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 ------ ----- &