T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, April 15, 2008, Vol. 12, No. 89 Headlines ACE SECURITIES: Moody's Junks Rating on Cl. M-4 S. 2005-SL1 Certs. ALERIS INT'L: Posts $128MM Net Loss in Year Ended December 31 ALLIANCE BANCORP: Moody's Slashes Rating on Cl. M-2 Certs. to Caa2 AMES DEPARTMENT: Wants Plan Filing Deadline Moved to October 23 ANSLEY PARK: Moody's Junks Rating on $450MM Notes ANTHRACITE CRE: Moody's Holds Ratings on Stable Performance AUSTIN HOUSING: Moody's Holds 'B1' Rating on $9.135MM Bonds AUSTIN HOUSING: Moody's Affirms B3 Rating with Neg. Outlook AVALON RE: S&P Slashes Ratings to 'CC' After Steam Pipe Explosion BANC OF AMERICA: Fitch Holds Low-B Ratings on Four Cert. Classes BARRINGTON BROADCASTING: S&P Keeps 'B' Ratings; Outlook Now Neg BEAR STEARNS: First Qtr. Earnings Dip to $115MM from 2007's $554MM BEXLEY PLACE: Case Summary & Ten Largest Unsecured Creditors BFWEST LLC: Has $205 Million in Debt to Creditors BLOCKBUSTER INC: Extends $1.3BB Unsolicited Bid for Circuit City BROWN SHOE: Operating Challenges Prompts S&P's Negative Outlook CANADIAN TRUSTS: Investors Want ABCP Plan Voting Deadline Moved CANADIAN TRUSTS: CIBC to Provide Funding for Canadian ABCP Rescue CANADIAN TRUSTS: Canaccord to Redeem 97% of Clients' ABCP Stake C-BASS: Poor Collateral Performance Cues Moody's to Cut Ratings CALEDONIA MINING: Posts CN$4MM Net Loss in Year ended December 31 CHESAPEAKE CORP: Weak Performance Cues S&P to Chip Rating to 'B+' CELSIA TECH: Modifies Debenture Interest Due Dates to May 2010 CITIUS II: Moody's Downgrades Ratings to C on $39 Million Notes COBALT CMBS: Stable Performance Cues Fitch to Affirm Ratings DELTA AIR: Deal with Pilots Clears Way for Northwest Merger DELTA AIR: Board Votes "For" Merger with Northwest Airlines DIRECT INSITE: December 31 Balance Sheet Upside-Down by $1 Million EDM EQUIPMENT: Files Chapter 7 Liquidation in Nebraska EDUCATION RESOURCES: Asks Court to Clarify Creditors' Info Access EDUCATION RESOURCES: Wants to Hire EPIQ Bankruptcy as Claims Agent EGPI FIRECREEK: To Restate Financial Statements Due to Errors FINANCIAL GUARANTY: Explores Options, Including Capital Infusion FIRST FRANKLIN: Moody's Lowers Ratings on 16 Certificate Classes FLOWSERVE CORP: Moody's Holds Ratings and Changes Outlook to Pos. FREMONT GENERAL: Inks $5.6 Bil. Asset Sale Deal with CapitalSource FREMONT GENERAL: NYSE Suspends Shares Trading, Plans Delisting FREMONT HOME: Fitch Slashes Ratings on $704.2MM Certificates FREMONT HOME: Moody's Junks Rating on Cl. SL-A Certificates FRONTIER AIRLINES: Denver Airport Rating Not Affected by Filing FUSION TELECOM: Appoints Gordon Hutchins Jr. to President and CEO GENERAL GROWTH: Moody's Cuts Unsecured Debt Rating to Ba2 from Ba1 GLOBAL CREDIT: S&P Designates 'B+' Ratings on Negative CreditWatch GLOBAL TEL*LINK: Moody's Holds B2 CF Rating with Stable Outlook GENERAL MOTORS: Idles Arlington Assembly Plant for Three Weeks GMAC COMMERCIAL: Moody's Affirms 'C' Rating on $15.261MM Certs. GORDON GANZ: Files for Bankruptcy After Closure of Grain Business GOULD CITY: Council Decides to Hire Bankruptcy Attorney GSC ABS: Poor Credit Quality Cues Moody's to Downgrade Ratings HANCOCK FABRIC: Wants $100 Mil. GE Capital Exit Financing Approved HAWTHORNE ON NORTH: Case Summary & 11 Largest Unsecured Creditors HSBC HOME: Fitch Junks Ratings on 14 Certificate Classes HUDBAY MINERALS: S&P Withdraws 'B+' Corporate Credit Rating HUGHES NETWORK: S&P Changes Outlook to Stable; Retains 'B' Rating JED OIL: December 31 Balance Sheet Upside-Down by $16 Million JHT HOLDINGS: S&P Withdraws 'CCC+' Corporate Credit Rating KIMBALL HILL: Lenders' Waiver Agreement Further Extended to May 9 LAM RESEARCH: S&P Changes Watch Posting of BB- Rating to Negative LB-UBS COMMERCIAL: S&P Low-B Initial Ratings on Six Cert. Classes LBI MEDIA: S&P Revises Outlook to Stable; Confirms 'B' Rating LE-NATURE'S: Court Approves Second Amended Disclosure Statement LE-NATURE'S: Amended Plan Confirmation Hearing Set on June 9 LENNAR CORP: Posts $88MM Net Loss in Quarter Ended February 29 LINEN 'N THINGS: Weak Operating Margin Prompts Moody's Caa2 Rating MAIR HOLDINGS: Big Sky Unit Gets Default Notice from Mesa Air MANITOWOC COMPANY: To Acquire Enodis In Deal Valued at $2.1 Bil. MCDERMOTT SA: Fifth Amendment on Facility Won't Change S&P Ratings MERRILL LYNCH: Fitch Downgrades Ratings on $134.1MM Certificates MS LLC: Case Summary & 17 Largest Unsecured Creditors MTR GAMING: Posts $11 Million Net Loss in Year ended December 31 N-45 FIRST: Moody's Lifts Rating to Ba1 from Ba2 on Class E Certs. NEXSTAR BROADCASTING: S&P Assigns Ratings on Negative CreditWatch NORANDA ALUMINUM: December 31 Balance Sheet Upside-Down by $76,000 NORTH FOREST: S&P Removes 'BB' Rating From CreditWatch Negative NORTHWEST AIRLINES: Board Votes "For" Merger with Delta Air NORTHWEST AIRLINES: Seeks Allowance for $5,954,902 ALPA Claims NORTHWEST AIRLINES: Delta and Pilots Pact Clears Way for Merger NORTHWEST AIRLINES: Dissolves NWA Inc. and NWA Holdings NORTHWEST AIRLINES: Makes Four Additional Shares Distribution ORIGINAL TOTAL: Case Summary & Five Largest Unsecured Creditors PARAMOUNT RESOURCES: Earns $416.2 Million in Year Ended Dec. 31 PEACE ARCH: Insiders May Now Resume Share Trading PERVASIP CORP: Appoints Scott Widham to Board of Directors PHIBRO ANIMAL: Completes AIM Market Listing, Raises $45 Million PILGRIM'S PRIDE: Cuts Weekly Production by 5% on Soaring Feed Cost PLY GEM: Weak Housing Industry Prompts S&P's Negative CreditWatch PSI CORP: Engages Seligson & Giannattasio as its Auditors QUEBECOR WORLD: Seeks Approval to Hire KPMG (US) as Tax Advisor QUEBECOR WORLD: Seeks Court on KPMG (Canada) as Tax Consultant QUEBECOR WORLD: Wants Ernst & Young as Tax Services Provider RAPTOR NETWORKS: Secures $3 Million Financing from Three Investors SAXON ASSET: Fitch Chips Ratings on $354.9 Million Certificates SCOTTISH RE: A.M. Best Downgrades Ratings and Put It Under Review SKYBUS AIRLINES: Seeks Approval of Air Canada Settlement SOLUTIA INC: Has 60,766,560 Outstanding Shares as of February 29 SOLUTIA INC: Settlement Pact with Solvay Gets Court Approval SOLUTIA INC: Harbinger Entities Disclose 30.1% Equity Stake SPANSION INC.: Inks Patent Cross-License Agreement with IBM SPECIALTY UNDERWRITING: Fitch Cuts Ratings on Five Cert. Classes STURGIS IRON: Court OKs Getzler Henrich as Financial Advisors STURGIS IRON: Court Approves Dresser Hiring as Special Counsel TAHERA DIAMOND: Last Day of Filing Bids for Assets is April 28 TAHERA DIAMOND: Wants MCTO Imposed; Gives Operational Update TEKNI-PLEX INC: Inks Restructuring Pact with Key Stakeholders TIENDAS DONATO: Case Summary & 30 Largest Unsecured Creditors ULTRAPETROL LTD: Moody's Holds 'B2' CF Rating on $180 Mil. Notes VIDEOTRON LTD: Prices $455 Mil. Notes Offering; Amends Facility WACHOVIA CORP: Selling $7 Billion Common, Preferred Stocks WACHOVIA CORP: Posts Net Loss of $350MM for Q1; To Cut Dividends WACHOVIA BANK: S&P Upgrades Ratings on Two Classes From Low-Bs WACHOVIA BANK: Moody's Affirms B3 Rating on $2.436MM Class O Cert. WINDSTREAM CORP: S&P Changes Outlook to Stable; Holds 'BB+' Rating WORNICK CO: Can Hire Kurtzman Carson as Claims and Noticing Agent WORNICK CO: Judge Aug Approved Amended Disclosure Statement WORNICK CO: Plan Confirmation Hearing Scheduled on June 23 * Fitch Says Positive Signs Emerged Despite Decline in US Housing * S&P Downgrades 12 Tranches' Ratings From Six Cash Flows and CDOs * S&P Assigns Ratings on 147 CDO Tranches on Negative CreditWatch * David A. McKibbin Joins McDonald Hopkins-WPB Unit as Of Counsel * Structured Finance Lawyer Mark S. Dola Joins King & Spalding * Ascend Says US Major Airlines Face $110BB Fleet Upgrade Costs * Large Companies with Insolvent Balance Sheets ********* ACE SECURITIES: Moody's Junks Rating on Cl. M-4 S. 2005-SL1 Certs. ------------------------------------------------------------------ Moody's Investors Service has downgraded eight certificates and placed on review for possible downgrade one class of certificates, from two transactions issued by ACE Securities Corp. Home Equity Loan Trust. The transactions are backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were too low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2005- SL1 -- Cl. M-3, Downgraded to Ba3 from Ba1 -- Cl. M-4, Downgraded to Caa2 from B1 -- Cl. M-5, Downgraded to C from Caa2 Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- SL2 -- Cl. A, Downgraded to B1 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa3 from Ba3 -- Cl. M-2A, Downgraded to C from Caa1 -- Cl. M-2B, Downgraded to C from Caa1 -- Cl. M-3, Downgraded to C from Ca ALERIS INT'L: Posts $128MM Net Loss in Year Ended December 31 ------------------------------------------------------------- Aleris International Inc. reported results for the fourth quarter and full year ended Dec. 31, 2007. For three months ended Dec. 31, 2007, the company incurred net loss of $114.0 million compared to net income of $10.9 million for the same period in the previous year. The loss from continuing operations includes $51.2 million of special items, including $21.6 million in restructuring and other charges, $15.1 million from purchase accounting, and $11.2 million in unrealized mark-to-market losses on derivative financial instruments. In addition, the fourth quarter results include amortization expense of $9.2 million as a result of the company's acquisition by Texas Pacific Group, an increase of $4.0 million from the comparable period of 2006. The continued softness in the North American building and construction and automotive industries well as destocking in the North American and European distribution industries impacted fourth quarter shipment levels and profitability. "Fourth quarter performance was significantly impacted by reduced volumes in our Global Rolled and Extruded Products business," Steven J. Demetriou, chairman and chief executive officer, said. "The U.S. construction and automotive industries continued to weaken and demand in certain European end uses was impacted by customer inventory destocking. We have taken aggressive actions to offset the reduced demand in North America, including the announced closure of our Bedford, Ohio and Toronto, Canada paint facilities, and the temporary reduction of manufacturing at our Richmond, Virginia rolling mill." "The cost performance of our European rolled products business in the fourth quarter was negatively impacted by the complexity and activity associated with the completion of our state-of-the-art 160" hot mill in Koblenz, Germany and the Duffel, Belgium plate project. However, both projects are successfully on-line and production has met our expectations. Over the long-term, the investment of capital into our European rolled products business will allow us to expand our production of aerospace and other heat treat plate and sheet, brazing sheet and other high-end product offerings." For full year 2007, the company has net loss of $128.6 million compared to net income of $70.3 million in 2006. The loss from continuing operations contains $146.2 million of unfavorable special items including $104.3 million from purchase accounting, $32.8 million of restructuring and other charges, and $9.1 million in sponsor management fees. In addition, the 2007 results include amortization expense of $40.1 million, an increase of $33.0 million over 2006 as a result of the TPG acquisition. In 2006, Aleris reported revenues of $4.2 billion and income from continuing operations of $30.8 million. The 2006 results included $98.5 million of unfavorable special items. In addition, operating results were negatively impacted by tightening scrap spreads in its North American specification alloy business well as the higher costs of alloys and hardeners used in the manufacturing process, negative effect of metal price lag and approximately $32 million of out of the ordinary cost including higher absorption, environmental reserves and other items. Free cash flow from continuing operations for 2007 was $421.7 million, driven by aggressive working capital management that yielded increased turns from 5.2 to 6.6 per year and a decrease in days of working capital from 70 to 56 in 2007 versus 2006. During the fourth quarter, the company recorded $21.6 million of restructuring and other charges. These charges resulted from the impairment of long-lived assets at the Monterrey, Mexico recycling facility, the Toronto, Ontario paint facility, and the Bedford, Ohio coating facility as a result of the announced closure of those facilities and severance costs related to the departure of certain executive officers. Restructuring and other charges for the full year of $32.8 million included the fourth quarter charges as well as costs associated with several acquisitions that were not consummated and other facility consolidations. Approximately $9.5 million of the total restructuring and other charges will result in cash payments, primarily in 2008. Capital expenditures were $191.8 million in 2007, compared with $119.4 million for the previous year. The increase is primarily attributable to a full year of the Corus Aluminum acquisition and the expansion projects which accounted for $137.1 million of capital expenditures in 2007. The company ended the year with $2.7 billion of net debt and $369 million of liquidity, excluding the impact of the Zinc sale. Pro forma for the application of the net proceeds from the Zinc sale, net debt was $2.4 billion as of Dec. 31, 2007. Aleris' management has completed its assessment of the effectiveness of the company's internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Based upon its documentation, testing and evaluation, Management has concluded that the company did not have effective internal control over financial reporting as of Dec. 31, 2007; within the context of the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission. At Dec. 31, 2007, the company's balance sheet showed total assets of $5.117 billion, total liabilities of $4.269 billion and total shareholders' equity of approximately $0.848 billion. About Aleris International Inc Headquartered in Beachwood, Ohio, Aleris International Inc. (NYSE: ARS) -- http://www.aleris.com/-- manufactures rolled aluminum products and offers aluminum recycling and the production of specification alloys. The company also manufactures value-added zinc products that include zinc oxide, zinc dust and zinc metal. The company operates 42 production facilities in the United States, Brazil, Germany, Mexico and Wales, and employs approximately 4,200 employees. * * * Moody's Investor Service placed Aleris International Inc.'s long- term corporate family rating at 'B2' in November 2006. The rating still holds to date with a stable outlook. ALLIANCE BANCORP: Moody's Slashes Rating on Cl. M-2 Certs. to Caa2 ------------------------------------------------------------------ Moody's Investors Service has downgraded seven certificates and maintained on review for possible further downgrade four of those classes of certificates from a transaction issued by Alliance Bancorp Trust. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: Alliance Bancorp Trust 2007-S1 -- Cl. A-1, Downgraded to Baa3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Baa3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-3, Downgraded to Baa3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-4, Downgraded to B3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa2 from Aa2 -- Cl. M-2, Downgraded to Caa3 from B1 -- Cl. M-3, Downgraded to C from Caa2 AMES DEPARTMENT: Wants Plan Filing Deadline Moved to October 23 --------------------------------------------------------------- Ames Department Stores asks the United States Bankruptcy Court for the Southern District of New York to further extend their exclusive periods to file a Chapter 11 plan and solicit acceptances of that plan until Oct. 23, 2008, according to Bloomberg News. The report, citing court documents, says the Debtor filed its plan and a related disclosure statement but has refrained from soliciting votes pending a determination as to the solvency of the Debtor's estates and recoveries under the plan. A hearing is set on April 23, 2008, to consider the Debtor's request, notes Bloomberg. Founded in Southbridge, Massachusetts, Ames Department Stores is a regional discount retailer that, through its subsidiaries, currently operates 452 stores in 19 states and the District of Columbia. In 1990, Ames sought relief under Chapter 11 of the United States Bankruptcy Code, blaming low profitability and consumers who defaulted on their debt payments. Rocky Hill, Connecticut-based Ames filed for chapter 11 protection on Aug. 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Togut, Segal & Segal LLP and Weil, Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. On August 14, 2002, Ames announced plans to go out of business, liquidate and close all 327 stores. ANSLEY PARK: Moody's Junks Rating on $450MM Notes ------------------------------------------------- Moody's Investors Service has downgraded its rating of one class of notes issued by Ansley Park ABS CDO, Ltd. The notes affected by the rating action are: Class Description: $450,000,000 Class A-1 Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: B3, on review with future direction uncertain -- Current Rating: Caa3 Ansley Park ABS CDO, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities and CDO securities. The transaction experienced an event of default under the Indenture. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. In this regard, Moody's was informed by the Trustee that the majority of the Controlling Class directed the Trustee to proceed with the sale and liquidation of the Collateral in accordance with the Indenture. The Trustee also notified Moody's that it sold all of the Collateral, made a final distribution and applied the proceeds of the liquidation in accordance with applicable provisions of the Indenture on March 27, 2008. In that distribution, according to the trustee, the only noteholders to receive a distribution of liquidation proceeds were holders of Class A-1 Notes. Available funds were not sufficient to pay the Class A-1 Notes in full. The rating actions taken reflect the changes in severity of loss associated with certain tranches and reflect the final liquidation distribution. ANTHRACITE CRE: Moody's Holds Ratings on Stable Performance ----------------------------------------------------------- Moody's Investors Service affirmed the ratings of 10 classes of Notes issued by Anthracite CRE CDO 2006-HY3, Ltd. as: -- Class A, $174,457,251, Floating Rate Notes Due 2051, affirm at Aaa -- Class B-FL, $50,995,196, Floating Rate Notes Due 2051, affirm at Aa2 -- Class B-FX, $8,946,526, Fixed Rate Notes Due 2051, affirm at Aa2 -- Class C-FL, $42,048,671, Floating Rate Deferrable Interest Notes Due 2051, affirm at A2 -- Class C-FX, $7,157,221, Fixed Rate Deferrable Interest Notes Due 2051, affirm at A2 -- Class D, $12,525,136, Floating Rate Deferrable Interest Notes Due 2051, affirm at A3 -- Class E-FL, $49,205,891, Floating Rate Deferrable Interest Notes Due 2051, affirm at Baa2 -- Class E-FX, $4,473,263, Fixed Rate Deferrable Interest Notes Due 2051, affirm at Baa2 -- Class F, $23,260,967, Floating Rate Deferrable Interest Notes Due 2051, affirm at Baa3 -- Class G, $42,048,671, Fixed Rate Notes Due 2051, affirm at Ba2 Moody's is affirming all Notes due to overall stable pool performance. The collateral of Anthracite CRE CDO 2006-HY3, Ltd. is in the form of a static pool and does not have reinvestment risk. The deal closed on May 23, 2006 and was fully-ramped up by Oct. 23, 2006. It employs a senior sequential and pro rata principal payment structure. CMBS principal proceeds will be paid sequentially, while proceeds from commercial real estate loans will be paid pro rata to rated Notes prior to: 1) an Event of Default; or 2) the date that the current collateral balance is greater than 50% of the effective data balance. BlackRock Financial Management, Inc. serves as the Collateral Administrator. As of the March 24, 2008 distribution date, the transaction's aggregate bond balance has decreased to $596.5 million from $645.4 million at issuance, mainly due to the pay-offs of four commercial real estate loans (Lake Las Vegas Hyatt B-note, Wyndham Hotel Portfolio Mezzanine loan, Lembi Portfolio Mezzanine loan, and Palladium @ City Place Mezzanine loan) and the pay-downs from four other commercial real estate loans (Windsor I B-note, GGP Portfolio B-note, PPG Place Mezzanine loan, and PMSR Portfolio Mezzanine loan). The Notes are currently collateralized by 58 classes of CMBS securities from 15 separate transactions (74.8%) and six commercial real estate loans (25.2%) consisting of three B-notes (9.9%) and three Mezzanine loans (15.3%). Since issuance, there have been no losses on the underlying collateral. Among the Moody's rated CMBS securities (32.6% of the pool balance), there have been no upgrades, and one Moody's rated CMBS security was downgraded. Credit estimates were performed on 27 non-Moody's rated CMBS classes and underlying ratings were updated on six commercial real estate loans (67.4% of the pool balance). Moody's uses a weighted average rating factor as an overall indicator of the credit quality of a CDO transaction. Based on Moody's analysis, the current WARF is 5,357 compared to 5,811 at issuance. Moody's reviewed the ratings, performed credit estimates, or updated the underlying ratings on all the collateral supporting the Notes. The distribution is as follows: Baa1-Baa3 (7.6% compared to 5.5% at issuance); Ba1-Ba3 (21.3% compared to 21.6% at issuance); B1-B3 (23.6% compared to 22.4% at issuance) and Caa1-NR (47.6% compared to 50.5% at issuance). AUSTIN HOUSING: Moody's Holds 'B1' Rating on $9.135MM Bonds ----------------------------------------------------------- Moody's Investors Service has affirmed the B1 rating on Austin Housing Finance Corporation Multifamily Housing Revenue Bonds (Stony Creek/Princeton Apartments Project), Series 1999 A, of which $9,135,000 remain outstanding. The outlook remains negative based on thin financial performance and fluctuating occupancy levels that will need to stabilize for sometime before considering an outlook change. The taxable Series 1999B bonds have matured on Nov. 1, 2004 and no longer carry Moody's rating. Legal Security: The bonds are limited obligations payable solely from the revenues, receipts and security from the two properties. Stony Creek is a 132-unit multifamily rental housing facility constructed in 1982, located in the Southwest Austin submarket of Texas. Princeton Apartments is a 90-unit multifamily rental housing facility constructed in 1965, and is located in the East Austin submarket. Credit Strengths -- Current occupancy rate at Princeton increased to 87% from 83% since Moody's last update in August 2007 and is projected to reach 90% by next quarter. -- Fully funded Debt Service Reserve Fund ($805,000) and partially funded Renewal and Replacement Fund ($84,461) provide additional security for bondholders. -- The owner recently engaged Capstone Real Estate Service, a local company that specializes in multifamily housing to manage both properties. Credit Challenges --Thin but improving debt service coverage level of 1.04 times based on un-audited, 12-month operating statement, ending December 2007. -- Replacement and Reserve Fund is underfunded and will likely not be replenished in the immediate future. -- A significant number of tenants at Princeton have Section 8 vouchers, which generally contributes to stable rent revenue and occupancy but limits management's ability to maximize rental income amid increasing expenses. -- The property is subject to rental housing restrictions such as limitation on tenants' income and rent on certain units, restricting both revenue and the pool of potential tenants Recent Developments/Results: The un-audited 12 moth operating statement ending December 2007 shows somewhat thin but improving financial performance. Revenues declined by about 3% in 2007 from 2006 level but operating expenses also declined by more than 9%, resulting in the adjusted debt service coverage of 1.04 times, calculated based on Maximum Annual Debt Service of $805,000. Debt service coverage was adjusted to include the required deposit into the Replacement and Repair Fund. Excluding such deposit, the ratio would increase to 1.12 times. The decline in expenses was largely due to a decline in contracted services and administrative expenses. Rent levels at the project have remained the same over the past few years and no increases are expected in the immediate future. The Replacement and Repair Reserve Fund remains underfunded ($84,461) and Moody's does not anticipate the properties will replenish it in the near term. However, the debt service reserve fund has remained untapped to-date which provides additional security for bondholders. Princeton Apartments which experienced significant declines in occupancy in the past couple of years is now showing signs of improvements. Current physical occupancy increased to 87% from 83% since our last update on August 2007. The owner projects the occupancy rate to reach 90% by next quarter due to improving neighborhood that is expanding with a new hospital and more retail stores opening up nearby, resulting in more traffic but no new significant competition for the property. Further, the owner completed a significant rehabilitation of the property which improved its appeal. Stony Creek Apartments, on the other hand, has always had stronger occupancy rate than Princeton Apartments which currently stands at 94%. Unlike Princeton, Stony Creek is experiencing some competition from new multifamily housing developments but the owner does not foresee any immediate impact on the property. The property owner has recently changed property management from Arbor Property Management to Capstone Real Estate Service, a local company that specializes in multifamily housing. Capstone was founded in 1969 and currently manages about 53,000 multi-family units and 1,000,000 square feet of commercial space nationwide. Capstone is expected to use its expertise in the multifamily housing and knowledge of the service area to improve performance at both properties. Capstone's near term focus is to increase and maintain high occupancy levels while keeping cost low. Outlook The outlook for the bonds remains negative due to thin margins and low but increasing occupancy at Princeton. What could change the rating -UP -- Continued improvement in debt service coverage and replenishment of Replacement and Repair Fund would put an upward pressure on the rating. What could change the rating -DOWN -- Significant decrease in revenues due to increase in vacancy or expenditures that results in weaker project operating performance could result in a downgrade. AUSTIN HOUSING: Moody's Affirms B3 Rating with Neg. Outlook ----------------------------------------------------------- Moody's Investors Service has affirmed the B3 rating on Austin Housing Finance Corporation Multifamily Housing Revenue Bonds (Rutland Place Apartments Project), Series 1998 A, of which $11,675,000 remain outstanding. The B3 rating affirmation is based upon Moody's review of unaudited, 12-month operating statement ending December 2007 and current occupancy reports provided by the property owner. The negative outlook has been affirmed due to length of time it will take to replenish Debt Service Reserve Fund and the Replacement and Repair Fund, both currently well below levels required pursuant to the transaction documents. Further, current physical occupancy declined to mid 80s due to fire in one of the apartment buildings January 2008 that affected 16 units. Mitigating this concern is the fact the property is insured and renovation of affected units has started. The owner has loss of rent insurance but the level of coverage and impact on debt service coverage is unknown at this time. The taxable Series 1998B bonds have matured on Nov. 1, 2005 and no longer carry Moody's rating. Legal Security: The bonds are limited obligations payable solely from the revenues, receipts and security from the project which is a 294-unit multifamily housing development located in North Central Austin submarket, and is comprised of 16 garden style apartment buildings (known as Rutland Place I) and 15 other apartment buildings (known as Rutland Place II). Phase I was built in 1979 and Phase II was built in 1985. Credit Strengths -- The property has been generating positive cash flow over the past couple years, which excess is being used to replenish the Debt Service Reserve Fund but Moody's does not expect full funding in the near term. -- The owner recently engaged Capstone Real Estate Service, a local company that specializes in multifamily housing to manage both properties. -- According to market data provided by Torto Wheaton Research, occupancy in the submarket is forecasted to remain stable while rent is forecasted to grow. Credit Challenges -- Current physical occupancy has declined from an average of 95% to 84% due to fire in one of the buildings affecting 16 units, 5.4% of total units, but the property is insured for loss of rent. -- Debt Service Reserve Fund balance is $107,504 as of Dec. 31, 2007, 12% of total requirement, and Replacement and Repair Fund is depleted. -- Thin debt service coverage level of 1.08 times assuming regularly scheduled deposits into the Replacement and Repair Fund based on un-audited, 12-month operating statement ending Dec. 31, 2007, but a notable improvement from 0.98% in the prior 12-month period. -- The property is subject to rental housing restrictions such as income limitations restricting the pool of potential tenants as well as owner's ability to maximize rental income. Recent Developments/Results: The unaudited operating statement shows improved debt service coverage level to 1.08 from 0.98 times assuming regularly scheduled deposits into the Replacement and Repair Fund and 1.16 times from 1.06 times in 2006 when excluding such deposit. The project has been able to generate excess cash flows, which is being used to replenish the Debt Service Reserve Fund which increased slightly to $107,504 as of Dec. 31, 2007 from $101,000 for same period in 2006. Given the challenges that the project faced in the recent past during which time it needed to rely on various surplus funds to pay for operating, maintenance and repair and replacement needs over the past three years as well as to pay debt service on the bonds, both the Operating Reserve Fund and Replacement and Repair Fund are currently unfunded. Current physical occupancy has declined to about 84% due to fire in January 2008 that affected 16 units. The owner will be collecting loss of rent insurance but it's premature to determine the level of coverage and assess the impact on debt service coverage at this time. There is a significant competition from other multifamily developments in the area and immediate return to prior occupancy levels upon completion of renovation which already started remains somewhat uncertain. Offsetting this concern is the fact that affected apartments will likely be more attractive and appealing to potential tenants upon completion of the renovation. According to property owner, it will take eight to ten months to redo the damaged apartments. TWR also forecasts that occupancy in the property submarket (North Central Austin) will increase in the next three years, estimating 94.2% in 2008, 94.7% in 2009 and 95.3% in 2010. Moody's believes that B3 rating for the bonds is appropriate and reflects the thin debt service coverage and tap on reserves. Further, the volatility the project is currently experiencing justifies the negative outlook. Outlook The rating outlook for the bonds remains negative based upon the underfunded reserve funds which will require the project to be stable for some time to be fully replenished, declining occupancy and uncertainty surround insurance coverage and return to prior occupancy levels. What could change the rating -UP -- Fully funded reserves -- Significant improvement in debt service coverage What could change the rating -DOWN -- Continued tapping Debt Serve Reserve Fund to pay bondholders or a default on the bonds. AVALON RE: S&P Slashes Ratings to 'CC' After Steam Pipe Explosion ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its subordinated debt rating on Avalon Re Ltd.'s Class C notes to 'CC' from 'CCC-'. The action follows notification from HSBC Bank (Cayman) Ltd. that the steam pipe explosion that occurred in New York City on July 18, 2007, would be a covered event under the terms of the reinsurance agreement between Avalon Re Ltd. and Oil Casualty Insurance Ltd. "To date, Avalon Re Ltd. has experienced $297 million of covered losses due to Hurricane Katrina and the explosion at the Buncefield oil depot," said Standard & Poor's credit analyst Gary Martucci. "This leaves only $3 million of covered losses that can be incurred prior to any losses being borne by the Class C noteholders." The covered-loss report indicated that losses could be as high as $50 million. The final determination of the loss payment is not expected to occur in the near future. Although the losses will reduce the amount of subordination supporting the Class A and B notes, Standard & Poor's is not taking action on the Class A and B notes, which are currently rated 'B+' and 'CCC', respectively. Standard & Poor's has been told that there are currently no claims under review that are expected to cause additional losses to Avalon Re. Ltd. The notes are scheduled to mature on June 6, 2008, though they are subject to extension under terms set forth in the transaction documents. BANC OF AMERICA: Fitch Holds Low-B Ratings on Four Cert. Classes ---------------------------------------------------------------- Fitch Ratings has affirmed these Banc of America Commercial Mortgage Inc., series 2003-2, commercial mortgage pass-through certificates: -- $47.2 million class A-1 at 'AAA'; -- $451.5 million class A-1A at 'AAA'; -- $106.3 million class A-2 at 'AAA'; -- $168.1 million class A-3 at 'AAA'; -- $482.3 million class A-4 at 'AAA'; -- Interest-only class XC at 'AAA'; -- Interest-only class XP at 'AAA'; -- $56.7 million class B at 'AAA'; -- $21.0 million class C at 'AAA'; -- $44.1 million class D at 'AAA'; -- $23.1 million class E at 'AAA'; -- $21.0 million class F at 'AA'; -- $23.1 million class G at 'AA-'; -- $21.0 million class H at 'A'; -- $18.9 million class J at 'BBB+'; -- $10.5 million class K at 'BBB-'; -- $10.5 million class L at 'BB'; -- $8.4 million class M at 'BB-'; -- $8.4 million class N at 'B+'; -- $4.2 million class O at 'B'; -- $2.7 million class BW-A at 'AAA'; -- $1.2 million class BW-B at 'AAA'; -- $8.7 million class BW-C at 'AAA'; -- $2.6 million class BW-D at 'AAA'; -- $3.6 million class BW-E at 'AAA'; -- $3.2 million class BW-F at 'AAA'; -- $3.1 million class BW-G at 'AAA'; -- $2.6 million class BW-H at 'AAA'; -- $2.6 million class BW-J at 'AAA'; -- $2.1 million class BW-K at 'AAA'; -- $3.5 million class BW-L at 'AAA'. Fitch does not rate the $27.1 million class P or classes HS-A, HS-B, HS-C, HS-D or HS-E. The affirmations are due to the stable performance and minimal pay down of the pool. As of the March 2008 distribution date, the pool's aggregate certificate balance has decreased 7% to $1.64 billion from $1.77 billion at issuance. In total 43 loans (33.6%) have defeased, including 1328 Broadway (7.9%), a shadow rated and second largest loan in the pool. In February 2008, one (0.7%) loan transferred to special servicing due to imminent default. The loan is secured by a 121-unit multifamily property in Laramie, Wyoming. The coupon rate is 4.9% and maturity is August 2014. The service-reported September 2007 occupancy was 53% and debt service coverage ratio was 0.58 times. Hines-Sumitomo Portfolio (12.8%) and Newgate Mall (2.6%) maintain their investment grade shadow ratings based on stable loan performance. The Hines Sumitomo portfolio, the largest loan in the pool, is secured by three office properties, two of which are located in New York, New York and the third in Washington, DC. Occupancy has remained stable compared to issuance occupancy of 98.9%. The loan is interest only with a maturity date in 2013. The senior pooled portion has a coupon of 4.78% and the non-pooled portion has a coupon of 4.98% Newgate Mall is a 724,619 square feet anchored retail center in Ogden, Utah. Occupancy remained stable at 98.3% from 94.7% at issuance. The loan is a balloon with a coupon rate of 4.8% and maturity in 2010. Only 0.8% of the pool matures in 2008 and no loans are scheduled to mature in 2009. The weighted average coupon rate is 5.4%. There are currently 13 (6%) Fitch loans of concern due to declining DSCR or occupancy. BARRINGTON BROADCASTING: S&P Keeps 'B' Ratings; Outlook Now Neg --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Hoffman Estates, Illinois-based Barrington Broadcasting LLC to negative from stable. At the same time, S&P affirmed all ratings on the company, including the 'B' corporate credit rating. "The outlook revision reflects the difficulties that we believe the company faces over the intermediate term in making meaningful debt reductions and increasing EBITDA," said Standard & Poor's credit analyst Jeanne Mathewson, "both of which will be essential to complying with an aggressive covenant-tightening schedule." Two-year average EBITDA, which smoothes the effects of advertising and Olympics cycles, is used in the covenants' EBITDA definition. BEAR STEARNS: First Qtr. Earnings Dip to $115MM from 2007's $554MM ------------------------------------------------------------------ Bear Stearns Companies Inc. submitted financial results for the quarter ended Feb. 29, 2008 with the Securities and Exchange Commission. The company's net income decreased to $115 million for the quarter ended Feb. 29, 2008, compared to $554 million for the same quarter last year. Total revenues dipped to $3.4 billion for the quarter ended Feb. 29, 2008, compared to total revenues of $4.7 billion for the same period last year. Bear Stearns experienced a significant liquidity crisis during the end of the week of March 10, 2008, that seriously jeopardized its financial viability. On March 16, 2008, the company and JPMorgan Chase & Co. entered into an agreement and plan of merger following the significant liquidity crisis. On March 24, 2008, the company and JPMorgan Chase entered into an amendment to the agreement and plan of merger. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, a wholly owned subsidiary of JPMorgan Chase will merge with and into the company with the company continuing as the surviving corporation and as a wholly owned subsidiary of JPMorgan Chase. The results for the three months ended Feb. 29, 2008, includes approximately $600 million in net inventory markdowns during the 2008 quarter primarily related to losses experienced in the mortgage-related and leveraged finance areas, as a result of extremely challenging market conditions. Bear Stearns said its net income and revenues will be adversely impacted in the event JPMorgan Chase terminates its operating guaranty in respect of certain trading and other obligations of the company and certain of the company's subsidiaries or its guaranty to the Federal Reserve Bank of New York of the company's borrowings from the Federal Reserve Bank of New York at the Prime Dealer Discount Window. The company said it faces significant legal risks in its businesses, and the volume of claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial institutions have been increasing. 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'. BEXLEY PLACE: Case Summary & Ten Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Bexley Place, L.P. 5817 Allentown Way Temple Hills, MD 20748 Tel: (301) 440-6025 Bankruptcy Case No.: 08-14869 Chapter 11 Petition Date: April 8, 2008 Court: District of Maryland (Greenbelt) Judge: Wendelin I. Lipp Debtor's Counsel: Stanton J. Levinson, Esq. (tiger110@earthlink.net) P.O. Box 1746 Silver Spring, MD 20915 Tel: (301) 649-7888 Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million Debtor's Ten Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Peter Fillat Architects, Inc. $198,107 720 Aliceanna Street, Suite 200 Baltimore, MD 21202 Tel: (410) 576-9310 Land Design, Inc. Trade $71,369 200 South Peyton Street Alexandria, VA 22314 Tel: (703) 549-7784 (extension) 285 John A. Lally, Esquire Professional services $60,000 14513 Main Street Upper Marlboro, MD 20772 Tel: (301) 466-1668 Facchina-MCG Trade $25,000 Gally Public Affairs Consulting & lobbying $18,182 Trend, Inc. $15,000 RCLCO $13,102 Robert Charles Lesser & Co., $12,040 LLC MuniCap, Inc. $9,348 Delta Telephone & Cabling, Trade $5,005 Inc. BFWEST LLC: Has $205 Million in Debt to Creditors ------------------------------------------------- BFWest LLC owes at least $205 million to a group of creditors, Dawn McCarty of Bloomberg News reports. As reported in the Troubled Company Reporter on March 27, 2008, BFWest is an affiliate of mezzanine lender Builder Financial Corp. BFWest's sister companies Builder Funding and BFSPE LLC make the loans, while the Debtor keeps track of acquisition and development loans. BFWest owed Builder Funding $58.1 million of unsecured debt, and BFSPE LLC $32.5 million. BFWest also owed $114.9 million to WestLB, which is secured by certain loans and mortgages. Headquartered in Fort Lauderdale, Florida, BFWest, LLC -- http://www.builderfinancial.com/-- a privately held specialty finance company that facilitates the financing of residential real estate transactions by providing mezzanine financing to builders. It holds a portfolio of acquisition, development and construction loans. The company filed for Chapter 11 protection on March 26, 2008 (Bankr. S.D. Fla. Case No.08-13528). Eyal Berger, Esq., and Michael D. Seese, Esq., at Kluger, Peretz, Kaplan & Berlin, PL, represent the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case to date. When the Debtor filed for protection against its creditors, it listed assets and debts between $100 million to $500 million. BLOCKBUSTER INC: Extends $1.3BB Unsolicited Bid for Circuit City ---------------------------------------------------------------- Blockbuster Inc. on Monday publicly announced an offer to acquire Circuit City Stores Inc. for at least $6 per share in cash, or roughly $1.3 billion, subject to due diligence. The offer was initially made in a letter sent to Circuit City chairman and chief executive officer Philip Schoonover on Feb. 17, 2008, on behalf of the Blockbuster board of directors, who fully supports the bid. Blockbuster's $1.3 billion buyout bid for Circuit City started a controversy on Wall Street as capitalists wonder how could two financially mixed up companies merge. Stocks of each corporation plummeted in 2007, Merissa Marr and Gary McWilliams of Wall Street Journal report. The letter reiterated Blockbuster's interest in pursuing an acquisition of Circuit City. The company noted that the cash necessary would be generated through the issuance of additional Blockbuster equity, in a rights offering to its existing shareholders. The company also added that the borrowing capacity of the combined business would provide the remaining cash proceeds. To date, however, Circuit City has failed to provide due diligence necessary to allow Blockbuster to make a definitive proposal. Blockbuster said it is making its proposal public because it believes the shareholders of Circuit City must have the opportunity to participate in determining the destiny of the company. In addition, as Blockbuster has other strategic opportunities, its offer is conditioned upon timely commencement of the due diligence process. Blockbuster noted the combination of the two companies would result in an $18 billion retail enterprise positioned to capitalize on the growing convergence of media content and electronic devices. The transaction would allow both companies to benefit from the revenue growth generated by their complementary products, while the resulting synergies would substantially improve consolidated financial performance, thereby increasing shareholder value. "Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage," Jim Keyes, Blockbuster chairman and chief executive officer, said. "We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements well as cost synergies." "At Blockbuster, we have successfully deployed a series of strategic initiatives designed to provide our customers with convenient access to media content," Mr. Keyes continued. "These strategic initiatives have already improved our financial results. Driven by strong performance in our domestic same-store revenues, we expect first quarter 2008 adjusted EBITDA to be approximately $110 million versus $23 million for the same period last year." "Additionally, net income for the first quarter of this year should be $30 million compared to a net loss of $49 million for the first quarter of 2007," Mr. Keyes continued. "These results are a clear demonstration that our strategy is working. We look forward to engaging in further conversations with Circuit City and reaching an agreement as soon as possible. Circuit City is still assessing Blockbuster's proposal, WSJ said. Circuit City has also advised its stockholders not to take any move, unless queries on the acquisition are answered. According to WSJ, Blockbuster's extreme action to stay in business is a sign that the DVD rental business is in the process of extinction. WSJ says the bid has the "strong backing" of Blockbuster's biggest shareholder, investor Carl Icahn, and the support of dissident Circuit City shareholder Mark J. Wattles. According to WSJ, Mr. Wattles said he would support Blockbuster's bid and would press for acceptance of any offer "north of $6 a share." Mr. Wattles also indicated Monday, WSJ relates, that he had spoken to Mr. Icahn by phone and the billionaire investor confirmed he would backstop the deal if needed. Mr. Wattles has launched a proxy battle for Circuit City, seeking to remove CEO Schoonover, WSJ says. About Circuit City Stores Inc. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments: domestic and international. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (NYSE: BBI, BBI.B) -- http://www.blockbuster.com/-- is a leading global provider of in-home movie and game entertainment, with over 7,800 stores throughout the Americas, Europe, Asia and Australia. (Movie Gallery Bankruptcy News Issue No. 15; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) At Jan. 6, 2008, the company's total debt, including capital lease obligations was $757.8 million compared with $984.2 million in Dec. 31, 2006. * * * As reported in the Troubled company Reporter on Dec. 28, 2007, Fitch Ratings affirmed Blockbuster Inc.'s long-term Issuer Default Rating at 'CCC' and the senior subordinated notes at 'CC/RR6'. The rating outlook is stable. The company had approximately $991 million of debt outstanding as of Sept. 30, 2007. BROWN SHOE: Operating Challenges Prompts S&P's Negative Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on St. Louis, Missouri-based Brown Shoe Co. Inc. to negative from stable. At the same time, S&P affirmed all other ratings on the company, including the 'BB' corporate credit rating. "The outlook revision reflects the operating challenges facing the company given the generally weak economic conditions," said Standard & Poor's credit analyst David Kuntz. S&P also expects sales and margins to be hurt by cost increases from suppliers over the medium term, and a further deterioration in credit metrics for 2008. CANADIAN TRUSTS: Investors Want ABCP Plan Voting Deadline Moved --------------------------------------------------------------- Certain Canadian companies affected by the Canadian asset-backed commercial paper market want to postpone a scheduled April 25, 2008 voting date for the proposed ABCP restructuring plan proposed by the Pan-Canadian Investors Committee for Third-Party Structured ABCP, Bloomberg News reports. The investors assert that they need to study the proposal further. Some of the investors noted that they only received 360 pages of the relevant documents, Doug Alexander at Bloomberg relates. The Pan-Canadian Committee has "not given the other noteholders enough time and information to properly respond to this filing," Peter Linder told Bloomberg. Mr. Linder represents seven junior oil and gas companies that hold more than CN$100 million of ABCP. He has declined to identify his clients. Another consultant of certain ABCP holders, Colin Kilgour, said "[a] request for an extension is reasonable and likely. An extra month or so to make sure everyone has the opportunity to review and understand the situation is prudent," Bloomberg quotes. Investor Meetings The Pan-Canadian Investors Committee for Third-Party Structured ABCP was scheduled to hold a national teleconference for noteholders yesterday. The conference call was to provide an opportunity for noteholders to ask questions about the Committee's proposed plan to restructure 20 of the trusts covered by last summer's Montreal Accord, affecting $32-billion of notes. It also afforded an opportunity for noteholders who were unable to attend those meetings in person to learn more about the plan. The first round of investor meetings called for by the Pan- Canadian Committee was held March 31, 2008, in Toronto and Montreal. Similar meetings were held in Edmonton, Calgary, and Vancouver on April 1. Several retail ABCP holders attended the April 1 meeting, wherein the attendees expressed their confusion about the proposed ABCP restructuring. All the investors want is a sure way to recoup their investments, reports say. Purdy Crawford, chair of the Committee, reiterated in the April 1 meetings that the Committee considers the retail investors a high priority, and that their complaints about the complexity of the proposed ABCP restructuring plan is understood, edmontonjournal.com relates. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of September 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANADIAN TRUSTS: CIBC to Provide Funding for Canadian ABCP Rescue ----------------------------------------------------------------- Canadian Imperial Bank of Commerce is set to contribute funding to five other big banks for the Pan-Canadian Committee for Third- Party Structured ABCP's rescue plan to revive the Canadian ABCP market, according to Reuters. Specifically, the Pan-Canadian Committee has entered into an agreement with CIBC on certain default swaps related to two ABCP Trusts. Under the Agreement, CIBC will put up CN$300 million to a CN$14 billion margin funding facility designed as a reserve, if the ABCP investments ends up in another crisis in the future. CIBC is Canada's fifth largest bank. Pan-Canadian Committee's Statement On April 8, 2008, the Pan-Canadian Committee for Third-Party Structured ABCP announced that satellite trusts of Structured Asset Trust Series E and Structured Investment Trust III Series E have reached an agreement with CIBC concerning the termination of one of CIBC's credit default swaps -- related to SAT Series E -- and the inclusion of CIBC's two other credit default swaps -- related to SAT Series E and SIT III Series E -- as part of the Committee's CCAA restructuring plan. Reaching a mutually satisfactory agreement on the three swaps was a condition of CIBC's participation in the margin funding facility, which is integral to the Committee's restructuring plan. The agreement resulted from negotiations that began several months ago among CIBC and investors who own a substantial majority of the outstanding SAT Series E notes. As part of the agreement, a credit default swap transaction with Nemertes Credit Linked Certificate Trust (Commerce - LSS II) Series 2006, which is a satellite trust of SAT, has been terminated. The termination resulted in a loss to noteholders of SAT Series E of approximately $163 million, or approximately 23% of principal. The maximum recovery of funds for SAT Series E investors as a result of this unwinding is now approximately 77%. "We are pleased to see the successful restructuring of these swaps," said Purdy Crawford, Chair of the Committee. "This restructuring is a long and complicated road comprising many steps, and today's announcement represents further progress towards successful implementation of the overall restructuring plan." CIBC is one of the financial institutions working with the Committee to resolve liquidity issues attached to the ABCP market in Canada and, together with a number of other Canadian Schedule I banks, has agreed, subject to certain conditions, to participate as a lender in the margin funding facilities that are proposed to be put in place upon implementation of the restructuring plan. The Committee held a series of roundtable meetings with investors across the country the past week to talk about its restructuring Plan, details of which are available on Ernst & Young Inc.'s Web site, http://www.ey.com/ca/commercialpaper Under provisions of the Companies' Creditors Arrangement Act, the Plan must be approved by a majority of noteholders (regardless of the size of their holdings) that vote at the meeting, as well as by noteholders representing not less than 66-2/3% of the total aggregate principal amount of affected ABCP that vote at the meeting. If the Plan is approved by the noteholders at the meeting, a further hearing will be held before the Court for its final sanction of the Plan. National Bank of Canada Joins in the Rescue Effort The Financial Post reports that National Bank of Canada has agreed to offer improved credit facilities to roughly 100 corporate and commercial clients affected by the Canadian ABCP crisis, until the notes of those clients mature. National Bank of Canada is Canada's sixth largest bank. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of September 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANADIAN TRUSTS: Canaccord to Redeem 97% of Clients' ABCP Stake --------------------------------------------------------------- Canaccord Capital Inc. unveiled on April 9, 2008, details of the Canaccord Relief Program to repurchase, at par value, up to CN$138 million of restructured third-party Asset Backed Commercial Paper (ABCP) from clients who hold CN$1 million or less. "After many months of negotiating on behalf of our clients, Canaccord is pleased to offer a solution that provides them with par value on their ABCP investment. Clients will remain entitled to receive any unpaid interest to the extent it is payable pursuant to the restructuring plan and Canaccord will reimburse the share of the overall restructuring costs borne by our eligible clients," said Mark Maybank, chief operating officer of Canaccord Capital Inc. "We worked hard to secure this deal and have contributed our capital to it. With a tangible restructuring in place and a rally in global credit markets, we have been able to source and evaluate numerous bids from parties interested in purchasing the notes and choose the best outcome for our clients." The Canaccord Relief Program is dependent on a successful restructuring of the third-party ABCP market, and combines a market bid from third-party sources with a Canaccord-funded top- up to achieve par value. Clients will also receive any unpaid interest to the extent that it is available under the restructuring plan, and Canaccord will reimburse the eligible clients' actual share of the restructuring costs. Clients who hold CN$1 million or less of ABCP in aggregate will be eligible for this relief. This includes up to 1,430 -- or 97% -- of Canaccord's impacted clients. All funds required for these repurchases will be deposited in escrow as soon as possible. Eligible clients who wish to participate in the program will be required to execute assignments of all the notes they will receive on the implementation of the restructuring. These assignments will only be effective upon payment of the purchase price. The closing will be subject to a successful restructuring, and certain other conditions required under the market bid for the restructured notes. The closing of this purchase will take place as soon as possible following the closing of the restructuring, but not more than 20 business days after the completion of the distribution of restructured notes in accordance with the restructuring plan. The restructuring plan is currently scheduled to close at the end of May 2008. Canaccord expects to make a further announcement confirming completion of the escrow, and will provide formal documentation about the Canaccord Relief Program in the very near term. "We appreciate our clients' patience during this difficult time and we regret that this process has taken so long to complete and the hardship this has caused our clients. We hope they will view the Canaccord Relief Program as a successful outcome to this unprecedented disruption in the Canadian capital markets," added Paul Reynolds, president and chief executive officer of Canaccord Capital Inc. "Canaccord has a long history of commitment to its clients, which we believe we've demonstrated throughout this challenging process. With these efforts behind us, we look forward to continuing to live up to our values and grow our business as a leading global investment dealer." More information about the Canaccord Relief Program is available to clients at http://www.canaccordrelief.com/ Early this month, Canaccord disclosed a one-time after-tax charge of approximately CN$39.6 million or $0.82 per share, related to the Canaccord Relief Program for clients holding third-party Asset Backed Commercial Paper. The charge also includes a provision for management restructuring and other costs, the company said in a press release. "This is a significant charge to our earnings that reflects our commitment to resolving a very difficult process in the best possible way for our clients," said Mr. Reynolds said. "We remain well capitalized and committed to our clients, which we believe we've demonstrated throughout this process. With these efforts behind us, we look forward to continuing to live up to our values and grow our business as a leading global investment dealer." Through its principal subsidiaries, Canaccord Capital Inc. (TSX & AIM: CCI) is a leading independent, full service investment dealer in Canada with capital markets operations in the United Kingdom and the United States of America. Canaccord is publicly traded on both the Toronto Stock Exchange and AIM, a market operated by the London Stock Exchange. Canaccord has operations in two of the principal segments of the securities industry: private client services and capital markets. Together, these operations offer a wide range of complementary investment products, brokerage services and investment banking services to Canaccord's private, institutional and corporate clients. Canaccord has approximately 1,676 employees worldwide in 30 offices, including 23 Private Client Services offices located across Canada. Canaccord Adams, the international capital markets division, has operations in Toronto, London, Boston, Vancouver, New York, Calgary, Montreal, San Francisco, Houston and Barbados. Pan-Canadian Committee Welcomes Canaccord's Offer The Pan-Canadian Investors Committee for Third-Party Structured ABCP welcomed Canaccord's offer to acquire all the restructured third-party ABCP of its clients who hold CN$1 million or less of the affected ABCP, if the Committee's proposed restructuring plan is accepted by noteholders and the Court. The Committee understands that the Canaccord proposal consists of an offer to repurchase all of the restructured ABCP of those clients at par, plus an amount designed to reimburse their share of the overall restructuring costs allocated to these notes. In addition, Canaccord's clients will remain entitled to receive any amounts payable on account of accrued interest during the restructuring period pursuant to the Committee's plan. "We believe this is an important step in resolving the concerns of smaller noteholders," says Committee chairman Purdy Crawford in a press release. "We have consistently expressed our empathy for the plight of these noteholders, many of whom we recognize face dire circumstances." The Chairman added that: "The Committee encourages other financial intermediaries who may have sold affected ABCP to small investors to follow Canaccord's initiative and address the concerns of their smaller clients by providing liquidity solutions such as this one. The Committee is delighted that the restructured notes available under the Committee's plan have provided a basis for renewed liquidity options such as this." On March 17th, the Ontario Superior Court of Justice granted an application by the Committee, under the provisions of the Companies' Creditors Arrangement Act (CCAA), to establish a procedure for noteholder approval of the restructuring plan filed by the Committee. The plan must now be approved by noteholders at a meeting in Toronto on April 25th and sanctioned by the Court. A copy of the plan, together with the related Information Statement and other documents, has been mailed to all registered and beneficial noteholders, and is available on the public Web site of Ernst & Young Inc., the Court-appointed monitor in the ABCP restructuring (www.ey.com/ca/commercialpaper) Juroviesky Reserves Position on Canaccord's Conditional Partial Offer Juroviesky and Ricci LLP noted in a press statement that it was pleased to read of Canaccord Capital Inc.'s proposal to conditionally purchase a portion of the Frozen ABCP it sold to some of its clients. "While we welcome any offer that may relieve the burden currently being experienced by our Retail Clients, CCI's proposal indicates that the Offer is subject to certain conditions that have not been publicly disclosed, and are not currently known by Juroviesky and Ricci LLP. Accordingly, Juroviesky and Ricci LLP currently reserves on whether or not it supports the offer, subject to obtaining further information regarding the conditions relating to the Offer," said Juroviesky. "We also represent the interests of clients that purchased their ABCP from sources outside Canaccord, and that accordingly, may not be able to participate in the Offer," Juroviesky said. "Juroviesky and Ricci LLP wants to stress that at this time we are still pursuing an offer to be made to all of our clients that purchased their ABCP from all sources that will relieve ALL our clients' frozen ABCP immediately at full value," said Juroviesky. "We accordingly urge our clients to not take any un-informed action until further direction from us, and we have had the opportunity to analyze all the details relating to the Canaccord Proposal," Juroviesky stated. "Further information and direction will be forthcoming from our offices, when we have additional material information." ABCP Investors Still Wary of Canaccord Proposal According to The Canadian Press, the Canaccord Relief Program was disclosed a day before the House of Commons finance committee in Ottawa, Canada, was to give six ABCP retail holders an opportunity to air their ABCP-related concerns. Retail ABCP investors, who hold about CN$350 million worth of non-bank ABCP, are still not satisfied with the Relief Program which Canaccord has put forward. Reuters reports that Diane Urquhart, a financial analyst representing the retail ABCP holders, asserted at an April 10 House of Commons special meeting that the Canaccord Proposal is not sufficient. "This problem has not been resolved yesterday despite the positive press coverage. The offer is incomplete. Only some families are being paid, numerous families have been left out," Reuters quotes Ms. Urquhart. Retail ABCP Investors have hinted at the April 10 parliamentary hearing that they might take legal action with respect to the ABCP they hold, Reuters says. "It is my belief that the ABCP was sold in the Canadian market unlawfully and that it should have been sold with prospectus," Ms. Urquhart added, Reuters notes. While the Canaccord Proposal seeks to repurchase 97% of its impacted clients, it excludes 43 clients that hold more than CN$1 million worth of ABCP. These clients are composed of 28 corporate holders and 15 individual investors, which include New Gold Inc., Redcorp Ventures Ltd. and Universal Uranium Ltd. According to Globe and Mail, the corporate investors intend to ask Mr. Justice Colin Campbell of the Superior Court of Ontario to allow them a veto in the ABCP restructuring process. The Program is "inquitable and arbitrary," Norsemont Mining, Inc. Chief Executive Patrick Evans also told The Canadian Press. He believes the Relief Program was set up to gain enough votes for the Pan-Canadian Committee Restructuring Plan, which is scheduled to be voted on April 25. Norsemont Mining holds CN$7 million in ABCP. Universal Uranium Ltd. Executive Vice President Bill Galine agrees with Mr. Evans. "How can you take care of just 97% of your people?" The Canadian Press quotes Mr. Galine. Universal Uranium holds CN$1,400,000 in ABCP. The Canadian Press noted that several attendees of the parliamentary meeting complained that certain Canadian regulatory bodies like the Ontario Securities Commission and the Office of the Superintendent of Financial Institutions, failed to closely monitor the ABCP market when illegal practices were being carried out. "The current financial regulatory system is broken and offers no protection to Canadian investors," Ms. Urquhart avers, according to The Canadian Press. Credential Securities Working on Relief Plan Credential Securities, Inc., a brokerage firm based in Vancouver, has clients who hold roughly CN$48 million in ABCP investments. Credential Senior Vice President Elaine McHarg said in an interview with Bloomberg News that her firm is currently negotiating a relief plan for its clients. "We are looking at a whole range of possibilities," Ms. McHarg told Bloomberg. "We would not be looking at buying it back without appropriate partnerships." "This proposal would be separate from Canaccord, but we are well informed by the Canaccord proposal," Ms. McHarg added. No details of the plan has been reported as of press time. Credential averred that it has sold debt to about 335 retail ABCP customers. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of September 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). C-BASS: Poor Collateral Performance Cues Moody's to Cut Ratings --------------------------------------------------------------- Moody's Investors Service has downgraded 6 certificates from C-BASS Series 2007-SL1 Trust. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-SL1 -- Cl. M-1, Downgraded to Caa2 from A2 -- Cl. M-2, Downgraded to Caa3 from A3 -- Cl. B-1, Downgraded to Ca from Ba1 -- Cl. B-2, Downgraded to Ca from B2 -- Cl. B-3, Downgraded to C from Caa1 -- Cl. B-4, Downgraded to C from Ca CALEDONIA MINING: Posts CN$4MM Net Loss in Year ended December 31 ------------------------------------------------------------------ Caledonia Mining Corporation reported its fourth quarter and 2007 annual financial results. The company reported net income before discontinued operations of CN$0.494 million compared to net income before discontinued operations of CN$3.841 million for the same period in the previous year. For the year ended Dec. 31, 2007, Caledonia net loss after tax of CN$3.9 million includes an unrealized loss on foreign exchange of CN$1.012 million. Cash available at year end totaled CN$0.076 million from continuing operations. "The extremely challenging economic environment in Zimbabwe caused delays in completing the No 4 shaft expansion at our Blanket Gold Mine, which in turn severely interfered with production and ultimately impacted on the Group's financial performance, stated Stefan Hayden, president and CEO. "However the Nama Project progressed well, which culminated in the recent signing of four off-take agreements with large Chinese refiners." "During the current quarter, I am pleased to disclose that we have signed agreements for the sale of the Barbrook and Eersteling companies for a total cash consideration of $12.91 million," added Mr. Hayden. "These transactions are expected to close during the second and third quarter of this year respectively." At Dec. 31, 2007, the company's balance sheet showed total assets of CN$29.492 million, total liabilities of CN$5.397 million and total shareholders' equity of CN$24.095 million. About Caledonia Mining Caledonia Mining Corporation (TSX: CAL) (OTC BB: CALVF) (AIM: CMCL) -- www.caledoniaminin.com -- is a Canadian registered mining, exploration and development corporation that owns a diversified portfolio of carefully selected, high quality mines and exploration properties in Southern Africa and Canada. In June 2006 Caledonia acquired the Blanket Mine in Zimbabwe from Kinross Gold Corporation of Toronto. Caledonia's two South African gold mines, Barbrook Mine and Eersteling Gold Mine, are both currently on care-and-maintenance and were put up for sale in December 2006. Going Concern Doubt On March 28 2008, BDO Dunwoody LLP's audit report of Caledonia Mining Corp.'s consolidated financial statements for the years ended Dec. 31, 2007, and 2006, is expressed in accordance with Canadian reporting standards which do not require a reference in the auditor's report to events and conditions which cast doubt on the company's ability to continue as a going concern in the auditors' report when these are adequately disclosed in the financial statements. The company's ability to continue as a going concern is dependent upon attaining profitable operations, realizing proceeds from the disposal of mineral properties and obtaining sufficient financing to meet its liabilities, its obligations with respect to operating expenditures and expenditures required on its mineral properties. CHESAPEAKE CORP: Weak Performance Cues S&P to Chip Rating to 'B+' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings for Richmond, Virginia-based Chesapeake Corp., including the corporate credit rating, which was lowered to 'B+' from 'BB-'. At the same time, S&P assigned a recovery rating of '6' to the company's existing subordinated notes, indicating S&P's expectation for negligible (0% to 10%) recovery in the event of a payment default. All ratings were removed from CreditWatch, where they were placed with negative implications on Dec. 18, 2007. The outlook is negative. "The downgrade reflects the company's weaker-than-expected operating performance during 2007 due to lower results than expected in certain segments, start-up production costs for a new product line, and expenses for process-improvement initiatives," said Standard & Poor's credit analyst Andy Sookram. "As a result, credit metrics have weakened materially to a level no longer consistent with the former ratings." In addition, S&P expects that earnings may continue to be weak over the next several quarters, which would pressure credit measures and potentially tighten liquidity. Chesapeake supplies specialty paperboard packaging (about 83% of sales) and plastic packaging for pharmaceutical, health care, spirits, confectionery, cosmetics, food, tobacco, household, and chemical products. The company is one of the largest virgin- fiber-based folding carton producers in Europe. CELSIA TECH: Modifies Debenture Interest Due Dates to May 2010 -------------------------------------------------------------- In connection with its previously issued 8% Secured Convertible Debentures pursuant to a Securities Purchase Agreement dated as of May 25, 2007, Celsia Technologies disclosed that on March 26, 2008, the company obtained consent from more than 70% of the holders to modify the terms of Section 2 of the debentures to provide that, in lieu of making the interest payments in cash or in shares of common stock of the company on the interest payment dates, such interest payments will accrue and be paid in full in cash on May 25, 2010 . In consideration for the holders' consent to the modification, the company will distribute to the holders a one time distribution equal to the value of 2% of the outstanding principal amount due under the debentures as of March 31, 2008, which, in lieu of the April 1, 2008 interest payment, will be paid in cash on the maturity date. Each holder will have the right, in its sole discretion, to convert any accrued but unpaid interest on the principal amount due under the debentures into duly authorized, validly issued, fully paid and non-assessable shares of common stock at the applicable interest conversion rate at any time prior to the maturity date. About Celsia Technologies Headquartered in Miami, Florida, Celsia Technologies Inc. (OTC BB: CSAT) -- http://www.celsiatechnologies.com/-- is a full solution provider and licensor of thermal management products and technology for the PC, consumer electronics, lighting and display industries. The company develops anc commercializes next- generation cooling solutions built on patented micro thermofluidic technology. Celsia Technologies' intellectual property portfolio includes patents registered in Korea, the U.S., Japan and Taiwan, with patents pending in the EU, Russia, India and China. At Dec. 31, 2007, the company's consolidated balance sheet showed $6,124,404 in total assets and $6,348,495 in total liabilities, resulting in a $224,091 total stockholders' deficit. Going Concern Disclaimer PKF, in New York, expressed substantial doubt about Celsia Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm reported that at Dec. 31, 2007, the company and its subsidiaries have commenced limited revenue producing operations and have an accumulated deficit of $40,292,494. CITIUS II: Moody's Downgrades Ratings to C on $39 Million Notes --------------------------------------------------------------- Moody's Investors Service has downgraded these notes issued by Citius II Funding, Ltd.: Class Description: $20,000,000 Class C Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Caa2 -- Current Rating: C Class Description: $19,000,000 Class D Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C In addition Moody's also announced that it has downgraded and left on review for possible downgrade these notes: Class Description: Up to $1,800,000,000 Class A ST Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: Up to $1,800,000,000 Class A LT Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $95,000,000 Class A Secured Floating Rate Notes Due 2047 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $50,000,000 Class B Secured Floating Rate Notes Due 2047 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. COBALT CMBS: Stable Performance Cues Fitch to Affirm Ratings ------------------------------------------------------------ Fitch Ratings has affirmed Cobalt CMBS Commercial Mortgage Trust, series 2007-C2, commercial mortgage pass-through certificates as: -- $32.4 million class A-1 at 'AAA'; -- $241.1 million class A-2 at 'AAA'; -- $71.9 million class A-AB at 'AAA'; -- $857.5 million class A-3 at 'AAA'; -- $485.6 million class A-1A at 'AAA'; -- $221.9 million class A-MFX at 'AAA'; -- $102.6 million class A-JFX at 'AAA'; -- $21.2 million class B at 'AA+'; -- $27.2 million class C at 'AA'; -- $21.2 million class D at 'AA-'; -- $15.1 million class E at 'A+'; -- $18.1 million class F at 'A'; -- $20 million class A-MFL at 'AAA'; -- $100 million class A-JFL at 'AAA'; -- $30.2 million class G at 'A-'; -- $24.2 million class H at 'BBB+'; -- $24.2 million class J at 'BBB'; -- $30.2 million class K at 'BBB-'; -- $12.1 million class L at 'BB+'; -- $3 million class M at 'BB'; -- $9.1 million class N at 'BB-'; -- $6 million class O at 'B+'; -- $3 million class P at 'B'; -- $6 million class Q at 'B-'; -- Interest-only class X at 'AAA'. Fitch does not rate the $30.2 million class S. The affirmations are the result of stable pool performance. There have been no delinquent or specially serviced loans since issuance. As of the March 2008 distribution report the transaction's principal balance has decreased slightly as interest-only loans represent 53.4% of the pool. Additionally, 37.6% of the pool presently has an interest-only period ranging from one to 72 months. Fitch reviewed the most recent operating statement analysis reports and occupancy figures for the seven shadow rated loans in the transaction: Peter Cooper Village and Stuyvesant Town (10.4%), Ala Moana Portfolio (4.1%), Shadow Pines Apartments (0.5%), 3505- 3521 East Chapman Retail Center (0.3%), Pathmark Store (0.2%), Highland Orchard Apartments (0.2%) and 201 Wilshire (0.1%). Based on their stable performance since issuance the loans maintain their investment grade shadow ratings. Peter Cooper Village and Stuyvesant Town (10.4%) is a multifamily property comprised of 56 multistory buildings with a total of 11,227 residential apartments in Manhattan, New York. In addition to the residential component, the complex contains approximately 100,000 square feet of retail space, 20,000 sf of professional office space, and six parking garages with 2,260 licensed spaces. The property benefits from the strong sponsorship of Tishman Speyer Properties, LP and Blackrock Realty. The sponsor is in the process of converting the stabilized units to market rate rents as they become vacant, or if criteria established by the State of New York involving the legal rental rate level and occupant income levels are met. As of Dec. 31, 2007, 33.7% of the units are market rate (66.3% are stabilized) compared to approximately 27% at issuance (approximately 73% were stabilized) and an additional 6.7% are currently vacant and undergoing renovations to prepare for market rate tenants. The borrower is expected to spend approximately $125 million in capital expenditures, financed through amounts on deposit in the general reserve which has a current balance of $91.7 million. In addition, the reserve to cover debt service shortfalls, conversion costs, capital expenditures, and operating expenses during the term of the loan has a current balance of $203.8 million. The trust portion represents a $250 million pari passu piece of the entire $3.0 billion A note. There is an additional $1.5 billion of mezzanine debt outside the trust. Ala Moana Portfolio (4.1%) is collateralized by a two million square foot mixed use retail and office property located in Honolulu, Hawaii. Retail anchors include Sears, Macy's and Nordstrom's. Major tenants include Shirokiya, Barnes & Noble, Longs Drugs, Kaiser Foundation and Gap. In-line tenants include Tiffany, Cartier, Louis Vuitton, Chanel, Dior, Banana Republic, Prada, Williams Sonoma, Apple and Disney. The retail portion of the collateral is occupied by nearly 275 tenants while the office portion is occupied by 184 tenants. The property benefits from the experienced sponsorship and management of GGP LP, a real estate investment trust which currently owns and manages a portfolio of 200 regional malls totaling 200 million sf. The pari passu $100 million A-8 note of the $1.315 billion whole A note is included in this transaction with the remainder of notes A-1 through A-7 securitized in various transactions. The $1.5 billion whole loan consists of notes A-1 through A-8 and notes B through F. Occupancy as of Dec. 31, 2007 has increased slightly to 97.1% from 96.9% since issuance. DELTA AIR: Deal with Pilots Clears Way for Northwest Merger ----------------------------------------------------------- Delta Air Lines Inc. and its pilots have reached an agreement in principle on a contract that would purportedly clear the way for the carrier's merger with Northwest Airlines Corp., Bloomberg News reports. [The Wall Street Journal has reported that the board of directors of both airline companies approved the merger. A separate story is included in today's Troubled Company Reporter.] The accord would allegedly raise Delta pilots' pay and give them an equity stake in the consolidated carrier, people familiar with the talks said. Any pact would need to be approved by the leaders of the Delta pilots union, a unit of the Air Line Pilots Association, before the carriers could finalize their deal, says The Atlanta Journal- Constitution. The Delta union's 6,000 members also may vote later on whether to ratify a new labor contract tied to the merger. "With oil at $110 per barrel and the weakening economy, Delta probably got to the point where they felt like they needed to move ahead," said Michael Derchin, an analyst with FTN Midwest Research Securities Corp. in New York. "It always made strategic, long-term sense for these companies." The merger talks hit a snag in February when the airlines' pilots weren't able to agree on a way to protect members' seniority rankings after a consolidation. Now, Delta wants to draw up a new contract with just its 7,000 pilots, and Northwest's 5,000 pilots would be asked to join under a single contract later, said the people who didn't want to be identified because the plan is still private. The plan includes a small premium for Northwest investors, the unidentified sources said, reports Bloomberg. "It's sort of a backhanded slap at the Northwest pilots," said Douglas Marshall, director of the Aviation Graduate Program at the University of North Dakota. "Delta's pilots are going to have more leverage. They will be in a stronger position." Negotiations to create a combined seniority list may take months to complete, Bloomberg says, citing people familiar with the situation. "It is hard to anticipate Northwest pilots' level of interest in agreeing to an unknown Delta seniority integration proposal," said Robert Mann of R.W. Mann & Co. in Port Washington, New York, a consultant for airlines and unions. Betsy Talton, spokeswoman for Delta, and Tammy Lee, a spokeswoman for Northwest, declined to comment. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and US$17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. DELTA AIR: Board Votes "For" Merger with Northwest Airlines ----------------------------------------------------------- The board of directors of both Delta Air Lines Inc. and Northwest Airlines Corp. gave their consent Monday to allow the two airlines to merge based on an all-stock deal, The Wall Street Journal and The Associated Press relate. The combination of Delta and Northwest, which is still subject to regulatory approval, stands to create the world's largest airline operator in the world valued at $17.7 billion, AP says. Under the merger, each Northwest shareholder will get 1.25 shares in the combined company for every share owned, or equivalent to 17% premium as of Monday's trading, based on WSJ's and AP's reports. Both reports recount that Delta and Northwest have emerged from bankruptcy in 2007 and "are in much better shape" as compared with smaller airlines that have recently gone bankrupt. The deal, reportedly, could incite potential workers' protest. Air France-KLM Partnership Reports note that Delta and Northwest have partnered with Air France-KLM SA, which previously indicated plans to invest $750.0 million in the merger of the two U.S. airlines. As reported in the Troubled Company Reporter on Feb. 22, 2008, amid the merger rumors, Franco-Dutch airline Air France-KLM expressed its interest to invest in the entity that would emerge from a Delta and Northwest merger. Pierre-Henri Gourgeon, Air France-KLM's deputy CEO said in an analysts' conference call that the investment would depend on whether the U.S. airlines obtain a green light from competition authorities and probably won't result in any payments before the end of 2008. The investment is said to be close to $1.0 billion or EUR680.0 million. Labor Issues Concerning potential employee protest, the TCR said on April 10, 2008, that Northwest and Delta have revived their merger talks, even without the pre-arranged deal from both carriers' pilots, said people familiar with the situation. Delta's board members convened on April 4, 2008, and agreed to continue the talks which were reportedly intensifying. Delta pilots were granted permits to picket at Northwest hubs from April 8 to 24, to protest over the carriers' pilot-seniority dispute. Northwest's pilots union said it reserves the right to do the same thing at Delta hubs if it chooses. Previously, pilots' leaders from both carriers were unable to reach an agreement on an acceptable seniority list integration. The original deal between the parties included a common pilot labor contract for their combined 11,000 pilots that would give all of them raises, with Northwest's 5,000 aviators getting heftier increases to bring them up to Delta levels. The new deal may include a smaller pay package for pilots. The carriers are not required by law to come up with pre-merger pilots' labor agreements to push through with the deal. Delta and Northwest, however, wanted to avoid a messy, labor wrangle once the deal was consummated and, therefore, made efforts to come up with a "common labor contract." A report about Delta reaching an agreement in principle with its pilots that would purportedly clear the way for the carrier's merger with Northwest is included in today's TCR issue. Expected Revenue Boost After Merger Once approved by regulators, the merger will result in a projected annual sales of $31.7 billion, significantly higher than American Airlines Inc.'s annual sales, according to AP. WSJ reports that the merger will realize annual revenue and cost reduction will reach at least $1.0 billion. WSJ adds that the Delta and Northwest will need less than $1.0 billion to complete the merger. Wave of U.S. Airline Consolidation According to the reports, the merger signals the start of a series of collaborative efforts among U.S. airlines to address the rise in fuel costs, weakened economy, and the financial crisis. Larger airlines also have greater ability to compete internationally, relate the reports. The TCR related on March 24, 2008, that United Air Lines Inc. would pursue a consolidation with Continental Airlines Inc. if given the go-ahead, to create the airline industry's biggest carrier. Stephen Canale, a union representative on United Airlines' board of directors, said that Continental is "without question" the first choice for a United merger. The TCR said that the merger between Delta and Northwest, which was at that time currently under consideration, could incite a United-Continental tie-up. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and US$17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's