T R O U B L E D C O M P A N Y R E P O R T E R Thursday, April 17, 2008, Vol. 12, No. 91 Headlines AEGIS MORTGAGE: Court Extends Exclusivity Deadline to June 8 AEGIS MORTGAGE: Court OKs Severance Plan for Remaining Employees AHERN RENTALS: Debt-Financed Expansion Cues Moody's Neg. Outlook ALERIS INT'L: Moody's Holds B2 Rating and Revises Outlook to Neg. ALOHA AIRLINES: May Employ Epiq as Notice and Claims Agent AMERICAN AIRLINES: Fitch Holds Ratings & Revises Outlook to Stable AMR CORP: Posts $328 Million Net Loss in First Quarter of 2008 AMERICAN HOME: Sale of Mortgage Loan Servicing Biz Now Closed AMERICAN HOME: Asks Court to Disallow & Expunge 392 Claims AMERICAN HOME: Panel Seeks to Hire Hennigan as Conflicts Counsel AMR CORP: Fitch Holds Ratings and Revises Outlook to Stable ASCALADE COMMS: Provides Status Update on Disclosure Default AVALON RE: Fitch Cuts Rating to C from CCC- on Class C Notes BANCREDIT CAYMAN: Tricom Wants Claim Pegged at $120,000 BANCREDIT CAYMAN: Hearing for Tricom Case Examiner Adjourned BEAR STEARNS: Fitch Affirms 'B-' Rating on $2.9 Million Loans BEAR STEARNS: Moody's Chips Ratings on Nine Certificate Classes BERRY PLASTICS: S&P Rates $530.6 Million Sr. Secured Notes at BB- BLOCKBUSTER INC: Fitch Won't Take Rating Actions on Circuit Deal BROADVIEW NETWORKS: S&P Holds B- Rating; Revises Outlook to Stable BRODER BROS: Profit Margin Erosion Prompts Moody's to Junk Rating BRUSHFIELD CDO: Poor Credit Quality Cues Moody's Rating Downgrades CALAMOS INVESTMENTS: Seeks Financing to Address Illiquidity CFM U.S.: Wants Court to Approve Sale Bidding Procedures CFM U.S.: Can Access $8,000,000 Bank of Montreal DIP Facility CFM CORPORATION: Cuts 390 Workforce & Wind Down Ontario Operations CHANDLER INC: A.M. Best Holds 'bb-' Ratings on $24MM Debentures CITIGROUP COMMERCIAL: Expected Losses Cue Fitch to Cut Ratings CWABS ASSET-BACKED: Moody's Chips Ratings on Worsening Performance CWHEQ REVOLVING: Moody's Cuts Baa3 Rating to Ba2 on Cl. B Certs. COMMODORE CDO: Moody's Chips Ratings and Puts It Under Review DELPHI CORP: Wants Exclusivity Extended Beyond Plan Effective Date DELPHI CORP: Mulls Suing Plan Investors for Reneging on New EPCA DELTA AIR: Northwest Merger Cues S&P to Put Ratings on Pos. Watch DELTA AIR: Northwest Merger Cues Moody's to Put Rtng. Under Review DELTA AIR: Northwest Merger Prompts Fitch to Affirm 'B' ID Rating DORADO BECKVILLE: Case Summary & 20 Largest Unsecured Creditors DIABLO GRANDE: Wants to Hire Sheppard Mullin Bankruptcy Counsel EDGEWATER FOODS: Posts $1,014,793 Net Loss in Qtr. Ended Feb. 29 EQUISTAR CHEMICAL: Amends Partnership Supplement with Millennium EVRAZ GROUP: Fitch Assigns 'BB' Rating on Senior Unsecured Notes FIELDSTONE MORTGAGE: Moody's Cuts Ratings on Six Certificates FINANCIAL MEDIA: Posts $1,066,379 Net Loss in Qtr. Ended Feb. 29 FINLAY ENTERPRISES: Posts $10MM Loss in Year Ended December 31 FIREKEEPERS DEVELOPMENT: S&P Rates Proposed $325MM Sr. Notes at B FORTRESS ABS: S&P Reinstates Ratings on Three Classes of Notes FOX TROT: Moody's Lowers Rating to B1 from Baa3 on $19MM Notes FREMONT INVESTMENT: CapitalSource Deal Prompts Fitch's Pos. Watch GE COMMERCIAL: Fitch Holds Low-B Ratings on Four Cert. Classes GMAC COMMERCIAL: Fitch Holds 'B-' Rating on $4.8MM Class O Certs. GOLDEN KEY: Trustee Names Deloitte & Touche as Receiver GOODYEAR TIRE: Sets June 30 as Conversion Period for $4 Mil. Notes GRAND CIRCLE: S&P Withdraws 'B' Corporate Credit Rating GREAT PANTHER: Net Loss Rises to C$19MM in Year ended December 31 GREENPOINT MORTGAGE: Moody's Puts Three Cert. Ratings Under Review GREYSTONE LOGISTICS: Feb. 29 Balance Sheet Upside-Down by $9.6MM GSAA HOME: Moody's Junks Ratings on Four Certificate Classes GSAMP TRUST: Moody's Downgrades Ratings on 37 Certificates GSAMP TRUST: Moody's Chips Ratings on 24 Tranches HANOVER CAPITAL: Gets Notice of Listing Non-Compliance from AMEX HOOP HOLDINGS: U.S. Trustee Appoints Seven-Member Creditors Panel HOOP HOLDINGS: U.S. Trustee Sets Sec. 341(a) Meeting on April 25 INDEPENDENCE IV: Moody's Slashes Ba3 Rating to Caa2 on $26MM Notes INDYMAC INABS: Moody's Junks Ratings on Four Certificate Classes INPHONIC INC: Files Ch. 11 Liquidation Plan & Disclosure Statement INTERSTATE AUTO: Poor Performance Cues A.M. Best to Chip Ratings IPALCO ENTERPRISES: Lenders Agree to Amend $371MM Notes Indenture JP MORGAN: Fitch Holds 'B-' Rating on $4.6MM Class N Certificates KENNETH GOOD: Case Summary & 20 Largest Unsecured Creditors LEINER HEALTH: Sale Bidding Procedure, Incentive Program Approved LE MONDE: Moody's Chips Rating to Caa1 on Two Certificate Classes LIBERTY HARBOUR: Moody's Junks Rating on $17MM Class C Notes LINENS 'N THINGS: Deferred Payment Cues S&P to Put Default Ratings LINENS 'N THINGS: Deferred Payment Cues Moody's to Junk Ratings LOUISIANA RIVERBOAT: Can Hire Winston & Strawn as Special Counsel LOUISIANA RIVERBOAT: Can Hire Mesirow as Financial Advisors LOUISIANA RIVERBOAT: Hires Kurtzman Carson as Claims Agent LOUISIANA RIVERBOAT: Court Extends Schedules Filing to April 25 LUCHT'S CONCRETE: Hires Sender & Wasserman as Bankruptcy Counsel LUCHT'S CONCRETE: Hires Ted Clifton as Financial Consultant LUCHT'S CONCRETE: Hires Knight Field Fabry as Accountants MAXXAM INC: Posts $47 Million Net Loss in Year ended December 31 MIDNIGHT PROPERTIES: Voluntary Chapter 11 Case Summary MORGAN STANLEY: S&P Upgrades Secured Note Rating to BB+ from BB MORGAN STANLEY: Moody's Slashes Ratings on 16 Certificate Classes MOVIDA COMMS: Obtains Court Approval to Wind Down Business M. VANINI: Voluntary Chapter 11 Case Summary NATIONAL GAS: Settlement Hearing on 3 Lawsuits Moved to April 28 NEWPORT TELEVISION: S&P Puts 'B' Credit Rating with Stable Outlook NIEUW HAARLEM: S&P Withdraws Ratings at Collateral Mngr.'s Request NORTHWEST AIRLINES: Delta Air Merger Prompts S&P's Negative Watch NORTHWEST AIRLINES: Merger Cues Moody's to Put Rtng. Under Review NORTHWEST AIRLINES: Merger Prompts Fitch to Affirm Delta Rating NUTRITIONAL SOURCING: Wants Until July 31 to File Chapter 11 Plan NEW YORK RACING: Seeks to Extend Plan-Filing Period to May 2 OAKLAND VIEW: Voluntary Chapter 11 Case Summary OCTANS I: Moody's Lowers Ratings to C on Eight Note Classes OFFICE DEPOT: Decline in Performance Cues S&P to Cut Rating to BB+ OPEN TEXT: S&P Holds 'BB-' Rating; Changes Outlook to Positive PANTRY INC: Reduced Operating Margin Cues Moody's Rating Review PENTON MEDIA: CEO French Calls for Salary and Hiring Freeze PIER 1 IMPORTS: Earns $13.7 Million in 4th Quarter Ended March 1 PILGRIM'S PRIDE: Responds to Enforcement Action on Five Facilities PINNACLE POINT: Moody's Slashes A3 Rating to B3 on $14MM Notes POLYONE CORP: S&P Affirms 'B+' Rating on $80 Mil. Unsecured Notes POPULAR ABS: Fitch Downgrades Ratings on $94.5MM Certificates POWERMATE HOLDING: U.S. Trustee Appoints 7-Member Creditors Panel PRC LLC: Seeks May 8 Hearing to Consider Disclosure Statement PRIMUS TELECOM: Values Reassessment Prompts Moody's to Cut Rating PROTOCALL TECH: To Restate Financial Statements to Correct Errors PRUDENTIAL COMMERCIAL: Fitch Affirms 'B' Rating on $3.6MM Certs. QUALITY DISTRIBUTION: Cuts Florida Workforce by Approximately 17% RENAISSANCE HOME: Moody's Cuts Ratings to Ba3 on Two Certificates RITE AID: Extends Consent Solicitation for 8.125% and 7.5% Notes RITE AID: Shareholder Thornburg Investment Declares 10.22% Stake RHODES COS: S&P Cuts CCC+ Rating to CCC on Liquidity Constraints SHARPER IMAGE: Levin Resigns from Board, Wants to Acquire Assets SHARPER IMAGE: Asks Court to Extend Schedules Filing Date to May 2 SIRVA INC: More Parties Object to Joint Plan of Reorganization SOLO CUP: Successful Mgmt. Turnaround Cues S&P to Lift Rtng. to B- SOURCE ENTERPRISES: Court Denies Compensation to Former Counsel STATE STREET: Earns $530 Million in First Quarter Ended March 31 STEEL DYNAMICS: Moody's Rates $125 Million Unsecured Debt at Ba2 STRUCTURED ASSET: Fitch Lowers Ratings on $3.1 Bil. Certificates STRUCTURED ASSET: Fitch Chips Ratings on $317.6MM Certificates TAHOMA CDO: Moody's Downgrades Ratings on Eight Note Classes TALBOTS INC: Financing Arrangements Can Fund 2008 Operating Plan TEGRANT CORP: S&P Chips Rating to B- from B on Weak Performance TOURMALINE CDO: Poor Credit Quality Cues Moody's to Cut Ratings TRICOM SA: Hearing for Case Examiner Adjourned Sine Die TRICOM SA: Wants Bancredit Claim Pegged at $120,000 TRICOM SA: Gets Permission to Hire Chapter 11 Professionals TRM CORP: Net Loss Slides to $8 Million in Year ended December 31 UAL CORP: Fitch to Hold 'B-' ID Ratings Due to Fuel Costs, Etc. US AIRWAYS: Fitch Affirms 'CCC/RR6' Senior Unsecured Debt Rating UTILITY SERVICE: Case Summary & 16 Largest Unsecured Creditors VASOGEN INC: Lays Off 85% Workforce Under Restructuring Plan VICORP RESTAURANTS: Bankruptcy Filing Cues S&P to Vacate 'D' Rtng. VITALSIGNS HOMECARE: Case Summary & 20 Largest Unsecured Creditors WCH INC: Case Summary & Largest Unsecured Creditor WHITEHAWK CDO: Moody's Places Ca Ratings Under Review WHX CORP: To Raise $200 Mil. Through Subscription Rights Offering ZACKS FASHIONS: Rises From Receivership, Now Back in Operation ZENITH FUNDING: Moody's Cuts Ratings to Caa2 on Two Cert. Classes * Fitch Says Large US Banks Are Likely to See Increased Pressures * S&P Puts Ratings on 559 Classes of US RMBS Under Negative Watch * S&P Says About $94 Bil. of Investment-Grade Will Mature in 3Q'08 * Brian Gart Joins Berger Singerman of Florida * Joel H. Levitin Joins Cahill Gordon & Reindel LLP as Partner * Beard Audio Presents "Understanding CDS Contract Risks" Seminar * April 17 Webinar Virtual Discussion Focuses on Distress Retail * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* AEGIS MORTGAGE: Court Extends Exclusivity Deadline to June 8 ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware granted the request of Aegis Mortgage Corp. and its debtor-affiliates to extend their deadline to file a Chapter 11 Plan to June 8, 2008, as well as the deadline to solicit acceptances of the plan to Aug. 7, 2008. Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, said that the brief extension will further the intent of Section 1121 of the Bankruptcy Code, which gives the Debtors opportunity to negotiate with their creditors and to propose and confirm a consensual plan. Mr. Cairns said the request is appropriate since the Debtors met the requirements for a valid extension. He argued that: (1) the Debtors' cases involved the liquidation of the assets of a company engaged in complex financial transactions; (2) the Debtors are generally paying their postpetition obligations as they become due; (3) the Debtors have acted in good faith to maximize the value of estates for the creditors' benefits and they continue to expeditiously move their cases forward; and (4) the extension is not sought to pressure creditors. The court ruling does not prejudice the Debtors' right to further move the deadline, and any party's right to object. Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119). Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P., serve as counsel to the Debtors. The Official Committee of Unsecured Creditors is represented by Landis Rath & Cobb LLP. In schedules filed with the Court, Aegis disclosed total assets of $138,265,342 and total debts of $4,125,470. (Aegis Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AEGIS MORTGAGE: Court OKs Severance Plan for Remaining Employees ---------------------------------------------------------------- Aegis Mortgage Corporation and its debtor-affiliates won approval from the U.S. Bankruptcy Court for the District of Delaware to implement a severance plan for their 24 remaining personnel, composed of five corporate officers and 19 rank-and-file employees. The Debtors intend to pay $273,937 to the Corporate Officers pursuant to the Severance Plan. Payment for each Officer depends upon the duration of his employment with the Debtors. The three Officers who will be employed until June 30, 2008, will get severance payment equal to two months worth of salary while the two other Officers who will work until December 31, 2008, will receive payment equal to four months worth of salary. Meanwhile, the Debtors intend to pay $201,780 to the rank-and- file employees, with each of them receiving $10,620. Seven of those employees who will work until December 31, 2008, will also get $5,000 bonus each. The Debtors say the Severance Plan is necessary to keep their personnel during the liquidation of their assets, and to motivate them to continue working hard, given the decrease in their compensation packages as a result of the bankruptcy filings. The Debtors also note that their workforce have been reduced from 1,302 to 24, and the remaining employees are now performing multiple services to liquidate the remaining assets. The Debtors aver that the Severance Plan would be less costly than increasing the salaries of the personnel. Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119). Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P., serve as counsel to the Debtors. The Official Committee of Unsecured Creditors is represented by Landis Rath & Cobb LLP. In schedules filed with the Court, Aegis disclosed total assets of $138,265,342 and total debts of $4,125,470. (Aegis Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AHERN RENTALS: Debt-Financed Expansion Cues Moody's Neg. Outlook ---------------------------------------------------------------- Moody's Investors Service has changed the rating outlook of Ahern Rentals, Inc. to negative from stable. All existing ratings, including Ahern's B2 corporate family rating, have been affirmed. The negative outlook reflects Moody's concerns over Ahern's plans to continue the debt-financed expansion of its rental fleet in anticipation that demand in the core Las Vegas market will remain strong. Moody's expects that the level of capital spending planned, although likely to be below the 2007 level, will still require a material amount of increased borrowing on the existing revolving credit facility. Ahern's returns and its ability to sustain the B2 rating could be pressured by any slowdown in the here-to-fore robust pace of growth in the Las Vegas construction market, the supply of rental equipment being directed to Las Vegas by Ahern's competitors, and the potential decline in equipment utilization and rental rates. Additionally, Moody's notes that availability under the company's revolving credit facility, could decline to below $40 million in coming periods. This level of availability is modest in relation to Ahern's size, the capital spending level planned and the increased potential for weaker operating performance. Nevertheless, should utilization rates be sustained at current levels despite the possibility of increasing competitive intensity within Las Vegas, the downward rating pressure could be mitigated and the outlook stabilized. The ratings affirmation is based on Ahern's moderate leverage, good margins and strong position in the Las Vegas market where several large commercial construction projects are underway. The affirmation also reflects an expectation of continued adequate liquidity. In March 2008 the company increased its revolving credit facility commitment to $350 million from $300 million. The revolving credit facility has minimum fixed charge coverage, maximum leverage and minimum utilization rate covenant tests that become operative if availability declines below set thresholds. In October 2007 the company amended the credit facility's fixed charges definition to exclude depreciation, depending on defined availability criteria; this change helped ensure the company's compliance for the third and fourth quarter 2007 test periods, which was required due to the revolving credit facility's excess availability dipping below the minimum level required to avoid the covenant ratio test during the first quarter of 2008. With the recent increase in the revolving credit facility commitment, Moody's does not anticipate that the covenant ratio test will take effect in coming periods, though if the test does take effect, Moody's anticipates that adequate covenant compliance headroom would exist. Ratings affirmed: -- Corporate family . . . B2 -- Probability of default . . . B2 -- $290 million 9.25% second priority global notes due August 2013 . . . B3 LGD5 -- Speculative grade liquidity . . . SGL-3 Ahern Rentals, Inc., headquartered in Las Vegas, Nevada, is a regional equipment supplier with 43 branches predominately in the Southwest region of the United States. As of December 2007 Ahern had in excess of 34,200 pieces of rental equipment having an original cost of approximately $733 million. The company specializes in high reach equipment. ALERIS INT'L: Moody's Holds B2 Rating and Revises Outlook to Neg. ----------------------------------------------------------------- Moody's Investors Service revised the rating outlooks for Aleris International Inc., and Aleris Deutschland to negative from stable. At the same time, Moody's affirmed Aleris's B2 corporate family rating, the B2 rating on the senior secured term loans at Aleris International and Aleris Deutschland Holding GMBH due 2013, the B3 rating on its 9% senior unsecured notes due 2014, and the Caa1 rating on its 10% senior subordinated notes due 2016. The change in outlook reflects the company's ongoing performance challenges in light of weak end market conditions, principally in the U.S. residential and transportation markets, the continued high degree of leverage under which the company is operating, and expectations for limited to negative free cash flow over the near term. The outlook also incorporates Aleris's earnings sensitivity to volume levels, which Moody's expects to decline again in 2008, although not by the magnitude seen in 2007. The downside risks associated with a continued deterioration in housing starts, residential investment, and transportation spending, as well as a more broad-based global contraction, are important factors in the rating. Given Aleris's limited history as a combined entity following the Corus acquisition in 2006, as well as its subsequent bolt-on acquisitions in 2007, a pro forma comparison of year-over-year shipment levels is challenging. However, Moody's estimates that North American building and construction volumes were down in the mid-teens during the fourth quarter of 2007, challenging Aleris's sales and operating margins. As a result of these difficult operating conditions, the company's interest expense exceeded its operating earnings in FY2007. Considering the "margin on metal" business model construct that Aleris operates under, Moody's views Aleris's ability to increase margins as limited resulting in the need to record substantive volume improvements for earnings improvement, which is viewed as unlikely over the near term. However, Moody's recognize the company's efforts to improve its fixed cost position in 2008, including announcing multiple facility closures in Tennessee, Ohio, Virginia, and Ontario. Aleris's B2 corporate family rating reflects its high degree of financial leverage, the sensitivity of its earnings to volume levels, the ongoing execution risks for timely deleveraging, particularly for a company with relatively thin margins and high sensitivity to volume levels, and Aleris's propensity towards acquisitions, which Moody's believes will be a continuing impetus for growth over the intermediate term. The rating also considers the potential for increased supply of extruded products from offshore sources, as well as competition from other products. At the same time, the ratings recognize Aleris's strong market position as a major global supplier of aluminum rolled products, its ability to pass through most of the cost pressures resulting from changes in raw material prices, and its diverse geographic and end market exposure, which helps protect the company from regional or product specific weakness, demonstrated this year as stronger European markets partially offset weakness in the North American residential and transportation markets. Also embedded in the rating is Moody's expectation that Aleris will apply its free cash flow generation to deleverage over the next several years. The B2 corporate family rating also considers the level of liquidity available to Aleris under its asset backed bank facility, which were it to dissipate significantly, could negatively impact the rating. Moody's last rating action on Aleris was Nov. 29, 2006, when its corporate family rating was downgraded to B2 from B1 following its merger with Texas Pacific Group in a leveraged transaction. Headquartered in Beachwood, Ohio, Aleris is a leading global producer of aluminum rolled products. In 2007, the company generated revenues of approximately $6.0 billion. ALOHA AIRLINES: May Employ Epiq as Notice and Claims Agent ---------------------------------------------------------- The United States Bankruptcy Court for the District of Hawaii gave Aloha Airlines Inc. and its debtor-affiliates permission to employ Epiq Bankruptcy Solutions LLC as their notice and claims agent, effective as of the bankruptcy filing. The assistance of a notice agent and claims agent is necessary for the economical and efficient administration of the Debtors' cases, and to avoid the duplication of effort in claims administration and in providing notices to their creditors, Aloha Airlines said. The Debtors will pay EPIQ a $25,000 retainer to be applied against EPIQ's final invoice for services provided to the Debtors. The Debtors will indemnify EPIQ against any and all losses, claims, damages, liabilities, costs, arising out of or relating to EPIQ's rendering of services pursuant to the agreement, other thanlosses resulting solely from EPIQ's gross negligence or willful misconduct. As compensation for their services, EPIQ's professionals bill: Senior Consultant not fixed Senior Case Manager $225-$275 per hour Case Manager (Level 2) $185-$220 per hour IT Programming Consultant $140-$190 per hour Case Manager (Level 1) $125-$175 per hour Clerk $40- $60 per hour The level of Senior Consultant activity will vary by engagement. If the services are required the usual average is $295 per hour. About Aloha Airlines Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines Inc. -- http://www.alohaairlines.com/-- and its affiliates are carriers that fly passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operate a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. This is the airline's second bankruptcy filing. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. No creditors' committee, trustee, or examiner has been appointed in these cases. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $100 million to $500 million. AMERICAN AIRLINES: Fitch Holds Ratings & Revises Outlook to Stable ------------------------------------------------------------------ Fitch Ratings has affirmed the debt ratings of AMR Corp. and its principal operating subsidiary, American Airlines, Inc., as: AMR -- Issuer Default Rating at 'B-'; -- Senior unsecured debt at 'CCC/RR6'. American Airlines -- IDR at 'B-'; -- Secured bank credit facility at 'BB-/RR1'. The Rating Outlook for both AMR and American has been revised to Stable from Positive. Ratings for AMR and American reflect the high degree of leverage in the carrier's capital structure, its heavy fixed cash obligations and the ever-present operating risks it faces in an industry that remains uniquely vulnerable to fuel and demand shocks. Following two consecutive years of improving free cash flow generation and significant debt reduction ($2.3 billion of debt payments in 2007 alone), AMR and the entire U.S. airline industry now face a weakening operating environment that will likely lead to some credit quality deterioration over the next year. In a prolonged high fuel cost scenario that assumes no significant pull-back in crude oil and jet fuel prices through early 2009, AMR and all of the major U.S. carriers will face intensifying liquidity pressures - particularly if an extended economic slowdown drives a sharp reduction in air travel demand. Significantly, however, AMR's large cash balances and unencumbered asset holdings provide considerable room to maneuver in response to a prolonged industry downturn. AMR's estimated March 31 unrestricted cash balance of $4.4 billion provides a substantial liquidity cushion for the carrier to absorb an extended fuel and revenue shock while meeting 2008 fixed obligations (including approximately $900 million of scheduled debt maturities and an estimated $350 million of cash pension funding). In addition, non-core assets could be monetized to shore up cash before liquidity reaches distressed levels. Still, Fitch remains cautious about the risk of a follow-on fuel price spike and a slowdown in the airline's unit revenue growth rate for 2008 and 2009. A near-term revision of the Rating Outlook to Negative within the next few months is therefore a real possibility if operating trends worsen. For the first quarter, AMR has estimated that jet fuel prices averaged $2.73 per gallon. This compares with a full year 2007 average price of $2.13 per gallon. Fitch estimates that a 10-cent change in the price of jet fuel drives approximately $310 million of annual consolidated costs. Based on an average 2008 fuel price scenario of $3.00 per gallon, therefore, AMR would face approximately $2.7 billion of higher fuel costs this year compared with 2007. In the wake of Chapter 11 restructurings at Delta, Northwest, United and US Airways, AMR's labor costs are the highest in the U.S. airline industry, and it retains defined benefit pension plans for its unionized employees. With fuel costs soaring, pressure to control non-fuel operating costs will intensify this year. If additional cuts in domestic capacity are made, however, pressure on unit operating costs will increase. AMR's pilot contract is now open and amendable, and the pilots' union has called for substantial raises. The carrier therefore faces a more difficult task in working with labor to pursue cost-saving initiatives designed to offset fuel price pressure and a potential softening of unit revenue trends. Looking ahead, industry conditions are expected to remain challenging for at least the next year, as airlines struggle to offset record-high jet fuel prices with higher revenue and lower non-fuel costs. Although demand fundamentals have held up thus far despite the weakening U.S. economy, concern is growing that industry demand could weaken in the next few months. Potentially significant cutbacks in domestic capacity plans by virtually all of the U.S. carriers will help to support industry unit revenue in the face of a potential slackening in demand, but the airlines will continue to struggle with rapidly increasing unit costs. Any capacity rationalization linked to industry consolidation would have to wait until early 2009 at the earliest-following what is expected to be a lengthy Department of Justice review of the Delta-Northwest merger and any other follow-on transactions. Negative rating actions (either an Outlook revision to Negative or a downgrade of the IDR into the 'CCC' category) could follow if sustained high jet fuel prices (above $3.00 per gallon) through the summer, coupled with weakening revenue per available seat mile trends and softening air travel demand drive substantially negative free cash flow, forcing AMR to raise debt levels and shore up liquidity moving into 2009. AMR CORP: Posts $328 Million Net Loss in First Quarter of 2008 -------------------------------------------------------------- AMR Corporation, the parent company of American Airlines, Inc., reported net loss of $328 million for the first quarter of 2008. The current quarter results compare to a net profit of $81 million for the first quarter of 2007. Record jet fuel prices contributed significantly to the company's loss in the first quarter of 2008. The company paid $665 million more for fuel in the first quarter of 2008 than it would have paid at prevailing prices from the prior-year period. AMR paid $2.74 per gallon for jet fuel in the first quarter compared to $1.85 a gallon in the first quarter of 2007, a 48% increase. "The first quarter proved yet again that fuel prices remain one of the biggest threats to our industry and our company, and we also can't ignore the ongoing concerns about the U.S. economy and the potential impact on travel demand," AMR Chairman and CEO Gerard Arpey said. "Clearly, it has been a challenging start to 2008, and I want to take this time to again apologize to our customers who were inconvenienced by our recent cancellations and also thank all of our employees who worked tirelessly through difficult weather and maintenance challenges to take care of our customers. While our first quarter financial results were disappointing, through our hard work in recent years to contain costs and strengthen our balance sheet and liquidity we are better positioned to withstand today's uncertainty. However, we also recognize that we have a lot more hard work ahead of us and that our efforts must be ongoing," he said. Mr. Arpey noted that the company is taking numerous steps to address the challenging circumstances that it faces, including its recent hiring freeze for management and support staff and the announcements that AMR is making additional reductions to its 2008 capacity plan and is accelerating the replacement of its MD-80 fleet with more efficient Boeing 737-800s. Mr. Arpey also reiterated AMR's commitment to continue to work with the FAA to demonstrate the company's ongoing commitment to safety and compliance with the FAA's directives. AMR's planned divestiture of its regional carrier, American Eagle, also continues to move forward, Mr. Arpey said. Operational Performance AMR reported first quarter consolidated revenues of approximately $5.7 billion, an increase of 5.0% year over year. AMR estimates that weather and maintenance cancellations reduced first quarter consolidated revenue by approximately $75 million to $80 million. American's mainline passenger revenue per available seat mile (unit revenue) increased by 6.5% in the first quarter compared to the year-ago quarter. Mainline capacity, or total available seat miles, in the first quarter decreased by 1.5% compared to the same period in 2007. The year-over-year decrease in capacity was largely the result of higher-than-anticipated weather cancellations, pilot early retirements, and maintenance cancellations. American's mainline load factor - or the percentage of total seats filled - was a record 79.1% during the first quarter, compared to 78.1% in the first quarter of 2007. American's first- quarter yield, which represents average fares paid, increased 5.1% compared to the first quarter of 2007, its 12th consecutive quarter of year-over-year yield increases. American's mainline cost per available seat mile (unit cost) in the first quarter increased 15.8% year over year. The largest contributor to the year-over-year increase in unit costs in the first quarter of 2008 was fuel. Excluding fuel, mainline unit costs in the first quarter of 2008 increased by 3.3% year over year. As part of its efforts to improve the cost and fuel efficiency of its fleet, as well as lessen the company's impact on the environment, AMR provided an update on its plans to replace MD-80 aircraft with 737-800s. The company expects to take delivery of a total of 34 737-800 aircraft in 2009 and 36 737s in 2010. Of these, the company has firm commitments in place for 27 737s to be delivered in 2009 and three 737s to be delivered in 2010. This compares to the company's fleet renewal update in January, when it said that it had firm commitments to take delivery of 23 737s in 2009. Balance Sheet Update Mr. Arpey noted that the company's efforts to strengthen its balance sheet in recent years have better positioned AMR to face the current industry challenges. AMR ended the first quarter with $4.9 billion in cash and short- term investments, including a restricted balance of $426 million, compared to a balance of $5.9 billion in cash and short-term investments, including a restricted balance of $471 million, at the end of the first quarter of 2007. The year-over-year decrease in the company's cash and short-term investment balance is primarily related to AMR's total debt payments of approximately $2.3 billion in 2007, including prepayment of approximately $1 billion. AMR's Total Debt, which it defines as the aggregate of its long- term debt, capital lease obligations, the principal amount of airport facility tax-exempt bonds, and the present value of aircraft operating lease obligations, was $15.2 billion at the end of the first quarter of 2008, compared to $17.5 billion at the end of the first quarter of 2007. AMR's Net Debt, which it defines as Total Debt less unrestricted cash and short-term investments, was $10.7 billion at the end of the first quarter of 2008, compared to $12.2 billion at the end of the first quarter of 2007. As a result of scheduled principal payments as well as prepayments, refinancings and other efforts to strengthen its balance sheet, AMR's net interest expense in the first quarter of 2008 was $23 million lower than in the year-ago period, a 14% reduction. AMR contributed $25 million to its employees' defined benefit pension plans in the first quarter and made an additional contribution of $50 million on April 15. AMR has contributed more than $2 billion to its employee defined benefit pension plans since the beginning of 2002. About AMR Corp. Headquartered in Forth Worth, Texas, AMR Corporation (NYSE: AMR) operates with its principal subsidiary, American Airlines Inc. -- http://www.aa.com/-- a worldwide scheduled passenger airline. At the end of 2006, American provided scheduled jet service to about 150 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. American is also a scheduled airfreight carrier, providing freight and mail services to shippers throughout its system. Its wholly owned subsidiary, AMR Eagle Holding Corp., owns two regional airlines, American Eagle Airlines Inc. and Executive Airlines Inc., and does business as "American Eagle." American Beacon Advisors Inc., a wholly owned subsidiary of AMR, is responsible for the investment and oversight of assets of AMR's U.S. employee benefit plans, as well as AMR's short-term investments. * * * As reported in the Troubled Company Reporter on Nov. 30, 2007, following the announcement by AMR Corp. that it intends to divest its American Eagle Holding Corp. subsidiary in 2008, Fitch said it expects no near-term impact on the debt ratings of AMR and its principal operating subsidiary, American Airlines Inc. Fitch affirmed both entities' Issuer Default Ratings at 'B-' on Nov. 13, 2007, while revising the Rating Outlook for AMR to Positive. AMERICAN HOME: Sale of Mortgage Loan Servicing Biz Now Closed ------------------------------------------------------------- Wilbur L. Ross' AH Mortgage Acquisition Co., Inc., has informed Judge Christopher Sontchi that closing of the sale of the mortgage loan servicing business of American Home Mortgage Investment Corp. and its debtor-affiliates has occurred, thus, it is withdrawing its prior request to compel the Debtors to effectuate the closing. AHM Acquisition, however, reserves all rights and claims for damages under the Asset Purchase Agreement relating to the Debtors' obligations to effectuate the Final Closing. The U.S. Bankruptcy Court for the District of Delaware approved the sale of American Home Mortgage Servicing Inc.'s mortgage loan servicing business to AHM Acquisition for about $500,000,000, pursuant to an Asset Purchase Agreement, under a two-stage closing process. The Initial Closing occurred on Nov. 16, 2007. Under the APA, the Debtors operated the Servicing Business for the economic benefit and risk of AHM Acquisition pending the final closing. To fund the servicing operations in the interim, the Debtors entered into a $50,000,000 Debtor-in-Possession Loan and Security Agreement, which was later amended to increase the financing commitment to $100,000,000. In its request to compel, AHM Acquisition asserted that the Debtors failed to effectuate the Final Closing, which has been scheduled for March 31, 2008, because of certain issues with Calyon New York Branch, a bank that owns some of the mortgages serviced by the unit. Calyon Denies Causing Closing Delay Calyon New York told the Court it objects to any allegations or suggestions that it has caused or in any responsible for any delay in the Final Closing. Calyon also reserved its rights to raise objections on the request. In its response to the request, the Debtors informed Judge Sontchi that they negotiated with Calyon concerning matter effecting the occurrence of the Final Closing. The negotiations resulted to a stipulation, which was filed with the Court both in the dockets of the bankruptcy cases, and in Calyon's adversary proceeding against the Debtors. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The U.S. Bankruptcy Court for the District of Delaware extended the exclusive periods for American Home Mortgage Investors Corp. and its debtor-affiliates to file a plan of reorganization through June 2, 2008; and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Asks Court to Disallow & Expunge 392 Claims ---------------------------------------------------------- American Home Mortgage Investment Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to disallow and expunge 392 claims in their entirety pursuant to Section 502(b) of the Bankruptcy Code, Rules 3003 and 3007 of the Federal Rules of Bankruptcy Procedure, and Rule 3007-1 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware. The Debtors identified 50 claims that are duplicative of the previously-filed proofs of claim. The Debtors say claimants appear to have filed the same claims with both Epiq Bankruptcy Solutions, LLC, and either the Debtors or the Bankruptcy Clerk. Among the largest Duplicate Claims are: Duplicate Surviving Surviving Claimant Claim No. Claim No. Claim Amount -------- --------- --------- ------------ Gerrity, Sean T. 823 6977 $996,510 Waterhouse, Drew 9454 1791 230,097 Michaud, David P. 8226 7184 54,402 Simon, Kimberly J. 4579 4578 32,808 Sweeney, Robert E. 287 7469 32,581 Thoet, Lance 4889 4959 31,245 The Debtors also identified 91 claims that have been amended and superseded by subsequently-filed proofs of claim. The Amended Claims, thus, no longer represent valid claims against the bankruptcy estates, and should be disallowed. Among the largest Amended Claims are: Amended Surviving Surviving Claimant Claim No. Claim No. Claim Amount -------- --------- --------- ------------ Somerman, Steven M. 703 6437 $760,086 Bartolotta, Joseph W. 1226 1909 350,000 Eininger, Mitchell 569 645 293,669 Angellotti, Anthony 8431 8433 91,169 Maco, John 1003 6626 90,546 Bartolotta, Joseph W. 1227 1906 75,000 Eininger, Mitchell 568 646 66,666 The Debtors inform the Court that 168 claims were filed by parties on account of equity interests. The Debtors object to the Equity Interest Claims because they were each filed by a shareholder based on ownership of the Debtors' stocks, and not on account of damages or a claim against the Debtors. Among the largest Equity Interest Claims are: Claimant Claim No. Claim Amount -------- --------- ------------ Aldridge, Eugene C. 9486 $2,241,252 El Ad US Holding, Inc. 8395 1,315,103 Frieder, Nathan & Lillian 6149 656,970 Ward, Scott K. 7376 557,101 De Pinho, Frank 9479 494,500 Cregeen, John R. 7964 475,708 Cregeen, John R. 8003 475,591 Papa, Herman D. 4147 466,178 Knicos, James & Tara 4703 410,073 Bellezza, Leonard 9416 357,132 Kukes, Jerry W. 5793 354,718 There are 77 claims that were filed against incorrect Debtors, or against no specified Debtor. To correct the claims register, the Debtors object to the Wrong Debtor Claims and request entry of an order reassigning the claims to the correct Debtors. Among the largest Wrong Debtor Claims are: Claim Wrong Correct Claim Claimant Number Debtor Debtor Amount -------- ------ ------ ------ ------ Boston Properties 8645 AHMHI AHMC 196,522 Pitney Bowes Credit 9503 AHMHI AHMC 175,910 Kruse Way, LLC 6148 AHMHI AHMC 171,621 Kruse Way, LLC 6146 AHMHI AHMC 160,794 Howard Hughes 2177 AHMHI AHMC 116,212 Pitney Bowes Credit 1623 AHMHI AHMC 107,450 Review of the Debtors' records shows that they have satisfied six claims after the Petition Date in accordance with the Bankruptcy Code, applicable rules or a Court order. Therefore, the Debtors ask the Court to disallow in full and expunge these Satisfied Claims: Claimant Claim No. Claim Amount -------- --------- ------------ Bruno, Jill 353 $4,563 Rigsby, Judith 2528 2,402 Alaimo, Diane E. 2661 1,875 Albrecht, Marsha 1442 1,250 Borrillo, Regina 8144 Unspecified Byllott, Debra 8145 Unspecified About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The U.S. Bankruptcy Court for the District of Delaware extends the exclusive periods for American Home Mortgage Investors Corp. and its debtor-affiliates to file a plan of reorganization through June 2, 2008; and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMR CORP: Selling Asset-Management Subsidiary for $480 Million -------------------------------------------------------------- AMR Corporation, the parent company of American Airlines, Inc., reached a definitive agreement to sell American Beacon Advisors, Inc., its wholly owned asset-management subsidiary, to Lighthouse Holdings, Inc., which is owned by investment funds affiliated with Pharos Capital Group, LLC and TPG Capital, two private equity firms. AMR will receive total consideration of approximately $480 million. While primarily a cash transaction, AMR will retain a minority equity stake in the business. AMR expects to close the sale this summer subject to satisfactory completion of customary closing conditions as well as the approval of the Board of Trustees of the American Beacon family of mutual funds, shareholders of the American Beacon family of mutual funds, and consents from other American Beacon clients. AMR, which has been engaged in an ongoing strategic value review process related to certain businesses under the AMR umbrella, believes that the sale is in the best interests of AMR and its shareholders and will benefit American Beacon, its employees, customers and other stakeholders. The sale is intended to allow AMR and its shareholders to recognize the full value of American Beacon while allowing AMR to focus on its core airline business. American Beacon currently provides a number of services for AMR and its affiliates, including cash management for AMR and investment advisory services and investment management services for American's pension, 401(k) and other health and welfare plans. AMR anticipates that it will continue its relationships with American Beacon after the closing. However, to ensure that continuing relationships between American Beacon and American's pension, 401(k) and other health and welfare plans after closing satisfy the fiduciary duties and other rules that apply to these plans, an independent third party has been engaged to review and approve any such continuing relationships. In addition to currently providing these investment management services and asset oversight services to AMR, American Beacon currently serves as the investment manager of the American Beacon Funds, a family of mutual funds with both institutional and retail shareholders, and provides customized fixed income portfolio management services. Subject to the approval of the shareholders of the American Beacon family of mutual funds, it is anticipated that American Beacon will continue to be investment manager for the mutual funds. American Beacon Advisors has consistently grown since its creation in 1987, adding new products and growing average assets under management to $65 billion in 2007. For 2007, on a separate company basis, American Beacon's gross revenue was $101 million and income before income taxes was approximately $48 million, both of which increased approximately 40% over 2006. "The decision comes after a careful evaluation of the strategy that we believe will deliver the most value to our shareholders and create the ownership structure that makes the most sense for American Beacon," AMR Chairman and CEO Gerard Arpey said. "What started out more than 20 years ago as a smart way to manage AMR's benefit plans and cash has evolved and grown significantly into a successful financial management and advisory firm that is fully capable of standing on its own and is well positioned to pursue further growth opportunities outside of AMR." Mr. Arpey added that AMR is looking forward to engaging American Beacon for cash management services after the transaction closes and will remain actively engaged with American Beacon through a 10% ownership interest. "Pharos and TPG believe that the asset management business is a robust sector, in which American Beacon is a strong leader, with an outstanding, 20-year track record of performance in multiple asset classes across a variety of investment cycles," Kneeland Youngblood, co-founder and managing partner of Pharos Capital, said. "We look forward to working with the American Beacon team and TPG to fully leverage its strengths into industry-leading growth as well as continuing its superior customer service and performance. And, we welcome the opportunity to work with AMR not only as a significant client, but also as a long-term partner." "Having significantly grown our third-party revenue over the past several years, we believe the timing of the divestiture is just right for our company, our customers and our employees," American Beacon Advisors Chairman William F. Quinn said. "We're looking forward to focusing on growing our core business, while continuing to serve the needs of our customers and building on our successful history under a new ownership structure. Our management team and employees are excited about the many opportunities that this transaction will present to American Beacon, and our customers can rest assured that we intend to provide the same high level of service and expertise that they have come to expect from American Beacon in the past." Credit Suisse advised AMR on the transaction and Rothschild Inc. continues to advise AMR in its ongoing strategic value review. Merrill Lynch & Co. acted as exclusive financial advisor to Pharos Capital and TPG Capital. About AMR Corp. Headquartered in Forth Worth, Texas, AMR Corporation (NYSE: AMR) operates with its principal subsidiary, American Airlines Inc. -- http://www.aa.com/-- a worldwide scheduled passenger airline. At the end of 2006, American provided scheduled jet service to about 150 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. American is also a scheduled airfreight carrier, providing freight and mail services to shippers throughout its system. Its wholly owned subsidiary, AMR Eagle Holding Corp., owns two regional airlines, American Eagle Airlines Inc. and Executive Airlines Inc., and does business as "American Eagle." American Beacon Advisors Inc., a wholly owned subsidiary of AMR, is responsible for the investment and oversight of assets of AMR's U.S. employee benefit plans, as well as AMR's short-term investments. * * * As reported in the Troubled Company Reporter on Nov. 30, 2007, following the announcement by AMR Corp. that it intends to divest its American Eagle Holding Corp. subsidiary in 2008, Fitch said it expects no near-term impact on the debt ratings of AMR and its principal operating subsidiary, American Airlines Inc. Fitch affirmed both entities' Issuer Default Ratings at 'B-' on Nov. 13, 2007, while revising the Rating Outlook for AMR to Positive. AMERICAN HOME: Panel Seeks to Hire Hennigan as Conflicts Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of American Home Mortgage Investment Corp. and its debtor-affiliates seeks the authority of the U.S. Bankruptcy Court for the District of Delaware to retain Hennigan, Bennett & Dorman LLP, as special conflicts counsel, in accordance with the terms of a retainer letter. James J. McGinley, co-chairman of the Creditors Committee, says they decided to retain Hennigan Bennett to avoid any issues with respect to actual or potential conflicts of interest arising from the fact that Bank of America, N.A., administrative agent for certain prepetition secured lenders, and certain of its affiliates are clients of the Creditors Committee's bankruptcy counsel. As conflicts counsel, Hennigan Bennett provide, among other things, legal services in connection with: -- any matter, in which the Creditors Committee may be adverse to BofA, including any matter relating to the Debtors' use of BofA's cash collateral and the investigation of the extent, validity and priority of BofA's asserted security interests in the Debtors' assets; -- any matter, in which the Creditors Committee may be adverse to one of the prepetition secured lenders, JPMorgan Chase Bank; -- representing the Creditors Committee in other bankruptcy and commercial litigation matters; and -- providing other advice and representation as may be necessary or appropriate in the Chapter 11 cases. Hennigan Bennett will not provide the Committee substantive legal advice outside of the insolvency and business litigation areas, including advice in areas as patent, labor, criminal or real estate law. The firm will also not devote attention to, form professional opinions as to, or advise the Creditors Committee with respect to its disclosure obligations under federal securities or other non-bankruptcy laws. Hennigan Bennett will be paid on its ordinary and customary hourly rates: Attorneys $265 to $875 Financial consultants $425 to $690 Paralegals and clerks $85 to $265 Hennigan Bennett will also be reimbursed of all reasonable costs and expenses it incurred. Pursuant to the parties' Retention Agreement, the Creditors Committee agreed to pay the firm additional amounts as would constitute a reasonable fee, based upon factors as the complexity of the problems presented, the nature and extent of the opposition encountered, the results accomplished, and the skill exercised in accomplishing those results. Joshua D. Morse, an associate of Hennigan Bennett, assures the Court that the firm and its attorneys are disinterested persons, who do not hold or represent an interest adverse to the Creditors Committee, and who do not have any connection with the Debtors, their creditors, or any other party-in-interest. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The U.S. Bankruptcy Court for the District of Delaware extends the exclusive periods for American Home Mortgage Investors Corp. and its debtor-affiliates to file a plan of reorganization through June 2, 2008; and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Countrywide's Bid for Late Claims Filing Approved ---------------------------------------------------------------- American Home Mortgage Investment Corp., its debtor-affiliates, Countrywide Home Loans, Inc., Countrywide Bank, F.S.B., ReconTrust Bank, N.A., and Landsafe agree in a Court-approved stipulation to resolve Countrywide's request to allow late filing of its proofs of claim. The Parties agree that Countrywide's claims will be deemed timely-filed, and that the Debtors reserve their rights to object to the Claims on any basis other than timeliness. As reported by the Troubled Company Reporter on April 2, 2008, Countrywide, ReconTrust and Landsafe ask the U.S. Bankruptcy Court for the District of Delaware to allow the late filing of their proofs of claim one business day beyond the January 11, 2008 Bar Date in the bankruptcy case of American Home Mortgage Investment Corp. and its debtor-affiliates. Countrywide Capital in Lake Havasu city, Arizona, is listed at one of the Debtor's 39 largest unsecured creditors. It holds unspecified unliquidated loan repurchase. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The U.S. Bankruptcy Court for the District of Delaware extends the exclusive periods for American Home Mortgage Investors Corp. and its debtor-affiliates to file a plan of reorganization through June 2, 2008; and solicit and obtain acceptances for that plan through July 31, 2008. (American Home Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMR CORP: Fitch Holds Ratings and Revises Outlook to Stable ----------------------------------------------------------- Fitch Ratings has affirmed the debt ratings of AMR Corp. and its principal operating subsidiary, American Airlines, Inc., as: AMR -- Issuer Default Rating at 'B-'; -- Senior unsecured debt at 'CCC/RR6'. American Airlines -- IDR at 'B-'; -- Secured bank credit facility at 'BB-/RR1'. The Rating Outlook for both AMR and American has been revised to Stable from Positive. Ratings for AMR and American reflect the high degree of leverage in the carrier's capital structure, its heavy fixed cash obligations and the ever-present operating risks it faces in an industry that remains uniquely vulnerable to fuel and demand shocks. Following two consecutive years of improving free cash flow generation and significant debt reduction ($2.3 billion of debt payments in 2007 alone), AMR and the entire U.S. airline industry now face a weakening operating environment that will likely lead to some credit quality deterioration over the next year. In a prolonged high fuel cost scenario that assumes no significant pull-back in crude oil and jet fuel prices through early 2009, AMR and all of the major U.S. carriers will face intensifying liquidity pressures - particularly if an extended economic slowdown drives a sharp reduction in air travel demand. Significantly, however, AMR's large cash balances and unencumbered asset holdings provide considerable room to maneuver in response to a prolonged industry downturn. AMR's estimated March 31 unrestricted cash balance of $4.4 billion provides a substantial liquidity cushion for the carrier to absorb an extended fuel and revenue shock while meeting 2008 fixed obligations (including approximately $900 million of scheduled debt maturities and an estimated $350 million of cash pension funding). In addition, non-core assets could be monetized to shore up cash before liquidity reaches distressed levels. Still, Fitch remains cautious about the risk of a follow-on fuel price spike and a slowdown in the airline's unit revenue growth rate for 2008 and 2009. A near-term revision of the Rating Outlook to Negative within the next few months is therefore a real possibility if operating trends worsen. For the first quarter, AMR has estimated that jet fuel prices averaged $2.73 per gallon. This compares with a full year 2007 average price of $2.13 per gallon. Fitch estimates that a 10-cent change in the price of jet fuel drives approximately $310 million of annual consolidated costs. Based on an average 2008 fuel price scenario of $3.00 per gallon, therefore, AMR would face approximately $2.7 billion of higher fuel costs this year compared with 2007. In the wake of Chapter 11 restructurings at Delta, Northwest, United and US Airways, AMR's labor costs are the highest in the U.S. airline industry, and it retains defined benefit pension plans for its unionized employees. With fuel costs soaring, pressure to control non-fuel operating costs will intensify this year. If additional cuts in domestic capacity are made, however, pressure on unit operating costs will increase. AMR's pilot contract is now open and amendable, and the pilots' union has called for substantial raises. The carrier therefore faces a more difficult task in working with labor to pursue cost-saving initiatives designed to offset fuel price pressure and a potential softening of unit revenue trends. Looking ahead, industry conditions are expected to remain challenging for at least the next year, as airlines struggle to offset record-high jet fuel prices with higher revenue and lower non-fuel costs. Although demand fundamentals have held up thus far despite the weakening U.S. economy, concern is growing that industry demand could weaken in the next few months. Potentially significant cutbacks in domestic capacity plans by virtually all of the U.S. carriers will help to support industry unit revenue in the face of a potential slackening in demand, but the airlines will continue to struggle with rapidly increasing unit costs. Any capacity rationalization linked to industry consolidation would have to wait until early 2009 at the earliest-following what is expected to be a lengthy Department of Justice review of the Delta-Northwest merger and any other follow-on transactions. Negative rating actions (either an Outlook revision to Negative or a downgrade of the IDR into the 'CCC' category) could follow if sustained high jet fuel prices (above $3.00 per gallon) through the summer, coupled with weakening revenue per available seat mile trends and softening air travel demand drive substantially negative free cash flow, forcing AMR to raise debt levels and shore up liquidity moving into 2009. ASCALADE COMMS: Provides Status Update on Disclosure Default ------------------------------------------------------------ Ascalade Communications Inc. is providing an update pursuant to the Ontario Securities Commission Policy 57-603 Defaults by Reporting Issuers in complying with financial statement filing requirements. The Troubled Company Reporter reported on April 2, 2008 that as a result of Ascalade Communications's application under the Companies' Creditors Arrangement Act, it does not expect to file its audited annual financial statements for the year ended Dec. 31, 2007, and the management's discussion and analysis, as well as, its annual information form for the year ended Dec. 31, 2007. Ascalade does not anticipate completing the filings prior to the lifting or expiry of the CCAA protection order. Eventually, the British Columbia Supreme Court extended the creditor protection period granted to Ascalade Communications Inc. under the Companies' Creditors Arrangement Act from April 2, 2008, to June 4, 2008, as reported by the Troubled Company Reporter on April 7, 2008. In accordance with the OSC Policy 57-603, the company confirms that: (i) there is no material change to the information set out in its initial default announcement filed pursuant to the OSC Policy, (ii) there has been no failure by the company to adhere to the "Alternative Information Guidelines" set out in the OSC Policy with respect to the financial statement filing default, and (iii) there is no other material information concerning the affairs of the company that has not been generally disclosed. About Ascalade Communications Inc. Based in Richmond, British Columbia, Ascalade Communications Inc. (TSE:ACG) -- http://www.ascalade.com/ -- is an innovative product company that designs, develops and manufactures digital wireless and communication products. The company deliver products by offering its partners and customers complete vertical integration, from product design and development to final production. The company's products include digital cordless phones, Voice over Internet Protocol phones, digital wireless baby monitors and digital wireless conference phones. Ascalade products have been distributed in over 35 countries and under 80 regional brands. Ascalade also has facilities in Qingyuan, China, Hong Kong and a sales office in Hertfordshire, United Kingdom. AVALON RE: Fitch Cuts Rating to C from CCC- on Class C Notes ------------------------------------------------------------ Fitch Ratings has downgraded the long-term credit ratings of the class C variable-rate notes of Avalon Re Ltd. to 'C' from 'CCC-'. Fitch has also revised the distressed recovery rating of the class C notes to 'DR3' from 'DR4'. The rating actions affect $135 million of Avalon Re variable-rate notes. Avalon Re provides coverage to Oil Casualty Insurance, Ltd., a Bermuda-based insurer, on a three-year excess of loss reinsurance contract that attaches when losses exceed $300 million. Avalon Re received notification that the steam pipe explosion that occurred in New York City on July 18, 2007 would be a covered event under the terms of the reinsurance agreement between Avalon Re and OCIL. The covered loss report indicates that losses up to $50 million could potentially be ceded to Avalon Re. This amount represents approximately one third of the class C outstanding principal balance. Fitch does not currently anticipate further losses to the class C notes, or losses to either the class A or B notes. However, all three classes of notes could incur additional losses if additional insured events occur before the expiration of the reinsurance agreement on May 31, 2008. Fitch continues to monitor OCIL's insurance losses. If the class C notes are exhausted by subsequent losses, holders of the class B notes will then suffer a loss, followed by holders of the class A notes if the class B notes are exhausted. Avalon Re is a Cayman Islands-domiciled insurance company formed solely to issue the variable-rate notes, enter into a reinsurance contract with OCIL, and to conduct activities related to the notes' issuance. The variable-rate notes are insurance-linked collateralized securities that will suffer a loss of principal if OCIL's aggregate insured losses exceed a specified threshold that varies by note class. The affected notes are: Avalon Re, Ltd. -- $135 million class C variable rate notes due June 6, 2008 downgraded to 'C', distressed recovery rating revised to 'DR3' from 'DR4'. BANCREDIT CAYMAN: Tricom Wants Claim Pegged at $120,000 ------------------------------------------------------- Pursuant to Section 502(c) of the Bankruptcy Code, Tricom SA and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to: (i) estimate the claim of Bancredit Cayman Limited at no more than $120,000; and (ii) estimate the claim of Bancredito (Panama), S.A., at zero. Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New York, says the proposed estimation of the claims is merely to avoid delay in the confirmation of the Debtors' Prepackaged Joint Chapter 11 Plan of Reorganization. "Although the deadline to file objections to the reorganization plan has yet to expire, the [Debtors] fully anticipate that [Bancredit Cayman's] representatives will continue their obstructionist tactics in a misguided attempt to derail the reorganization," Mr. Nashelsky points out. Bancredit Cayman, and Bancredito Panama have proposed the appointment of an examiner in Tricom's case before confirmation proceedings related to Tricom's plan commences. They also proposed the deposition of the Debtors, GFN Corp., Ltd., and its affiliates. Bancredit Cayman seeks to recover $120,000,000, while Bancredito Panama asserts a claim for $70,000,000. The Debtors say they cannot afford to wait for the outcome of a determination on the merit of those claims since it would delay and impede the reorganization. In connection with the proposed estimation of claims, the Debtors seek the Court's authority to: (i) hear legal argument concerning the legal obstacles that representatives of Bancredit Cayman and Bancredito Panama will face in pursuing their claims in terms of venue and ability to state legally cognizable claims; and (ii) submit declarations concerning foreign law without requiring foreign legal experts to travel to the United States of America for live testimony. The Ad Hoc Committee supports the Debtors' request. About Tricom Tricom, S.A., was incorporated in the Dominican Republic on January 25, 1988, as a Sociedad Anonima. Tricom is one of the pre-eminent full service communications services providers in the Dominican Republic. Headquartered in Santo Domingo, Tricom offers local, long distance, and mobile telephone services, cable television and broadband data transmission and Internet services, which are provided to more than 729,000 customers. Tricom's wireless network covers about 90% of the Dominican Republic's population. Tricom's local service network is 100% digital. The Company also owns interests in undersea fiber- optic cable networks that connect and transmit telecommunications signals between Central America, the Caribbean, the United States and Europe. Tricom USA, Inc., a wholly owned subsidiary of Tricom, was incorporated in Delaware in 1992, and at that time was known as Domtel Communications. A name change was effected in 1997 and Domtel Communications formally became Tricom USA, Inc. Tricom USA originates, transports and terminates international long-distance traffic using switching stations and other telecommunications equipment located in New York and Florida. Tricom S.A. and its U.S. affiliates filed for Chapter 11 protection on Feb. 29, 2008 (Bankr. S.D. N.Y. Case No. 08- 10720). Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New York City, represent the Debtors. When the Debtors' filed for protection from their creditors, they listed total assets of US$327,600,000 and total debts of US$764,600,000. (Tricom Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000) About Bancredit Bancredit (Cayman) Limited is a Cayman Islands banking institution within a Dominican Republic group of companies. Bancredit is in liquidation proceedings before the Grand Court of the Cayman Islands since 2004. Richard E L Fogerty and G James Cleaver of Kroll (Cayman) Limited were appointed by the Cayman Islands Court to act as Bancredit's Joint Official Liquidators on May 31, 2004. The Liquidators, on the estate's behalf, filed a petition under Chapter 15 of the Bankruptcy Code on May 10, 2006, before the U.S. Bankruptcy Court for the Southern District of New York in Manhattan (Case No.: 06-11026). Timothy T. Brock, Esq., at Satterlee Stephens Burke & Burke LLP in New York, represents the Liquidators in the Chapter 15 case. The Liquidators estimated that the company had more than $100 million in total assets and $215 million in total debts at the time of the Chapter 15 filing. On November 16, 2007, a complaint was lodged against Tricom SA under docket reference Bancredit Cayman Limited v. Tricom, SA Adversary No. 7-2595 before a New Jersey court. Bancredit asserted at least $120,552,000 in claims against Tricom. The Liquidators, in a January 2008 report to Bancredit unsecured creditors, said Bancredit may be unlikely to receive repayment in full of the amounts it provided to Tricom given Tricom's apparent insolvency. However, the Liquidators said they would maintain the claims so that Bancredit would have the right to be involved in restructuring negotiations. BANCREDIT CAYMAN: Hearing for Tricom Case Examiner Adjourned ------------------------------------------------------------ Chief U.S. Bankruptcy Judge Stuart Bernstein of the U.S. Bankruptcy Court for the Southern District of New York, on April 2, 2008, adjourned indefinitely the hearing on the proposed appointment of an examiner filed by Bancredit Cayman Limited, according to a report by Bloomberg News. Bancredit Cayman has sought the appointment of an examiner to investigate the alleged misconduct of Tricom SA and its debtor- affiliates, the Ad Hoc Committee formed by certain holders of Unsecured Financial Claims against Tricom, and other parties who had anything to do with the negotiation and formulation of the Debtors' Prepackaged Joint Chapter 11 Plan of Reorganization. Bancredit Cayman seeks to recover $120,000,000 from Tricom, S.A., which was allegedly looted from the bank by its director, Manuel Arturo Pallerano, who is also the majority controlling owner of Tricom. The alleged transfer of funds caused Bancredit Cayman to be insolvent. Examiner Appointment On behalf of Bancredit Cayman, Timothy T. Brock, Esq., at Satterlee Stephens Burke & Burke LLP, in New York, told the Court that a special committee was appointed by the Debtors' Board of Directors to investigate the transaction made by Manuel Arturo Pellerano sometime in December 2002, wherein he allegedly unlawfully transferred $70,000,000 in funds from Bancredit Cayman Limited to Tricom, S.A. Hunton & Williams LLP and BDO Seidman LLP were retained by the Special Committee to assist in the investigation. The Special Committee, Mr. Brock said, was not given authority to obtain all of the information, which was necessary to do a thorough investigation. The Special Committee did not have any subpoena powers, and it was thus not able to obtain all of the documents and information it sought, he said. According to Mr. Brock, the Special Committee was terminated in May 2007, before it was able to provide its Final Report to Tricom, and subsequently counsel to the Special Committee completed the Final Report which was provided to Tricom in July 2007. Nevertheless, the Special Committee made available to the Tricom Board and senior management an initial report in September 2005 which purported to summarize the Special Committee's findings through that time. Mr. Brock noted that Tricom characterizes the Special Committee's findings in a "bewildering manner" when Tricom stated that "[v]arying conclusions can be reached as to whether we properly accounted for the [December 2002 Transaction] based on different hypothetical fact scenarios" and that under certain of those scenarios the December 2002 Transaction did not qualify as equity, but "should be classified outside of permanent equity as 'mezzanine financing'." The Special Committee's findings were based only on hypothetical fact scenarios, and not specific factual findings, Tricom asserted. Bancredit Cayman intends for the examiner to investigate and report on: (i) the findings of the Special Committee and BDO Seidman, and the actions taken by the Debtors and the affiliates of Mr. Pellerano in response to the report; and (ii) the Debtors, the Ad Hoc Committee, and any self-dealing by Mr. Pellerano and his affiliates. Mr. Brock said that a Court-approved examiner is necessary to review the findings of the Special Committee, considering how the Debtors' reacted to the findings and how the Special Committee was prevented from obtaining pertinent information from parties believed to be under the control of Mr. Pellerano, his family members and affiliated companies, including GFN Corp., Ltd. Mr. Brock said that contrary to the Debtors' characterization of the December 2002 transaction as equity in its financial statements, the Special Committee's findings show that the transaction yielded debt for accounting purposes. He added that if the transaction cannot be deemed to be equity but debt, the Debtors' Prepackaged Joint Chapter 11 Plan of Reorganization Plan, therefore, had not been proposed in good faith. According to Mr. Brock, the Debtors have not also implemented most of the Special Committee's recommendations, including the creation of an independent audit committee and engagement with an internationally recognized auditing firm. Debtors, et al. Object Tricom S.A., and its affiliates want the Court to deny the proposed appointment of an examiner. Representing the Debtors, Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New York, says that Bancredit Cayman did not provide facts sufficient to justify the cost and delay involved with the appointment and the corresponding investigation. He adds that the bank merely relied on a selective discussion of certain disclosures contained in the Debtors' Disclosure Statement and annual reports. Mr. Nashelsky further says that the information requested by Bancredit Cayman has long been available including the Special Committee's reports, however, the bank chose to abandon its effort to prove its claim against the Debtors. "Admittedly, the representatives abandoned their effort to discover the facts for about 14 months," Mr. Nashelsky notes. "They now ask the Court to remedy their own neglect because the Debtors now seek to complete one of the last steps of their restructuring, a goal publicly announced by the Debtors well over a year ago." Mr. Nashelsky says that all parties-in-interest are assured that the Reorganization Plan was properly negotiated and provides fair treatment. "No member of the Ad Hoc Committee is connected with the [6] affiliated creditors," Mr. Nashelsky clarifies, adding that the Ad Hoc Committee, the affiliated creditors, and the Debtors retained separate legal counsel and financial advisors. The affiliated creditors are Balking Trading, Inc., Eastern Power Corporation, Editorial AA, S.A., Ellis Portfolio, S.A., Minstar Ventures, Ltd., and Porter Capital, Ltd. Mr. Nashelsky also clarifies that the Reorganization Plan places majority control of the reorganized Debtors to the holders of unsecured financial claims not affiliated with Mr. Pellerano or the affiliated creditors. "Following confirmation of the [reorganization] plan, such creditors will own the vast majority of the stock to be issued by the parent company of the reorganized Debtors, and will control the [reorganized Debtors] Board of Directors," Mr. Nashelsky explains. He adds that the affiliated creditors will receive prescribed minority voting protections under the terms of the Reorganization Plan. Mr. Nashelsky further clarifies that Bancredit Cayman could still pursue its claims against the Debtors even after the confirmation, since nothing in the Reorganization Plan waives or discharges the bank of its rights. On the contrary, the Debtors cannot survive a protracted proceeding that may result from the appointment of an examiner in light of the cost and uncertainty attendant to it, he points out. In separate statements, the Ad Hoc Committee and the affiliated creditors also urge the Court to deny the proposed appointment. The parties contend that the appointment of an examiner merely seeks to prove Bancredit Cayman's claim that does not have any legal basis, and delay the confirmation of the Reorganization Plan. They point out that the Court is not required to appoint an examiner to advance the litigation interests of one party to a two party dispute, even under the mandatory provisions of Section 1104(c)(2) of the Bankruptcy Code. With respect to Bancredito (Panama), S.A.'s contention, the Ad Hoc Committee says that Bancredito Panama has yet to file any action against the Debtors. Bancredito Panama's own public filings show that its claim is not actually directed against the Debtors but various third parties, says the Ad Hoc Committee. Bancredit Cayman Retaliates Bancredit Cayman contends that the proposed appointment is not a two-party dispute but is in the interests of all creditors, including the general unsecured creditors who are not represented before the Court. "The reorganization plan's basic scheme relegates the Class 7 creditors to proceeding against the equity of the reorganized [Debtors], and the adequacy of that equity is not only unknown but appears plainly inadequate," says Timothy T. Brock, Esq., at Satterlee Stephens Burke & Burke LLP, in New York. According to Mr. Brock, any diminution of estate property is detrimental to Class 7 creditors, who have no voice in the proceedings. "The reorganization plan accomplishes precisely such a diminution of property, and does so for the benefit of insiders by releasing and indemnifying them from potential claims and paying the affiliated creditors directly in secured debt," Mr. Brock points out. He says that this disposition of estate property has not been scrutinized and adequately disclosed, and that only an independent examiner can provide the transparency and assure that the distributions are proper. Mr. Brock says that a 60 to 90-day investigation will not harm the Debtors' reorganization. With respect to the allegation that Bancredit Cayman did nothing to pursue the discovery, Mr. Brock relates that the bank held off pursuing any court action to enforce its subpoenas after it was contacted by the Special Committee to ask about its claim. Believing that it would be the beginning of a genuine attempt to resolve its claim, Bancredit Cayman's representative Richard Fogerty met with the Special Committee in May 2007 to discuss about the claim, Mr. Brock relates. Mr. Brock says that the bank also sent letters to the Special Committee and to the Debtors' chief restructuring officer Kevin Lavin, however, it did not receive any response from both parties. In late November 2007, Bancredit filed its adversary proceeding against the Debtors, to which the Debtors did not answer and instead filed a request for its dismissal in February 2008. The possibility of any discovery in the adversary proceeding was stayed after the Debtors filed for Chapter 11. Appointment is Warranted Diana G. Adams, United States Trustee for Region 2, and Bancredito Panama urge the Court to approve the appointment of an examiner. The U.S. Trustee generally argues that the appointment is warranted given that the unsecured debts in the Debtors' cases far exceed $5,000,000. Meanwhile, Bancredito Panama asserts that the appointment serves the interest of all creditors by ensuring that the valuations and claims supporting the reorganization plan are not tainted by fraud. About Tricom Tricom, S.A., was incorporated in the Dominican Republic on January 25, 1988, as a Sociedad Anonima. Tricom is one of the pre-eminent full service communications services providers in the Dominican Republic. Headquartered in Santo Domingo, Tricom offers local, long distance, and mobile telephone services, cable television and broadband data transmission and Internet services, which are provided to more than 729,000 customers. Tricom's wireless network covers about 90% of the Dominican Republic's population. Tricom's local service network is 100% digital. The Company also owns interests in undersea fiber- optic cable networks that connect and transmit telecommunications signals between Central America, the Caribbean, the United States and Europe. Tricom USA, Inc., a wholly owned subsidiary of Tricom, was incorporated in Delaware in 1992, and at that time was known as Domtel Communications. A name change was effected in 1997 and Domtel Communications formally became Tricom USA, Inc. Tricom USA originates, transports and terminates international long-distance traffic using switching stations and other telecommunications equipment located in New York and Florida. Tricom S.A. and its U.S. affiliates filed for Chapter 11 protection on Feb. 29, 2008 (Bankr. S.D. N.Y. Case No. 08- 10720). Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New York City, represent the Debtors. When the Debtors' filed for protection from their creditors, they listed total assets of US$327,600,000 and total debts of US$764,600,000. (Tricom Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000) About Bancredit Bancredit (Cayman) Limited is a Cayman Islands banking institution within a Dominican Republic group of companies. Bancredit is in liquidation proceedings before the Grand Court of the Cayman Islands since 2004. Richard E L Fogerty and G James Cleaver of Kroll (Cayman) Limited were appointed by the Cayman Islands Court to act as Bancredit's Joint Official Liquidators on May 31, 2004. The Liquidators, on the estate's behalf, filed a petition under Chapter 15 of the Bankruptcy Code on May 10, 2006, before the U.S. Bankruptcy Court for the Southern District of New York in Manhattan (Case No.: 06-11026). Timothy T. Brock, Esq., at Satterlee Stephens Burke & Burke LLP in New York, represents the Liquidators in the Chapter 15 case. The Liquidators estimated that the company had more than $100 million in total assets and $215 million in total debts at the time of the Chapter 15 filing. On November 16, 2007, a complaint was lodged against Tricom SA under docket reference Bancredit Cayman Limited v. Tricom, SA Adversary No. 7-2595 before a New Jersey court. Bancredit asserted at least $120,552,000 in claims against Tricom. The Liquidators, in a January 2008 report to Bancredit unsecured creditors, said Bancredit may be unlikely to receive repayment in full of the amounts it provided to Tricom given Tricom's apparent insolvency. However, the Liquidators said they would maintain the claims so that Bancredit would have the right to be involved in restructuring negotiations. BEAR STEARNS: Fitch Affirms 'B-' Rating on $2.9 Million Loans ------------------------------------------------------------- Fitch Ratings has upgraded Bear Stearns Commercial Mortgage Securities Inc., series 2003-TOP12, as: -- $31.9 million class C to 'AA+' from 'AA'; -- $13.1 million class D to 'AA' from 'AA-'; -- $14.5 million class E to 'A' from 'A-'; -- $7.3 million class F to 'A-' from 'BBB+'; -- $7.3 million class G to 'BBB+' from 'BBB'; -- $5.8 million class H to 'BBB' from 'BBB-'. In addition, Fitch has affirmed these classes: -- $59.3 million class A-2 at 'AAA'; -- $185.9 million class A-3 at 'AAA'; -- $487.3 million class A-4 at 'AAA'; -- Interest only class X-1 at 'AAA'; -- Interest only class X-2 at 'AAA'; -- $30.5 million class B at 'AAA'; -- $5.8 million class J at 'BB+'; -- $2.9 million class K at 'BB'; -- $2.9 million class L at 'BB-'; -- $2.9 million class M at 'B'; -- $2.9 million class N at 'B-'. Fitch does not rate the $11.6 million class O. Class A-1 has been paid in full. The rating upgrades reflect additional pay down and defeasance since Fitch's last rating action. As of the March 2007 distribution date, the pool has paid down 24.9% to $871.8 million from $1.16 billion at issuance. Of the original 152 loans, 133 remain in the transaction and twelve (7.5%) have been defeased. There are no delinquent or specially serviced loans. Fitch reviewed the most recent servicer provided operating statement analysis reports for the nine remaining non-defeased shadow rated loans (25.3%): West Shore Plaza (7.1%), West Valley Mall (6.7%), Sun Valley Apartments (2.5%), Cedar Knolls Shopping Center (2.1%), 284 Mott Street (2.1%), Eagle Plaza (1.8%), Carriage Way (1.1%), Deerfield Estates (1.1%), and Wayne Towne Center (0.8%). Based on their stable performance since issuance the loans maintain their investment grade shadow ratings. West Valley Mall (6.7%) is collateralized by 621,697 square feet of a 717,573 sf regional mall in Tracy, California. Anchor tenants include Gottschalks, Target, Sears and JC Penney. Major tenants include a 14 screen Cinemark, Ross Dress 4 Less, Barnes & Noble and Old Navy. In-line tenants include Pier 1, Lemer New York and Big 5 Sporting Goods. The property benefits from the experienced sponsorship of General Growth Properties, a real estate investment trust and the second largest owner and operator of malls in the U.S. In-line sales for the twelve months ending December 2007 were $303 per square foot compared to $294 psf at issuance. Occupancy as of March 18, 2008 has increased to 98.4% from 95.9% at issuance. West Shore Plaza (7.1%) is collateralized by 831,439 sf of a 1.1 million sf regional mall located in Tampa, Florida. Anchor tenants include Burdines, JC Penney, Sears and Saks Fifth Avenue. The major tenant is a 14 screen American Multi-Cinemas. In-line tenants include Banana Republic, Express, Limited, Victoria's Secret, Ann Taylor and Foot Locker. The property benefits from the experienced sponsorship of Glimcher Realty Trust, a REIT which specializes in regional and super-regional malls. In-line sales for the twelve months ending January 2008 were $463 psf compared to $369 psf at issuance. As of Aug. 9, 2007 occupancy has remained stable at 96% compared to 95.9% at issuance. Sun Valley Apartments is a 306-unit multifamily property located in Florham Park, New Jersey. Occupancy as of Dec. 31, 2007 is 95.1%, unchanged since issuance. Fitch will continue to monitor the performance of the shadow rated loans as year end 2007 financial statements become available. Three loans (3.3%) mature in 2008 and one loan (3.9%) matures in 2009 with a weighted average coupon of 4.56% and a servicer reported weighted average debt service coverage ratio of 1.95x. The pool's weighted average coupon for the remaining loans is 5.21%. BEAR STEARNS: Moody's Chips Ratings on Nine Certificate Classes --------------------------------------------------------------- Moody's Investors Service has downgraded 9 certificates and has placed on review for further possible downgrade 6 of those classes of certificates from Bear Stearns Second Lien Trust 2007-SV1. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were too low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: Bear Stearns Second Lien Trust 2007-SV1 -- Cl. M-2, Downgraded to A1 from Aa2 -- Cl. M-3, Downgraded to A2 from Aa3 -- Cl. M-4, Downgraded to A3 from A1 -- Cl. M-5, Downgraded to Baa1 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to Baa2 from A3; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to Baa3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. B-2, Downgraded to Ba3 from Baa2 -- Cl. B-3, Downgraded to B3 from Ba3 -- Cl. B-4, Downgraded to Caa2 from B1 BERRY PLASTICS: S&P Rates $530.6 Million Sr. Secured Notes at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'BB-' and '1' recovery rating to Berry Plastics Corp.'s $530.6 million first- priority floating-rate senior secured notes due 2015. The 'BB-' and '1' recovery rating indicate the expectation of very high (90%-100%) recovery in the event of a payment default. Proceeds from the proposed notes will be used to refinance the company's existing $520 million first-lien bridge loan, which was issued to fund the acquisition of Captive Plastics Inc. in February 2008. S&P affirmed all the ratings on Berry, including the 'B' corporate credit rating. The outlook is negative. At Dec. 29, 2007, Evansville, Indiana-based Berry had total debt of about $3.4 billion. "The rating on Berry Plastics Group Inc. and its subsidiary Berry Plastics Corp. reflects the company's highly leveraged financial profile and acquisition driven growth strategy, which offsets its fair business profile with large market shares in niche segments, a well-diversified customer base, and strong customer relationships," said Standard & Poor's credit analyst Liley Mehta. BLOCKBUSTER INC: Fitch Won't Take Rating Actions on Circuit Deal ---------------------------------------------------------------- Fitch Ratings will not take any rating action following Blockbuster's (IDR rated 'CCC'; Stable Outlook) announcement that it is pursuing an acquisition of Circuit City Stores, Inc. in an all cash offer in the range of $6 to $8 per share, subject to due diligence. The bid represents a total enterprise value of approximately $1.1 billion to $1.4 billion. The all cash proposal is intended to be funded with the issuance of additional Blockbuster equity, probably in a rights offering to the company's existing shareholders. A portion of the financing will likely come from its credit facility. Blockbuster expects the closing of the transaction to be the beginning of 2009. Blockbuster is the leading player in the home video rental industry with $5.5 billion in revenues in 2007. The company's strong brand recognition and broad geographical coverage have resulted in Blockbuster capturing approximately 40% market share in the rental market. However, operating performance continued to soften in 2007 with EBITDA margin decreasing 250 basis points to 3.2% as a result of store closures and investments in the online business. Therefore, credit metrics have deteriorated with 2007 adjusted debt/EBITDAR and EBITDAR coverage of interest and rents at 7.1 times and 1.1x, respectively. Given the weak 2007 operating results, the company implemented a turnaround strategy which includes cost-containment efforts and modified pricing on its Total Access, Unlimited Total Access and mail-order-only plans. Fitch expects the initiatives will help improve operating EBITDA margin in 2008. Circuit City, a consumer electronics retailer, produced net sales of $11.7 billion and an operating loss of $353.6 million in 2007. The company's gross margin contracted 291 basis points to 20.7% due to decreases in product margins and extended warranty net sales. Circuit City had approximately $68 million of debt outstanding at the end of fiscal 2007. At Feb. 29, 2008, the company's domestic segment operated 682 Superstores and 11 other locations and its international segment operated through 779 retail stores and dealer outlets in Canada. Beyond the weak operating results of Blockbuster and Circuit City and concerns regarding Blockbuster's ability to successfully integrate the acquired operations, Fitch needs to understand the operational strategy of the combined entity. In addition, while an equity infusion could be beneficial, the combined entity would still be highly leveraged. Fitch will continue to evaluate any impact to the ratings upon disclosure of the final purchase price, financing for the transaction and potential synergies to be realized if a definitive agreement can be reached. BROADVIEW NETWORKS: S&P Holds B- Rating; Revises Outlook to Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Rye Brook, New York-based competitive local exchange carrier Broadview Networks Holdings Inc. to stable from positive. At the same time, S&P affirmed the 'B-' corporate credit rating and 'CCC+' secured note issue rating and the '5' recovery rating. "The outlook change reflects our view that, given Broadview's 2007 performance and its uncertain growth prospects in 2008, especially with a weakening economy, the likelihood that the company will be able to achieve net free cash flow positive results is more uncertain than we previously thought," said Standard & Poor's credit analyst Catherine Cosention. "Therefore, there is less of a prospect for an upgrade over the next one to two years," she said. The ratings on Broadview reflect the company's vulnerable business position and its highly leveraged financial profile. Broadview's business risk is very high as a CLEC facing competitive threats from the much larger, financially stronger incumbent telephone companies, especially Verizon Communications Inc. While Broadview has provided tailored communications services and customer care, its prime differentiator in light of such significant competition has been its lower service prices. As such, accelerated marketing by Verizon could further pressure Broadview's prices and margins in the next few years. In light of such substantial business risk, the company's financial resources are limited, given capital requirements to support customer growth. Broadview's 2007 acquisition of InfoHighway, which is about one- third its size in terms of revenue, expanded the company's capabilities and customer base in three key markets: New York City, Boston, and Washington D.C. It also provides Broadview direct fiber connection to about 500 buildings, enabling it to serve larger business customers. The company serves 20 markets in 10 contiguous states, including New York, Philadelphia, Boston, Baltimore, and Washington, D.C. Broadview targets small to midsize businesses with a bundled T1 offer. Although Broadview has a base of about 75,000 small and midsize business customers and 807,000 total lines, its ability to materially grow this base of business is highly uncertain. Moreover, while most of the legacy Broadview customers are on multiyear contracts with evergreen renewals, this only partially mitigates the risk of line churn, which remains an ongoing issue. BRODER BROS: Profit Margin Erosion Prompts Moody's to Junk Rating ----------------------------------------------------------------- Moody's Investors Service has downgraded Broder Bros., Co.'s Corporate Family Rating and Probability of Default Rating to Caa1 from B3 and lowered the rating on the company's senior unsecured notes to Caa2 from Caa1. The rating outlook remains negative. The rating actions follows the company's continued erosion in profit margins in the second half of 2007 that resulted in operating performance weaker than Moody's previous expectations. The downgrade also reflects continued negative trends in revenues during this period, indicating market share erosion. As a result of weaker performance, financial leverage has increased with debt/EBITDA near 8.6 times and fixed charge coverage of 0.8 times. The negative outlook reflects concerns that the company's liquidity profile may erode if it is unable to improve cash flow. Ratings could be lowered further if the company's revenues continue to contract, indicating market share losses, or if operating margins do not begin to show recovery toward historical levels over the course of 2008. These ratings were downgraded and LGD assessments adjusted: -- Corporate family rating to Caa1 from B3 -- Probability of default rating to Caa1 from B3 -- $225 million Senior Unsecured Notes due 10/2010 to Caa2 (LGD 5, 72%) from Caa1 (LGD 5, 73%) Broder Bros. Co., based in Trevose, Pennsylvania, is a leading distributor of imprintable sportswear and accessories in the U.S. For the 12 month period ending Dec. 29, 2007 Broder reported revenues of approximately $929 million. BRUSHFIELD CDO: Poor Credit Quality Cues Moody's Rating Downgrades ------------------------------------------------------------------ Moody's Investors Service has downgraded and left these notes issued by Brushfield CDO 2007-1 Ltd. on review for possible downgrade Class description: $62,500,000 Class A-1LB Floating Rate Notes Due July 2052 -- Prior Rating: Aaa -- Current Rating: Baa2, on review for possible downgrade Class description: $26,250,000 Class A-2L Floating Rate Notes Due July 2052 -- Prior Rating: Aa2 -- Current Rating: B1, on review for possible downgrade Class description: $12,500,000 Class A-3L Floating Rate Notes Due July 2052 -- Prior Rating: A2 -- Current Rating: Caa1, on review for possible downgrade In addition Moody's announced that it has downgraded these notes. Class description: $9,375,000 Class B-1L Floating Rate Notes Due July 2052 -- Prior Rating: Baa2 -- Current Rating: C Class description: $9,375,000 Class B-2L Floating Rate Notes Due July 2052 -- Prior Rating: Ba2 -- Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. CALAMOS INVESTMENTS: Seeks Financing to Address Illiquidity ----------------------------------------------------------- Calamos Investments said it intends to announce refinancing arrangements as it reaches agreements with specific lenders. These announcements