T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, April 16, 2008, Vol. 12, No. 90 Headlines 2038 NOTES: Moody's Junks Rating on $82.5 Million Class B Notes ABITIBIBOWATER INC: S&P Junks Ratings on $350MM Convertible Notes ADAM AIRCRAFT: Pueblo City Demands $2 Million Repayment AMERICAN TECH: Sells North Texas Steel & Whitco Shares to NTS-WIT AMDL INC: CFO Ariura's Annual Compensation Increased to $210,000 ASARCO LLC: Judge Schmidt Clarifies Examiner's Duties ASARCO LLC: Court Stretches Plan-Filing Period to June 10 ASARCO LLC: Wants to Obtain $5 Mil. Credit Facility from JPMorgan ASPEN TECH: Posts $9 Million Net Loss in Quarter Ended Sept. 30 ASPEN TECH: Earns $45.5 Million in Fiscal Year Ended June 30 ATHLETES WORLD: Impacts Forzani's Fourth Quarter 2008 Earnings ATLANTIC WINE: Inks LOI to Acquire IEC's Oil & Gas Business ATSI COMMS: Accounts Receivable Financing Increased to $5,000,000 AMERICAN AXLE: Mexico Axle Plant Supplies Auto Parts to GM BALLY TOTAL: Discloses Plan Distribution for Former Stockholders BANCO FIBRA: S&P Puts 'BB-' Foreign Currency Rtng. on $150MM Notes BAYOU GROUP: Court Slaps 20-Yr. Prison Sentence to Exec. for Fraud BEAR STEARNS: JPMorgan Buys 3.9 Million Shares for $33.1 Million BERRY PLASTICS: $530 Mil. Note Issuance Spurs Moody's 'B3' Rating BERRY PETROLEUM: S&P Lifts Corp. Credit Rating to BB from BB- BLOCKBUSTER INC: Circuit City Bid Won't Affect S&P's Ratings Now BOMBARDIER INC: S&P Lifts Ratings to BB+ from BB; Removes Watch BUFFETS HOLDINGS: Seeks Court OK To Reject 23 Exectory Contract BUFFETS HOLDINGS: Wants to Hire Quinn Emanuel as Counsel BUFFETS HOLDINGS: U.S. Trustee Balks at Tahoe Joe's Bonus Payment BUFFETS HOLDINGS: Wants Until April 21 to File Schedules CAPITALSOURCE INC: Planned Fremont Deal Cues Fitch to Hold Ratings CARRINGTON MORTGAGE: Fitch Lowers Ratings on $245.4MM Certificates CHRYSLER LLC: Confirms New OEM Product Pacts with Nissan Motor CLASSICSTAR LLC: Court Approves U.S. Trustee's Conversion Plea CLAYTON HOLDINGS: Greenfield Deal Wont Affect S&P's 'B' Rating CLST HOLDINGS: Posts $310,000 Net Loss in Quarter Ended Feb. 29 CRAB BARN: Case Summary & 19 Largest Unsecured Creditors DEL MONTE: Solid Market Position Cues Moody's Rating Affirmations DELTA AIR: Reaches $17.7 Bil. All-Stock Merger Pact with Northwest DELTA AIR: Northwest Pilots and Machinist Oppose Merger DILLARD'S INC: Moody's Downgrades Corporate Credit Rating to 'B1' DILLARD'S INC: S&P Cuts Rating to BB- from BB with Stable Outlook DIOMED HOLDINGS: To Pay Hercules $6 Mil. from Settlement Proceeds DORADO BECKVILLE: Case Summary & 20 Largest Unsecured Creditors EMAGIN CORP: Dec. 31 Balance Sheet Upside Down by $3.975 Million ESKIM LLC: Case Summary & Seven Largest Unsecured Creditors FLOWSERVE CORP: Fitch Affirms 'BB' Ratings with Positive Outlook FORD CREDIT: Moody's Gives 'Ba1' Initial Rating on Class D Notes FORD CREDIT: Fitch to Assign 'BB' Rating on $21MM Class D Trusts FORD CREDIT: S&P Puts 'BB+' Preliminary Rating on Class D Notes FRED LEIGHTON: Chapter 11 Filing Stays Auction of $34 Mil. Assets FRED LEIGHTON: Voluntary Chapter 11 Case Summary FRESHWATER OF HARRISBURG: Case Summary & 12 Largest Creditors FRIEDMAN INC: White Jewelers Acquires Certain Assets for $14.3MM FRONTIER AIRLINES: Bankruptcy Filing Prompts Securities Delisting GENTA INC: Eliminates 30% Workforce in Restructuring Operations GENERAL MOTORS: Reopens Two Plants Supplied by Axle in Mexico GREAT PANTHER: Reduces Exercise Price of WK Warrants to $1.42 GTM HOLDINGS: Weak Credit Metrics Cues Moody's Rating Cut to 'B3' HEARTLAND AUTOMOTIVE: Wants Until September 6 to File Ch. 11 Plan HSBC HOME: Fitch Downgrades Ratings on $225.6 Million Certificates ICEWEB INC: Names Ret. Gen. Harry E. Soyster to Board of Directors INGLESIDE TEXAS: S&P Lifts Bond Rating to BBB from BB INGLESIDE TEXAS: S&P Lifts Rating on GO Debt to BBB from BB JEFFERSON COUNTY: Deadline to Pay Sewer Debt Extended by 30 Days JPMORGAN CHASE: S&P Affirms Low-B Ratings on Five Cert. Classes KEY COMMERCIAL: Stable Performance Cues Fitch to Affirm Ratings KNIGHT INC: Reduction in Leverage Prompts Moody's Rating Upgrades LANDING DEVELOPMENT: Case Summary & 31 Largest Unsecured Creditors LEVITT AND SONS: Wants Plan-Filing Period Stretched to May 12 LEVITT AND SONS: Committee Can Hire Bilzin Sumberg as Tax Counsel LEVITT AND SONS: Wants to Reject CBS Outdoor Contracts LID LTD: Gets Court Approval to Access Banks' Cash Collateral LINENS 'N THINGS: To Defer $16.1MM Interest Payment on Sr. Notes LINENS 'N THINGS: Likely Default Cues Fitch to Cut ID Rating to C MAJESTIC STAR: Dec. 31 Balance Sheet Upside-Down by $167.8 Million MANITOWOC COMPANY: Moody's Confirms Low-B Ratings on Enodis Deal MERRILL LYNCH: S&P Chips Ratings on Five Classes of Certificates MGM MIRAGE: Saves $75MM on Costs with 440 Managerial Staff Cuts MOVIE GALLERY: Files Additional Supplements to 2nd Amended Plan MOVIE GALLERY: Assumes More Leases to Appease Landlords MOVIE GALLERY: Rejects 320+ Leases Including Hollywood Stores MYSTIQUE ENERGY: Court Extends CCAA Protection Until Sept. 15 NEUROGEN CORP: Offers Exchangeable Preferred Stock for $30.6MM NEW CENTURY: Fitch Chips Ratings on $692.8 Million Certificates NEWPORT TELEVISION: Moody's Junks Rating on $100 Mil. Senior Notes NEW YORK TIMES: Eliminates 100 News Staff to Cut Operating Costs NICK'S OF BOCA: Placed into Chapter 7 Liquidation by Owner NIELSEN COMPANY: Confirms 10% Reduction of Total Workforce NORTH COAST: A.M. Best Affirms C++(Marginal) Issuer Credit Rating NORTHWEST AIRLINES: Reaches $17.7BB All-Stock Pact with Delta NORTHWEST AIRLINES: Pilots and Machinist Oppose Delta Merger ORIGEN FINANCIAL: Completes $46 Million Secured Note Financing PACIFIC LUMBER: Court Extends Confirmation Hearing to April 29 PACIFIC LUMBER: More Parties Back Marathon/Mendocino Plan PACIFIC LUMBER: Scopac Challenges Validity of BoNY Liens PARADISE MUSIC: Employs Carlton Capital as Financial Advisor PARKER HUGHES: Seeks Liquidation of Assets Under Chapter 7 PINE TREE: Moody's Cuts Rating on $4 Mil. Notes to 'B1' From 'A3' PLACER VINEYARDS: Case Summary & Three Largest Unsecured Creditors PLASTECH ENGINEERED: Panel Opposes Payment to Repudiating Vendors PLASTECH ENGINEERED: Rejects 70 Reclamation Demands on Claims PORTOLA PACKAGING: Feb. 29 Balance Sheet Upside Down by $103.3MM PRICELINE.COM INC: Good Performance Prompts S&P to Lift Ratings QUALITY DISTRIBUTION: Weak Performance Cues S&P to Revise Outlook RECKSON OPERATING: Fitch Holds 'BB+' Rating; Removes Neg. Watch REMY WORLDWIDE: Court Sets Hearing to Close Case on April 23 REVLON INC: Posts Preliminary Results For the 2008 First Quarter REVLON INC: Receives Requisite Approvals For Reverse Stock Split RIVER ROCK: Dec. 31, 2007 Balance Sheet Upside Down by $26.0 Mil. SEA CONTAINERS: Court OKs Navigant Consulting as Pension Advisors SEA CONTAINERS: Panel Obtains International Judicial Assistance SPECTRUM BRANDS: S&P Holds 'CCC+' Rating Revises Outlook to Dev. ST JOSEPH'S HOSPITAL: Patients Seek Medical Records Copy STRUCTURED INVESTMENTS: Moody's Reviews 'B2' Rating on $10MM Notes TCM MEDIA: Moody's Withdraws All Ratings on Business Reasons TRICOM SA: Banco Multiple Leon Wants Bankruptcy Plan Revised TRUMP ENTERTAINMENT: Moody's Junks Probability of Default Rating TUCSON ELECTRIC: S&P's Rating Unaffected by ACC's Letter to UNS VERMILLION INC: Appoints John Hamilton to Board of Directors WASHINGTON MUTUAL: Amends Performance Bonuses Plan for Executives * S&P Says 38 Rated Entities Are Identified As Fallen Angels * S&P Expects Global Packaging Sector to Face Downgrade Pressures * S&P Downgrades Ratings on 31 Tranches From Eight Hybrid CDOs * S&P Cuts Ratings on Eight Classes from Four US RMBS Transaction * David A. White Joins McCarter & English as Litigation Partner * Justin Mirro Joins as a Managing Director of Moelis & Company * Two Jefferies Advisors Join Moelis' Restructuring Group * SMH Capital is Exclusive Agent in Liquidation of $2.8 Bil. CDOs * Total Bankruptcy Filings Increase Nearly 38 Percent in 2007 * Upcoming Meetings, Conferences and Seminars ********* 2038 NOTES: Moody's Junks Rating on $82.5 Million Class B Notes --------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible downgrade these notes: Class Description: $60,000,000 Class A-1 Floating Rate Senior Subordinate Secured Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $15,000,000 Class A-2 Floating Rate Subordinate Secured Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: Baa1, on review for possible downgrade Moody's also downgraded these notes: Class Description: $82,500,000 Class B Floating Rate Junior Subordinate Secured Notes Due 2038 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. ABITIBIBOWATER INC: S&P Junks Ratings on $350MM Convertible Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned recovery ratings to the senior unsecured debt issues of AbitibiBowater Inc., Abitibi- Consolidated Inc., and Bowater Inc. At the same time, S&P lowered the issue-level rating on these debts to 'CCC+' from 'B-'. Based on a separate recovery analysis of each entity, S&P assigned a recovery rating of '5 ' to the issues, indicating the expectation for a modest (10%-30%) recovery in the event of a payment default. S&P also assigned an issue-level rating of 'CCC+', with a recovery rating of '5', to the US$350 million convertible notes issued by AbitibiBowater. These notes are guaranteed by Bowater, and therefore rank pari passu with Bowater's unsecured debts. Ratings List AbitibiBowater Inc. Corporate credit rating B-/Negative/-- Abitibi-Consolidated Inc. Corporate credit rating B-/Negative/-- Bowater Inc. Corporate credit rating B-/Negative/-- Ratings Lowered/Recovery Rating Assigned To From -- ---- AbitibiBowater Inc. Senior unsecured debt CCC+ (Recovery rating: 5) B- Abitibi-Consolidated Inc. Senior unsecured debt CCC+ (Recovery rating: 5) B- Bowater Inc. Senior unsecured debt CCC+ (Recovery rating: 5) B- Rating Assigned AbitibiBowater Inc. US$350 mil. convertible notes CCC+ (Recovery rating: 5) ADAM AIRCRAFT: Pueblo City Demands $2 Million Repayment ------------------------------------------------------- Officials of Pueblo City, Colorado, indicated plans to demand payment of $2 million from bankrupt Adam Aircraft Inc., aka Adam Aircraft Industries, The Associated Press reports. The city extended $1.4 million to the Debtor in exchange for a promise of the creation of 440 jobs, AP quotes Pueblo attorney Tom Jagger, Esq. Pueblo City also claimed it acquired and renovated a building for Adam Aircraft, AP relates. As reported in the Troubled Company Reporter on April 9, 2008, Adam Aircraft's assets were sold to AAI Acquisition Inc. for $10 million plus assumption of debts. AP reports that the U.S. Bankruptcy Court in Colorado approved that sale a week ago. According to AP's report, AAI Acquisition intends to resume operations at Centennial, Colorado but has no immediate plans to resume operations at the cities of Pueblo or Ogden. About Adam Aircraft Denver, Colorado-based Adam Aircraft Inc., aka Adam Aircraft Industries -- http://www.adamaircraft.com/-- designs and manufactures advanced aircraft for civil and government markets. The A500 twin-engine piston aircraft has been Type Certified by the FAA, and the A700, which is currently undergoing flight test and development. The Debtor filed for chapter 7 liquidation on Feb. 15, 2008, with the U.S. Bankruptcy Court in Colorado after failing to secure financing. It also laid off 800 workers and listed assets between $1 million and $10 million, and debts between $50 million and $100 million. AMERICAN TECH: Sells North Texas Steel & Whitco Shares to NTS-WIT ----------------------------------------------------------------- On April 7, 2008, American Technologies Group Inc., as the owner of all of the issued and outstanding shares of Omaha Holdings Corp., Omaha Holdings Corp. and NTS-WIT Holdings LLC entered into a Stock Purchase and Sale Agreement pursuant to which Omaha Holdings agreed to sell to NTS-WIT Holdings all of its issued and outstanding shares in wholly owned North Texas Steel Company Inc. and Whitco Poles Inc. The shares comprise substantially all of the assets of Omaha Holdings, and the issued and outstanding shares of stock of Omaha Holdings, comprise substantially all of the assets of the company. NTS-WIT Holdings is a wholly owned subsidiary of Laurus Master Fund Ltd. As disclosed in the company's Quarterly Report on Form 10-QSB for the quarter ended Jan. 31, 2008, the company received a notice of default with respect to its current obligations due to Laurus and a demand for the immediate payment of all past due amounts owned to Laurus in the amount of $13,580,810. A summary of material terms of the purchase agreement: -- Seller will sell to purchaser the shares for a purchase price equal to the then total outstanding principal amount of indebtedness owned by the company to Laurus plus all accrued and unpaid interest thereon. Simultaneously, all evidence of indebtedness owed by the company to Laurus will be deemed paid in full and shall be cancelled. The company is also indebted to the Gryphon Master Fund L.P. in the amount of $500,000 plus accrued and unpaid interest, and the Gryphon Debt will be simultaneously satisfied and cancelled. -- Warrants and options of the company issued to Laurus will be partially terminated so that Laurus shall not own more than 25% of the issued and outstanding shares of common stock of the company on a fully diluted basis, as of the date of closing. -- Conditions precedent to closing include, but are not limited to, (i) completion of due diligence by purchaser to its sole satisfaction, (ii) entry into a management agreement by and between purchaser and a management team, and (iii) approval of the purchase agreement by the shareholders of the company. The company will seek shareholder approval of the purchase agreement through a special shareholders meeting to be held on June 15, 2008, subject to the company's ability to file a Definitive Schedule 14A with the Securities and Exchange Commission. A full-text copy of the Stock Purchase and Sale Agreement, dated April 7, 2008, is available for free at: http://researcharchives.com/t/s?2a8d About American Technologies Based in Fort Worth, Texas, American Technologies Group Inc. (NASDAQ: ATEG) -- was engaged, prior to 2001, in the development, commercialization and sale of products and systems using patented and proprietary technologies including catalyst technology and water purification. The company largely ceased operations during 2001 and began focusing efforts on restructuring and refinancing. In September 2005, the company entered into various financing transactions and acquired North Texas Steel Company Inc., an AISC Certified structural steel fabrication company based in Fort Worth, Texas. On April 25, 2006, the company purchased certain assets of Whitco Company LP, a business conducting the sale and distribution of steel and aluminum lighting poles. The Whitco assets are held in a separate subsidiary called Whitco Poles Inc. As reported in the Troubled Company Reporter on March 27, 2008, American Technologies Group Inc.'s consolidated balance sheet at Jan. 31, 2008, showed $17,747,188 in total assets and $23,753,019 in total liabilities, resulting in a $6,005,831 total stockholders' deficit. Going Concern Doubt RBSM LLP, in New York, expressed substantial doubt about American Technologies Group Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended July 31, 2007. The auditing firm reported that the the company has suffered recurring losses and is experiencing difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. AMDL INC: CFO Ariura's Annual Compensation Increased to $210,000 ---------------------------------------------------------------- Effective April 8, 2008, the base annual compensation of AMDL Inc.'s chief financial officer, Akio Ariura, was increased from $185,000 per year to $210,000. Mr. Ariura may also receive additional bonuses or other compensation as awarded from time to time by the company's Compensation Committee. Mr. Ariura does not serve under a written employment agreement with AMDL Inc. About AMDL Inc. Based in Tustin, California, AMDL Inc. (AMEX: ADL) -- http://www.amdl.com/-- is a vertically integrated specialty pharmaceutical company with operations in Shenzshen, Jiangxi, and Jilin, China. In combination with its subsidiary Jade Pharmaceutical Inc., AMDL engages in the research, development, manufacture, and marketing of diagnostic products. At Dec. 31, 2007, the company's consolidated balance sheet showed $32,867,178 in total assets, $7,145,665 in total liabilities, and $25,721,513 in total stockholders' equity. Going Concern Disclaimer KMJ Corbin & Company LLP, in Irvine, Calif., expressed substantial doubt about AMDL 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 said that the company has incurred significant operating losses and negative cash flows from operations through Dec. 31, 2007, and has an accumulated deficit at Dec. 31, 2007. ASARCO LLC: Judge Schmidt Clarifies Examiner's Duties ----------------------------------------------------- The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas ruled that the examiner in the Debtors' cases will monitor and assess whether the Plan Sponsor Selection Meeting is being conducted in a manner consistent with the Interim Bidding Procedures Order. The Court directed the Examiner to exercise caution so as not to chill the bidding or negatively affect the bid process. The Examiner may attend the Plan Sponsor Selection Meeting at the office of Baker Botts L.L.P., at 2001 Ross Avenue, in Dallas, Texas. Counsel for the Debtors will notify the Examiner of the date and time of the Plan Sponsor Selection Meeting. The Debtors will timely provide all submitted bids and proposals to the Examiner, and provide background as the Examiner reasonably deems appropriate in the performance of his duties. The Examiner will be entitled to receive confidential information, provided that the Examiner will maintain the confidentiality of the information. In the event any participant in the Plan Sponsor Selection Meeting believes that the plan sponsor selection process is being conducted in a manner inconsistent with the Interim Bidding Procedures Order, the participant may discuss the alleged inconsistency with the Examiner. The Examiner will examine the inconsistency, may seek to facilitate communications among the parties, and to the extent the Examiner deems appropriate, report to the Court regarding the plan sponsor selection process. The Examiner will be paid for its duties. About ASARCO Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). The Debtors have until June 10, 2008 to file a Chapter 11 plan of reorganization. (ASARCO Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: Court Stretches Plan-Filing Period to June 10 --------------------------------------------------------- The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas extended ASARCO LLC and its debtor- affiliates' exclusive period to file a plan of reorganization until June 10, 2008, and their exclusive period to solicit acceptances of that plan until Aug. 12, 2008. Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P., and Citigroup Global Markets, Inc., as holders of majority of the unsecured bonds issued by ASARCO LLC, told the Court that they support further extension of ASARCO's exclusive periods to the extent that ASARCO remain committed to the timeline established by the bidding procedures. If the Debtors abandon or materially alters the timetable for selecting a plan sponsor or if the process if unnecessarily delayed to the detriment of creditors for any reason, the Majority Bondholders said they reserve the right to seek termination of exclusivity. Asarco Incorporated and Americas Mining Corporation said they object to further extension of the exclusive periods to the extent duties have not been assigned to a Chapter 11 examiner. Asarco Inc. and Americas Mining believe that unless duties are assigned to an examiner, exclusivity should be terminated to allow them to propose their own plan of reorganization. About ASARCO Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). (ASARCO Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: Wants to Obtain $5 Mil. Credit Facility from JPMorgan ----------------------------------------------------------------- ASARCO LLC and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of Texas to enter into a $5,000,000 letter of credit facility with JPMorgan Chase Bank, N.A., and pay a $15,000 up-front deposit to JPMorgan for due diligence and documentation fees and expenses. The salient terms of the JPMorgan Credit Facility are: Credit Facility: $5,000,000 twelve-month credit facility for the issuance of letters of credit Closing Date: On or before May 15, 2008 Collateral: Each letter of credit issued under the Credit Facility and all fees and associated expenses and all interests on any unreimbursed draws will be secured by cash collateral, to be provided in advance of the issuance, in the amount of 110% of the face amount of the Letter of Credit Commitment Fee: A commitment fee equal to 0.50% per annum on the Commitment, payable annually to JPMorgan from the Closing Date until termination of the Commitment. Letter of Credit Fee: A letter of credit fee, equal to 1.5% per annum, on the daily maximum amount to be drawn under all letters of credit, payable monthly in arrears to JPMorgan, together with a $500 per issuance fee, plus any documentary and processing charges in accordance with JPMorgan's standard schedule for charges with respect to the issuance, amendment, cancellation, negotiation or transfer of each letter of credit and each drawing made thereunder. Expenses: ASARCO will pay all reasonable, documented out-of-pocket expenses of JPMorgan associated with the preparation, execution, delivery, administration and enforcement of the Credit Facility and any amendment or waiver and reasonable, documented fees and expenses of other advisors and professionals engaged by JPMorgan. Deposit: A $15,000 deposit will be used to cover JPMorgan's reasonable, documented out-of- pocket expenses, including reasonable fees, time charges and expenses of its attorneys, due diligence expenses, syndication expenses, if any, consultants' fees and expenses, if any, and travel expenses. Additional deposits may be required. If the Credit Facility is not consummated for whatever reason, the unused portion of the deposit will be returned to ASARCO. Default Rate: After default, the Letter of Credit Fee will be increased by 2% per annum. In December 2005, the Court authorized ASARCO to signed a $75,000,000 DIP loan facility with The CIT Group/Business Credit. The CIT DIP Facility, which included a letter of credit sub- facility for ASARCO's ongoing business needs, expired on its own terms on December 15, 2007. In light of ASARCO's cash reserves, the CIT DIP Facility was not renewed, Ishaq Kundawala, Esq., at Baker Botts L.L.P., in Dallas, Texas, says. In this light, the CIT DIP Facility must be replaced by a new stand-alone letter of credit facility, ASARCO asserts. About ASARCO Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). The Debtors have until June 10, 2008 to file a Chapter 11 plan of reorganization. (ASARCO Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASPEN TECH: Posts $9 Million Net Loss in Quarter Ended Sept. 30 --------------------------------------------------------------- Aspen Technology Inc. reported a net loss of $9.0 million in the first quarter ended Sept. 30, 2007, compared with a net loss of $1.6 million in the same period ended Sept. 30, 2006. Net loss applicable to common shareholders was $9.0 million in the first quarter of fiscal 2008 compared to net loss applicable to common shareholders of $5.3 million in the same period in fiscal 2007. For the quarter ended Sept. 30, 2007, AspenTech reported total revenue of $64.8 million, compared to $64.2 million in the first quarter of fiscal 2007. License revenue was $31.1 million, an increase of 11%, and services revenue was $33.7 million, a decrease of 6%, compared to the first quarter of fiscal 2007. AspenTech's loss from operations, determined in accordance with GAAP, was $8.4 million in the first quarter of fiscal 2008. This compares to an operating loss of $17,000 in the first quarter of fiscal 2007. GAAP operating expenses in the first quarter of fiscal 2008 included $2.5 million of non-cash stock-based compensation, $7.2 million in restructuring charges due to the previously announced move of the company's headquarters, and $1.5 million in incremental professional services fees associated with completing the financial restatement. In the first quarter of fiscal 2007, the company's GAAP operating expenses included $1.7 million in non-cash stock-based compensation, $1.9 million in amortization in intangibles and $1.4 million in restructuring charges. AspenTech had cash and cash equivalents of $129.5 million at Sept. 30, 2007, a decrease of approximately $2.8 million from $132.3 million at the end of June 30, 2007. Operating Cash Flow For the three months ended Sept. 30, 2007, operating activities provided $22.3 million of cash. A net loss of $9.0 million was offset by non-cash expenses for stock-based compensation and depreciation and amortization totaling $5.3 million, a $14.5 million decrease in installments and accounts receivable, a $3.0 million decrease in unbilled services, a $1.2 million decrease in prepaid expenses and other current assets, and a $4.8 million increase in accounts payable and accrued expenses. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $507.9 million in total assets, $378.0 million in total liabilities, and $129.9 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2a83 About AspenTech Based in Cambridge, Massachusetts, Aspen Technology Inc. (Nasdaq: AZPN) -- http://www.aspentech.com/-- provides process optimization software and services. AspenTech's integrated aspenONE(TM) solutions enable manufacturers to reduce costs, increase capacity, and optimize operational performance end-to-end throughout the engineering, plant operations, and supply chain management processes. * * * Moody's Investor Service placed the company's long-term corporate family rating at B2 and its equity-linked rating at Caa1 in October 2001. These ratings still hold to date with a stable outlook. ASPEN TECH: Earns $45.5 Million in Fiscal Year Ended June 30 ------------------------------------------------------------ Aspen Technology Inc. filed on Friday its Annual Report on Form 10-K for the fiscal year ending June 30, 2007, including the restatement of prior period results. Net income was $17.9 million in the fourth quarter of fiscal 2007. This represented a significant increase compared to net income of $3.9 million in the same period of fiscal 2006. Preferred stock discounts and dividends totaled $3.9 million in the fourth quarter of fiscal 2006 and zero in the fourth quarter of fiscal 2007, resulting in net income applicable to common shareholders of $17.9 million and $52,000 in the fourth quarter of fiscal 2007 and 2006, respectively. For the fourth quarter ended June 30, 2007, AspenTech reported total revenue of $101.4 million, an increase of 27% from the fourth quarter of the prior fiscal year, and above the company's original guidance of $85 million to $89 million. Within total revenue, license revenue was $68.0 million, an increase of 52%, and services revenue was $33.4 million, a decrease of 4%, compared to the fourth quarter of fiscal 2006, respectively. Brad Miller, chief financial officer of AspenTech, said "We are pleased to bring approximately nine months of comprehensive review of our financial accounts to a close with the filing of our fiscal 2007 10-K and first quarter fiscal 2008 10-Q financial statements. Our work included a detailed examination and restatement of prior financial statements, as well as a review of all significant accounting policies and processes. "Although it took longer than expected, we believe it was in the long-term interest of our shareholders and will benefit the company as we look to scale the business in the years ahead. With this significant body of work now behind us, we are highly focused on completing our overall goal of bringing our financial statements current and becoming relisted on a national securities exchange." Mark Fusco, chief executive officer of AspenTech, said "While the finance department has been focused on completing our financial statement filings, the company's customer facing operations have continued to execute at a high level. Following a record fiscal 2007 performance, the company has generated year-over-year license bookings growth of 25% during the first nine months of fiscal 2008, including 31% year-over-year growth during the third quarter." Fusco added, "The company ended the third fiscal quarter with a strong financial position highlighted by $137 million in cash, an increase from $132 million at Dec. 31, 2007, and net of $12 million used during the third quarter to retire our previously existing Key Bank secured borrowing facility. We continue to be optimistic about the company's long-term fundamental outlook based on our industry leading domain expertise, unique suite of aspenONE solutions and solid demand in our core markets." AspenTech's income from operations, determined in accordance with generally accepted accounting principles, was $24.0 million in the fourth quarter of fiscal 2007, exceeding the mid-point of the company's original guidance of approximately $16 million and representing an operating margin of 23.7%. This compares to operating income of $7.7 million in the fourth quarter of fiscal 2006, which represented an operating margin of 9.7%. GAAP operating expenses in the fourth quarter of fiscal 2007 included $3.1 million of non-cash stock-based compensation, $1.3 million of non-cash amortization of intangibles associated with previous acquisitions, $1.0 million in restructuring charges due to the company's continued office consolidations, and $800,000 in incremental auditing and professional fees associated with bringing the company's financial statements current - the combination of which reduced the company's operating margin by approximately 6 percentage points. These items reduced the prior year's operating margin by approximately 8 percentage points. Fiscal Year 2007 Financial Results For the fiscal year ended June 30, 2007, AspenTech reported total revenue of $341.0 million, an increase of 16% from fiscal 2006. Within total revenue, license revenue was $199.8 million, an increase of 30%, and services revenue was $141.3 million, an increase compared to $140.7 million, in fiscal 2006, respectively. AspenTech's income from operations, determined in accordance with GAAP, was $55.4 million in fiscal 2007, representing an operating margin of 16.2%. This compares to operating income of $18.8 million in fiscal 2006, which represented an operating margin of 6.4%. GAAP operating expenses in fiscal 2007 included $11.1 million of non-cash stock-based compensation, $6.5 million of non-cash amortization of intangibles associated with previous acquisitions, $4.6 million in restructuring charges due to the company's continued office consolidations, and $800,000 in incremental auditing and professional fees associated with bringing the company's financial statements current - the combination of which reduced the company's operating margin by approximately 7 percentage points. These items reduced the prior fiscal year's operating margin by approximately 7 percentage points. Net income was $45.5 million in fiscal 2007, compared with net income of $6.5 million in fiscal 2006. Net income applicable to common shareholders was $38.2 million in fiscal 2007, which was net of $7.3 million in preferred stock discounts and dividends. This represented a significant increase compared to a loss attributable to common shareholders of $8.9 million in fiscal 2006, which was net of $15.4 million in preferred stock discounts and dividends. AspenTech had cash and cash equivalents of $132.3 million at June 30, 2007, an increase of approximately $31.5 million from $100.8 million at the end of March 31, 2007. Summary of Restatement Effects of Prior Period Financial Results The company's Annual Report on Form 10-K for fiscal 2007 included the restatement of its financial statements for fiscal years ended June 30, 2006, and 2005, in addition to the first three quarters of the year ended June 30, 2007. On June 11, 2007, the company announced that it had identified errors related to the accounting for sales of installment receivables. In particular, the company determined that certain sales of installments receivable did not meet criteria for true sale accounting on an ongoing basis. As a result, two new balance sheet accounts were created - Collateralized Receivables and the related Secured Borrowing liability. The restated consolidated balance sheet as of June 30, 2006, includes the recording of $211.3 million in collateralized receivables, the related recording of $182.4 million in secured borrowings, and the elimination of $19.0 million in retained interest in sold receivables. As previously stated, the company views this newly reported liability as self funding, with collections of collateralized receivables servicing the liability. The company does not believe that this accounting conclusion alters its arrangements with its customers, and it has not changed its economic relationship with the financial institutions. The summary impact to income/loss from operations related to the restatement of installments receivable, in addition to correcting other errors in the company's previously reported financial statements, was: -- Income from operations improved from $28.1 million as previously reported to $31.4 million as restated for the nine months ended March 31, 2007; -- Income from operations in fiscal 2006 was $18.8 million both as previously reported and as restated; -- Loss from operations in fiscal 2005 improved from a previously reported operating loss of $70.0 million to a restated operating loss of $59.0 million. On Feb. 11, 2008, the company announced it had identified errors relating to its historical accounting for income taxes for certain international tax obligations, primarily arising from transactions among consolidated subsidiaries or from revaluation of foreign currencies. As a result, the company increased tax provisions for these potential obligations in the applicable period in the amounts of $4.1 million for the nine months ended March 31, 2007, $3.2 million for the year ended June 30, 2006, $6.8 million for the year ended June 30, 2005, and $4.6 million as of June 30, 2004. The summary impact on net income or loss as a result of the restatement was: -- Net income for the nine months ended March 31, 2007 as restated was $27.6 million, a decrease from $31.9 million as previously reported; -- Net income for fiscal 2006 as restated was $6.5 million, a decrease from $12.8 million as previously reported; -- Net loss for fiscal 2005 as restated was $69.1 million, an improvement from $73.6 million as previously reported. In addition, in the calculation and disclosure of deferred tax balances, errors were identified for the book or tax accounting treatment for certain items. These errors resulted in the incorrect disclosure of components of the company's deferred taxes and the related offsetting valuation allowance within the income tax footnote. Accordingly, the deferred tax balances included in the income tax footnote and the offsetting valuation allowance has been restated as of June 30, 2006. As these net deferred tax assets had a full valuation allowance, the adjustments to deferred tax assets had no net impact on the company's consolidated balance sheet or statements of operations. Ending cash balances were not affected as a result of the restatement; however, the presentation of the cash flow statement was restated. The net proceeds from the sale of installments receivable were previously classified in cash flows from operations and have been restated as cash flows from financing activities. Payments made on secured borrowings are now similarly classified as cash flows from financing activities. Annual collections relating to installments receivable that were previously transferred to a financing institution are recognized as cash flows from operations. The company did not previously recognize these collections within its cash flow statement following the transfer of the installments receivable to the financing institution. Liquidity and Capital Resources a) Operating Cash Flow In fiscal 2007, operating activities provided $55.7 million of cash as net income, plus non-cash expenses for stock-based compensation and depreciation and amortization totaling $30.5 million, was partially offset by a $30.9 million increase in installments receivables, primarily related to the sale of receivables to Key Bank, the proceeds from which are presented as a component of cash from financing activities. Accrued expenses increased by $1.8 million due to increases in accruals for income taxes and professional fees associated with the restatement of the company's financial statements. b) Borrowings Collateralized by Receivable Contracts (i) Traditional Programs The company historically has maintained arrangements with financial institutions providing for borrowings that are secured by the company's installment and other receivable contracts, and for which limited recourse exists against the company. As of June 30, 2007, the company had outstanding secured borrowings of $180.3 million that were secured by collateralized receivables totaling $183.2 million. Availability under these arrangements is dependent upon the company's generation of additional customer receivables and the financial institutions' willingness to continue to enter into these transactions. The company estimates that there was in excess of $64.0 million available under the Traditional Programs at June 30, 2007. (ii) Securitization of Accounts Receivable The securitization transactions in fiscal 2005 and 2007 include collateralized receivables whose value exceeds the related borrowings from the financial institutions. The company receives and retains collections on these securitized receivables after all borrowing and related costs are paid to the financial institution. The financial institutions' rights to repayment are limited to the payments received from the collateralized receivables. The carrying value of the collateralized receivables at June 30, 2007, under these arrangements was $61.9 million and the secured borrowings totaled $25.8 million. (iii) Fiscal 2005 Securitization On June 15, 2005, the company securitized and transferred installments receivable with a net carrying value of 71.9 million and received cash proceeds of $43.8 million. The transfers of installments receivable to the securitization facility did not qualify as a sale for accounting purposes and has been accounted for as a secured borrowing. These borrowings are secured by collateralized receivables and the debt and borrowing costs are repaid as the receivables are collected. (iv) Fiscal 2007 Securitization On Sept. 29, 2006, the company entered into a three-year revolving securitization facility and securitized and transferred installments receivable with a net carrying value of $32.1 million and received cash proceeds of $20.0 million. The transfers of installments receivable to the securitization facility did not qualify as a sale for accounting purposes and have been accounted for as a secured borrowing. These borrowings are secured by collateralized receivables and the debt and borrowing costs are repaid as the receivables are collected. In December 2007, the company paid the outstanding amount of the Fiscal 2005 securitization at its carrying value. The company had been in violation of certain covenants related to the Fiscal 2007 Securitization due to the delay in filing its financial statements and other violations. In March 2008, the company paid the outstanding amount of the Fiscal 2007 Securitization at its carrying value plus a termination fee of $800,000, and this securitization is no longer available. c) Credit Facility In January 2003 and through subsequent amendments, the company executed a loan arrangement with Silicon Valley Bank. This arrangement provides a line of credit of up to the lesser of (1) $15.0 million or (2) 70% of eligible domestic receivables, and a line of credit of up to the lesser of (1) $10.0 million or (2) 80% of eligible foreign receivables. As of June 30, 2007, there were $7.4 million in letters of credit outstanding under the line of credit, and there was $13.1 million available for future borrowing. On Oct. 16, 2007, the company executed an amendment to the Loan Arrangement that adjusted the terms of certain financial covenants, including modifying the date the company must provide monthly unaudited and annual audited financial statements to the bank. The loan arrangement expires in May 2008. The company is currently in negotiations to either: (i) extend this line of credit with the company's current lender and amend the terms of the facility; or (ii) obtain a facility from another lender. Contractual Obligations The company's total contractual obligations, which primarily consisted of operating leases for the company's headquarters and other facilities, sub-contractor purchase commitments, and other debt obligations, totaled $62.9 million at June 30, 2007. Other than these, there were no other commitments for capital or other expenditures. Total contractual future sublease rental income as of June 30, 2007, was $7.2 million, which is not included. On Sept. 5, 2007, the company entered into an additional sublease agreement related to its former office space in Cambridge, Massachusetts, effective Oct. 1, 2007, for approximately 50,000 square feet that expires on Sept. 30, 2012. This new sublease agreement represents $5.5 million of scheduled sublease payments not included in the total. Effective Sept. 1, 2007, the landlord terminated a portion of the company's lease in Houston, Texas with respect to approximately 14,000 square feet of the original leased space. This termination agreement has not been included in the total and represents future reductions of $2.6 million in lease payments. Balance Sheet At June 30, 2007, the company's consolidated balance sheet showed $528.9 million in total assets, $391.7 million in total liabilities, and $137.2 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended June 30, 2007, are available for free at http://researcharchives.com/t/s?2a82 About AspenTech Based in Cambridge, Massachusetts, Aspen Technology Inc. (Nasdaq: AZPN) -- http://www.aspentech.com/-- provides process optimization software and services. AspenTech's integrated aspenONE(TM) solutions enable manufacturers to reduce costs, increase capacity, and optimize operational performance end-to-end throughout the engineering, plant operations, and supply chain management processes. * * * Moody's Investor Service placed the company's long-term corporate family rating at B2 and its equity-linked rating at Caa1 in October 2001. These ratings still hold to date with a stable outlook. ATHLETES WORLD: Impacts Forzani's Fourth Quarter 2008 Earnings -------------------------------------------------------------- The Forzani Group Ltd. reported fiscal 2008 fourth quarter and year-end results for the 14- and 53-week periods ended Feb. 3, 2008. Unless otherwise stated, prior year comparisons are to the 13- and 52-week periods ended Jan. 28, 2007. The company's fourth quarter 2008 results were impacted by its acquisition of bankrupt Athletes World Ltd. Forzani CEO Robert Sartor was quoted by The Canadian Press as stating that he expects Forzani to emerge from Companies Creditors Arrangement Act proceedings sometime in late May and that the 66 Athletes World Stores it plans to keep will be immediately accretive to Forzani's business after that. As reported in the Troubled Company Reporter on Dec. 6, 2007, Forzani disclosed that it plans to close 37 of Athletes World's 138 stores. Forzani CFO Bill Gregson said that the stores to be closed are those that have been continuing to incur losses. Fourth Quarter Results Net earnings for the fourth quarter were $28.7 million, or $0.85 per share, compared to the prior year's fourth quarter of $21.1 million, or $0.62 per share, a 36.0% increase in profits and a 37.1% increase in earnings per share. The negative impact to net earnings and earnings per share, as a result of the acquisition of Athletes World, was less than $0.3 million or $0.01 per share. Net earnings were positively impacted during the quarter, by a reduction in corporate income tax rates, which added $2.2 million or $0.06 per share. Retail system sales for the quarter were $524.7 million, an increase of $84.5 million, or 19.2% from the prior year 13-week sales of $440.2 million. The results were positively impacted by a return to seasonal weather in the East which drove sales of winter hardgoods and outerwear, the additional week of operations in the quarter, and the Athletes World acquisition during the quarter. Same store sales, in corporate locations were up 10.6% and up 17.7% in franchise locations, for an overall same store sales increase of 13.0%. Excluding the impact of the 53rd week, quarterly sales were up 5.9% in corporate locations and 12.8% in franchise locations for an overall same store sales increase of 8.3%. Revenue, consisting of corporate store sales, wholesale sales, service income, equipment rentals, franchise fees and franchise royalties, was $410.6 million, up $57.4 million, or 16.3% over the 4th quarter last year. Yearly Results Net earnings for the year were $47.5 million, or $1.40 per share compared to $35.2 million and $1.06 per share in the prior year, a 34.9% increase in profits and a 32.1% increase in earnings per share. Cash flow from operations increased to $82.7 million from $77.4 million. On a per share basis, cash flow increased 4.7% to $2.45 compared to $2.34 in the prior year. The negative impact to net earnings and earnings per share, as a result of the acquisition of Athletes World Limited, was less than $0.3 million, $0.01 per share. Net earnings and earnings per share were positively impacted by a reduction, in the fourth quarter, in the corporate income tax rate. The rate reduction added $2.2 million or $0.06 per share to earnings for the year. Retail system sales for the 53 weeks were $1,529.1 million, a $112.4 million increase from sales for fiscal 2007. Same store sales in corporate stores increased 3.3%, while franchise stores increased 10.0%, with total same store retail system sales increasing 5.6%. Excluding the impact of the 53rd week, sales were up 1.3% in corporate locations and 8.5% in franchise locations for an overall same store sales increase of 3.8%. Revenue was $1,331.0 million, a $67.0 million, or 5.3% increase over the 52-week period last year. Balance Sheet The company's working capital of $125.1 million declined by 22.3% or $36.0 million from the prior year. The decrease is the result of the reclassification of $50 million in term financing as a current liability during the year, due for repayment on June 30, 2008. The company expects to renew this credit facility prior to its expiry on June 30, 2008. As at Feb. 3, 2008, there were 32,970,021 Common Shares issued and outstanding. During the 12 months, ended March 26, 2008, pursuant to the normal course issuer bid approved by the Toronto Stock Exchange on March 23, 2007, the company purchased 1,832,900 Common Shares of the company. The company's application for a renewal of the normal course issuer bid commencing March 28, 2008, and expiring March 27, 2009, was accepted by the Toronto Stock Exchange on March 26, 2008. On April 9, 2008 the company declared a dividend of $0.075 per Class A common share, payable on May 5, 2008 to shareholders of record on April 21, 2008. Management's Comments The momentum that was lost in the third quarter of the year was regained despite the ongoing impact of the surge in the Canadian dollar. Seasonal weather, particularly in Eastern Canada drove comparative store sales through to year end, resulting in record quarterly and annual results for the company. The company exited fiscal 2008 with a clean inventory position, solid margins, and growth potential throughout the organization. The results include the operations of Athletes World stores, which were acquired Nov. 26, 2007. For the first 8 weeks of the first quarter of the company's fiscal 2009 year, same store sales from corporate stores were down 8.0% and franchise same store sales decreased 4.3% for an overall retail system sales decline of 6.6% as continuing winter weather across the country hampered sales of spring products. Corporate margins rose versus prior year as a result of cleaner winter inventories. About The Forzani Group The Forzani Group Ltd. (TSX: FGL) -- http://www.forzanigroup.com/ is Canada's largest national retailer of sporting goods, offering a comprehensive assortment of brand-name and private-brand products, operating stores from coast to coast, under corporate banners: Sport Chek, Coast Mountain Sports, Sport Mart, National Sports and Hockey Experts. The company also retails on-line at -- http://www.sportmart.ca-- and provides a content rich sporting goods information site at -- http://www.sportchek.ca-- The Forzani Group is also a franchisor under the banners: Sports Experts, Intersport, Econosports, Atmosphere, Tech Shop, Pegasus, The Fitness Source and Nevada Bob's Golf. About Athletes World Headquartered in Ontario, Athletes World Ltd. is a shoe retailer with more than 100 stores in Canada. It is the only remaining Canadian retailer unit of Bata Ltd., -- http://www.bata.com/-- a privately owned global shoe manufacturer and retailer. Bata is led by a third generation of the Bata family. With operations in 68 countries, Bata is organized into four business units. Bata Canada, based in Toronto, serves the Canadian market with 250 stores. Based in Paris, Bata Europe serves the European market with 500 stores. With supervision located in Singapore, Bata International has 3,000 stores to serve markets in Africa, the Pacific, and Asia, Finally, Bata Latin America, operating out of Mexico City, sells footwear throughout Latin America. Bata owns more than 4,700 retail stores and 46 production facilities. Total employment for the company exceeds 50,000. Athletes World filed for protection from its creditors under the Companies' Creditors Arrangement Act with the Ontario Superior Court of Justice on Oct. 30, 2007. It owes about $152 million, about $115 million of which is owed to its parent company, Bata. The Forzani Group Ltd. acquired Athletes World on Nov. 30, 2007, and expects that the CCAA proceedings of Athletes World will end in late May 2008. ATLANTIC WINE: Inks LOI to Acquire IEC's Oil & Gas Business ----------------------------------------------------------- Atlantic Wine Agencies Inc. announced on April 8, 2008, that it had executed a letter of intent with Independence Energy Corporation, a privately held company located in Alberta, Canada, that sets forth an agreement for Atlantic to acquire all of IEC's issued and outstanding common shares. The acquisition is based upon securing an operating oil and gas production company with assets consisting of 31 sections of land under direct ownership and 80 sections held under farm-in agreements with six producing gas wells together with pipeline and infrastructure collection facilities. Atlantic disclosed that its Board of Directors sought out a business in the energy sector which was positioned to profit from the continued growth and strength in the price of oil as well as the emerging reliance and appreciation in price of domestic natural gas. The company said that its Board has spent considerable time and energy identifying potential targets and reviewing assets throughout North America with the goal of providing substantial value and potentially significant long term growth for the current Atlantic shareholders. IEC appears to be a suitable candidate as it has successfully explored and developed reserves as well as contributed to a reliable ongoing rate of growth. Consideration for the acquisition will consist of a share exchange agreement the specific terms of which will be determined in accordance with a valuation of IEC's interests based upon a geological reserve report prepared by an independent third party. The Letter of Intent and acquisition is subject to the completion of due diligence, board and shareholder approvals, the satisfaction/release of any security interests held in IEC's interests to be conveyed, and the execution of definitive agreements. Other material terms of the Letter of Intent are as follows: -- Atlantic shall recapitalize the number of shares of common stock outstanding through a reverse stock split of 25:1 thereby resulting in 4,520,798 shares outstanding immediately prior to the Share Exchange -- Atlantic shall issue approximately 40,000,000 shares in exchange for IEC's assets and certain expenses related to the Share Exchange -- Atlantic shall change its name to "First Canadian Petroleum Corporation" or a similar name Although there can be no assurances, the parties to the Letter of Intent have allocated approximately 30 days to complete their due diligence efforts and anticipate signing the definitive agreements within that time, with a closing within 30 days thereafter. About Atlantic Wine Based in Somerset West, South Africa, Atlantic Wine Agencies Inc. (OTC BB: AWNA.OB) -- http://www.atlanticwineagencies.com/ -- through its two wholly owned subsidiaries, Mount Rozier Estates (Pty) Limited and Mount Rozier Properties (Pty) Limited, owns a vineyard in the Stellenbosch region of Western Cape, South Africa. The vineyard and surrounding properties consist of 80.9 hectares of arable land for viticultural as well as residential and commercial purposes. In 2006, the company decided, after expending considerable resources and efforts, to exit the winery business. At Dec. 31, 2007, the company's consolidated balance sheet showed $2,810,799 in total assets, $2,772,074 in total liabilities, and $38,725 in total stockholders' equity. Going Concern Doubt Meyler & Company LLC, in Middletown, N.J., expressed substantial doubt about Atlantic Wine Agencies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended March 31, 2007, and 2006. The auditing firm reported that the company has incurred cumulative losses of $7,749,230 since inception, has negative working capital of $1,912,728, and there are existing uncertain conditions the company faces relative to its ability to obtain capital and operate successfully. ATSI COMMS: Accounts Receivable Financing Increased to $5,000,000 ----------------------------------------------------------------- On March 26, 2008, ATSI Communications Inc. amended its Account Transfer Agreement with Wells Fargo Business Credit, a division of Wells Fargo Bank, N.A. to increase the maximum amount that may be outstanding at any time from $3,000,000 to $5,000,000. Under the terms of the amended Agreement, the company may offer to sell with recourse not less than $350,000 nor more than $5,000,000 in its accounts receivable to WFBC each month until Dec. 6, 2008, up to a maximum amount outstanding at any time of $5,000,000. The company is not obligated to offer accounts in any month and WFBC has the option to decline to purchase any accounts. WFBC will pay the company the face amount of each domestic account sold less a fee of 0.0349% of the face amount for each day after the sale until the account is collected in full. WFBC will pay the company the face amount of each foreign account sold less a fee 1.02% of the face amount for the 1st day outstanding and an additional 0.0349% of the face amount of such account for each additional day period that an account remains unpaid thereafter. If any account is not collected within 90 days after sale or WFBC determines that the account debtor is not financially able to pay the account, the company is required to repurchase such account from WFBC for the face amount. Performance of the agreement is secured by a security interest in all of the company's accounts receivable and certain officers of the company have provided a limited guaranty for the benefit of WFBC in the event of a breach of representations by the company with respect to any account sold or the improper receipt and retention of payments under any account by any person. The agreement may be terminated by the the company or WFBC upon 30 days written notice before Dec. 6, 2008, and renews automatically for an additional one-year term if not terminated by either party. The company is required to pay a fee in the amount of 0.3% of the Maximum Credit Facility ($5,000,000), or $15,000, if the agreement is terminated by WFBC for default or is terminated by the company. About ATSI Communications Headquartered in San Antonio, Texas, ATSI Communications Inc. (OTC BB: ATSX) -- http://www.atsi.net/-- operates through two wholly owned subsidiaries, Digerati Networks Inc. and Telefamilia Communications Inc. Digerati is a global VoIP carrier serving markets in Asia, Europe, the Middle East, Latin America and Mexico. Telefamilia provides retail communication services to the Hispanic market in the United States. ATSI also owns a minority interest of a subsidiary in Mexico, ATSI Comunicaciones S.A. de C.V., which operates under a 30-year government issued telecommunications license. At Jan. 31, 2008, the company's consolidated balance sheet showed $2,516,000 in total assets and $2,766,000 in total liabilities, resulting in a $250,000 total stockholders' deficit. Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 22, 2007, Malone & Bailey, PC, in Houston, Tex., expressed substantial doubt about ATSI Communications Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended July 31, 2007, and 2006. The auditing firm stated that ATSI has a working capital deficit, has suffered recurring losses from operations and has a stockholders' deficit. AMERICAN AXLE: Mexico Axle Plant Supplies Auto Parts to GM ---------------------------------------------------------- General Motors Corp. is reopening two assembly factories within April with axles supplied by American Axle & Manufacturing Holdings Inc.'s plant in Guanajuato, Mexico, according to David Barkholz and Robert Sherefkin of Crain News Service citing Automotive News sources. GM continued manufacturing Chevrolet Silverados and GMC Sierras in its plant in Fort Wayne, Indiana, last week, and plans to resume pickup production in a plant in Oshawa, Ontario, on April 21, 2008. As reported in the Troubled Company Reporter on April 14, 2008, the strike called by the United Auto Workers union at Axle's original U.S. locations continues into its 47th day. Approximately 3,650 associates are represented by the UAW at five facilities in Michigan and New York. With the objective of reaching a compromise agreement, Axle requested the Federal Mediator assigned by the Federal Mediation & Conciliation Service to assist in the company's ongoing negotiations with the UAW. Axle had hoped that the involvement of an impartial third party at the bargaining table could assist both sides. The UAW refused to allow the Federal Mediator to help the parties reach agreement. Axle was disappointed in the UAW's decision. "While the UAW had conversations with a representative of the Federal Mediation and Conciliation Service, it was concluded that a mediator could add little to the process at this juncture; in fact, it would place the mediator in a no-win situation," UAW President Ron Gettelfinger said. "Throughout these negotiations, the UAW has repeatedly offered responsible proposals and counter- proposals to Axle in an attempt to bring a conclusion to bargaining." As reported in the Troubled Company Reporter on April 11, 2008, negotiators representing AAM and the UAW met at the bargaining table for the first time in over three weeks on April 9, 2008. At this meeting, the UAW presented a new economic proposal to Axle. Although it was a slight improvement from the UAW's previous bargaining positions, the all-in labor cost proposed by the UAW is still approximately 200% of the market rate of Axle's competitors in the United States automotive supply industry. Axle expressed disappointment over the UAW's failure to make proposals that address the competitive reality Axle and its UAW- represented associates jointly face in the U.S. driveline marketplace. Axle needs a structural change in labor costs at its original U.S. locations that is comparable to the agreements the UAW has previously made with Axle's competitors in the United States automotive supply industry. If the UAW continues to refuse to make realistic economic proposals, Axle will be forced to consider closing these facilities. Axle has no desire to close the original U.S. locations. Axle's preferred approach is to reach an agreement with the UAW on a new U.S. market competitive labor cost structure for these facilities. If such a market competitive agreement is accomplished, these facilities will be able to bid competitively for new business and Axle will be able to continue investing in these operations. Axle has offered generous buy-outs for associates who do not wish to continue to work for Axle subject to a competitive wage and benefits package. Axle has also offered to make annual buy-down cash payments to associates who accept a competitive wage and benefits package. Axle's proposed buy-outs and buy-downs will provide its associates and families a financial cushion and soft landing during the transition to a new U.S. market competitive labor cost structure. These proposals are similar to those that have been successfully used by Chrysler, Ford, GM and Delphi in recent agreements with the UAW. Negotiations are continuing. Axle remains hopeful that the International UAW will soon put forward economic and operating proposals that will allow Axle to compete on a level playing field with its competitors in the United States automotive supply industry and maintain its manufacturing operations in the original U.S. locations. GM has about 30 facilities affected by the strike at Axle as the supplier attempts to negotiate with the union. Chrysler LLC is temporarily closing its vehicle assembly facility in Newark, Delaware as the strike among UAW union members at AAM stretches. AAM supplies Chrysler components for the Dodge Durango and Chrysler Aspen sport utility vehicles in Newark and two versions of the Dodge Ram pickup made in Saltillo, Mexico. About GM Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. About Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. * * * As reported in the Troubled Company Reporter on April 4, 2008, Moody's Investors Service placed American Axle & Manufacturing Holdings, Inc.'s Ba3 Corporate Family Rating under review for downgrade. As reported in the Troubled Company Reporter on Nov. 27, 2007, Moody's Investors Service affirmed American Axle & Manufacturing Holdings, Inc.'s Corporate Family rating of Ba3 as well its senior unsecured rating of Ba3 to American Axle & Manufacturing Inc.'s notes and term loan. At the same time, the rating agency revised the rating outlook to stable from negative. BALLY TOTAL: Discloses Plan Distribution for Former Stockholders ---------------------------------------------------------------- Bally Total Fitness Holding Corp. and its debtor-affiliates notified the U.S. Bankruptcy Court for the Southern District of New York that, pursuant to their First Amended Joint Prepackaged Chapter 11 Plan of Reorganization, they were set to make an initial distribution to holders of Class 7 Old Common Stock. Under the interim distribution, the Debtors were to distribute $12,778,669 to the holders of Old Common Stock, which corresponds to $0.31 per share. The Debtors may make further distributions to the Holders of Old Common Stock upon the resolution of remaining Claims under Section 510(b) of the Bankruptcy Code filed against their bankruptcy estates, Andrew K. Glenn, Esq., at Kasowitz, Benson, Torres & Freidman LLP, in New York, informed Judge Lifland. Approximately $3.5 million has been reserved by Bally's disbursing agent, pending disallowance of certain outstanding claims that were filed in Bally's chapter 11 case. These reserved funds may fund a second distribution to holders of Old Common Stock, but such a distribution is subject to satisfactory resolution of the outstanding claims. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre-packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham & Watkins, L.L.P. represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had $408,546,205 in total assets and $1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. On Aug. 13, 2007, they filed an Amended Joint Prepackaged Plan and on Aug. 17 filed a Modified Amended Prepackaged Plan. (Bally Total Fitness Bankruptcy News Issue No. 14; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) BANCO FIBRA: S&P Puts 'BB-' Foreign Currency Rtng. on $150MM Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' foreign currency rating to Banco Fibra S.A.'s upcoming $150 million unsecured, unsubordinated, two-year medium-term notes, issued through its principal office in Brazil or its Cayman Island branch. S&P's foreign currency rating on Fibra is BB-/Stable/B. The ratings on Fibra incorporate the increasing competition affecting most Brazilian banks operating in the small and midsize company segment. In addition, the ratings reflect potentially higher delinquency ratios, given increases in consumer-finance loans, and the bank's challenge to maintain an increasing and diversified funding base. Fibra's still-strong asset quality indicators, good track record, expertise in the corporate and middle-market segments, improved profitability, and the benefits of the implicit support of its shareholder, the Vicunha Group, temper these risks. Fibra's credit operations remain concentrated in the low corporate and middle-market segments. We believe the bank has the necessary knowledge, flexibility, and customer service policies to compete in the market and sustain its position as a relevant player. Although increasing competition from larger banks could pressure interest margins further, S&P believe Fibra will be able to gradually replace low corporate operations with middle-market credits and retail loans, strengthening its strategy and sustaining its margins. The increasing proportion of retail loans in the total loan portfolio (13.7% of the bank's total credit operations as of December 2007, compared with 10.5% in June 2007) indicates that Fibra's retail strategy was executed successfully. S&P expect the retail portfolio to represent approximately 20%-30% of the loan portfolio in the future, contributing to a diverse portfolio mix and enhanced profitability. Fibra's adjusted ROA is stable, averaging 1.7% for the past three years. The stable outlook on Fibra reflects our expectation that the bank will be able to sustain its good asset quality indicators at a rate of less than 4%, while growing its funding base and maintaining adequate capitalization and profitability. S&P could revise the outlook to negative or lower the ratings if there is a significant deterioration in Fibra's asset-quality ratios; if the bank's liquidity and funding are pressured; or if Fibra fails to show more robust profitability levels. On the other hand, S&P could revise the outlook to positive or raise the ratings depending on the bank's ability to deliver a consistent and successful growth strategy for the longer term. Such a positive rating action would also depend on the bank sustaining an adequate liquidity position, and improving profitability and capitalization. BAYOU GROUP: Court Slaps 20-Yr. Prison Sentence to Exec. for Fraud ------------------------------------------------------------------ The Honorable Colleen McMahon of the U.S. District Court for the Southern District of New York sentenced former Bayou Group LLC executive Samuel Israel III to 20 years in prison, Andrew Edwards of The Wall Street Journal reports. Mr. Israel, who was also ordered to pay restitution for $300 million, was primarily responsible for duping investors of more than $450 million through false misrepresentation of the company's financial condition, says WSJ. WSJ relates that Judge McMahon had already sentenced Mr. Israel's co-conspirators, Daniel Marino and James G. Marquez, in January. As reported in the Troubled Company Reporter on Feb. 18, 2008, Judge McMahon denied Mr. Marquez's request to spend spring break with his children in Florida. The Court sentenced Mr. Marquez to a term of 51 months in prison, who will officially report to prison on Monday, April 21. As reported in the Troubled Company Reporter on March 7, 2008, Bayou Group and its debtor-affiliates delivered 47 adversary complaints to the Honorable Adlai S. Hardin Jr. of the U.S. Bankruptcy Court for the Southern District of New York, seeking to recover certain fraudulent transfers made by investors against the Debtors. Bayou Fund expects to recover at least $8 million. The Bayou entities are: -- Bayou Management LLC; -- Bayou Advisors LLC; -- Bayou Equities LLC -- Bayou Fund LLC; -- Bayou Superfund; -- Bayou No Leverage Fund LLC; -- Bayou Affiliates Fund LLC; and -- Bayou Accredited Fund LLC. The Debtors related that these proceedings arose from a massive fraudulent investment scheme committed by the Bayou entities, which controlled private pooled investment hedge funds. The Debtors said that the Bayou entities have attracted at least $450 million in investments for their hedge funds before suffering millions of dollars in trading losses. The Bayou entities attempted to stay afloat and prolonged the scheme by disclosing false investment performance and creating false financial statements. In addition, the entities attempted to conceal their losses through a series of fraudulent transfers to certain of their investor creditors. As a result, the Bayou entities used their depleted capital and capital from new investors to pay redemption proceeds to investor creditors seeking to exit the hedge funds, according to the complaint. These redemption proceeds were paid based on inflated statements of what the investments were worth and with fraudulent intent by the the Bayou entities. Consequently, the Bayou entities' fraudulent investment scheme collapsed, with at least $250 million in principal unpaid to hundreds of creditors. The Debtors continue to seek the return of the fictitious investment gains fraudulently transferred to redeeming investors so that the funds can be equitably redistributed pro rata to all of the Bayou entities' creditors. "[P]eople who commit crimes while wearing a tie do not get a break. . . [but will be] punished severely," WSJ quotes Judge McMahon as saying. WSJ says that Mr. Israel is expected to be officially imprisoned on June 9. About Bayou Group Based in Chicago, Illinois, Bayou Group LLC operates and manages hedge funds. The company and its affiliates filed for chapter 11 protection on May 30, 2006 (Bankr. S.D.N.Y. Case No. 06-22306) in order to pursue recoveries for the benefit of defrauded investors. Bayou also filed lawsuits against former investors who allegedly received fictitious profits and an inequitably large return of their principal investments. Jeff J. Marwil at Jenner & Block was appointed on April 28, 2006 as the federal equity receiver. Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors in their restructuring efforts. Joseph A. Gershman, Esq., and Robert M. Novick, Esq., at Kasowitz, Benson, Torres & Friedman, LLP, represents the Official Committee of Unsecured Creditors. Kasowitz, Benson, Torres & Friedman LLP is counsel to the Unofficial Committee of the Bayou Onshore Funds. Sonnenschein Nath & Rosenthal LLP represents the Sonnenschein Investors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BEAR STEARNS: JPMorgan Buys 3.9 Million Shares for $33.1 Million ---------------------------------------------------------------- Between April 11, 2008 and April 14, 2008, JPMorgan Chase & cO. acquired 3,298,600 shares of Bear Stearns Companies Inc. common stock in the open market for an aggregate purchase price of $33,154,017, according to a regulatory JPMorgan filed with the Securities and Exchange Commission. As of April 14, 2008, JPMorgan Chase beneficially owned 119,855,914 shares of common stock, or approximately 49.78% of the outstanding shares of common stock of Bear Stearns. Bear Stearns had 240,750,092 shares of common stock issued and outstanding as of April 14, 2008. Of these shares, JPMorgan Chase had the sole power to vote or to direct the vote and the sole power to dispose of or to direct the disposition of 118,380,394 shares of common stock, and shared voting and dispositive power with respect to 1,475,520 shares. As reported in the Troubled Company Reporter on April 9, 2008, the share exchange between JPMorgan and Bear Stearns had been completed. Pursuant to the terms of the share exchange agreement between the parties, on April 8, 2008, JPMorgan Chase purchased 95 million newly issued shares of Bear Stearns common stock, or 39.5% of the outstanding Bear Stearns common stock after giving effect to the issuance, in exchange for 20,665,350 shares of JPMorgan Chase common stock. Last month, as previously reported, investors Wayne County Employees' Retirement System of Michigan and the Police and Fire Retirement System of the City of Detroit asked the Delaware Chancery Court in Wilmington to issue a restraining order to prevent the purchase of 95 million new Bear Stearn shares by JPMorgan, contending that the new shares will make JPMorgan a major shareholder and will enable it to vote in favor of an unsubtantial $10 per share merger deal. Yesterday's TCR reported that Bear Stearns 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. 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'. BERRY PLASTICS: $530 Mil. Note Issuance Spurs Moody's 'B3' Rating ----------------------------------------------------------------- Moody's Investors Service affirmed the Corporate Family Rating of B3 of Berry Plastics Corporation and assigned a B1 rating to the new senior secured notes due 2015. The outlook is stable. This rating action is in response to the company's announcement on April 14, 2008 that it issuing $530 million senior secured floating rate notes to replace the $520 million senior secured bridge facility used to finance its $500 million acquisition of Captive Holdings, Inc. Instrument rating actions are detailed below. The affirmation of Berry's Corporate Family Rating reflects the company's success to date integrating previous acquisitions, potential for significant synergies, and Captive's strategic fit with Berry's core rigid plastic business. Berry's pro-forma competitive profile includes annual revenue of $3.4 billion, and a low customer concentration, with no single customer accounting for more than 6%. The combined organization is also expected to maintain healthy liquidity. The ratings are constrained by Berry's aggressive financial and acquisition policies, weakened credit metrics, and heightened integration and financial risk. The large interest expense burden leaves the company dependent upon realization of synergies to drive improvements in EBITDA and generate free cash flow to de- leverage. Potentially lengthy lags in contractual raw material cost pass-throughs and integration and operating risk pose a threat to the de-leveraging plan. There remains little room in Berry's credit profile for any material acquisitions or negative variance in operating performance. Moody's took these rating actions for Berry Plastics Corporation: -- Affirmed Corporate Family Rating of B3 -- Affirmed Probability of Default Rating of B3 -- Assigned $530 million senior secured FRN due 2015, B1 (LGD 2, 27%) -- Affirmed $1,200 million senior secured term loan due 2015, B1 (LGD 2, 27%) -- Affirmed $225 million senior secured second lien FRN due 2014, Caa1 (LGD 4, 63%) -- Affirmed $525 million senior secured second lien notes due 2014, Caa1 (LGD 4, 63%) -- Affirmed $265 million senior subordinated notes due 2016, Caa2 (LGD 5, 85%) -- Affirmed Speculative Grade Liquidity Rating of SGL-2 Moody's took these rating actions for Berry Plastics Group, Inc.: -- Affirmed $500 million senior unsecured term loan due 2014, Caa2 (LGD 6, to 94% from 93%) The rating outlook for Berry is stable. The ratings and outlook are subject to receipt of final documentation. Based in Evansville, Indiana, Berry Plastics Corporation is a supplier of plastic packaging products, serving customers in the food and beverage, healthcare, household chemicals, personal care, home improvement, and other industries. Net sales for the twelve months ended Dec. 29, 2007 amounted to approximately $3.1 billion. BERRY PETROLEUM: S&P Lifts Corp. Credit Rating to BB from BB- ------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Berry Petroleum Co. to 'BB' from 'BB-'. The outlook is stable. At the same time, S&P raised the issue rating on the senior subordinated notes to 'B+' from 'B'. The recovery rating remains at '6'. "The ratings action follows our revision of the company's outlook to positive on Dec. 27, 2007, and reflects the company's successful execution of its growth strategy and increasing production while maintaining moderate financial leverage," said Standard & Poor's credit analyst Aniki Saha-Yannopoulos. "Also driving the upgrade are our expectations that the company's 2008 capital budget will stay within internally generated cash flow," she said. The ratings on Berry Petroleum Co. reflect its heavy oil concentration, high lifting costs for the capital-intensive oil fields, lower operating margins relative to its peers, and volatile commodity prices. Tempering these weaknesses are the relatively low-risk nature of the company's reserve base, competitive finding and development costs, good reserve replacement, and a fairly moderate capital structure. Berry's reserve base, which consisted of 169 million barrels of oil equivalent as of Dec. 31, 2007 (approximately 70% oil; 61% developed), is in the midst of a multiyear transition that began in 2003. The company is diversifying its asset base to reduce its concentration of California heavy oil production. Through several acquisitions over the past three years that totaled about $485 million, Berry has amassed significant acreage and modest production in the Piceance, Uinta, and Denver-Julesberg basins. The acquired acreage, particularly in the Piceance Basin, offers Berry a large inventory of lower-risk, relatively inexpensive, primarily natural gas drilling prospects. By adding natural gas production, the company naturally hedges itself to an extent against spikes in natural gas prices needed for their tertiary oil production. The expanded gas strategy also provides Berry with growth opportunities that it previously lacked. Berry has had solid reserve replacement--averaging nearly 270% over the past three years--with competitive three-year average finding and development costs around $13.75 per boe. The 2007 F&D costs for the company were at $10.07 per boe as the company proved its significant probable and possible reserves. S&P expect F&D costs to remain in line for 2008. Ratings List Upgraded To From -- ---- Berry Petroleum Company Corporate Credit Rating BB/Stable/-- BB- /Positive/-- Berry Petroleum Company Subordinated Local Currency B+ B Recovery Rating 6 6 BLOCKBUSTER INC: Circuit City Bid Won't Affect S&P's Ratings Now ---------------------------------------------------------------- Standard & Poor's Ratings Services said that Dallas-based Blockbuster Inc.'s (B-/Negative/--) bid for Circuit City will not have an immediate effect on the video rental company's ratings or outlook. Blockbuster has launched a bid to acquire Richmond, Virginia-based Circuit City for at least $6 per share, or approximately $1 billion. The company has stated that financing would be a combination of cash and equity. S&P remain concerned that the acquisition could significantly increase Blockbuster's leverage, and it may be difficult for the company to secure the necessary funding to consummate the transaction. Blockbuster's operations have been challenged for a number of years due to the declining video rental industry and increased competition for the home entertainment market. Circuit City has performed poorly in the consumer electronics markets, especially against its main competitor, Best Buy Co. Inc. S&P will continue to monitor the ratings as additional information about the proposed transaction becomes available. BOMBARDIER INC: S&P Lifts Ratings to BB+ from BB; Removes Watch --------------------------------------------------------------- Standard & Poor's Ratings Services raised the long-term corporate credit and senior unsecured debt ratings on Montreal-based Bombardier Inc. to 'BB+' from 'BB'. At the same time, S&P removed the ratings from CreditWatch, where they were placed Dec. 3, 2007. S&P also assigned a '4' recovery rating to the senior unsecured notes, indicating the expectation for average (30%-50%) recovery in the event of a payment default. The outlook is stable. "Our rating action on Bombardier reflects the material improvement in its financial measures and liquidity, and management's focus on financial health and cost efficiency," said Standard & Poor's credit analyst Greg Pau. It also reflects the company's leading market positions in the business aircraft and transportation business, its increasing geographic diversity, and recent demand recovery, particularly in the commercial aircraft business. These positive factors are partially offset by the cyclicality of each individual business segment, substantial execution risk in new aircraft programs, and thin operating margins in the transportation business. The US$1 billion debt reduction and US$826 million contribution to pension plan assets, together with improved operating cash flow in fiscal 2008, resulted in a material improvement in cash flow and leverage measures. Bombardier's financial measures, supported by strong liquidity, are now more appropriate for the rating level. Bombardier's wide product range of business aircraft and established transportation track record and expertise in Europe support its strong market positions in aerospace and transportation. The increasing geographic and customer diversity, with only 35% of its revenue generated in North America, should reduce the exposure to the financially weak U.S. airline industry and to the slowing U.S. economy. This, together with its improved financial flexibility, should place Bombardier in a better position to weather the next downturn in the cyclical aerospace and transportation industries and to support the capital spending required for its businesses. In fiscal 2008, continued firm demand and favorable business conditions in both its aerospace and transportation divisions led to strong order acquisition and a significant increase in total backlog. While current business conditions are benign, Bombardier's aerospace business remains exposed to significant cyclicality and event risks. Although demand in transportation is more stable, project implementation issues or credit risk could erode traditionally thin operating margins. The likelihood that Bombardier will proceed with the planned 110- to 130-seat C-Series aircraft program is now higher, given the commitment of a prominent engine supplier and expressed interest by some potential buyers. Market demand should be supported by the C-Series' projected fuel efficiency and replacement need of aged aircraft in operation. Standard & Poor's has considered the potential financial impact of the C-series program and expects the company to be able to support the program with a moderate degree of cost escalation or delays. The stable outlook reflects that Bombardier's improved financial flexibility and geographic diversification should place the company in a better position to weather a cyclical downturn. S&P could raise the ratings or revise the outlook to positive if the company improves its financial measures by further reducing debt and maintaining strong cash flow. Conversely, the ratings could be lowered or the outlook revised downward if management adopts a more aggressive set of financial targets, or if Bombardier's liquidity position and free cash flow substantially weaken due to market disruption or aggressive capital expenditure. BUFFETS HOLDINGS: Seeks Court OK To Reject 23 Exectory Contract --------------------------------------------------------------- Buffets Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for authority to reject more than 20 contracts, which are not essential to their business, nunc pro tunc as of March 31, 2008. According to Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, the Contracts consist of (1) an employment-related agreement between the Debtors and a former employee of an entity that merged with the Debtors in 2006 and (2) certain portions of miscellaneous executory contracts related to closed restaurant locations. Ms. Morgan contends that the Contracts create a financial burden on the Debtors' estates. Thus, the Debtors seek to reject the Contracts and avoid the unnecessary operating costs associated with them. In addition, Ms. Morgan tells the Court that the Debtors have determined that it is highly unlikely that they would ever be able to locate a third party willing to accept an assignment of any of the Contracts. In the meantime, the Debtors would accrue administrative obligations, as well as the attendant cost of continuing to market the Contracts. The Contracts are: Party Agreement ----- --------- Allied Waste Services of Service Agreement Crestwood Non-Hazardous Wastes Alsco Service Agreement American Disposal Refuse Removal Service Agreement BFI Waste Services LLC d/b/a Customer Service Agreement Allied Waste Services of Nos. 6301 and 6302 Nashville (solid waste & recycling) Cintas Corporation Facility Services Rental Service Agreement City of Mesa Service Agreement Non Hazardous Waste Removal/Recycling Services Coca-Cola North America Letter Agreement dated 1/8/2007 &nbs