding against any of the NovaStar Entities prior to July 1, 2010; iii) an extension of the maturity date of NFI's indebtedness to Wachovia until at least July 1, 2010; or iv) delivery to the plaintiff of written documentation evidencing the full satisfaction of NFI's current indebtedness to Wachovia. In addition to the initial payments to be made to the the plaintiff following dismissal of the Involuntary petition, NFI will pay the plaintiff $5.5 million if, prior to July 1, 2010: a) NFI's average common stock market capitalization is at least $94.4 million over a period of five consecutive business days; or b) the holders of NFI's common stock are paid $94.4 in net asset value as a result of any sale of NFI or its assets. If NFI is sold prior to July 1, 2010 for less than $94.4 million and ceases to be a public company, then NFI will obligate the purchaser either to immediately pay $2 million to the plaintiff, or to pay the plaintiff $5.5 million in the event the value of the company exceeds $94.4 million prior to July 1, 2010 as determined by an independent valuation company. About NovaStar Financial Based in Kansas City, Missouri, NovaStar Financial Inc. (NYSE: NFI) -- http://www.novastarmortgage.com/-- is a specialty finance company that originates, purchases, securitizes, sells and invests in loans and mortgage-backed securities. The company also services a large portfolio of residential loans. American Interbanc Mortgage LLC and two other individual creditors filed an involuntary Chapter 11 petition against Novastar Home Mortgage Inc. on Jan. 23, 2008 (Bankr. W.D. Mo. Lead Case No. 08- 40245). Larry E. Parres, Esq., at Lewis, Rice & Fingersh, represents NHMI in its restructuring efforts. At the time of the petition filing, American Interbanc posted a judgment claim against NHMI for around $49 million. * * * NovaStar Financial's balance sheet as of Sept. 30, 2007, showed total assets of $4.54 billion, total liabilities of $4.62 billion, resulting in a total stockholders' deficit of $80.7 million. PACIFIC GOLD: Completes Share Restructuring of Pilot Mountain ------------------------------------------------------------- Pacific Gold Corp. completed a share restructuring of Pilot Mountain Resources Inc. by subscribing for new shares and raising the current outstanding shares of Pilot Mountain to 10 million shares. Pilot Mountain Resources plans to file a Form 10 filing with the Securities and Exchange Commission in April 2008 to prepare the company for a dividend distribution of 2 million of the shares owned by Pacific Gold at an undetermined date. Once the dividend is completed, Pilot Mountain should qualify for listing on the OTC Bulletin Board, Pacific Gold stated. In addition, Pacific Gold made similar arrangements for its 100% owned subsidiary Oregon Gold Inc. with similar arrangements regarding share structure and a Form 10 filing with the SEC. Management of Pacific Gold is pursuing a strategy of spinning off some Pacific Gold subsidiaries into their own publicly traded companies because management believes the projects are not currently reflective of the true value in the Pacific Gold stock price. Pilot Mountain owns claims that comprise Project W, which is a large predominantly tungsten-based resource with mineralized deposits that may contain up to a gross in ground value, before costs, of $800 million in base metals. Shares in both subsidiaries are still subject to lien under the agreement with Yorkville Advisors. Going Concern Doubt Mantyla McReynolds LLC expressed substantial doubt about Pacific Gold's ability to continue as a going concern after it audited the company's financial statements for the years ended Dec. 31, 2006 and 2005. The auditing firm pointed to the company's accumulated losses and negative cash flow from operations and working capital deficit. About Pacific Gold Based in Reno, Nevada, Pacific Gold Corp. (OTC BB: PCFG) -- http://www.pacificgoldcorp.com/-- is engaged in the acquisition and development of production-ready and in-production mining operations. The company is currently focused on alluvial gold and base metals operations located in western North America. Pacific Gold Corp. owns five operating subsidiaries: Nevada Rae Gold Inc. owns and operates the Black Rock Canyon gold mine, located in north-central Nevada; Pilot Mountain Resources Inc. owns Project W, a large tungsten based deposit in Nevada; Fernley Gold Inc. acquired exclusive lease rights to mine the Lower Olinghouse Placers in north-western Nevada; Oregon Gold Inc. owns the Bear Bench claims and Defiance mine, located in south-western Oregon; and Pacific Metals Corp. owns claims in San Juan and Delores Counties, Colorado, encompassing the Graysill Mine. PACIFIC LUMBER: Scopac Gets Final OK to Use Cash Collateral ----------------------------------------------------------- The United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, authorized Scotia Pacific Company LLC, on a third and final basis, to use the cash collateral securing certain timber notes it issued, including the cash held in the Scheduled Amortization Reserve Account, to fund its operations and the administration of its bankruptcy case. The Second Cash Collateral Order authorized Scopac, Bank of America National Trust and Savings Association, Bank of New York Trust Company, as trustee for the holders of the Timber Notes, and the Official Committee of Unsecured Creditors to agree on Scopac's further use of the Cash Collateral without motion, notice or a hearing. Under the Third Cash Collateral Order, the Court permits Scopac to use the Cash Collateral in accordance with a cash flow forecast for the 17-week period ending on June 27, 2008. A full-text copy of the Cash Collateral Budget is available for free at: http://bankrupt.com/misc/PALCO_Scopac_CashCollBudget.pdf In addition, a full-text copy of the February to June 2008 Budget is available for free at: http://bankrupt.com/misc/PALCO_ScopacFebJuneBudget.pdf The Court authorizes Scopac to draw from the SAR Account amount not to exceed $11,900,000, and directs Scopac to maintain not more than $2,500,000 cash outside the SAR Account. As adequate protection of the interests of BoNY and BofA in the Prepetition Collateral and Cash Collateral, Judge Richard Schmidt grants each of BofA and BoNY, on its own behalf and on behalf of BofA and the Noteholders, a first priority, perfected replacement lien and security interest in all the property of Scopac of the same type as the Prepetition Collateral in which BofA and BoNY do not have a lien. Each of BofA and BoNY is also granted a superpriority administrative claim under Section 507(b) of the Bankruptcy Code, to the extent of the postpetition diminution of their individual interests in the Prepetition Collateral and Cash Collateral. BofA's and BoNY's Superpriority Administrative Claims will be subject only to the fees and expenses of the Office of the United States Trustee and the Clerk of the Court. The liens granted to BofA, BoNY and the Noteholders will be subject and subordinate to a carve-out of the payment of allowed consultant and professional fees and disbursements incurred by the consultants and professionals retained by Scopac and the Committee, in an amount not to exceed: (1) unpaid consultant and professional fees and disbursements incurred from the Petition Date until any Event of Default; and (2) quarterly fees required to be paid pursuant to Section 1930(a)(6) of the Judiciary and Judicial Procedures Code. In no event will the Carve-Out include professional fees and disbursements incurred in connection with the actual filing of any claims or causes of action against BofA or BoNY, Judge Schmidt opines. Scopac will pay on a monthly basis, the reasonable fees of BofA and BoNY, including the reasonable fees and expenses of their counsel. As agreed by the parties-in-interest, Scopac's right to use the Cash Collateral will terminate on the earliest of: (a) the effective date of any confirmed Plan of Reorganization or Liquidation; (b) June 28, 2008; or (c) an occurrence of an event of default. Events of Default under the Cash Collateral Order refers to the occurrence and continuance of, among other things: (a) Scopac's withdrawal of more than the amount reflected in the Budget from the SAR Account for the applicable weekly Budget period; (b) Scopac's failure or refusal to pay any interest for the use of the Cash Collateral; (c) the conversion of Scopac's Chapter 11 cases to one under Chapter 7; (d) the appointment of a Chapter 11 trustee in Scopac's bankruptcy case; and (e) appointment of an examiner having extended powers relating to the operation of Scopac's business. Scopac and BoNY Stipulate on Payment of Professional Fees from SAR Account Judge Schmidt also approved a stipulation resolving dispute between Scopac and BoNY related to the SAR Account. Under the stipulation, Scopac and BoNY have agreed on certain terms to govern the use of the SAR Account to pay BoNY's professional fees. Subject to all restrictions applicable to the term "Valuation Consultants" in an initial Professional Fee stipulation between the same Parties, BoNY is authorized to use funds from the SAR Account to pay Bingham McCutchen and The Law Offices of Alan Waltner. BoNY will promptly provide Scopac with copies of all invoices and engagement letters pertaining to all funds withdrawn from the SAR Account up to March 18, 2008, to the extent not previously provided. Going forward, BoNY will give Scopac (a) five business days' prior written notice of its intention to withdraw any funds from the SAR Account, including a copy of each invoice for which any payment is being made, and (b) a timely accounting on or before the 10th day of each month for all withdrawals from the SAR Account during the prior month. As reported in the Troubled Company Reporter on Feb. 28, BoNY asked the Bankruptcy Court to increase the Monthly Cap of the SAR Account for payment of the Indenture Trustee's professional fees up to $500,000 per month, calculated on a rolling basis from May 10, 2007. Bank of America, N.A., as agent for Scopac's secured lenders, objected to the request. Scopac sought to recover nearly $1,000,000 that, it said, BoNY misappropriated from Scopac's SAR Account, to pay the bank's bankruptcy professionals. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 51; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Scopac Drops Request to Borrow $51MM from BofA -------------------------------------------------------------- Scotia Pacific Company LLC advised the U.S. Bankruptcy Court for the Southern District of Texas that it will withdraw its request to incur roughly $51,000,000 postpetition financing from Bank of America, N.A., after it received permission from the Court to use the cash collateral securing certain timber notes it issued. As reported in the Troubled Company Reporter on March 7, 2008, Scopac sought the Court's permission to obtain DIP financing from BofA to increase its operational flexibility and to fund its operations through confirmation of a Plan of Reorganization. The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes, objected, arguing that with respect to $38,000,000 in the Scheduled Amortization Reserve Account, Scopac has no immediate needs for further DIP financing. BoNY maintained thatScopac's operations will not cease if the proposed DIP Loan Facility is not obtained. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 51; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Files Supplements to Second Amended Plan -------------------------------------------------------- Pacific Lumber Company and its debtor affiliates delivered to the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi on March 15, 2008, supplements to their Second Amended Joint Plan of Reorganization. A. A list of Assumed Contracts, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_DebtorsAssumedContracts.pdf B. Officers and Directors for Reorganized PALCO (1) Directors * Ezra G. Levin previously served as a director of PALCO, and currently serves as a director of MAXXAM. Mr. Levin will receive an annual stipend of $36,000 plus $1,000 for any special committee meetings. * Michael J. Rosenthal previously served as a director of PALCO, and currently serves as a director of MAXXAM. Mr. Rosenthal will receive an annual stipend of $36,000 plus $1,000 for any special committee meetings. * Four Remaining Directors will be designated by Marathon Structured Finance Fund, L.P. The four Marathon designees, together with Mr. Levin and Mr. Rosenthal, will jointly agree upon the selection of a chief executive officer for Reorganized PALCO, who will serve as the seventh director of Reorganized PALCO. The officers and remaining management team of Reorganized PALCO will be selected by the Board, which will be substantially controlled by Marathon Structured Finance Fund L.P. (2) Officers The MAXXAM Entities intend to nominate five officers for Reorganized PALCO: Officer Designation ------- ----------- George O'Brien Chief Executive Officer and President Gary L. Clark Chief Financial Officer Henry Long Vice President of Operations Frank S. Bacik Vice President and General Counsel Bernard Birkel Secretary C. Officers and Directors of Reorganized Scotia Pacific Company LLC (1) The Reorganized Scopac board will be comprised of five directors. The board of Reorganized PALCO will select two of those directors. The New Indenture Trustee will also select two directors for the Reorganized Scopac Board. The fifth director will be the chief executive officer of Reorganized Scopac, whose selection will be jointly agreed upon by the other four directors of Reorganized Scopac. (2) The MAXXAM Entities intend to nominate five officers for Reorganized PALCO: Officer Designation ------- ----------- George O'Brien CEO & President Frank S. Bacik Vice President & General Counsel Gary L. Clark Chief Financial Officer Jeffrey Barrett, Ph.D. Vice President Bernard L. Birkel Secretary D. Agreement and Plan of Merger for PALCO Debtors, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_DebtorsMergerPlan.pdf E. Organizational Documents of Reorganized PALCO and Scopac, which include: -- Reorganized PALCO's Amended and Restated Certificate of Incorporation; -- Reorganized PALCO's Amended and Restated Bylaws; -- Reorganized Scopac's Amended and Restated Limited Liability Company Agreement; -- PALCO Board Resolutions Approving Merger and Related Transactions; -- PALCO Stockholder Consent Approving Mergerand Related Transactions; -- Britt Lumber Board Resolutions Approving Merger and Related Transactions; -- Britt Lumber Board Stockholder Consent Approving Merger and Related Transactions; -- Salmon Creek Board Resolutions Approving Merger and Related Transactions; -- Salmon Creek Stockholder Member Consent Approving Merger and Related Transactions; -- Scotia Inn Board Resolutions Approving Merger and Related Transactions; -- Scotia Development Board Resolutions Approving Merger and Related Transactions; -- Scotia Development Member Consent Approving Merger and Related Transactions; -- Scopac Board Resolutions Approving Amended and Restated Certificate of Formation; and -- Scopac Shareholder Consent Approving Amended and Restated Certificate of Formation. A full-text copy of the Debtors' Organizational Documents is available for free at: http://bankrupt.com/misc/PALCO_Debtors_OrgDocs.pdf F. Form of New Indenture Agreement and New Timber Notes, a full- text copy of which is available for free at: http://bankrupt.com/misc/PALCO_DebtorsNewIndAgrmt.pdf The Debtors have yet to file with the Court the definitive terms of a contemplated exit financing facility. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 51; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Marathon Supplements to 1st Amended Joint Plan -------------------------------------------------------------- Marathon Structured Finance Fund L.P. and Mendocino Redwood Company, LLC, delivered to the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi on March 15, 2008, supplements to their First Amended Joint Plan of Reorganization. The five Plan Supplements are: A. A list of executory contracts and unexpired leases that may be, but are not required to be, assumed pursuant to the Marathon Amended Plan. The list also contains certain estimates by the Debtors of cure costs that would result from assumption of the agreements. A list of Marathon's Assumed Contracts is available for free at: http://bankrupt.com/misc/PALCO_Marathon_AssumedContracts.pdf B. Annual Compensation for Newco Senior Officers Officer Compensation ------- ------------ Richard Higgenbottom $125,000 Chief Executive Officer Michael E. Jani 100,000 President and Chief Forester of Timberland Operations John L. Russell 100,000 President of Sawmill and Distribution Operations Martin R. Olhiser 100,000 Senior Vice President James Pelkey 100,000 Chief Financial Officer C. Townco List of Officers Officer Title ------- ----- Richard Higgenbottom Chief Executive Officer [Michael Jani] President [John Russell] President [Martin Olhiser] Executive Vice President [James Pelkey] Chief Financial Officer and Secretary D. Newco Organizational Documents, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_MarathonNewcoOrgDocs.pdf E. Townco Organizational Documents, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_MarathonTowncoOrgDocs.pdf F. New Timber Notes Indenture, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_MarathonTimberNotesIndenture.pdf G. Litigation Trust Agreement, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_MarathonLitigationTrustAgrmt.pdf H. Potential Claims and Causes of Action and Identities of Potential Defendants, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_MarathonPotentialClaims.pdf About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 51; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: BoNY Files Supplements to Amended Plan for Scopac ----------------------------------------------------------------- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes, submitted to the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi on March 15, 2008, supplements to its First Amended Plan of Reorganization for Scotia Pacific Company LLC. BoNY's five Plan Supplements are: A. A list of executory contracts to be assumed by the purchaser of Scopac's assets as a going concern, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_BoNYExecutoryContracts.pdf B. Sales Procedures for the Sale of the Assets of Scopac, a full- text copy of which is available for free at: http://bankrupt.com/misc/PALCO_BoNYScotiaSalesProc.pdf C. Litigation Trust Agreement, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_BoNYLitigationTrustAgrmt.pdf D. Liquidation Trust Agreement, a full-text copy of which is available for free at: http://bankrupt.com/misc/PALCO_BoNYLiquidatingTrustAgrmt.pdf E. Environmental Rider to Plan, Disclosure Statement and Sales Procedures BoNY has modified its Plan and drafted its Sales Procedures to make it clear that after the Amended BoNY Plan is confirmed: * The Plan Agent for the Post-Confirmation Scopac under the Amended BoNY Plan will fully and completely comply with any and all environmental obligations; * The Commercial Timberlands will be sold intact and not as separate parcels; and * Notwithstanding any other provision of the Sale Procedures or the Plan, any person or entity that acquires the assets of Scopac at the sale contemplated under the Amended BoNY Plan, including the Indenture Trustee if it acquires the property through a successful credit bid, must assume, satisfy, complete, perform, comply with and be subject to all Environmental Obligations as if no Chapter 11 bankruptcy cases had been filed. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 51; http://bankrupt.com/newsstand/or 215/945-7000). PALM INC: S&P Puts 'B' Rating on Negative Watch After Revenue Dive ------------------------------------------------------------------ Standard & Poor's placed its 'B' corporate credit rating and other ratings on Palm Inc. on CreditWatch with negative implications. "The action reflects the company's declining revenues and profitability levels, which have fallen significantly below earlier expectations," said Standard & Poor's credit analyst Bruce Hyman. The company reported negative EBITDA for the November 2007 and February 2008 quarters, in part because of a market shift towards its lower-priced products. Still, cash balances, $272 million at Feb. 28, 2008, remain adequate for near to intermediate term operations. S&P will assess Palm's prospects for returning to profitability in resolving the CreditWatch. PASCACK VALLEY: Court OKs $45MM Asset Sale to HUMC/Touro College ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey authorized the sale of Pascack Valley Hospital Association's assets to Hackensack University Medical Center and Touro Medical College for $45 million, Bill Rochelle of Bloomberg News reports. As reported in the Troubled Company Reporter on March 7, 2008, the Debtor, in consultation with The Bank of New York, determined that HUMC/Touro College's $45 million bid was the highest and best offer beating 9 Knoll-LN LLC's offer. Jack M. Zackin, Esq., at Sills Cummis & Gross P.C. in Newark, New Jersey, said 9 Knoll also offered $45 million but the bid included the Debtor's furniture, fixtures and equipments valued at $500,000. The Debtor's asset is comprised of real property located at 250 Old Hook Road in Westwood, New Jersey. The auction sale was held on Feb. 27, 2008, before the Hon. Rosemary Gambardella. Headquartered in Westwood, New York, Pascack Valley Hospital Association, Inc. -- http://www.pvhospital.org/-- operates a full-service, 291-bed non-profit medical facility, part of a system of healthcare affiliates known as the Well Care Group, Inc., which provides a full range of the most advanced, technically specialized healthcare services available. The company filed for Chapter 11 protection on September 24, 2007 (Bankr. Case No.07-23686). Jack M. Zackin, Esq., at Sills Cummis Radin Tischman, represents the Debtor in its restructuring efforts. The U.S. Trustee for Region 3 appointed creditors to serve on an Official Committee of Unsecured Creditors on this case. Douglas J. Mcgill, Esq., at Drinker Biddle & Reath, represents the Committee. When the Debtor filed for protection against its creditors, it listed assets between $1 million to $100 million and debts of more than $1 million. PERKINS & MARIE: S&P Lifts Rating to 'B-' on Amended Credit Deal ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Memphis, Tennessee-based Perkins & Marie Callender's Inc. to 'B-' from 'CCC+.' The outlook is stable. "The upgrade reflects the company's recently amended credit agreement that loosens financial covenants," explained Standard & Poor's credit analyst Jackie E. Oberoi, "thereby increasing EBITDA cushion to about $11 million for the leverage ratio covenant and $13 million for the interest coverage requirement based on Oct. 7, 2007, EBITDA levels." In exchange, term loan pricing will increase 250 basis points and consenting lenders were paid a 25- bps fee. PHI INC: Weak Credit Measures Prompts S&P To Chip Ratings to 'B+' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered the corporate credit rating on helicopter services provider PHI Inc. to 'B+' from 'BB-'. At the same time, S&P lowered the issue-level rating on PHI's senior unsecured debt to 'B+' from 'BB-'. The outlook is stable. As of Dec. 31, 2007, PHI had about $337.4 million in debt, adjusted for operating leases. "The downgrade is based on PHI's weak credit measures and subpar operating performance," said Standard & Poor's credit analystAniki Saha-Yannopoulos. The company's operations are concentrated in the U.S., and bad weather in the first and fourth quarters of 2007 and the remnant aftereffects of the pilot strike have hurt the company's operating margins. Financial leverage also remained elevated throughout 2007. The ratings on Lafayette, Lousiana-based PHI reflect the company's participation in the highly cyclical and volatile oil and gas industry, exposure to weather and seasonal fluctuations that may limit flight hours, limited geographic diversity, and highly leveraged financial risk profile. Partially tempering these weaknesses are the company's large market share in the Gulf of Mexico and the industry's oligopolistic structure. QMED INC: Secures $750K Funding for Strategic Alternative Venture ----------------------------------------------------------------- QMed Inc. entered into an agreement with Michael Cox, former CEO of QMed, John Gargana, a former director of QMed and Barry Levine, to receive up to $750,000 in working capital. The company relates that the transaction will allow them to pursue a strategic alternative and to satisfy its need for working capital in the immediate future. The financing is structured to provide $375,000 to the company at closing, with an additional $375,000 to be deposited into an escrow account, which could be released at the company's request, in two stages, upon achieving certain milestones in connection with the possible sale of the company or its assets, within certain specified time frames. Either the company, on reaching the milestones, or such investors, may require the release of such funds to the company. The loan proceeds plus interest, together with up to $620,000 in severance obligations owed to Mr. Cox, as to which he has agreed to forbear, will be secured by substantially all assets of the company, other than securities and other investment property. Mr. Cox has agreed to forbear on his severance obligations of up to $620,000, until the earlier of Jan. 15, 2009 and the closing of either an asset or stock sale. At the closing of this financing, the company will issue to the Investors warrants to acquire up to 19.9% of the company's common stock at an exercise price of $.001 per share; of which, warrants to purchase up to 9.95% of the company's common stock will immediately be exercisable, with the balance becoming exercisable in proportion to the remaining proceeds in the escrow being released to the company. The investors will be entitled, in the case of a sale or exchange of all or, under certain circumstances, a majority of the outstanding shares, or an issuance of new shares constituting a majority of the outstanding shares, or a sale of all or substantially all of the company's assets, to receive, either from the company or by virtue of the transaction itself, the consideration payable in connection with the transaction on the shares underlying their warrants, or if no consideration is payable with respect to the shares in the transaction, as in a new issuance of shares or in certain asset sale transactions, the market value of the shares after giving effect to the transaction, in each case net of the exercise price of the warrants. Pursuant to the transaction, the Investors have the right to have two observers present at board meetings. The staff at Nasdaq has informed the company orally that they are of the opinion that, as Mr. Gargana resigned as director of QMed, this transaction would violate a NASDAQ rule unless shareholder approval were obtained, because the issuance of warrants in the transaction may be deemed compensation. Because of QMed's need for working capital, and because the company is already in receipt of delisting letters from NASDAQ, QMed has decided to proceed with the transaction without seeking shareholder approval. As a result, the company's shares may be delisted by Nasdaq. The company has not yet determined whether it will appeal Nasdaq's or its staff's determination. This transaction does not involve the assets or operations of QMedCare of New Jersey Inc., and its HMO operations. The company and QMedCare of New Jersey Inc. continue to work with the New Jersey Department of Banking and Insurance on the orderly wind down of operations of the New Jersey HMO. About Qmed Inc. Headquartered in Eatontown, New Jersey, Qmed Inc. (NasdaqCM: QMED) -- http://www.qmedinc.com/-- provides evidence-based clinical information management systems around the country to its health plan customers. The system incorporates Disease Management services to patients and decision support to physicians. The company's QMedCare subsidiary specializes in serving high-risk populations of Medicare beneficiaries. Going Concern During the nine months ended Aug. 31, 2007, the company incurred net losses totaling $13.1 million, had net cash used in operating activities of $5.1 million as of Aug. 31, 2007. The company believes these factors raise substantial doubt as to the company's ability to continue as a going concern. QMED INC: Unit to Pay $750,000 as Settlement to DAKOTACARE Claims ----------------------------------------------------------------- QMed Inc.'s LakeShore Captive Insurance subsidiary will pay $750,000 to DAKOTACARE, in connection with the approval received from the South Carolina Department of Insurance to enter into and conclude a settlement with DAKOTACARE. The company relates that the settlement will resolve all potential claims and liabilities to DAKOTACARE, including those related to the South Dakota Special Needs Plan in which not only LakeShore, but also QMed and certain QMed subsidiaries, including QMedCare Dakota LLC and QMedCare Inc., had been involved. The settlement involves the release by DAKOTACARE of claims against LakeShore, well as any claims against the company and its subsidiaries. The company anticipates that, with this settlement and certain additional steps, it will wind down the businesses of the subsidiaries involved in the South Dakota project, specifically, QMedCare Dakota LLC, LakeShore and QMedCare Inc. LakeShore, the company's captive insurance subsidiary, has approximately $794,000, of which, LakeShore is in the process of obtaining releases to fund this settlement obligation well as certain costs associated with the dissolution of this subsidiary. As a result of this settlement, the company will record in the fourth quarter of 2007, a non-cash reversal in connection with previously recorded liabilities of approximately $7.4 million, related to its incurred but not reported medical expenses. Additionally, since the company is discontinuing its Special Needs Insurance activities, it will record a charge in the fourth quarter of 2007 totaling approximately $900,000 related to the write-down of impaired assets. "We are pleased that this matter has been resolved," Jane Murray, QMed's chief executive officer, said. "With the Investors' investment, and the settlement of the South Dakota related liabilities, QMed will continue to pursue strategic alternatives with its advisors while remaining singularly focused on its core disease management and health informatics business," Ms. Murray said. About Qmed Inc. Headquartered in Eatontown, New Jersey, Qmed Inc. (NasdaqCM: QMED) -- http://www.qmedinc.com/-- provides evidence-based clinical information management systems around the country to its health plan customers. The system incorporates Disease Management services to patients and decision support to physicians. The company's QMedCare subsidiary specializes in serving high-risk populations of Medicare beneficiaries. Going Concern During the nine months ended Aug. 31, 2007, the company incurred net losses totaling $13.1 million, had net cash used in operating activities of $5.1 million as of Aug. 31, 2007. The company believes these factors raise substantial doubt as to the company's ability to continue as a going concern. RIVIERA HOLDINGS: Mark Lefever Resigns as Chief Financial Officer ----------------------------------------------------------------- Mark B. Lefever resigned as chief financial officer and executive vice president of Riviera Holdings Corporation and as president of Riviera Black Hawk effective March 31, 2008. Mr. Lefever has accepted a position as chief financial officer of Fontainebleau Las Vegas LLC. Mr. William L. Westerman, CEO and Chairman of Riviera Holdings, will assume the duties of president of Riviera Black Hawk and chief financial officer of Riviera Holdings Corporation in the interim. "[Mr. Lefever] was a welcome addition to the Riviera team when he joined us two years ago," Mr. Westerman said. "He was instrumental in securing our refinancing in 2007, well as providing invaluable insight and direction for our company. We wish him the best in his future endeavors with our next door neighbor, Fontainebleau Las Vegas, as they continue to develop their project. Given Fontainebleau's close proximity to the Riviera, I am confident that Mark will be available to provide a very smooth transition as we actively search for our new CFO." Headquartered in Las Vegas, Riviera Holdings Corporation (Amex: RIV) -- http://www.rivierahotel.com/-- owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colorado. * * * As reported in the Troubled Company Reporter on March 17, 2008, Riviera Holdings Corporation's balance sheet at Dec. 31, 2007, showed total assets of $218.46 million and total liabilities of $266.28 million, resulting to total shareholders' deficit of $47,826. ROBECO CDO: S&P Puts 'BB' Rating on Class B-2 on Negative Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class B-1L, B-1LB, and B-2 notes issued by Robeco CDO II Ltd., an arbitrage CBO transaction managed by Robeco Weiss, Peck & Greer, on CreditWatch with negative implications. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the notes since the deal was initially rated in August 2001, primarily the decline in credit quality of the underlying portfolio. Standard & Poor's will review the results of current cash flow runs generated for Robeco CDO II Ltd. to determine the level of future defaults the rated classes can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. S&P will compare the results of these cash flow runs with the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement available. Ratings Placed on CreditWatch Negative Robeco CDO II Ltd. Rating ------ Class To From Balance (million) ----- -- ---- ----------------- B-1L BBB/Watch Neg BBB $38.000 B-1LB BBB/Watch Neg BBB $5.000 B-2 BB/Watch Neg BB $22.000 Other Outstanding Ratings Robeco CDO II Ltd. Class Rating Balance (million) ----- ------ ----------------- A-1L AAA $80.965 A-2L AAA $34.000 RUNNING DEER: Case Summary & 14 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Running Deer Golf Club LLC P.O. Box 611 Elmer, NJ 08318 Bankruptcy Case No.: 08-14439 Chapter 11 Petition Date: March 13, 2008 Court: District of New Jersey (Camden) Judge: Judith H. Wizmur Debtor's Counsel: Joel Schwartz, Esq. Law Offices of Joel Schwartz 333 Tilton Road Northfield, NJ 08225 Tel: 609-677-9454 Estimated Assets: $1 million to $100 million Estimated Debts: $1 million to $100 million Debtor's list of its 14 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Sterling Mortgage $4,200,000 New Jersey Business Finance Corp. $850,000 185 Bridge Plaza North, Suite 211 Fort Lee, New Jersey 07024 Internal Revenue Service 941 $100,000 State of New Jersey, Sales & Use $75,000 Fisher & Son Co. Inc. $40,000 Bertino Engineering $40,000 Donald Rogers Inc. $30,000 Don Urie Associates Inc. $30,000 E.W. Bostwick Inc. $22,000 Nelson Johnson, Esq. $20,000 South Jersey Propane $16,000 Fleetway Capital Corp. $10,880 Franklin Alarm Co. Inc. $8,000 Fred Harz & Son $7,500 SALONE HOLDINGS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Salone Holdings, LLC 602-9 West DuBois Avenue DuBois, PA 15801 Bankruptcy Case No.: 08-70278 Chapter 11 Petition Date: March 19, 2008 Court: Western District of Pennsylvania (Johnstown) Judge: Bernard Markovitz Debtor's Counsel: Christopher A. Boyer, Esq. (bankruptcy@leechtishman.com) Leech, Tishman, Fuscaldo & Lampl, LLC 525 William Penn Place, 30th Floor Pittsburgh, PA 15219 Tel: (412) 261-1600 Fax: (412) 227-5551 http://www.leechtishman.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. SECURITY CAPITAL: Board Suspends Declaration of Quarterly Dividend ------------------------------------------------------------------ Security Capital Assurance Ltd.s board of directors elected not to declare either a quarterly dividend with respect to its common shares or a semi-annual dividend with respect to the Security Capital Assurance series A preference shares. The company expects that this election by the companys board of directors will reduce cash outflow by approximately $9.9 million for the period ended March 31, 2008. Any future dividends will be subject to the discretion and approval of the board of directors, applicable law and regulatory requirements. As reported in the Troubled Company Reporter on Mar. 19, 2008, Security Capital reported results for the three-month and full- year periods ended Dec. 31, 2007. The net loss in the fourth quarter of 2007 was $1.1 billion versus net income of $35.8 million in the fourth quarter of 2006. For the full-year 2007, the company reported a net loss of $1.2 billion versus net income of $117.4 million for the full-year 2006. As of Dec. 31, 2007, the company had total shareholders' equity of $427.1 million and common shareholders' equity of $180.5 million. About Security Capital Assurance Security Capital Assurance Ltd. (NYSE: SCA) -- http://www.scafg.com-- is a Bermuda-domiciled holding company whose primary operating subsidiaries, XL Capital Assurance Inc. and XL Financial Assurance Ltd, provide credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally. SECURITY CAPITAL: S&P Junks Preference Shares' Rating From 'BB-' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Security Capital Assurance Ltd.'s series A perpetual noncumulative preference shares to 'C' from 'BB-'. The shares remain on CreditWatch with negative implications. At the same time, Standard & Poor's withdrew its 'BB+' preliminary senior secured debt rating and 'BB-' preliminary preferred stock rating on SCA's Rule 415 shelf registration. These actions follow the company's recent announcement that its board of directors elected not to declare a semiannual dividend payable on March 31, 2008. SENTINEL MANAGEMENT: Auditor Sued by Chapter 11 Trustee for $550MM ------------------------------------------------------------------ Frederick Grede, Chapter 11 trustee appointed in Sentinel Management Group Inc.'s bankruptcy case, demanded $550 million from McGladrey & Pullen LLP, the Debtor's auditor, alleging that the auditing firm ignored purported federal violations of Sentinel's former officers, The Associated Press and The Wall Street Journal report. Mr. Grede told the U.S. Bankruptcy Court for the Northern District of Illinois that McGladrey & Pullen and partner, G. Victor Johnson, "substantially contributed to and caused hundreds of millions of dollars of losses" that led to the downturn of Sentinel in August 2007, reports relate. Sentinel was hit by the crisis in the subprime-mortgage industry last year. According to the reports, Mr. Grede asserted that McGladrey & Pullen, which audited the Debtor's report for 2006, certified the false financial statements and entered accounting information that caused misstatements in Sentinel's report. Mr. Grede pointed out that with the auditing firm's neglect, it permitted the Debtor's former officers to operate the company for their personal advantage, according to the reports. WSJ and AP note that the Debtor currently has pending litigation against clients and the Securities and Exchange Commission. Mr. Johnson and the auditing firm's representative refused to give comments on the issue. Mr. Bloom Given Time to Settle Lawsuit Against Trustee As reported in the Troubled Company Reporter on Feb. 11, 2008, the Honorable John H. Squires of the U.S. Bankruptcy Court for the Northern District of Illinois gave a defendant in Sentinel Management Group Inc.'s Chapter 11 case more time to settle allegations of fraud against him. Philip M. Bloom, a defendant in an adversary proceeding in Sentinel's bankruptcy case and former CEO of Sentinel, had earlier requested the Court to dismiss a lawsuit against him for alleged preferential and fraudulent transfers and damages. In an effort to avoid unnecessarily expending time and resources, Mr. Bloom and the Chapter 11 Trustee that filed the lawsuit both agreed to temporarily suspend further litigation and instead focus efforts on potential settlement. Judge Squires extended, until Feb. 15, 2008, the period wherein Mr. Bloom can file his reply to the dismissal request with the Court. Additionally, Judge Squires stretched the date of hearing on Mr. Bloom's dismissal request to Feb. 28, 2008. About McGladrey & Pullen McGladrey & Pullen LLP -- http://www.mcgladrey.com/-- is a national CPA firm that offers audit and accounting services to midsized companies. It serves clients from approximately 100 offices across the United States. About Sentinel Management Based in Northbrook, Illinois, Sentinel Management Group Inc. -- http://www.sentinelmgi.com/-- is a full service firm offering a variety of security solutions. The company filed a voluntary chapter 11 petition on Aug. 17, 2007 (Bankr. N.D. Ill. Case No. 07-14987). Ronald Barliant, Esq., Randall Klein, Esq., and Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black Rosenbloom & Moritz, Ltd. represent the Debtor. Quinn, Emanuel Urquhart Oliver & Hedges, LLP, represent the Official Committee of Unsecured Creditors. DLA Piper US LLP represents as the Committee's co-counsel. When the Debtor sought bankruptcy protection, it listed assets and debts of more than $100 million. On Aug. 28, 2007, the Court approved Frederick Grede as the Debtor's Chapter 11 Trustee. Mr. Grede selected Catherine L. Steege, Esq., Christine L. Childers, Esq., and Vincent E. Lazar, Esq., at Jenner & Block LLP as his counsels. As reported in the Troubled Company Reporter on Dec. 19, 2007, the Court extended, until June 13, 2008, the Debtor's exclusive periods to file a Chapter 11 plan of reorganization and disclosure statement. SIRIUS SATELLITE: Merger With XM is Not Anti-Competitive, DOJ Says ------------------------------------------------------------------ The U.S. Department of Justice has informed SIRIUS Satellite Radio Inc. and XM Satellite Radio Holdings Inc. that it has ended its investigation into the pending merger of SIRIUS and XM without taking action to block the transaction. This decision means the DOJ has concluded that the merger is not anti-competitive and it will allow the transaction to proceed. SIRIUS and XM each obtained stockholder approval for the deal in November 2007. The pending merger is still subject to approval of the Federal Communications Commission. About XM Based in Washington, D.C., XM Satellite Radio Holdings Inc. -- http://www.xmradio.com/-- parent of XM Satellite Radio Inc. (Nasdaq: XMSR), is a satellite radio company, with more than 8.5 million subscribers. XM delivers entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Ferrari, Subaru, Suzuki and Toyota. About SIRIUS Satellite Based in New York, SIRIUS Satellite Radio Inc. (NASDAQ: SIRI) -- http://www.sirius.com/ -- provides sports radio programming, broadcasting play-by-play action of more than 350 pro and college teams. SIRIUS features news, talk and play-by-play action from the NFL, NASCAR, NBA, NHL, Barclays English Premier League soccer, UEFA Champions League, the Wimbledon Championships and more than 125 colleges, plus live coverage of several of the year's top thoroughbred horse races. SIRIUS also features programming from ESPN Radio and ESPNews. * * * As reported in the Troubled Company Reporter on March 6, 2008, Standard & Poor's Ratings Services revised the CreditWatch implications of the ratings on Sirius Satellite Radio Inc. (CCC+/Watch Developing/--) to developing from positive. S&P originally placed the ratings on CreditWatch, with positive implications, on Feb. 20, 2007, based on the company's definitive agreement to an all-stock "merger of equals" with XM Satellite Radio Holdings Inc. (CCC+/Watch Developing/--). SHARPER IMAGE: Resumes Merchandise Gift Card Policy --------------------------------------------------- Sharper Image Corp. has resumed redemption of all its customers' Gift Cards, Reward Cards, Gift Certificates and Merchandise Certificates for their full value. "We appreciate the Bankruptcy Court's prompt approval of our request to again honor all our customers' Gift Cards for their full value," said Robert Conway, Chief Executive Officer of the Debtor, in a statement. "While some conditions apply under the approved new voluntary policy, we hope our customers will consider this a fair solution." Under the Court approved new policy, all Gift Cards, etc., will be honored for their full value with two conditions: (1) they must be redeemed in full in one transaction -- no partial redemptions permitted, and (2) customers must purchase an item that costs double the value of the gift card or merchandise certificate. A complete summary of the Merchandise Gift Card Policy is available for viewing at http://www.sharperimage.comand in all the Debtor's stores. About Sharper Image Corp. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of Unsecured Creditors has been appointed in the case. When the Debtor filed for bankruptcy, it listed total assets of US$251,500,000 and total debts of US$199,000,000. (Sharper Image Bankruptcy News Issue No. 7, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHARPER IMAGE: TomTom Demands Segregation of Portable GPS Systems ----------------------------------------------------------------- TomTom, Inc., seeks to revoke the credit it granted to Sharper Image Corp. and asserts its right for the reclamation of certain goods because of the Debtor's insolvency, pursuant to Section 546(c) of the Bankruptcy Code and Article 2-702(2) of the Uniform Commercial Code. TomTom demanded the segregation of the goods it supplied to the Debtor pursuant to a purchase order for goods received on January 10, 2008. TomTom's attorney, Lee Harrington, Esq., at Nixon Peabody, LLP, in Boston, Massachusetts, relates that the purchase order may indicate an order of 3,000 units of TomTom ONE 3rd Editions Portable GPS Systems, worth $390,000. Based on the initial review of its books and records, TomTom notes that it only made a partial shipment to the Debtor of 1,308 units worth $170,040 under the January 2008 Purchase Order. About Sharper Image Corp. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of Unsecured Creditors has been appointed in the case. When the Debtor filed for bankruptcy, it listed total assets of US$251,500,000 and total debts of US$199,000,000. (Sharper Image Bankruptcy News Issue No. 7, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHARPER IMAGE: Wells Fargo Objects to Garmin Administrative Claim ----------------------------------------------------------------- Wells Fargo Retail Finance, LLC, disputes Garmin USA, Inc.'s request for a $568,784 administrative expense claim for goods the entity delivered to Sharper Image Corp. within 20 days before the Debtor's bankruptcy filing. Wells Fargo and certain other lenders provided a $60,000,000 loan to the Debtor pursuant to the Court-approved DIP Loan and Security Agreement. The DIP Loan is secured by a superpriority lien in substantially all of the Debtor's assets. Garmin's Request for Administrative Claims Payment As reported in the Troubled Company Reporter on March 18, Garmin USA asked the U.S. Bankruptcy Court for the District of Delaware to allow an administrative expense claim in the full value of the goods that were received by the Debtor within 20 days before the Petition Date. Alternatively, pursuant to Section 2-702 of the Uniform Commercial Code and Section 546(c) of Bankruptcy Code, Garmin USA asked the Court to direct the Debtor to return of all Goods sold on credit and received within 45 days prior to the Petition Date. Dealer Agreement with Garmin Garmin USA entered into a domestic dealer agreement with Sharper Image on Dec. 29, 2004, whereby the Debtor agreed to be a non- exclusive independent dealer for Garmin USA's products. In the ordinary course of business, Garmin USA shipped goods to the Debtor for use by the Debtor in its business, including: Invoice Number Amount Date Shipped Date Received ------------- ------ ------------ ------------- 37770735 US$267,293 12/7/07 12/14/07 37770728 US$138,596 12/7/07 12/13/07 37838954 US$377,985 12/10/07 12/13/07 40973889 US$136,795 2/1/08 2/6/08 40973892 US$251,991 2/1/08 2/7/08 41033190 US$64,798 2/4/08 2/7/08 41033191 US$115,198 2/4/08 2/8/08 As of the Debtor's bankruptcy filing on Feb. 19, 2008, the Debtor owed Garmin USA US$2,132,222 for prepetition deliveries of goods. In the 20 days preceding the Petition Date, Garmin USA sold to the Debtor US$568,784 in Goods in the ordinary course of business. Wells Fargo Responds to Garmin's Request Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, reminds the Court that pursuant to the terms of the Final DIP Order, Wells Fargo holds a prior security interest and prior administrative claim in Debtor's assets, including the Garmin Goods. Thus, Wells Fargo objects to payment of Garmin's administrative claim before Wells Fargo has been paid. To the extent that Garmin's Administrative Claim is valid, he asserts that it is subject to and subordinate to the DIP protections and the prepetition loan protections. "If Garmin's application is allowed, [the] payment of Garmin's Administrative Claim would reduce the loan availability to the Debtor under the DIP Loan Agreement, adversely affect the Budget approved by the Final DIP Order, and ultimately could prejudice the Debtor," Mr. Collins said. Other creditors who have served notices of reclamation and administrative expense claims may also insist on immediate payment if ever Garmin's Administrative Claim was paid at this time, Mr. Collins adds. Moreover, Section 503(b)(9) of the Bankruptcy Code does not entitle Garmin to immediate payment of its Administrative Claim. While Section 503(b)(9) permits the payment of certain administrative expenses upon proper application, the timing of any payment is subject to the discretion of the Court. In light of (i) Wells Fargo's superpriority claim entitlement over payments to Garmin, (ii) the terms of the Final DIP order, and (iii) the prejudice to both Wells Fargo and the Debtor that would result from the immediate payment of the Garmin Administrative Claim, Garmin is not entitled to immediate payment of its Administrative Claim and the Court should deny Garmin's Application, Mr. Collins emphasizes. "Since Wells Fargo has not consented to the return of any Garmin Goods, allowance of Garmin's Reclamation Claim would constitute an event of default under the DIP Loan Agreement," Mr. Collins points out. About Sharper Image Corp. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of Unsecured Creditors has been appointed in the case. When the Debtor filed for bankruptcy, it listed total assets of US$251,500,000 and total debts of US$199,000,000. (Sharper Image Bankruptcy News Issue No. 7, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) SIMPLON BALLPARK: Cisterra Wants to Foreclose on Condo Project -------------------------------------------------------------- Steve Black of Cisterra Partners LLC told the U.S. Bankruptcy Court for the Southern District of California that despite the short-term extensions given to Simplon Ballpark LLC involving loans that were due in May, the Debtor remained unable to get funds to complete a condominium project, Mike Freeman writes for The Union Tribune in San Diego, California. Simplon Ballpark, a Simplon Corporation affiliate, was forced to seek protection under chapter 11 of the U.S. Bankruptcy Code after failing to secure financing for its Cosmopolitan Square project, a 25-floor condominium tower located at Petco Park. Tribune reveals that the Debtor has applied more than $25 million to the still unfinished project. According to the report, Mr. Black asserted that the Debtor defaulted on the extension deals and filed bankruptcy petition on the eve of foreclosure. He asked the Court to allow foreclosure on the Cosmopolitan Square, which is valued at $26.5 million, Tribune says. Mr. Black told the Court that Simplon Ballpark owes about $10 million to 14 other lenders, Tribune notes, citing court filings. Tribune adds that based on court filings, the Debtor has $1.5 million in unpaid bills payable to subcontractors. Based on the report, Simplon Ballpark obtained an initial loan of $15 million from Liberty Bankers Life Insurance in 2005 and Cisterra Partners acquired that loan from Liberty in 2007. Tribune reveals that another Simplon Corporation affiliate sought chapter 11 protection for a condominium/hotel project to be built at Ash Street and Front Street in downtown San Diego. According to the report, that other affiliate owes $13.5 million and its condo/hotel site is now used as a parking lot and a taco shop, Tribune quotes court filings as stating. Simplon CEO Confident to Get Financing Company officers stated, Tribune notes, that bankruptcy is a way to buy time needed in getting more funds to complete the unfinished Cosmopolitan Square. Simplon Corporation CEO Jack Scull told reporters that he is "confident [they] will remedy the situation and emerge much stronger . . . in relatively short" time. He added that they expect to finish the condo in spring, Tribune says. The Debtor's failure to get additional capital was caused by the crises in the financial and housing sectors, according to the report. About Simplon Ballpark San Diego, California-based Simplon Ballpark LLC is a real estate developer and an affiliate of Simplon Corporation -- http://www.simploncorporation.com/-- that develops and owns several large properties in Southern California. Simplon specializes in high-rise and land development. Simplon Ballpark filed for chapter 11 protection on March 4, 2008 (Bankr. S.D. Calif. Case No. 08-01803). Judge James W. Meyers presides the case. Hanno T. Powell, Esq., at Powell & Pool represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets and debts between $100 million and $500 million. It did not file a list of its largest unsecured creditors. SIRVA INC: Reports $412.7M Net Loss for Year Ended December ----------------------------------------------------------- Sirva Inc. reported a net loss of $412.7 million for the year ended December 31, 2007. Liquidity and Capital Resources -- Long-term Debt The company said it has $490.6 million senior credit facility through its subsidiary, SIRVA Worldwide, Inc. This Credit Facility with JPMorgan Chase Bank and a consortium of other lenders consists of a $315.6 million term loan obligation and a $175.0 million revolving credit facility. Borrowings under the revolving credit facility were $85.0 million and $29.0 million as of December 31, 2007 and 2006, respectively. As a result of the Chapter 11 filing of the company, the entire amount of the Term Loan and Revolving Credit Facility as of December 31, 2007 has been classified as a current liability. The company had outstanding letters of credit of $23.1 million and $18.6 million as of December 31, 2007 and 2006, respectively. It had available credit of $66.9 million and $127.4 million as of December 31, 2007 and 2006, respectively. -- Convertible Perpetual Preferred Stock On August 23, 2007, the company's stockholders approved the conversion of the Convertible Notes into shares of Convertible Preferred Stock and the related issuances of the Convertible Preferred Stock and common stock. As a result, the Convertible Notes automatically converted into an aggregate of 75,000 shares of Convertible Preferred Stock. -- Short-term Debt Sirva Inc.'s subsidiary, SIRVA Mortgage, Inc., utilizes a flexible early purchase facility and a warehousing credit and security agreement to fund mortgage loans held for resale. The flexible early purchase facility is the primary means for SIRVA Mortgage to fund its traditional residential first mortgage lending. The outstanding balance against the flexible early purchase facility was $40.4 million and $85.6 million as of December 31, 2007 and 2006, respectively. The outstanding balance against the warehousing credit and security agreement was $21.9 million and $39.4 million as of December 31, 2007 and 2006, respectively. The outstanding balance under the flexible early purchase facility at the end of February 2008 was approximately $19.3 million and is anticipated to be fully paid on or before June 1, 2008. On December 21, 2007, SIRVA Mortgage executed a loan participation sale agreement with Colonial Bank, N.A., as a new mortgage lender for a $175.0 million loan participation facility. No amounts were outstanding under this facility as of December 31, 2007. Also on December 21, 2007, SIRVA Mortgage executed a master repurchase agreement with Colonial Bank, N.A. for a $25.0 million committed revolving mortgage loan facility with the same new lender. This facility expires in December 2008. The outstanding balance against the committed revolving mortgage loan facility was $12.7 million as of December 31, 2007. A subsidiary, SIRVA Finance Limited, and various international subsidiaries of SIRVA Relocation LLC, maintain relocation financing facilities with various European banks of $36.6 million at December 31, 2007. The outstanding balance of these facilities was $19.4 million and $24.1 million at December 31, 2007 and 2006, respectively. After the company's bankruptcy filing, outstanding obligations under the Credit Facility amounted to $511.0 million. On February 6, 2008, the entered into a Credit and Guarantee Agreement that provides up to $150.0 million in financing, comprised of a term loan facility of up to $65.0 million and a revolving credit facility of up to $85.0 million. The DIP Facility has a sublimit of $60.0 million for letters of credit to be issued for purposes that are reasonably satisfactory to the DIP Agent. Cash flows The most significant cash flows from discontinued operations are the proceeds in 2006 from disposition of the Business Services Division in the United Kingdom and Ireland for $85.7 million and the proceeds in 2005 from the disposition of the Australian and New Zealand Pickfords Records Management businesses for $79.0 million. Net cash provided by operating activities was $18.4 million in 2007 compared to a net use of cash of $111.5 million and $6.1 million in 2006 and 2005, respectively. Net cash used by investing activities was $8.9 million in 2007 compared to net cash provided of $84.7 million and $77.8 million in 2006 and 2005, respectively. The net cash proceeds from dispositions for the years ended December 31, 2007, 2006 and 2005, are $5.3 million in 2007, $87.3 million in 2006, and $114.2 million in 2005. Net cash used for financing activities was $15.3 million and $111.7 million in 2007 and 2005, respectively, compared to net cash provided of 31.4 million in 2006. Balance Sheet The company reported total assets of $894.4 million, total liabilities of $1,149.0 million and total stockholders' deficit of $325.0 million for the year ended December 31, 2007. About Sirva Inc. Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets : SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation solutions to a well-established and diverse customer base. The company handles all aspects of relocation, including home purchase and home sale services, household goods moving, mortgage services and home closing and settlement services. SIRVA conducts more than 300,000 relocations per year, transferring corporate and government employees along with individual consumers. SIRVA's brands include Allied, Allied International, Allied Pickfords, Allied Special Products, DJK Residential, Global, northAmerican, northAmerican International, Pickfords, SIRVA Mortgage, SIRVA Relocation and SIRVA Settlement. The company has operations in Costa Rica. The company and 61 of its affiliates filed separate petitions for Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No. 08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is representing the Debtor. An official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, it reported total assets of US$924,457,299 and total debts of US$1,232,566,813 for the quarter ended Sept. 30, 2007. The combined hearing on the adequacy of the disclosure statement and the confirmation of the Debtors' proposed Plan of Reorganization is set April 18, 2008. (Sirva Inc. Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). SIRVA INC: Former Senior VP Wants Stay Lifted to Pursue Labor Case ------------------------------------------------------------------ Robert Noia filed a complaint against SIRVA, Inc., and SIRVA Relocation, LLC, in the United States District Court for the District of Connecticut, seeking damages for wrongful discharge, among other claims. Mr. Noia asserts that he was discharged from his position as senior vice-president for client development in January 2006. At the time of his discharge, SIRVA had an Employment Practices Liability Insurance Policy, issued by the Illinois National Insurance Company Policy, which provides for wrongful discharge actions of up to $3,000,000, including defense costs. Illinois National has issued a Reservation of Rights letter indicating that it is providing defense cost coverage as well as coverage of the wrongful discharge claim to SIRVA. Against this backdrop, Mr. Noia asks the Court to lift the stay to pursue his wrongful termination claim against SIRVA, to the extent his claim is covered by the Illinois Insurance. About Sirva Inc. Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets : SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation solutions to a well-established and diverse customer base. The company handles all aspects of relocation, including home purchase and home sale services, household goods moving, mortgage services and home closing and settlement services. SIRVA conducts more than 300,000 relocations per year, transferring corporate and government employees along with individual consumers. SIRVA's brands include Allied, Allied International, Allied Pickfords, Allied Special Products, DJK Residential, Global, northAmerican, northAmerican International, Pickfords, SIRVA Mortgage, SIRVA Relocation and SIRVA Settlement. The company has operations in Costa Rica. The company and 61 of its affiliates filed separate petitions for Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No. 08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is representing the Debtor. An official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, it reported total assets of US$924,457,299 and total debts of US$1,232,566,813 for the quarter ended Sept. 30, 2007. The combined hearing on the adequacy of the disclosure statement and the confirmation of the Debtors' proposed Plan of Reorganization is set April 18, 2008. (Sirva Inc. Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). SPANSION TECHNOLOGY: Moody's Junks Unit's Liquidity Ratings ----------------------------------------------------------- Moody's Investors Service lowered the corporate family and long- term debt ratings of Spansion, LLC, downgraded the company's speculative grade liquidity rating to SGL-4 from SGL-2 and changed the outlook to negative. The actions reflect the company's weaker than expected operating performance and weakened liquidity position primarily stemming from increasingly challenging end market dynamics in Spansion's core flash memory market and decreased internal cash flow generating prospects ahead of large capital spending requirements. These ratings were downgraded and the outlook revised to negative: -- Corporate Family Rating: Caa1 -- Probability of Default Rating: Caa1 -- $625 Million Senior Secured Floating Rate Notes due 2013 to B2 (LGD-2, 26%) from B1 (LGD-3, 30%) -- $250 Million Senior Unsecured Notes due 2016 to Caa2 (LGD-5, 72%) from Caa1 (LGD-5, 70%) -- Speculative Grade Liquidity Rating to SGL-4 from SGL-2 The downgrade reflects uncertainties surrounding Spansion's ability to generate sufficient internal operating cash flow and obtain external financing to fund the company's large accelerated capital expenditure program (albeit reduced from 2007 levels) associated with its 300mm wafer capacity expansion initiatives, which include the build-out of its leading edge Japanese flash memory manufacturing facility, or "SP1". Additionally, Moody's believes Spansion will be challenged to expand its leading edge technology in a timely manner beyond NOR-based consumer electronics end markets, which depend, in large part, on consumer discretionary spending, an area that has experienced a marked slowdown in recent months. The negative ratings outlook considers the difficult conditions in the flash memory market, which has been hampered by excess capacity, lower unit demand and continued sharp ASP (average selling price) erosion over the past year. Given the current tight liquidity environment, the negative outlook also considers uncertainty surrounding Spansion's ability to successfully arrange external financing to fund the gap between the company's internal cash flow generation and capital expenditure requirements expected for fiscal 2008. At year end, Spansion had roughly $220 million of total availability under its existing credit facilities and $416 million of cash and short term investments, which included approximately $120 million of illiquid auction rate securities. For fiscal year ended Dec. 30, 2007, Spansion generated about $230 million of cash from operations versus $1.1 billion of capex. Management expects total capex for fiscal 2008 to be roughly $540 million. Though the funding gap could be alleviated through a combination of cash drawdown, the monetization of technology tools or equipment, additional borrowings under its approximately $430 million Spansion Japan equipment financing facility and $175 million US senior secured revolving credit facility, as well as the possibility of non-core asset sales, the ratings outlook would not likely stabilize until there is also evidence of ASP stabilization, ramp of sufficient production volumes at SP1, continued customer adoption of its advanced MirrorBit NOR and ORNAND architectures, as well as achievement of meaningful cost savings and gross margin benefits from a richer product mix with SP1. Spansion Technology Inc., headquartered in Sunnyvale, California, and parent of Spansion LLC, is a leading provider of flash memory semiconductors, with $2.5 billion of revenue in fiscal 2007. SPECTRUM BRANDS: Sets 2008 Annual Shareholders Meeting on April 29 ------------------------------------------------------------------ Spectrum Brands, Inc., will hold its annual shareholders' meeting on Tuesday, April 29, 2008 at 8:00 a.m. ET at the Westin Atlanta Perimeter North, located at 7 Concourse Parkway in Atlanta, Georgia. Shareholders of record as of March 15, 2008 will be entitled to vote at the meeting. Headquartered in Atlanta, Georgia, Spectrum Brands Inc. (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a supplier of batteries, portable lighting, lawn and garden products, household insect control, shaving and grooming products, personal care products and specialty pet supplies. The company's consolidated balance sheet at Dec. 30, 2007, showed $3.27 billion in total assets and $3.41 billion in total liabilities, resulting in a $141.2 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 12, 2008, Spectrum Brands Inc. disclosed in a regulatory filing that it has entered into a confidentiality and standstill agreement with Harbinger Capital Partners Master Fund I Ltd. in order to provide Harbinger with confidential information relating to certain of the company's strategic operating assets in connection with Harbinger's evaluation of a possible acquisition. In the third quarter of Spectrum Brands Inc.'s fiscal year ended Sept. 30, 2006, the company engaged advisors to assist it in exploring possible strategic options including divesting certain assets, in order to sharpen its focus on strategic growth businesses, reduce its outstanding indebtedness and maximize long- term shareholder value. ST MARY LAND: S&P Lifts Rating to 'BB' on Satisfactory Results -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on oil and gas exploration and production company St. Mary Land & Exploration Co. to 'BB' from 'BB-'. The outlook is stable. As of Dec. 31, 2007, Denver-based St. Mary had $442 million in debt. "The company's moderate financial leverage, its satisfactory 2007 operating results, and our expectation that its 2008 capital budget will stay within internally generated cash flow spurred the upgrade," said Standard & Poor's credit analyst David Lundberg. The rating on St. Mary reflects the company's midsize reserve base, average cost structure, and acquisitive growth strategy, as well as the E&P industry's highly cyclical and capital-intensive nature. These weaknesses are partially offset by the company's good track record of internal reserve replacement and production growth, balanced production mix between natural gas and oil, and moderate financial leverage. SYNAGRO TECHNOLOGIES: Moody's Cuts Corporate Family Rating to 'B3' ------------------------------------------------------------------ Moody's Investors Service downgraded its debt ratings of Synagro Technologies, Inc. -- corporate family and probability of default, each to B3 from B2, first lien senior secured to B1 from Ba3, and second lien senior secured to Caa2 from Caa1. Moody's also changed the ratings outlook to negative from stable. The downgrades were prompted by operating results that trail the levels that Moody's had anticipated the company would achieve in 2007. This has caused credit metrics to remain at levels that are indicative of issuers rated B3 or lower and has constrained headroom under financial covenants. Moody's also expects that credit metrics could remain pressured over the intermediate term because of anticipated higher debt as Synagro has plans to construct facilities associated with its growth strategy. The negative outlook reflects Moody's belief that lower than expected earnings and cash flows could constrain Synagro's ability during 2008 to maintain compliance with at least one of the financial covenants of the first lien credit agreement. Moody's notes, however, that the Credit Agreement contains a cure provision, whereby, an equity contribution by the sponsor would be treated as EBITDA for the purpose of calculating the leverage covenant. The B3 corporate family rating reflects Moody's belief that credit metrics are likely to remain near current levels over the intermediate term because of anticipated debt-funded construction projects required to meet Synagro's growth plans. Moody's believes that the combination of the delays in the execution of Synagro's recent facility contract awards and the potential of fluctuating processing volumes at contracted facilities could affect Synagro's ability to maintain compliance with financial covenants, particularly as these become more restrictive over time. Notwithstanding these risks, Moody's recognizes the benefits of Synagro's leading market position, the recurring revenues of the long-tenured, contracted customer base and the typically recession-resistant nature of non-hazardous organic waste generation. Liquidity is adequate, primarily because of the modestly positive free cash flow the company's existing on-line operations generate and the expectation that Synagro would maintain at least $25 million of availability under the $100 million revolving credit. The outlook could be changed to stable if Synagro was to sustain an increased cushion for maintaining compliance with financial covenants. The ratings could be upgraded if Synagro was to sustain Debt to EBITDA below 6.0 times and EBIT to Interest above 1.5 times during the pending construction phase. The ratings could be downgraded if Synagro was to sustain Debt to EBITDA above 7.5 times or EBIT to Interest below 0.7 times or if it was to close one or more large debt-funded acquisitions. Issuer: Synagro Technologies, Inc. Downgrades: -- Corporate Family Rating, Downgraded to B3 from B2 -- Probability of Default Rating, Downgraded to B3 from B2 -- First Lien Senior Secured Bank Credit Facility, Downgraded to B1 from Ba3 -- Second Lien Senior Secured Bank Credit Facility, Downgraded to Caa2 from Caa1 Outlook Actions: -- Outlook, Changed To Negative From Stable Loss Given Default Assessments: -- Second Lien Senior Secured Bank Credit Facility, Changed to 81 - LGD5 from 82 - LGD5 Synagro Technologies, Inc., based in Houston, Texas, is the largest recycler of biosolids and other organic residuals including water and wastewater residuals, in the U.S. SYNOVICS PHARMA: Jan. 31 Balance Sheet Upside-Down by $10.3 Mil. ---------------------------------------------------------------- Synovics Pharmaceuticals Inc.'s consolidated balance sheet at Jan. 31, 2008, showed $21.2 million in total assets and $31.5 million in total liabilities, resulting in a $10.3 million total stockholders' deficit. At Jan. 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $3.7 million in total current assets available to pay $25.5 million in total current liabilities. The company reported a net loss of $2.2 million on net revenues of $4.3 million for the first quarter ended Jan. 31, 2008, compared with a net loss of $2.4 million on net revenues of $5.4 million in the corresponding period ended Jan. 31, 2007. The company said that the decrease in net revenues is substantially the result of the decline in sales of ephedrine and pseudoephedrine products. The primary reason for the decline in those sales relates to the temporary disruption in the availability of ephedrine guaifenisen products in the soft gel form. Full-text copies of the company's consolidated financial statements for the quarter ended Jan. 31, 2008, are available for free at http://researcharchives.com/t/s?2965 Going Concern Disclaimer As reported in the Troubled Company Reporter on Feb. 21, 2008, Miller, Ellin & Company LLP, in New York, expressed substantial doubt about Synovics Pharmaceuticals Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Oct. 31, 2007. The auditing firm stated that the company has negative working capital and has experienced significant losses and negative cash flows. About Synovics Pharmaceuticals Phoenix-based Synovics Pharmaceuticals Inc., fka, Bionutric, is focused on developing generics and improved formulations of already-approved prescription drugs. Its generic Metformin, a treatment for type 2 diabetes, is approved by the FDA but has not yet been launched. Synovics brings in revenue from over-the- counter drugmaker Kirk Pharmaceuticals, which it acquired in 2006. TAHERA DIAMOND: Won't File Annual Report for 2007 on March 31 ------------------------------------------------------------- Tahera Diamond Corporation said it will not be able to meet the March 31, 2008 deadline for the filing of its 2007 audited financial statements and related management discussion and analysis of financial condition. As previously announced, Tahera has obtained an order from the Ontario Superior Court of Justice providing protection for Tahera under the Companies' Creditors Arrangement Act. Since the focus of Tahera is currently on conserving cash until it can secure financing or restructure its operations under the CCAA, it was deemed in the best interest of the company and its shareholders to delay the preparation and filing of audited financial statements for the time being. Tahera does not know at this point in time when it would be in a position to prepare and file its financial statements and MD&A, as the filings will be driven by the outcome of its financing and restructuring efforts. Pending the filing of its financial statements and MD&A, the company intends to satisfy the alternative information guidelines recommended by Ontario Securities Commission Policy 57-603 and Canadian Securities Administrators Staff Notice 57-301. The company will request from the Canadian securities regulators, that a management cease trade order related to the company's securities be imposed against some or all persons who have been directors, officers or insiders of the company since Sept. 30, 2007, which cease trade order would generally not affect the ability of persons who have not been directors, officers or insiders of the company since that date to trade in the company's securities. If Tahera has not filed its audited financial statements for the 2007 year by May 31, 2008, the OSC may issue an Issuer Cease Trade Order as that term is defined in OSC Policy 57-603. In accordance with the alternative information guidelines of the OSC, Tahera intends to file throughout the period in which it is in default the same information as it is required to provide to its creditors at the time the information is provided to the creditors in the same manner as it would file a material change report under securities regulations. The company also anticipates having to postpone its annual meeting of shareholders until its audited annual financial statements for the 2007 financial year are prepared and available for mailing. As part of the management cease trade order, the company is required to issue regular updates. Within the coming weeks the company intends to provide unaudited financial and operational results as they are available. Corporate Update In regard to matters related to corporate restructuring, the company has retained the services of Blair Franklin Capital Partners Inc. Blair Franklin will be contacting potential interested parties in order to solicit expressions of interest leading to the sale of the company in whole or in part. Blair Franklin Capital Partners Inc. is a Toronto-based independent financial advisory firm. Changes to the Board of Directors Tahera also said that Andrew Adams, Patrick Lavelle, Robert Dickson, and Gary Jones have resigned as directors of the company. These changes are being made as a result of the company's current corporate restructuring resulting in a significant alteration to the activities and responsibilities of the board. Remaining with the board are Jonathan Goodman, Richard Molyneux, Colin Benner, and Peter Gillin. The remaining board members will act in an advisory capacity to management as operations at the Jericho Mine are placed into care and maintenance and as corporate transactions are pursued. The company would like to thank Messrs. Adams, Lavelle, Dickson, and Jones for their dedication, commitment, and significant contributions to the company over the years. About Tahera Diamond Tahera Diamond Corporation (TSX: TAH) -- http://www.tahera.com/-- is a Canadian owned diamond mining company. Tahera's wholly-owned Jericho project, commencing commercial production in early 2006, represents Canada's third, and Nunavut's first, diamond mine. As reported in the Troubled Company Reporter on Jan. 17, 2008, Tahera obtained an order from the Ontario Superior Court of Justice granting Tahera and its subsidiary protection pursuant to the provisions of the CCAA. Tahera sought protection under CCAA, as its current cash flows and cash on hand would not allow it to meet its current obligations and its obligations with respect to the 2008 winter road resupply. The Court extended until June 30, 2008, the stay it granted to Tahera under the Companies' Creditors Arrangement Act. TENNECO INC: IUE-CWA Objects to Delphi Sale of Damper Business -------------------------------------------------------------- The International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers-Communications Workers of America opposes the sale of Delphi Corp. and its debtor-affiliates' damper business located in Kettering, Ohio, to the extent that the purchaser does not have a fully completed collective bargaining agreement with the IUE-CWA and it Local 755 prior to the Sale. As reported in the Troubled Company Reporter on March 11, 2008, Delphi Automotive Systems LLC entered into a purchase agreement with Tenneco Inc. for the sale of certain ride control assets and inventory at Delphi's facility in Kettering, Ohio. The sale is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York. As part of the purchase agreement, Tenneco would pay approximately $10 million for existing ride control components inventory and approximately $9 million for certain machinery and equipment. Tenneco would also lease a portion of the Kettering facility from Delphi. In connection with the purchase agreement, Tenneco has entered into an agreement with the International Union of Electrical Workers, which represents the Delphi workforce at the Kettering plant. The agreement was ratified by the IUE� s rank and file in August 2007. Tenneco has also entered into a long-term supply agreement with General Motors Corp. to continue to supply passenger car shock and strut business to General Motors from the Kettering facility. Representing the union, Susan M. Jennik, Esq., at Kennedy, Jennik & Murray, P.C., in New York, clarified that the Aug. 5, 2007 collective bargaining agreement between the IUE-CWA and stalking horse bidder Tenneco Automotive Operating Company Inc. is expressly subject to additional negotiations. The IUE-CWA and Tenneco have not been able to reach an agreement that will enable the IUE-CWA to waive the non-sale provisions of its agreement with Delphi for the Kettering Facility, Ms. Jennik informs the U.S. Bankruptcy Court for the Southern District of New York. "The August 5, 2007 Tenneco and IUE-CWA agreement was and is incomplete," she emphasized. Accordingly, it is inappropriate for the Court to create sales procedures that contemplate an eventual sale of the Kettering Damper Business at this time, she said. The IUE-CWA asked the Court to postpone the hearing regarding the Sale until it reaches an agreement with Delphi Corp., General Motors Corp., and Tenneco on the terms of a successor collective bargaining agreement for the Kettering Facility and on an effects memorandum concerning the impact of the Sale on Kettering Union members. Delphi Reacts The IUE-CWA's objection is premature, the Debtors contend. The IUE-CWA's concern can be resolved at any time between now and the closing of the Sale, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, asserted. To the extent the IUE-CWA has an issue with respect to the completion of a collective bargaining agreement with the purchaser, this issue can and should be addressed at the Sale hearing, he argues. Any remaining issues between the IUE- CWA and the purchaser in connection with the Sale can be resolved even after closing, he adds. Mr. Butler pointed out that pursuant to the Court-approved memorandum of understanding between the Debtors and the IUE-CWA, the IUE-CWA already waived its right to enforce the "non-sale" provision of its national collective bargaining agreement with respect to the Kettering Facility to the extent necessary to complete the proposed Sale. The Debtors therefore had asked the Court to overrule IUE-CWA's objection. Beginning the Sale process now is imperative and will not adversely affect the IUE-CWA's rights or abilities to resolve its concerns, Mr. Butler maintained. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on March 17, 2008, Standard & Poor's Ratings Services still expects to assign a 'B' corporate credit rating to Delphi Corp. if the company emerges from bankruptcy in early April. S&P has revised its expected issue-level ratings because changes to the structure of the proposed financings have affected relative recovery prospects among the various term loans. S&P's expected ratings are: -- The $1.7 billion "first out" first-lien term loan B-1 is expected to be rated 'BB-' (two notches higher than the expected corporate credit rating on Delphi), with a '1' recovery rating, indicating the expectation of very high (90%-100%) recovery in the event of payment default. -- The $2 billion "second out" first-lien term loan B-2 is expected to be rated 'B' (equal to the corporate credit rating), with a '4' recovery rating, indicating the expectation of average (30%-50%) recovery in the event of payment default. -- The $825 million second-lien term loan is expected to be rated 'B-' (one notch lower than the corporate credit rating), with a '5' recovery rating, indicating the expectation of modest (10%-30%) recovery in the event of payment default. As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection as: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. About Tenneco Based in Lake Forest, Illinois, Tenneco Inc., (NYSE: TEN) -- http://www.tenneco.com/-- manufactures automotive ride and emissions control products and systems for both the original equipment market and aftermarket. Brands include Monroe(R), Rancho(R), and Fric Rot ride control products and Walker(R) and Gillet emission control products. The company has operations in Argentina, Japan, and Germany, with its European operations headquartered in Brussels, Belgium. The company has approximately 19,000 employees worldwide. * * * As reported in the Troubled Company Reporter-Latin America on Nov. 6, 2007, Fitch Ratings assigned a rating of 'BB-' to Tenneco Inc.'s new senior unsecured notes due 2015. The new notes replace a portion of the company's existing US$475 million in 10.25% senior secured second-lien notes for which the company is tendering. Fitch said the rating outlook is positive. TERWIN MORTGAGE: High Delinquency Rates Prompt Moody's Rating Cuts ------------------------------------------------------------------ Moody's Investors Service downgraded the ratings of 26 tranches from 8 Terwin Mortgage Trust Alt-A transactions. Ten downgraded tranches remain on review for possible further downgrade. Additionally, 22 tranches were placed on review for possible downgrade. The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, Alt-A mortgage loans. The ratings were downgraded or placed on review for possible downgrade, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions described below are a result of Moody's on-going review process. Complete rating actions are: Issuer: Terwin Mortgage Trust 2006-17HE -- Class A-1, Placed on Review for Possible Downgrade, currently Aaa -- Class A-2A, Placed on Review for Possible Downgrade, currently Aaa -- Class A-2C, Placed on Review for Possible Downgrade, currently Aaa -- Class A-2B1, Placed on Review for Possible Downgrade, currently Aaa -- Class A-2B2, Placed on Review for Possible Downgrade, currently Aaa -- Class M-1, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Class M-2, Downgraded to Caa1 from Baa3; Placed Under Review for further Possible Downgrade -- Class M-3, Downgraded to Ca from B1 -- Class M-4, Downgraded to Ca from Caa2 Issuer: Terwin Mortgage Trust 2006-3 -- Class II-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Class II-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Class II-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Class II-M-1, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Class II-M-2, Downgraded to Caa1 from Baa1; Placed Under Review for further Possible Downgrade -- Class II-M-3, Downgraded to Ca from Ba2 -- Class II-M-4, Downgraded to Ca from B3 Issuer: Terwin Mortgage Trust 2006-5 -- Class II-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Class II-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Class II-M-1, Downgraded to B2 from Aa2 -- Class II-M-2, Downgraded to Ca from Ba2 Issuer: Terwin Mortgage Trust 2006-7 -- Class II-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Class II-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Class II-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Class II-M-1, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Class II-M-2, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Class II-M-3, Downgraded to Ca from Ba2 -- Class II-M-4, Downgraded to Ca from B1 Issuer: Terwin Mortgage Trust 2006-9HGA -- Class A-1, Placed on Review for Possible Downgrade, currently Aaa -- Class A-2, Placed on Review for Possible Downgrade, currently Aaa -- Class A-3, Placed on Review for Possible Downgrade, currently Aaa -- Class M-1, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Class M-2, Downgraded to Caa1 from Baa1; Placed Under Review for further Possible Downgrade -- Class M-3, Downgraded to Ca from Ba2 -- Class M-4, Downgraded to Ca from B1 Issuer: Terwin Mortgage Trust 2007-2ALT -- Class A-1A, Placed on Review for Possible Downgrade, currently Aaa -- Class A-1B, Placed on Review for Possible Downgrade, currently Aaa -- Class A-2, Placed on Review for Possible Downgrade, currently Aaa -- Class M-1, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Class M-2, Downgraded to Ca from Ba3 -- Class M-3, Downgraded to Ca from Caa2 -- Class M-4, Downgraded to Ca from Caa3 Issuer: Terwin Mortgage Trust 2007-6ALT -- Class M-1, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Class M-2, Downgraded to Ca from Ba1 -- Class M-3, Downgraded to Ca from B2 -- Class M-4, Downgraded to Ca from Caa3 Issuer: Terwin Mortgage Trust, Series TMTS 2005-18ALT -- Class A-1, Placed on Review for Possible Downgrade, currently Aaa -- Class A-2, Placed on Review for Possible Downgrade, currently Aaa -- Class A-3, Placed on Review for Possible Downgrade, currently Aaa TRUMILLA HINNANT: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Trumilla Hinnant 98 Fairmount Street Dorchester, MA 02124 Bankruptcy Case No.: 08-11813 Chapter 11 Petition Date: March 17, 2008 Court: District of Massachusetts (Boston) Judge: Henry Boroff Debtor's Counsel: Michael S. Kalis, Esq. Michael S. Kalis, Esquire 632 High Street Dedham, MA 02026 Tel: (781) 461-0030 Fax: (781) 461-4563 mikalislaw@verizon.net Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million Debtor's list of its 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Great Lakes Educational student loans $32,607 Loan Services Inc. 2401 International Lane Madison, WI 53704 City of New Bedford water and sewer $10,179 1105 Shawmut Avenue taxes New Bedford, MA 02746 Boston Water & Sewer water and sewer $7,939 Commission 980 Harrison Avenue Boston, MA 02119 Tax Collector real estate taxes $4,085 Mailhandlers Union Card mastercard $2,500 credit card Harvard Dental Center dental (braces) $1,487 NStar utilities $800 Wells Fargo Bank NA deficiency due unknown upon foreclosure Wells Fargo Home Mortgage deficiency due unknown upon foreclosure Citi Residential Lending and deficiency due unknown EMC and Wells Fargo Deutsche Bank National Trust deficiency upon unknown Co. and Citi Residential foreclosure First Horizon Home Loans deficiency due unknown upon foreclosure UAL CORPORATION: Vanguard Windsor Discloses 3.36% Stake Ownership ----------------------------------------------------------------- Vanguard Windsor Funds - Vanguard Windsor Fund 51-0082711 disclosed in a regulatory filing with the United States Securities and Exchange Commission, dated Feb. 27, 2008, that it beneficially owns 3,902,100 shares of UAL Corp. common stock, which represents 3.36% of UAL's total outstanding shares. Vanguard Windsor has sole voting power for all its shares. There are 116,921,049 shares of UAL common stock at Dec. 31, 2007. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News, Issue No. 154 Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). * * * Fitch Ratings, on May 2007, affirmed the Issuer Default Ratings of UAL Corp. and its principal operating subsidiary United Airlines Inc. at B-. UBS MORTGAGE: Fitch Cuts Ratings to 'BB-' on Two Cert. Classes -------------------------------------------------------------- Fitch Ratings has taken rating actions on these UBS Mortgage Asset Securitization Transactions Asset Back Securities Trust mortgage pass-through certificates: Series 2002-NC1 -- Class M-2 affirmed at 'AAA'; -- Class M-3 affirmed at 'A+'; -- Class M-4 downgraded to 'BB-' from 'BBB-'. Series 2003-NC1 -- Class M-2 affirmed at 'AAA'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'AA-'; -- Class M-5 affirmed at 'A+'; -- Class M-6 affirmed at 'BBB+'. Series 2003-OPT1 -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'BBB'; -- Classes MF-5 & MV-5 downgraded to 'BB-' from 'BBB-'. Series 2004-OPT2 -- Classes A-1 & A-2 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'AA-'; -- Class M-5 affirmed at 'AA-'; -- Class M-6 affirmed at 'A+'; -- Class M-7 rated 'A', placed on Rating Watch Negative. The affirmations, affecting approximately $296.2 million of the outstanding certificates, are taken as a result of a stable relationship between credit enhancement and expected loss. The downgrades, affecting approximately $26.3 million in outstanding certificates, reflect deterioration in the relationship between CE and loss expectation. For series 2002- NC1, the 60+ delinquency is 38.34% of the current collateral balance, while the CE for the affected M-4 class is 12.49%. For series 2003-OPT1, the 60+ DQ is 20.94%, while the CE for the affected MF-5 and MV-5 classes is 5.41%. For both transactions, losses have exceeded excess spread for 11 of the last 12 months, and as such, overcollateralization levels are below their respective targets. Class M-7 from series 2004-OPT2, affecting $7.6 million of outstanding certificates, is placed on Rating Watch Negative because of current trends in the relationship between serious DQ and credit enhancement. The 60+ DQ is 19.69% of the current collateral balance, while the CE of class M-7 is 19.06%. This class is protected from losses by classes M-8 through M-10 and approximately $4.5 million in OC, which is below target. Fitch will monitor this transaction over the next six months. If losses continue to erode the OC and deplete the CE of this class, further rating action may be necessary. The collateral of the above transactions primarily consists of conforming and non-conforming, fixed-rate and adjustable-rate subprime mortgage loans secured by first and second liens on residential properties. The mortgages underlying the 'NC' transactions were originated or acquired by New Century Mortgage Corp. and are serviced by Ocwen Financial Corp. (rated 'RPS2' by Fitch). The mortgages underlying the 'OPT' transactions were originated or acquired by Option One Mortgage Corp. and are serviced by Option One Mortgage Corp. (rated 'RPS2+', on Rating Watch Negative, by Fitch). The pool factors for the above transactions range from 7% (2002-NC1) to 16% (2004-OPT2). The seasoning ranges from 41 months (2004-OPT2) to 64 months (2002-NC1). UTGR INC: S&P Junks Rating From 'B-' on Likely Bankruptcy Filing ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on UTGR Inc.; the corporate credit rating was lowered to 'CCC-' from 'B-'. The ratings remain on CreditWatch, where they were placed March 4, 2008 with negative implications. "The downgrade reflects our ongoing concerns about a potential bankruptcy filing as the company reportedly continues to negotiate a forbearance agreement with its lenders," said Standard & Poor's credit analyst Ben Bubeck. "While we believe that incentives exist for the company and its lenders to reach an extended agreement, the new ratings better reflect the near-term risk factors for a potential bankruptcy filing if the parties are not able to come to an agreement." In resolving the CreditWatch listing, S&P will assess the terms of any agreement that the company establishes with its lenders, including the time frame for which it provides liquidity-related relief. In addition, S&P will continue to monitor management's efforts to improve operating performance at the property. WALKER DADE: S&P Changes Outlook to Negative; Holds 'BB+' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook to negative from stable on Walker, Dade, and Catoosa Counties Hospital Authority, Georgia's $23.1 million series 1997A and series 2003 debt, issued for Hutcheson Medical Center. At the same time, Standard & Poor's affirmed its 'BB+' underlying rating on the bonds. The negative outlook contemplates an expected $12.7 million increase to long-term debt associated with a pending series 2008 tax-exempt bond issue. The series 2008 bonds will refund the outstanding series 1997A and series 2003 debt and provide new money for hospital facility renovations, equipment purchases, and information technology upgrades. "The negative outlook reflects the hospital's weak cash position and the balance sheet effect of the incremental planned debt. Overall, we believe that management is successfully implementing its turnaround plan as evidenced by positive net excess for fiscal 2007 and budgeted for 2008," said Standard & Poor's credit analyst Karl Propst. "We remain concerned about the weak liquidity, but we expect that Hutcheson will continue on its positive trajectory, and that pending projects will help to rebuild the medical center's cash and investment balances." WASHINGTON MUTUAL: Moody's Upgrades Rating on Class K to 'Ba1' -------------------------------------------------------------- Moody's Investors Service upgraded the ratings of seven classes and affirmed the ratings of eight classes of Washington Mutual Asset Securities Corp., Series 2003-C1 as follows: -- Class A, $ 142,475,563, affirmed at Aaa -- Class B, $11,438,000, affirmed at Aaa -- Class C, $2,859,000, affirmed at Aaa -- Class D, $12,867,000, affirmed at Aaa -- Class E, $2,860,000, upgraded to Aaa from Aa1 -- Class F, $4,289,000, upgraded to Aaa from Aa3 -- Class G, $5,718,000, upgraded to Aa2 from A2 -- Class H, $2,860,000, upgraded to A1 from Baa1 -- Class J, $5,718,000, upgraded to Baa1 from Ba1 -- Class K, $4,289,000, upgraded to Ba1 from Ba2 -- Class L, $1,430,000, upgraded to Ba2 from Ba3 -- Class M, $2,859,000, affirmed at B1 -- Class N, $2,860,000, affirmed at B2 -- Class O, $1,429,000, affirmed at B3 -- Class X, Notional, affirmed at Aaa Moody's is upgrading Classes E, F, G, H, J, K and L due to increased subordination levels and stable pool performance. As of the Feb. 25, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 63.3% to $209.6 million from $571.9 million at securitization. The Certificates are collateralized by 111 seasoned mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 8.5% of the pool, with the top 10 loans representing 38.2% of the pool. No loans have defeased. One loan has been liquidated from the pool resulting in a minimal realized loss. Currently there are no loans in special servicing. Twenty four loans, representing 22.1% 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 99.0% and 84.0% of the pool respectively. Moody's loan to value ratio is 65.2%, compared to 69.3% at Moody's last full review in February 2007 and compared to 74.8% at securitization. The top three loans represent 21.1% of the outstanding pool balance. The largest loan is the Center Pointe Plaza Loan ($17.8 million -- 8.5%), which is secured by a 252,400 square foot power center located in Christiana (suburban Wilmington), Delaware. As of September 2007, the property was 100.0% leased the same as at last review and at securitization. Major tenants include Home Depot (43.0% GLA; lease expiration December 2016), Babies 'R (16.6% GLA; lease expiration January 2013) and T.J. Maxx (11.8% GLA; lease expiration February 2013). The loan has amortized 20.0% since securitization. Moody's LTV is 53.0% compared to 57.5% at last review and 71.6% at securitization. The second largest loan is the Palmer Park Mall Loan ($16.2 million -- 7.7%), which is secured by a 448,000 square foot regional mall located in Easton, Pennsylvania. The center is anchored by Boscov's and Bon Ton and as of January 2008 was 97.0% leased (in-line occupancy was 91%), compared to 100% at last review and 95% at securitization. Performance has improved due to an increase in revenue. The loan has amortized 12.8% since securitization. Moody's LTV is 46.6% compared to 53.8% at last review and 75.8% at securitization. The third largest loan is the 33 Irving Place Loan ($10.4 million -- 4.9%), which is secured by a 166,321 square foot class B office building located in the East Midtown South submarket of New York City. As of September 2007, the building was 100.0% leased, the same as at securitization. The in-place rent is $30.85 per square foot, which is significantly below market. The loan has amortized 10.5% since securitization. Moody's LTV is 43.4% compared to 44.6% at last review and 55.3% at securitization. WEIGHT WATCHERS: S&P Changes Outlook to Stable on Debt Repayment ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on New York City-based commercial weight-loss service provider Weight Watchers International Inc. to stable from negative. At the same time, Standard & Poor's affirmed its ratings on the company, including its 'BB' corporate credit rating. The outlook revision is based on meaningful debt repayment since the company's debt-financed $1 billion January 2007 modified Dutch auction share repurchase that weakened WWI's credit measures, as well as sustained operating performance in fiscal 2007. "Credit protection measures have improved in line with our expectation of achieving leverage close to 3.5x by the end of 2007," said Standard & Poor's credit analyst Mark Salierno. The ratings on WWI reflect the company's narrow business focus, its participation in the highly competitive weight-loss industry, leveraged financial profile, and aggressive financial policy. These factors are somewhat mitigated by the company's leading market position, its well-recognized brand name, geographic diversity, predictable cash flows, and favorable demographic trends. WESTMORELAND COAL: Sept. 30 Balance Sheet Upside-Down by $184.3MM ----------------------------------------------------------------- Westmoreland Coal Company's consolidated balance sheet at Sept. 30, 2007, showed $757.8 million in total assets and $942.1 million in total liabilities, resulting in a $184.3 million total stockholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $115.2 million in total current assets available to pay $200.7 million in total current liabilities. The company reported a net loss of $7.0 million on revenues of $130.2 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $2.0 million on revenues of $129.7 million in the same period in 2006. The third quarter results included a $4.3 million increase in the company's coal segment's cost of sales driven by increases in operating and maintenance costs due to unusual rainfall, transition costs related to the termination of the contract operator at the Absaloka Mine and dragline repairs at that mine, and a $1.1 million write-off of inventory made obsolete as a result of equipment retired in connection with the company's Jewett Mine's new sales agreement and related new mining equipment plan. Third quarter results also included a $1.7 million restructuring charge and $1.1 million in increased depreciation, depletion and amortization related to increases in capital expenditures and capital leases for equipment at our mines. These increases were offset primarily by an $800,000 reduction in selling and administrative costs as result of reduced labor costs related to the company's restructuring plan and a $1.0 million reduction in interest expense. Nine Month Results For the nine months ended Sept. 30, 2007, total revenues were $378.6 million compared with total revenues of $323.4 million during the nine months ended Sept. 30, 2006. Net loss was $10.3 million in the nine months ended Sept. 30, 2007, compared with a net loss of $1.7 million in the corresponding period of 2006. Liquidity and Capital Resources As of Sept. 30, 2007, Westmoreland Coal Company had $4.6 million of its $14.0 million revolving line of credit available to borrow. On Oct. 29, 2007, this revolving credit facility was terminated and replaced with term debt and a new revolving credit facility at Westmoreland Resources Inc. As of Feb. 29, 2008, the company had $1.4 million of its $20.0 million revolving line of credit at WRI available to borrow. The company has engaged a large bank to assist the company in refinancing its existing debt at Westmoreland Mining, with the goal of better matching debt amortization with cash flow from the mining operations. The refinancing would be designed to provide for additional availability to finance future capital requirements of the mines, and provide for an increase in the amounts allowed to be distributed to Westmoreland Coal Company. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2964 About Westmoreland Coal Based in Colorado Springs, Colorado, Westmoreland Coal company (AMEX: WLB) -- http://www.westmoreland.com/-- is an independent coal company in the United States and a developer of independent power projects. The company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership and operation of the two-unit ROVA coal-fired power plant in North Carolina, an interest in a natural gas-fired power plant in Colorado, and the operation of four power plants in Virginia. WILTON SERVICES: Files for Chapter 7 Liquidation in Illinois ------------------------------------------------------------ Wilton Services LLC, the parent company of American Mausoleum, sought protection under chapter 7 with the U.S. Bankruptcy Court for the Central District of Illinois on March 17, 2008, Andy Kravetz of The Journal Star relates. Judge Thomas L. Perkins is set to preside a hearing today and might answer queries on who will run the mausoleum and cemetery, the report says. Last week, Gary Rafool, Esq., confirmed that the mausoleum is closed and interment ceremonies were temporarily suspended, the Star reveals. Carol Knowles of Illinois Comptroller Dan Hynes told reporters that her office can no longer take over the mausoleum as it did before saying "the situations are different." She said that previously, "bankruptcy wasn't an issue" but the revoked licenses of American Mausoleum former owner, Larry Leach, was. Ms. Knowles said that Mr. Leach, faced with criminal charges, surrendered his control over the mausoleum under a plea agreement, Star recounts. She added, according to Star, that a Circuit Court ordered an appointed receiver to run the mausoleum. In the bankruptcy case, the law does not allow a "state takeover of the cemetery/mausoleum," Star quotes Ms. Knowles as stating. Ms. Knowles, however, assured that Mr. Hynes is working so that the money intended for the pre-need and perpetual care accounts are properly deposited and accounted for, Star relates. According to her, that money was still intact as of the latest audit conducted in May. Despite Ms. Knowles' statement, an auditor was sent to review American Mausoleum's books again, Star adds. Wilton Services LLC's subsidiary, American Mausoleum, is located at 7911 North Allen Road in Peoria County, Illinois. XERIUM TECHNOLOGIES: Moody's Cuts Ratings on High Default Risk -------------------------------------------------------------- Moody's Investors Service downgraded Xerium Technologies, Inc.'s ratings due to the company's recent announcement that it expects to be non-compliant with its financial covenants in the first quarter of 2008 and future periods, without an amendment to its credit facility. Moody's specifically downgraded the company's corporate family rating to Caa1 from B2, its senior secured credit facilities to Caa1 from B2, its probability of default rating to Caa2 from B2, and its speculative grade liquidity rating to SGL-4 from SGL-3. The rating outlook is negative. The rating action reflects the heightened risk of a default under the company's credit agreement and the possibility of a bankruptcy filing if management is unsuccessful in obtaining financial covenant amendments from its lenders. The company is also in discussions with potential investors to raise equity securities that would be used to pay down debt. In addition, the company is in the process of assessing a potential impairment to its goodwill related to its roll covers business but may not be able to complete its analysis before the filing deadline for its Form 10- K. Moody's believes that the delayed filing of its Form 10-K may trigger a default under its credit agreement if the annual report is not filed by April 1, 2008. These matters create a high level of uncertainty surrounding Xerium's liquidity and the potential for triggering an event of default and, therefore, Moody's lowered the company's Probability of Default rating to Caa2, indicating an estimated 30% probability of default over a one-year time horizon. Xerium's corporate family rating and its senior secured debt ratings were lowered to Caa1 based on Moody's belief that creditors' recovery, in the event of default, would be relatively high. Moody's last rating occurred on Feb. 8, 2007, when Moody's downgraded the long-term debt and corporate family ratings of Xerium to B2 from B1 and maintained a stable outlook. Moody's continues to believe that Xerium's operating performance will remain weak. Xerium's customers continue to struggle operationally due to a slowdown in global paper production and significant overcapacity, especially in newsprint and fine paper. Moody's believes that this trend will continue with the closure of additional mills and further downtime at existing facilities in North America and Europe, Xerium's primary markets. Moody's also anticipates that previous volume losses will take longer than expected to recover and that recent investments in developing economies will take several years before they have a meaningful positive impact on cash flow. Downgrades: Issuer: Xerium Technologies, Inc. -- Corporate Family Rating, Downgraded to Caa1 from B2 -- Senior Secured Term Loan, Downgraded to Caa1 from B2 (LGD3, 33%) -- Senior Secured Revolving Credit Facility, Downgraded to Caa1 from B2 (LGD3, 33%) -- Probability of Default Rating, Downgraded to Caa2 from B2 -- Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 Outlook Actions: Issuer: Xerium Technologies, Inc. -- Outlook, Changed To Negative from Stable Xerium Technologies, Inc., headquartered in Youngsville, North Carolina, is a manufacturer and supplier of consumable products used primarily in the production of paper. XM SATELLITE: Merger with Sirius is Not Anti-Competitive, DOJ Says ------------------------------------------------------------------ The U.S. Department of Justice has informed SIRIUS Satellite Radio Inc. and XM Satellite Radio Holdings Inc. that it has ended its investigation into the pending merger of SIRIUS and XM without taking action to block the transaction. This decision means the DOJ has concluded that the merger is not anti-competitive and it will allow the transaction to proceed. SIRIUS and XM each obtained stockholder approval for the deal in November 2007. The pending merger is still subject to approval of the Federal Communications Commission. About SIRIUS Satellite Based in New York, SIRIUS Satellite Radio Inc. (NASDAQ: SIRI) -- http://www.sirius.com/ -- provides sports radio programming, broadcasting play-by-play action of more than 350 pro and college teams. SIRIUS features news, talk and play-by-play action from the NFL, NASCAR, NBA, NHL, Barclays English Premier League soccer, UEFA Champions League, the Wimbledon Championships and more than 125 colleges, plus live coverage of several of the year's top thoroughbred horse races. SIRIUS also features programming from ESPN Radio and ESPNews. About XM Based in Washington, D.C., XM Satellite Radio Holdings Inc. -- http://www.xmradio.com/-- parent of XM Satellite Radio Inc. (Nasdaq: XMSR), is a satellite radio company, with more than 8.5 million subscribers. XM delivers entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Ferrari, Subaru, Suzuki and Toyota. * * * As reported in the Troubled Company Reporter on March 6, 2008, Standard & Poor's Ratings Services revised the CreditWatch implications of the ratings on XM Satellite Radio Holdings Inc. and XM Satellite Radio Inc. (CCC+/Watch Developing/--) to developing from positive. S&P initially placed the ratings on CreditWatch, with positive implications, on Feb. 20, 2007, based on the company's definitive agreement to an all-stock "merger of equals" with Sirius Satellite Radio Inc. (CCC+/Watch Developing/--). * Moody's Says Economic Slowdown Takes Toll on U.S. Gaming Sector ----------------------------------------------------------------- The slowing U.S. economy is beginning to have a negative effect on casino gaming revenues, increasing the potential for negative rating actions in the U.S. gaming sector, says Moody's Investors Service. "Declining disposable income of potential customers and increasing travel costs are lowering overall visitation and spending per visit in many gaming markets," said Moody's Vice President Keith Foley. "Further, many markets are relatively new, with little documented history to indicate how they will perform during a period of prolonged economic weakness." Negative rating actions in the U.S. gaming sector are expected to significantly exceed positive rating actions in 2008, says Moody's. Currently, 11 U.S. gaming issuers are on review for possible rating downgrade and six have a negative outlook. Combined, these issuers account for almost 25% of the total number of rated U.S. gaming issuers. Foley said the economic slowdown and possibility of a consumer- based recession comes at the same time that fierce competition within and among gaming jurisdictions is requiring gaming companies to spend heavily on promotion and capital investment. Many issuers are also experiencing reduced access to capital markets, which increases the overall risks to the sector's credit profile, he notes. "Decreased access to capital is also likely to result in the cancellation or delay of development projects, which could hurt longer-term revenue and cash flow growth rates," Foley said. Reflecting these trends, Moody's revised the outlook for the gaming sector to negative from stable in February. While the slowing economy continues to pose near-term challenges, the longer-term fundamentals of the US gaming sector remain favorable, says Moody's. These include the growing popularity of gaming, a demographic shift towards age groups that exhibit a high propensity to gamble, and rapid advances in gaming technology that will enable gaming companies to monitor and react more quickly to changing customer tastes. "However, these positive long-term characteristics will not be enough to protect gaming companies from near-term economic and competitive challenges," says Foley. * Moody's Assesses Student Loan-backed Auction Rate Securities -------------------------------------------------------------- In a new report addressing frequently asked questions on the student loan-backed auction rate securitization market, Moody's Investors Service observes that the recent failures of auctions of student loan-backed auction rate securities have not been prompted by credit concerns over the securities. However, because the interest rates on SLARS are raised to a higher failed-auction rate when an auction fails, continued failure of the auctions can lead to rating pressure. "As the interest rate paid to SLARS noteholders increases and remains elevated from failed auctions, excess spread for many transactions will be reduced significantly, and less cash is available for under-collateralized bonds to build an asset-to-bond ration of at least 100%. Trusts that are heavily auction rate based, that are exposed to high failed auction rates, and have relatively low parity ratios will be negatively impacted the most," says Moody's Vice President Barbara Lambotte, who authored the report. Moody's believes that if SLARS interest rates remain at the failed auction rate for a sustained period of time, the ratings of student loan-backed securitizations at any rating level, including Aaa-rated tranches, issued out of trusts that include ARS could be adversely affected. * S&P Downgrades Ratings on 39 Classes From 17 RMBS Transactions ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 39 classes from 17 residential mortgage-backed securities transactions backed by U.S. subprime mortgage loan collateral issued in 2006. At the same time, S&P removed 36 of the lowered ratings from CreditWatch with negative implications. In addition, S&P affirmed its ratings on 37 classes from 17 RMBS transactions backed by U.S. subprime loans and removed them from CreditWatch negative. All of the ratings had been placed on CreditWatch negative on Jan. 30, 2008. The downgrades reflect S&P's opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given S&P's current projected losses. Due to current market conditions, S&P is assuming that it will take approximately 15 months to liquidate loans in foreclosure and approximately eight months to liquidate loans categorized as real estate owned. In addition, S&P is assuming a loss severity of approximately 45% for U.S. subprime RMBS transactions issued in 2006. The lowered ratings reflect S&P's assessment of credit support under two constant prepayment rate scenarios. The first scenario utilizes the lower of the lifetime or 12-month CPR, while the second utilizes a six-month CPR, which is very slow by historical standards. S&P assumed a constant default rate for each pool. Because the analysis focused on each individual class with varying maturities, prepayment scenarios may cause an individual class or the transaction itself to prepay in full before it incurs the entire loss projection. Slower prepayment assumptions lengthen the average life of the mortgage pool, which increases the likelihood that total projected losses will be realized. The longer a class remains outstanding, however, the more excess spread it generates. Standard & Poor's has updated its projected excess spread to account for the recent cuts in U.S. interest rates. In an upwardly sloping mortgage rate environment, Standard & Poor's announced that it would be discounting a portion of excess spread to account for potential interest rate modifications. An interest rate modification may extend the initial fixed-rate period of a mortgage loan to five years from two and three years. The reduction in interest rates has effectively extended the initial interest rates beyond the interest rate reset period. As a result of the reduction in excess spread, many loan modifications may no longer be needed. Standard & Poor's has updated its assumptions on excess spread to reflect the current environment. In assessing the creditworthiness of each class, S&P reviewed the individual delinquency and loss trends of each transaction, changes, if any, in risk characteristics, servicing, and the ability to withstand additional credit deterioration. For pools that are continuing to show increasing delinquencies, S&P increased its cash flow stresses to account for potential increases in monthly losses. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base case assumption S&P assumed in its analysis. For example, a class may have to withstand 115% of S&P's base case loss assumption in order to maintain a 'BB' rating, while a class had to withstand 125% of S&P's base case loss assumption to maintain a 'BBB' rating. Each class that has an affirmed 'AAA' rating can withstand approximately 150% of S&P's base case loss assumptions under its analysis, subject to individual caps assumed on specific transactions. S&P determined the caps by limiting the amount of remaining defaults to 90% of the current pool balances. Credit support for these transactions is provided through a combination of subordination, excess spread, and overcollateralization. The underlying collateral for these transactions consists of fixed- and adjustable-rate U.S. subprime mortgage loans that are secured by first and second liens on one- to four-family residential properties. To date, including the classes listed below and actions on both publicly and confidentially rated classes, S&P has resolved the CreditWatch placements of 349 classes from 69 U.S. RMBS subprime transactions from the 2006 and 2007 vintages. Currently, S&P's ratings on 2,255 classes from 446 U.S. RMBS subprime transactions from the 2006 and 2007 vintages are on CreditWatch negative. Standard & Poor's will continue to monitor the RMBS transactions it rates and take rating actions, including CreditWatch placements, when appropriate. Ratings Lowered Washington Mutual Asset-Backed Certificates WMABS Series 2006-HE2 Trust Rating ------ Transaction Class CUSIP To From ----------- ----- ----- -- ---- 2006-HE2 M-5 93934JAH7 B BB 2006-HE2 M-6 93934JAJ3 CCC B 2006-HE2 B 93934JAQ7 CC CCC Ratings Lowered and Removed From CreditWatch Negative Ace Securities Corp. Home Equity Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-ASAP1 M-5 BBB AA+/Watch Neg 2006-ASAP1 M-6 B AA/Watch Neg 2006-ASAP1 M-7 CCC AA-/Watch Neg 2006-ASAP3 M-2 BBB AA/Watch Neg 2006-ASAP3 M-3 B AA-/Watch Neg 2006-OP1 M-3 BBB AA/Watch Neg 2006-OP1 M-4 B AA-/Watch Neg C-BASS Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-CB4 M-3 A AA/Watch Neg 2006-CB4 M-4 BB AA-/Watch Neg CWABS Asset Backed Certificates Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-7 M-4 BBB AA-/Watch Neg First Franklin Mortgage Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-FF1 M-4 A AA/Watch Neg 2006-FF1 M-5 BBB AA/Watch Neg 2006-FF1 M-6 B AA-/Watch Neg 2006-FF7 M-1 BBB AA+/Watch Neg 2006-FF7 M-2 BB AA/Watch Neg 2006-FF7 M-3 B AA-/Watch Neg Home Equity Mortgage Loan Asset-Backed Trust Rating ------ Transaction Class To From ----------- ----- -- ---- INABS 2006-C M-2 BBB AA/Watch Neg INABS 2006-C M-3 B AA-/Watch Neg HSI Asset Securitization Corp. Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-OPT1 M-5 BBB AA-/Watch Neg Long Beach Mortgage Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-WL2 M-2 BBB AA/Watch Neg 2006-WL2 M-3 B AA-/Watch Neg MASTR Asset Backed Securities Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-FRE2 M-1 BBB AA+/Watch Neg 2006-FRE2 M-2 B AA/Watch Neg 2006-FRE2 M-3 CCC AA-/Watch Neg Nomura Home Equity Loan Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-FM1 M-4 BBB AA-/Watch Neg RASC Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-KS1 M-6 BBB AA-/Watch Neg Soundview Home Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-OPT4 M-2 BBB AA/Watch Neg Structured Asset Investment Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-1 M1 BBB AA+/Watch Neg 2006-1 M2 B AA/Watch Neg 2006-1 M3 CCC AA/Watch Neg 2006-1 M4 CCC AA-/Watch Neg 2006-3 M1 BB AA+/Watch Neg 2006-3 M2 CCC AA/Watch Neg 2006-3 M3 CCC AA-/Watch Neg Washington Mutual Asset-Backed Certificates WMABS Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-HE2 M-3 A AA/Watch Neg 2006-HE2 M-4 BB AA-/Watch Neg Ratings Affirmed and Removed From CreditWatch Negative Ace Securities Corp. Home Equity Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-ASAP1 M-4 AA+ AA+/Watch Neg 2006-ASAP3 M-1 AA+ AA+/Watch Neg 2006-OP1 M-1 AA+ AA+/Watch Neg 2006-OP1 M-2 AA AA/Watch Neg C-BASS Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-CB4 M-2 AA AA/Watch Neg CWABS Asset Backed Certificates Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-7 M-3 AA AA/Watch Neg First Franklin Mortgage Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-FF1 M-1 AA+ AA+/Watch Neg 2006-FF1 M-2 AA+ AA+/Watch Neg 2006-FF1 M-3 AA+ AA+/Watch Neg 2006-FF7 A-IO AAA AAA/Watch Neg 2006-FF7 I-A AAA AAA/Watch Neg 2006-FF7 II-A-1 AAA AAA/Watch Neg 2006-FF7 II-A-2 AAA AAA/Watch Neg 2006-FF7 II-A-3 AAA AAA/Watch Neg 2006-FF7 II-A-4 AAA AAA/Watch Neg Home Equity Asset Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-1 M-5 AA- AA-/Watch Neg Home Equity Mortgage Loan Asset-Backed Trust Rating ------ Transaction Class To From ----------- ----- -- ---- INABS 2006-C M-1 AA+ AA+/Watch Neg HSI Asset Securitization Corp. Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-OPT1 M-4 AA AA/Watch Neg MASTR Asset Backed Securities Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-FRE2 A-1 AAA AAA/Watch Neg 2006-FRE2 A-2 AAA AAA/Watch Neg 2006-FRE2 A-3 AAA AAA/Watch Neg 2006-FRE2 A-4 AAA AAA/Watch Neg 2006-FRE2 A-5 AAA AAA/Watch Neg Morgan Stanley ABS Capital I Inc. Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-NC1 M-4 AA- AA-/Watch Neg Nomura Home Equity Loan Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-FM1 M-2 AA+ AA+/Watch Neg 2006-FM1 M-3 AA AA/Watch Neg RASC Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-KS1 M-5 AA AA/Watch Neg Soundview Home Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-OPT4 M-1 AA AA/Watch Neg Structured Asset Investment Loan Trust Rating ------ Transaction Class To From ----------- ----- -- ---- 2006-1 A2 AAA AAA/Watch Neg 2006-1 A3 AAA AAA/Watch Neg 2006-1 A4 AAA AAA/Watch Neg 2006-3 A1 AAA AAA/Watch Neg 2006-3 A2 AAA AAA/Watch Neg 2006-3 A3 AAA AAA/Watch Neg 2006-3 A4 AAA AAA/Watch Neg 2006-3 A5 AAA AAA/Watch Neg 2006-3 A6 AAA AAA/Watch Neg * Business Bankruptcies Up More Than Twofolds in Washington Region ------------------------------------------------------------------ Anita Huslin of The Washington Post, citing court records, writes that as a result of the downturn in the housing and credit markets, the number of corporations that have filed for Chapter 11 protection so far this year in Maryland, Eatern Virginia and the District have more than doubled, compared with the same period in 2006. On the other hand, the number of smaller firms that have filed for liquidation under Chapter 7 has increased more than 12-fold. According to Ms. Huslin, business bankruptcies were not limited to real estate firms, and that many of the companies filing for bankruptcy seem to be "smaller, less experienced or overly leveraged businesses." Businesses are also finding difficulty securing loans to fund short-term funding needs, as lenders have become more selective and imposed stricter credit requirements. Patrick Danner of the Miami Herald reports that the number of businesses going bankrupt more than doubled in South Florida in 2007, and that 2006's Chapter 11 filings exceeded the total for the previous two years. Mr. Danner said that bankruptcy trustees and attorneys predict that "a lot more South Florida consumers and companies -- lawyers in tow -- will sink into bankruptcy over the next year", as a result of the downturn in the local economy, rising consumer debt, shrinking property values and tighter credit markets. Mr. Danner reports that last year, close to 11,000 South Floridians filed for personal bankruptcy, and that many observers anticipate personal bankruptcies this year will be in the high 20,000s to low 30,000s. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------ ------- Absolute Software ABT (3) 83 30 AFC Enterprises AFCE (40) 155 (20) APP Pharmaceutic APPX (80) 1,077 214 Ariad Pham ARIA (8) 101 65 Bare Escentuals BARE (104) 224 84 Blount Intl BLT (54) 412 129 CableVision System CVC (5,097) 9,141 (607) Carrols Restaurant TAST (13) 463 (29) Centennial Comm CYCL (1,063) 1,343 14 Centerplate-IDS CVP (18) 332 (20) Cheniere Energy CQP (228) 1,905 146 Cheniere Energy LNG (16) 2,962 428 Choice Hotels CHH (157) 328 (42) Cincinnati Bell CBB (668) 2,020 0 Claymont Stell PLTE (40) 158 80 Compass Minerals CMP (5) 820 201 Corel Corp. CRE (14) 266 (15) Crown Media HL CRWN (684) 676 4 CV Therapheutics CVTX (185) 259 177 Cyberonics CYBX (15) 136 (15) Deltek Inc PROJ (86) 166 (28) Denny's Corp DENN (179) 381 74 Domino's Pizza DPZ (1,450) 473 51 Dun & Bradstreet DNB (437) 1,659 (192) Einstein Noah Re BACL (34) 149 4 Extendicare Real EXE-U (32) 1,440 (15) Gencorp Inc. GY (52) 995 77 General Motors GM (35,480) 148,883 (9,720) Healthsouth Corp. HLS (1,070) 2,051 (331) Human Genome Sci HGSI (12) 949 47 IDEARC Inc IAR (8,600) 1,667 205 IMAX Corp IMAX (85) 208 (8) IMAX Corp IMX (85) 208 (8) Incyte Corp INCY (160) 276 228 Indevus Pharma IDEV (86) 199 40 Intermune Inc ITMN (31) 262 209 IPCS Inc IPCS (40) 547 76 Knology Inc KNOL (35) 619 7 Koppers Holdings KOP (14) 669 189 Life Sciences Re LSR (29) 502 1 Linear Tech Corp LLTC (564) 1,410 912 Lodgenet Interac LNET (48) 694 8 Maxxam Inc MXM (242) 544 120 Mediacom Comm-A MCCC (253) 3,615 (268) Moody's Corp MCO (784) 1,715 (360) National Cinemed NCMI (572) 464 67 Navistar Intl NAVZ (1,699) 10,786 164 Nexstar Broadcasting NXST (89) 709 (11) NPS Pharm Inc NPSP (188) 231 107 Primedia Inc PRM (129) 282 6 Protection One PONE (23) 673 6 Radnet Inc RDNT (53) 434 41 Redwood Trust RWT (718) 9,938 N.A. Regal Entertai-A RGC (119) 2,635 (2) Riviera Holdings RIV (48) 218 14 RSC Holdings Inc RRR (44) 3,460 (128) Rural Cellular-A RCCC (590) 1,350 110 Sally Beauty Hol SBH (745) 1,440 414 Sealy Corp. ZZ (113) 1,025 22 Solutia Inc SOA (1,449) 2,638 (293) Sonic Corp SONC (102) 765 (27) Spectrum Brands SPC (141) 3,265 828 St John Knits Inc SJKI (52) 213 80 Station Casinos STN (291) 3,932 (50) Stelco Inc STE (64) 2,657 693 Theravance THRX (66) 162 101 UST Inc UST (292) 1,487 446 Valence Tech VLNC (61) 20 8 Voyager Learning VLCY (53) 917 (637) Warner Music Gro WMG (47) 4,599 (764) Weight Watchers WTW (926) 1,046 (172) WR Grace & Co. GRA (316) 3,869 (1,057) XM Satellite-A XMSR (925) 1,609 (403) ZIX Corp ZIXI 0 19 (1) ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Philline P. Reluya, Joseph Medel C. Martirez, Ma. Cristina I. Canson, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2008. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***