T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, May 6, 2008, Vol. 12, No. 107 Headlines ADVANTAGE ONE: Case Summary & 19 Largest Unsecured Creditors ALLIED HOLDINGS: Release Post-Confirmation Quarterly Report ALOHA AIRLINES: Ch. 7 Trustee Sells Air Cargo Assets for $10.5MM AMERICHIP INT'L: Posts $969,582 Net Loss in 1st Qtr. Ended Feb. 29 AQUATIC CELLULOSE: Feb. 29 Balance Sheet Upside-Down by $4,576,529 ASSET BACKED: Fitch Affirms 'B' Ratings on Four Cert. Classes ATA AIRLINES: Final Hearing on Use of Cash Collateral on May 7 ATARI INC: To Merge with Infogrames Entertainment in $11MM Deal AVENTINE RENEWABLE: Liquidity Issues Cue S&P to Affirm 'B+' Rating BENAZZI CDO: Fitch Junks Ratings on Three Note Classes BERNOULLI HIGH: Fitch Lowers Ratings on Six Note Classes BI-LO LLC: Weak Performance Cues S&P to Revise Outlook to Neg. BLOUNT INTL: Acquires Carlton Holdings for $63,000,000 BRODERICK CDO: Poor Collateral Cues Fitch to Downgrade Ratings BSML INC: Andrew Rudnick Resigns as CEO and Board Chairman BSML INC: Appoints Jeffrey Nourse as New Chief Executive BUCHANAN ENTITIES: Voluntary Chapter 11 Case Summary C-BASS CBO: Fitch Slashes AA Rating to CCC on $29 Million Notes CALAMOS INVESTMENTS: To Refinance $300MM of Preferred Stocks CATHOLIC CHURCH: Fairbanks' Creditors Wants Pachulski as Counsel CATHOLIC CHURCH: Fairbanks' Creditors Wants Bundy as Co-Counsel CHALLENGER POWERBOATS: Auditor Raises Going Concern Doubt CHALLENGER POWERBOATS: Files Chapter 7 Petition in Missouri CHASEFLEX: Moody's Junks Ratings on Four Loan Classes CLAIRE'S STORES: Poor Performance Cues S&P to Junk Note Ratings CHECKSMART FIN'L: Bill 545 Cues S&P to Put Rtngs. Under Neg. Watch COBLESKILL BUSINESS: Case Summary & 12 Largest Unsecured Creditors COLUMBIA RIVER: Case Summary & 20 Largest Unsecured Creditors COUNTRYWIDE FINANCIAL: BofA Undecided on How to Treat $38MM Debt COUNTRYWIDE MORTGAGE: Fitch Lowers Ratings on Five Cert. Classes COUNTRYWIDE FIN'L: BOA's S-4/A Filing Cues S&P to Cut Rating DALTON CDO: Poor Collateral Prompts Fitch to Chip Ratings DANKA BUSINESS: To Undergo Voluntary Liquidation After Sale DAVID MORGAN: Case Summary & 19 Largest Unsecured Creditors DELTA AIR: Posts First Quarter 2008 Net Loss of $6,390,000,000 DELTA AIR: Merger with Northwest Will Result in 1,000 Cut Jobs DELTA AIR: Internal Revenue Service Withdraws $11.8 Bil. Claims DELTA AIR: JPMorgan Chase Holds 15% of Outstanding Common Stock DELUXE ENTERTAINMENT: S&P Holds B Rating; Revises Outlook to Neg. DEUTSCHE BANK: U.S. Affiliate Faces Insolvency Claims DUKE FUNDING: Fitch Junks Ratings on Six Note Classes DUKE FUNDING: Fitch Cuts 'BB-' Ratings to 'C' on Two Note Classes ELECTRICAL COMPONENTS: Poor Liquidity Cues S&P to Junk Credit Rtng EMPIRE LAND: Wants Court Approval of $20 Million Palmdale Loan ENRON CORP: Releases 14th Post-Confirmation Report ENRON CORP: Wants to Merge Certain Debtor-Affiliates to Save Costs ENRON CORP: Court OKs $1.66 Bil. Citigroup Settlement Agreement ENTEGRA TC: S&P Affirms 'B+' Rating on 2007 Recapitalization EOS AIRLINES: Organizational Meeting to Form Committees on May 8 EXPRESS SCRIPTS: Moody's Withdraws Ba1 Corp. Family Rating FAIRCHILD SEMICONDUCTOR: Moody's Holds Ba3 Corp. Family Rating FORT SHERIDAN: Collateral Deterioration Cues Fitch to Cut Ratings FULL COLOR SERVICES: Case Summary & 20 Largest Unsecured Creditors GMAC LLC: ResCap Unit Launches Exchange Offer for $12.8 Bil. Notes GMAC LLC: Fitch Cuts ID Rating to BB- After ResCap's Poor Fin'l GMAC LLC: S&P 'B' Rating Unaffected by ResCap's Downgrades GENERAL MOTORS: ResCap's Offer Does Not Affect S&P's Neg. Watch GUARDIAN TECH: Secures $7 Million Financing from Nine Investors INTERNATIONAL PAPER: Net Income Drops to $133MM in '08 1st Quarter INTERPUBLIC GROUP: Net Loss Lowers to $62MM in 2008 First Quarter ION MEDIA: S&P Puts '3' Recovery Rating on CCC+ Rated $400MM Notes IPCS INC: S&P Affirms 'B-' Rating and Changes Outlook to Stable IPSWICH STREET: Fitch Cuts Six Note Ratings and Removes Neg. Watch ISLE OF CAPRI: S&P Lowers BB- Rating to B+ and Removes Neg. Watch KLEROS PREFERRED: Fitch Junks Ratings on Four Note Classes LEXINGTON PRECISION: Gets Final Approval to Use $4 Mil. Facility LEXINGTON PRECISION: Gets Final Approval to Use $4 Mil. Facility LEVITZ FURNITURE: WFNNB Demands Allowance of $1,892,587 Claim LINENS N THINGS: Gets Interim OK to Tap $700-Mil. GECC DIP Loan LINENS 'N THINGS: Bankruptcy Filing Cues Fitch's Default Rating LINENS 'N THINGS: Bankruptcy Filing Cues Moody's Default Rating LINENS 'N THINGS: S&P Withdraws Default Rating MAGELLAN HEALTH: S&P Holds Ratings; Revises Outlook to Positive MARATHON STRUCTURED: Fitch Chips Rating to BB on Class A-1 Notes MERCK & CO: To Reduce U.S. Sales Force by 1,200 Positions MERRILL LYNCH: Fitch Chips Ratings on $121.3MM Certificates MERRILL LYNCH: Fitch Takes Rating Actions on Various Cert. Classes MERRILL LYNCH: Fitch Affirm 'BB' Rating on Class B-2 Certificates NAE OF KENDALL: Case Summary & Six Largest Unsecured Creditors NIELSEN CO: S&P Revises Outlook on 'B' Rating to Stable from Neg. NEXTEL CORP: S&P Lowers Ratings to 'BB' on Five Transactions NORTH SHORE: Case Summary & Nine Largest Unsecured Creditors NORTHWEST AIRLINES: Posts $4.1 Billion First Qtr. 2008 Net Loss NORTHWEST AIRLINES: Merger with Delta to Result in 1,000 Cut Jobs OFFICEMAX INC: Net Income Rises to $63MM in Quarter Ended March 29 ORIENT POINT: Fitch Junks Ratings on Five Note Classes PAMPELONNE CDO: S&P Puts Default Ratings on 12 Classes of Notes PLASTECH ENGINEERED: Seeks Permission to Wind Down Canadian Unit PLASTECH ENGINEERED: Can Remove Pending Actions Until August 29 PLASTECH ENGINEERED: Agrees to Return Hyundai Tooling to JCI PRB ENERGY: Wants To Use $2 Million Facility of Republic et al. PRIME MORTGAGE: Moody's Cut Ba1 Rating to B3; Puts Under Review QUALITY HOME: Weak Performance Prompts S&P to Cut Rating to B- RADWAN & AFFES: Voluntary Chapter 11 Case Summary RECYCLED PAPER: Payment Failure Prompts S&P's Default Ratings RELIANT CHANNELVIEW: Plan Filing Period Extended to June 20 RESIDENTIAL CAPITAL: Commences Exchange Offer for $12.8 Bil. Notes RESIDENTIAL CAPITAL: S&P Cuts Corp. Credit to CC on Debt Offer RESIDENTIAL CAPITAL: Debt Exchange Offer Cues Fitch to Cut Rating RESIDENTIAL CAPITAL: Moody's Cut Rating to Ca on Exchange Offer ROYAL UTILITIES: S&P Cuts Rating to BB+ After Sherritt Acquisition REYNOLDS AMERICAN: Debt Reduction Cues S&P to Lift Rating from BB+ SALISBURY INT'L: Fitch Slashes $33MM Note Rating to CC from A+ SEALY CORPORATION: March 2 Balance Sheet Upside-Down by $130MM SHAPES/ARCH HOLDINGS: Files Modified Disclosure Statement SHARPS CDO: Fitch Cuts Rating to C from BB on $6.9 Million Notes SPECIALTY UNDERWRITING: Fitch Downgrades Ratings on $97.5MM Certs. SOLO CUP: Fitch Affirms Ratings and Revises Outlook to Positive SOUTH FINANCIAL: Fitch Puts 'BB' Rating on $250MM Preferred Stock STEVEN MOLASKY: Case Summary & 14 Largest Unsecured Creditors STRUCTURED ASSET: Moody's Lowers Ratings on 57 Certificate Classes ST. JOSEPH'S: Moody's Assigns Ba1 Rating on $236.6 Million Bonds THOMAS WEISEL: To Slash 13% of Workforce First Half This Month TOMARCON INC: Case Summary & 20 Largest Unsecured Creditors TORO ABS: Fitch Slashes Rating to CCC from A- on $876.9MM Notes TORO ABS: Fitch Chips BBB Rating to C and Removes Negative Watch TOWERS OF CHANNELSIDE: Court Approves Disclosure Statement TOWERS OF CHANNELSIDE: Plan Confirmation Hearing Set for May 28 TRIAD GUARANTY: Planned Mortgage Unit Cues Fitch to Lower Ratings TRIAD GUARANTY: S&P Retains 'BB' Rating Under Negative Watch TROPICANA ENTERTAINMENT: Files Chapter 11 Bankruptcy in Delaware TROPICANA ENTERTAINMENT: Case Summary & 30 Largest Creditors UAL CORPORATION: ReGen Insists Cure Amount Worth $4,272,555 UAL CORPORATION: Union Workers Denounce New Incentive Plan US AIRWAYS: Incurs $236 Million Net Loss in First Quarter 2008 U.S. ENERGY: Wants Court to Set July 1 as Claims Bar Date VERTIS INC: Inks Forbearance Agreement with Senior Noteholders VICORP RESTAURANTS: U.S. Trustee Forms Seven-Member Committee VILLAGE HOTEL: Gets Interim OK to Use Lender's Cash Collateral VILLAGE HOTEL: Hires Lewis and Roca as Bankruptcy Counsel WELLCARE HEALTH: S&P Retains 'B+' Credit Rating Under Neg. Watch WESTAR ENERGY: Fitch Retains 'BB+' Rating Under Positive Watch WIREFREE PARTNERS: S&P Cuts Lease-Backed Notes Rating to BB WOLVERINE TUBE: Appoints William Evans to Board & Audit Committee * Fitch Says Delinquencies on US Timeshare ABS Receded in 1Q'08 * Fitch Says Recessionary Pressures Are Among Concerns for Banks * S&P Downgrades Ratings on Eight Tranches from Three Hybrid CDOs * S&P Says Consumer Products Remains Susceptible to Economic Stir * S&P Reports High-Yield Market Rebounded in Late March to April * Large Companies with Insolvent Balance Sheets ********* ADVANTAGE ONE: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Advantage One Mortgage Corp. 8151 Peters Rd., Ste. 2000 Plantation, FL 33324 Bankruptcy Case No.: 08-15308 Type of Business: The Debtor is a correspondent lender serving the lending needs of real estate professionals, builders and individual home buyers throughout the US. See http://www.advantage1mtg.com/ Chapter 11 Petition Date: April 28, 2008 Court: Southern District of Florida (Fort Lauderdale) Judge: John K. Olson Debtor's Counsel: David W. Langley, Esq. Email: dave@flalawyer.com 8181 W. Broward Blvd., Ste. 204 Plantation, FL 33324 Tel: (954) 356-0450 Fax: (954) 356-0451 Total Assets: $250 Total Debts: $1,816,519 Debtor's 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $550,000 Atlanta, GA 39901 SCP-Capri MG Owner $241,971 Attn: David W. Black, Esq. 7805 S.W. 6 Ct. Plantation, FL 33324 FIS Empower $239,381 50 S. Water Ave. Sharon, PA 16146 California Franchise Tax Board $200,000 Dell Financial Services $127,801 Colonial Bank $100,000 Kroll Factual Data $68,552 Equifax Credit Marketing $64,547 FIS Empower $61,760 Telepacific Communications $46,798 Who's Calling $38,551 CIT Technology $21,165 The Turning Point $12,365 Zurich North America $8,509 Bricar Enterprises $7,659 Wolters Kluwer $6,457 PAETEC/US LEC $5,794 CIT Technology $4,740 NCO Credit Services $4,154 ALLIED HOLDINGS: Release Post-Confirmation Quarterly Report ----------------------------------------------------------- Allied Holdings, Inc., and its 21 affiliates filed separate post- confirmation quarterly operating reports for the period Jan. 1, 2008, to March 31, 2008. Allied Holdings reports total cash disbursements of $59,921,965 for the period. Bank account balances reflect: Bank Account No. Balance ---- ----------- ------- Bank of America 9429019178 $138,203 Fidelity National Bank 59328 9,143 LaSalle Bank 5800299454 76,115 LaSalle Bank 5590056569 0 LaSalle Bank 5590056577 0 LaSalle Bank 5590056551 0 LaSalle Bank 5590056544 0 LaSalle Bank 5590056536 0 JPMorgan Chase 904123677 0 First Community Bank of Tifton 1900109 0 LaSalle Bank 5801012450 415,277 Regions Bank 6596012078 14,782 Counsel for the Reorganized Debtors, Kelly E. Culpin, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, delivered the post- confirmation reports to the Court on April 30, 2008. About Allied Holdings Based in Decatur, Georgia, Allied Holdings Inc. (AMEX: AHI, other OTC: AHIZQ.PK) -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represented the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provided the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provided financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. On May 11, 2007, the Court confirmed Allied's Second Amended Chapter 11 Plan of Reorganization. Allied emerged from bankruptcy on May 29, 2007. (Allied Holdings Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) * * * As of April 30, 2007, Allied Holdings Inc.'s consolidated balance sheet showed $217,379,000 in total stockholders' deficit resulting from total assets of $309,931,000 and total liabilities of $527,310,000. ALOHA AIRLINES: Ch. 7 Trustee Sells Air Cargo Assets for $10.5MM ---------------------------------------------------------------- Dane S. Field, interim Chapter 7 Trustee for Aloha Airlines Inc. and its debtor-affiliates, asks the Hon. Lloyd King of the United States Bankruptcy Court for the District of Hawaii for authority to sell the Debtors' "Air Cargo Assets" to Saltchuk Resources Inc. for $10.5 million free and clear of all liens and encumbrances. On May 1, 2008, Saltchuk and GMAC Commercial Finance LLC, the Debtors' senior secured lender, entered into a letter of intent for Saltchuk's purchase of the "Air Cargo Assets" from the Debtors' bankruptcy estates. The Air Cargo Assets handles 85% of the cargo traffic in the state of Hawaii, including a contract with the U.S. Postal Services. Under the salient terms of the letter of intent include, among other things: i) a $10.5 million purchase price; ii) a $1,000,000 earnest money deposit, including $500,000 previously deposited; iii) the assumption of aircraft and facility leases and other executory contracts, as selected by Saltchuk; and iv) a closing on or before May 14, 2008. Furthermore, the letter of intent requires GMAC Financial to finance the operation of the "Air Cargo Assets" pending the sale, Which GMAC Financial is only willing to fund until May 14, 2008. GMAC Financial agrees to carve-out a portion of the proceeds of the sale for the benefit of the Debtors' estates, wherein 5% of the proceeds, net of fees and expenses incurred in the sale, will be paid to th Chapter 7 Trustee to pay expenses and fees. A hearing is set for May 12, 2008, at 2:00 p.m., to consider approval of the Debtors' request. A full-text copy of the Letter of Intent is available for free at http://ResearchArchives.com/t/s?2b70 As reported in the Troubled Company Reporter on April 25, 2008, Saltchuk Resources lost the bid for Aloha Airlines Inc.'s contract services operations to Pacific Air Cargo, which offered $2 million for those assets. As reported in the Troubled Company Reporter on April 30, 2008, Judge King converted the Debtors' jointly administered Chapter 11 cases to liquidation proceedings under Chapter 7. On May 1, 2008, Judge King authorized the Chapter 7 Trustee to operate the Debtors' "Air Cargo Assets" under Section 721 of the Bankruptcy Code until the closing date. 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. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $100 million to $500 million. AMERICHIP INT'L: Posts $969,582 Net Loss in 1st Qtr. Ended Feb. 29 ------------------------------------------------------------------ Americhip International Inc. reported a net loss of $969,582 for the first quarter ended Feb. 29, 2008, compared with a net loss of $8,133,780 in the same period in 2007. Revenues for the three months ended Feb. 29, 2008, increased from $180,435 for the three months ended Feb. 28, 2007, to $921,472. This increase in revenues is primarily due to the acquisition of KSI Machine and Engineering Inc. during the year ending Nov. 30, 2007. Operating expenses, which include administrative expenses, legal and accounting expenses, consulting expenses and license expense decreased from $8,206,896 for the three months ended Feb. 28, 2007, to $1,351,283 for the three months ended Feb. 29, 2008, a decrease of $6,855,613. This decrease is due to a significant decrease in Director Fees and consulting expenses during the three months ended Feb. 29, 2008. Director Fees in 2007 were the result of the issuance of restricted common stock to each of the company's directors in the amount of $5,850,000. The company said it anticipates that the operations of KSI Machine and Engineering will bring to the consolidated balance sheet of AmeriChip annual revenues of approximately $3,600,000 based on revenues generated during the three months ended Feb. 29, 2008. Going Concern Disclaimer As reported in the Troubled Company Reporter on March 13, 2008, Jewett, Schwartz, Wolfe & Associates, in Hollywood, Fla., expressed substantial doubt about Americhip International Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Nov. 30, 2007. The auditing firm pointed to the company's recurring losses from operations. At Feb. 29, 2008, the company had an accumulated deficit of $33,129,549. This compares with an accumulated deficit of $32,159,967 at Nov. 30, 2007. Balance Sheet At Feb. 29, 2008, the company's consolidated balance sheet showed $7,329,077 in total assets, $6,987,585 in total liabilities, and $341,492 in total stockholders' equity. The company's consolidated balance sheet at Feb. 29, 2008, also showed strained liquidity with $1,245,544 in total current assets available to pay $4,306,792 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Feb. 29, 2008, are available for free at http://researcharchives.com/t/s?2b74 About AmeriChip International Headquartered in Clinton Township, Mich., AmeriChip International Inc. (OTC BB: ACHI.OB) -- http://www.americhiplacc.com/-- holds a patented technology known as Laser Assisted Chip Control, which can be used to re-engineer the manufacturing process for industrial metal machining applications. According to AmeriChip International, this technology, when implemented by the customer, will eliminate dangerous ribbon-like steel chips that tangle around moving tool parts, automation devices and other components essential to the machine processing of low to medium grade carbon steels and non-ferrous metal parts. AQUATIC CELLULOSE: Feb. 29 Balance Sheet Upside-Down by $4,576,529 ------------------------------------------------------------------ Aquatic Cellulose International Corp.'s consolidated balance sheet at Feb. 29, 2008, showed $1,095,311 in total assets and $5,671,840 in total liabilities, resulting in a $4,576,529 total stockholders' deficit. At Feb. 29, 2008, the company's consolidated balance sheet also showed strained liquidity with $255,388 in total current assets available to pay $5,671,840 in total current liabilities. The company reported net income of $5,597,919 for the third quarter ended Feb. 29, 2008, compared with net income of $1,387,799 in the same period ended Feb. 28, 2007. For the three month period ended Feb. 29, 2008, and Feb. 28, 2007, the company recorded other income of $5,672,083 and $1,538,103 respectively, associated with the company's 2003 and 2004 convertible debt. At Feb. 29, 2008, the estimated fair value of the company's derivative liability was $1,709,352, as well as a warrant liability of $2,447. This compares with the estimated fair value of the company's derivative liability of $7,138,823, as well as a warrant liability of $17,991 at Nov. 30, 2007. The company recognized its equity interest in Sargent South lease in the amount of $147,506 for the three month period ended Feb. 29, 2008, compared with $45,714 for the same period ended Feb. 28, 2007. The increase in equity interest is primarily due to increased production and the overall increases in the selling price of the company's natural gas. Liquidity At Feb. 29, 2008, the company had cash of $1,327 and total current assets of $255,388. In comparison, the company had cash of $231,637 and total current assets of $233,071 at Nov. 30, 2007. As of Feb. 29, 2008, the company had a working capital deficiency of $5,416,452 and an accumulated deficit of $10,555,980, compared with a working capital deficiency of $10,965,167 and an accumulated deficit of $16,153,898 at Nov. 30, 2007. Over the next twelve months, management said it is confident that sufficient working capital will be obtained from a combination of revenue and external financing to meet the company's cash commitments as they become payable. The company has in the past successfully relied on private placements of common stock, loans from private investors, sale of assets and the exercise of common stock warrants, in order to sustain operations. Full-text copies of the company's consolidated financial statements for the quarter ended Feb. 29, 2008, are available for free at http://researcharchives.com/t/s?2b78 Going Concern Disclaimer As reported in the Troubled Company Reporter on March 13, 2008, Peterson Sullivan PLLC expressed substantial doubt about Aquatic Cellulose International Corp.'s ability to continue as a going concern after auditing the company's financial statements for the years ended May 31, 2007, and 2006. The auditing firm pointed to the company's negative cash flow from operations during the year ended May 31, 2007, and accumulated deficit at May 31, 2007. The company continues to experience recurring losses. In addition, the company is receiving minimal cash flow from its oil and natural gas investments. About Aquatic Cellulose Headquartered in B.C., Canada, Aquatic Cellulose International Corp. (OTC: AQCI) is an independent oil and gas investment, development and production company, engaged in the acquisition and development of crude oil and natural gas reserves and production initially in the state of Texas of the United States. The company owns a 20 percent working interest and a 16 percent net revenue interest in the Sargent South Field, Hamill & Hamill lease, a 3,645-acre natural gas producing property located in Matagorda County, Texas. The company's interest applies to all depths from surface to 7000 feet, with the exception of three currently non-producing wells, number 19, 14 and 1-R, of which the company has no interest in. All of the company's South Sargent interests, both onshore and offshore, are subject to the company's Joint Operating Agreement with New Century Energy Corp. The company also is a fifty percent working interest participant in oil and gas leases comprised by the twenty five acre Isaac Holliday tract in the William Cooper Survey in Waller County, Texas (Brookshire Dome Field Area). ASSET BACKED: Fitch Affirms 'B' Ratings on Four Cert. Classes ------------------------------------------------------------- Fitch Ratings has taken rating actions on 10 Asset Backed Funding Corporation mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $683.2 million and downgrades total $106.3 million. ABFC 2003-AHL1 Total -- $11.5 million class AI affirmed at 'AAA'; -- $19.9 million class M-1 affirmed at 'AAA'; -- $4.3 million class M-2 affirmed at 'AA'; -- $2.3 million class M-3 affirmed at 'A+'; -- $0.8 million class M-4 affirmed at 'A'; -- $1.2 million class M-5 affirmed at 'BBB+'. Deal Summary -- Originators: Accredited Home Lenders, Inc. 100% -- 60+ day Delinquency: 15.34% -- Realized Losses to date (% of Original Balance): 1.34% ABFC 2003-OPT1 Total -- $15.1 million class A-1 affirmed at 'AAA'; -- $0.8 million class A-1A affirmed at 'AAA'; -- $14.2 million class A-3 affirmed at 'AAA'; -- $32.1 million class M-1 affirmed at 'AA+'; -- $5.7 million class M-2 downgraded to 'A-' from 'A+'; -- $1.5 million class M-3 downgraded to 'BBB+' from 'A'; -- $1.5 million class M-4 downgraded to 'BBB-' from 'A-'; -- $1.4 million class M-5 downgraded to 'BB' from 'BB+'; -- $0.8 million class M-6 affirmed at 'B'. Deal Summary -- Originators: Option One Mortgage Corporation 100% -- 60+ day Delinquency: 16.98% -- Realized Losses to date (% of Original Balance): 0.98% ABFC 2003-WF1 -- $19.9 million class A-2 affirmed at 'AAA'; -- $4.7 million class M-1 affirmed at 'AA'; -- $2.4 million class M-2 affirmed at 'A+'; -- $2.1 million class M-3 affirmed at 'BB'; -- $0.1 million class M-4 affirmed at 'BB-'. Deal Summary -- Originators: Wells Fargo Home Mortgage, Inc 100% -- 60+ day Delinquency: 12.71% -- Realized Losses to date (% of Original Balance): 1.20% ABFC 2003-WMC1 -- $23.0 million class M-1 affirmed at 'AAA'; -- $8.0 million class M-2 affirmed at 'A+'; -- $1.8 million class M-3 affirmed at 'A'; -- $1.2 million class M-4 affirmed at 'BBB+'; -- $1.1 million class M-5 affirmed at 'BBB'; -- $0.6 million class M-6 affirmed at 'B'. Deal Summary -- Originators: WMC Mortgage Corp. 100% -- 60+ day Delinquency: 10.80% -- Realized Losses to date (% of Original Balance): 0.75% ABFC 2004-FF1 -- $42.9 million class M-1 affirmed at 'AA-'; -- $21.7 million class M-2 affirmed at 'BBB+'; -- $7.2 million class M-3 downgraded to 'BB+' from 'BBB-'; -- $1.9 million class M-4 affirmed at 'B'; -- $1.9 million class M-5 affirmed at 'CC/DR4'; -- $0.8 million class M-6 affirmed at 'C/DR6'. Deal Summary -- Originators: First Franklin Financial Corporation 100% -- 60+ day Delinquency: 28.93% -- Realized Losses to date (% of Original Balance): 1.08% ABFC 2004-OPT1 -- $30.2 million class M-1 affirmed at 'AA+'; -- $16.5 million class M-2 affirmed at 'A+'; -- $2.0 million class M-3 affirmed at 'A'; -- $1.9 million class M-4 downgraded to 'BBB+' from 'A-'; -- $1.2 million class M-5 downgraded to 'BBB' from 'BBB+'; -- $1.6 million class M-6 affirmed at 'B'. Deal Summary -- Originators: Option One Mortgage Corporation 100% -- 60+ day Delinquency: 18.44% -- Realized Losses to date (% of Original Balance): 1.12% ABFC 2004-OPT2 -- $4.2 million class A-1 affirmed at 'AAA'; -- $0.5 million class A-1A affirmed at 'AAA'; -- $0.4 million class A-2 affirmed at 'AAA'; -- $27.0 million class M-1 affirmed at 'AA+'; -- $21.6 million class M-2 affirmed at 'AA-'; -- $3.8 million class M-3 affirmed at 'A+'; -- $1.6 million class M-4 affirmed at 'A'; -- $1.1 million class M-5 affirmed at 'BBB+'; -- $1.5 million class M-6 affirmed at 'BBB'; -- $0.3 million class B affirmed at 'BB+'. Deal Summary -- Originators: Option One Mortgage Corporation 100% -- 60+ day Delinquency: 11.91% -- Realized Losses to date (% of Original Balance): 0.64% ABFC 2004-OPT3 -- $13.8 million class A-1 affirmed at 'AAA'; -- $9.2 million class A-4 affirmed at 'AAA'; -- $34.3 million class M-1 affirmed at 'AA'; -- $22.5 million class M-2 affirmed at 'A'; -- $2.4 million class M-3 affirmed at 'A'; -- $2.0 million class M-4 affirmed at 'A-'; -- $1.2 million class M-5 affirmed at 'BBB' -- Zero balance class M-6 affirmed at 'BBB-'. Deal Summary -- Originators: Option One Mortgage Corporation 100% -- 60+ day Delinquency: 16.09% -- Realized Losses to date (% of Original Balance): 0.44% ABFC 2004-OPT4 -- $29.8 million class A1 affirmed at 'AAA'; -- $6.1 million class A2 affirmed at 'AAA'; -- $42.9 million class M1 affirmed at 'AA'; -- $30.3 million class M2 downgraded to 'BBB+' from 'A-'; -- $1.7 million class M3 downgraded to 'BBB' from 'BBB+'; -- $2.6 million class M4 downgraded to 'BB+' from 'BBB-'; -- $1.7 million class M5 downgraded to 'BB-' from 'BB+'; -- $1.9 million class M6 downgraded to 'B' from 'BB-'. Deal Summary -- Originators: Option One Mortgage Corporation 100% -- 60+ day Delinquency: 18.58% -- Realized Losses to date (% of Original Balance): 0.63% ABFC 2004-OPT5 -- $86.0 million class A-1 affirmed at 'AAA'; -- $29.7 million class A-4 affirmed at 'AAA'; -- $53.9 million class M-1 affirmed at 'AA'; -- $37.0 million class M-2 downgraded to 'BBB+' from 'A'; -- $7.2 million class M-3 downgraded to 'BBB-' from 'A-'; -- $3.4 million class M-4 downgraded to 'BB+' from 'BBB+'. Deal Summary -- Originators: Option One Mortgage Corporation 100% -- 60+ day Delinquency: 18.57% -- Realized Losses to date (% of Original Balance): 0.50% ATA AIRLINES: Final Hearing on Use of Cash Collateral on May 7 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana will convene a hearing May 7, 2008, to consider final approval of ATA Airlines, Inc.'s request to use its lenders' cash collateral. As reported by the Troubled Company Reporter on April 14, 2008, ATA Airlines obtained permission, on an interim basis, to use the cash collateral of its secured lenders to pay costs and expenses associated with the wind-down of its business, the orderly liquidation of its assets and the conduct of the Chapter 11 case. ATA Airlines is a borrower under a $360,000,000 term loan with JPMorgan Chase Bank, N.A., as administrative agent for certain lenders. ATA Airlines granted to the Administrative Agent and the Secured Lenders liens and security interests on its assets and property to secure its loan obligations. ATA Airlines has proposed to provide their lenders and JPMorgan replacement security interests in, and liens on, all of its assets in return for using their cash collateral. Terry Hall, Esq., at Bakers & Daniels, LLP, in Indianapolis, Indiana, has informed Judge Basil H. Lorch III that ATA Airlines projects to use $23,585,000 of the cash collateral as set forth in its 26-Week Forecast. A full-text copy of the budget forecast is available at no charge at: http://bankrupt.com/misc/ATA26WeekCashForecast While it is not able to accurately assess the value of all its assets at this time, ATA Airlines has said the estimated liquidation value of the collateral it owns that secures its obligations to the Secured Lenders is approximately $50,000,000. The Port of Oakland is expected to show up at Thursday's hearing to block the approval of ATA Airlines's request. Port of Oakland objects to the request to the extent the passenger facility charges are included within the replacement liens. Mark A. Salzberg, Esq., at Foley & Lardner LLP, in Washington, D.C., says that passenger facility charges ATA Airlines' collects are not property of the bankruptcy estate since ATA Airlines does not have equitable or legal interest in those facility charges. According to Mr. Salzberg, ATA Airlines was required to collect and remit to the Port certain passenger facility charges for using the Port's facilities in the operation of its business. Under the Port's regulatory scheme, those facility charges are trust funds collected by ATA Airlines and its agents, and held for the benefit of the Port. Mr. Salzberg says that ATA Airlines is not entitled to commingle the facility charges and is required to segregate in a separate account an amount of money equal to the average monthly liability for the facility charges. About ATA Airlines Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a diversified passenger airline operating in two principal business lines -- a low cost carrier providing scheduled passenger service that leverages a code share agreement with Southwest Airlines; and a charter operator that focused primarily on providing charter service to the U.S. government and military. ATA is a wholly owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned subsidiary of New ATA Investment, Inc., which in turn, is a wholly owned subsidiary of Global Aero Logistics Inc. ATA Acquisition also owns another holding company subsidiary, World Air Holdings, Inc., which it acquired through merger on August 14, 2007. World Air Holdings owns and operates two other airlines, North American Airlines and World Airways. ATA Airlines and its affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). The Honorable Basil H. Lorch III confirmed the Debtors' plan of reorganization on Jan. 31, 2006. The Debtors' emerged from bankruptcy on Feb. 28, 2006. Global Aero Logistics acquired certain of ATA's operations after its first bankruptcy. The remaining ATA affiliates that were not substantively consolidated in the company's first bankruptcy case were sold or otherwise liquidated. ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind. Case No. 08-03675), citing the unexpected cancellation of a key contract for ATA's military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business. ATA discontinued all operations subsequent to the bankruptcy filing. ATA's Chapter 22 bankruptcy petition lists assets and liabilities each in the range of $100 million to $500 million. (ATA Airlines Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). ATARI INC: To Merge with Infogrames Entertainment in $11MM Deal --------------------------------------------------------------- Atari, Inc., and Infogrames Entertainment S.A. reached a definitive agreement to merge, which: * brings to a close a period of financial underperformance for Atari; * strengthens Atari under Infogrames' new management team; * delivers a platform for future growth in the US; and * offers Atari shareholders an all cash exit. Under the terms of the merger agreement, Infogrames will acquire the remaining outstanding equity interests of Atari (other than shares of common stock held by Infogrames or its affiliates, which would be cancelled) for $1.68 per share, equivalent to a cash payment of approximately $11 million. Infogrames is currently the majority shareholder in Atari holding approximately 51.4%. Following the merger, Atari will be a wholly owned subsidiary of Infogrames. The merger will be funded by Infogrames from existing cash resources. The transaction is not subject to any financing conditions and is expected to close in the third calendar quarter of 2008. This agreement is an essential and positive development for Infogrames and its shareholders. It brings Atari fully under the control of Infogrames, delivering a platform for future growth in the U.S. This step closely follows a series of recent major restructuring actions implemented in an effort to reposition Atari, streamline its corporate structure and reduce its annualized costs, including costs related to being a US public company. The Board of Infogrames believes that full ownership of a restructured Atari is an important step for the Group, leading to a simplified operating structure that will deliver greater efficiency, provide the Group with greater opportunities to expand its US distribution capabilities and strengthen its platform for its global online initiatives. "Bringing Atari US and Infogrames businesses together will enable us to create a simplified global structure for our business as we seek to re-build a well-managed, cohesive and financially disciplined company," David Gardner, CEO, Infogrames, said. "This is a key strategic event for Infogrames that will benefit all of our shareholders. I believe that this transaction will generate significant benefits for the Group." The management of Atari, Inc., led by recently appointed President and CEO, Jim Wilson, will join the Group upon the closing of the transaction and remain focused on growing the key North American gaming market. "By joining Infogrames, we will have the opportunity to further transform Atari," Mr. Wilson said. "As part of this newly integrated company, we will be better able to streamline operations and have a stronger platform for growth in North America." The transaction was negotiated and approved by the Special Committee of the Board of Directors of Atari, consisting entirely of directors who are independent of Infogrames. In approving and recommending the merger transaction, the Special Committee considered, among other things, the terms of the merger agreement, which permits the Special Committee to terminate the agreement under certain circumstances, Atari's financial position and results of operations, general market and industry conditions, the risks of implementing Atari's business plan, Atari's limited liquidity and the limited range of options available to Atari. The Special Committee also considered the effects of Infogrames' controlling interest, the risk that the transaction will not be completed, the premium to Atari's share price 30 days prior to the date of Infogrames' offer, and the willingness of Infogrames to extend a loan of up to $20 million to Atari to cover expected capital requirements. The transaction is subject to a number of customary conditions, including the approval of the holders of a majority of outstanding shares. Atari expects to call a special meeting of shareholders to consider the merger in the third quarter of calendar 2008. Since Infogrames controls a majority of Atari's outstanding shares, Infogrames has the power to approve the transaction without the approval of Atari's other shareholders. In connection with the transaction, Infogrames has committed to lend Atari $20 million, subject to the terms and conditions of the credit agreement between Atari and Infogrames. This loan will be used to fund Atari's operational cash requirements during the period between the date of the merger agreement and its closing. About Atari Inc. Headquartered in New York, Atari Incorporated, (NASDAQ: ATAR) -- http://www.atari.com/-- publishes and distributes interactive entertainment software in the U.S. The company's 1,000+ published titles distributed by the company include hard-core, genre- defining franchises such as Test Drive(R); and mass-market and children's franchises such Dragon Ball Z(R). Atari Inc. is a majority-owned subsidiary of France- based Infogrames Entertainment SA, an interactive games publisher in Europe. As reported in the Troubled Company Reporter on Feb. 20, 2008, Atari Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $43.5 million in total assets and $60.3 million in total liabilities, resulting in a $16.8 million total stockholders' deficit. Going Concern Doubt New York-based Deloitte & Touche LLP expressed substantial doubt about Atari's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2007. The auditing firm pointed to the company's significant operating losses. As reported in the Troubled Company Reporter on March 28, 2008, Atari Inc. received a Staff Determination Letter from the Nasdaq Listing Qualifications Department stating that Atari Inc. has not gained compliance with the requirements of Nasdaq Marketplace Rule 4450(b)(3), and that its securities are therefore subject to delisting from The Nasdaq Global Market. On Dec. 21, 2007, the Nasdaq Listing Qualifications Department notified Atari Inc. that, pursuant to Nasdaq Marketplace Rule 4450(e)(1), unless the market value of Atari Inc.'s publicly held shares, which is calculated by reference to Atari Inc.'s total shares outstanding, less any shares held by officers, directors or beneficial owners of 10% or more, maintains an aggregate market value of $15 million or more for a minimum of 10 consecutive business days prior to March 20, 2008, Atari Inc.'s securities would be subject to delisting. As disclosed on March 21, 2008, the forbearance period granted by BlueBay High Yield Investments (Luxembourg) S.A.R.L., the lender under Atari's senior secured credit facility, has expired and Atari is currently in discussions with BlueBay with respect to, among other things, an extension of the forbearance period. AVENTINE RENEWABLE: Liquidity Issues Cue S&P to Affirm 'B+' Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on ethanol producer Aventine Renewable Energy Holdings Inc. At the same time, S&P placed the rating on CreditWatch with negative implications. The company currently has 207 million gallons of annual production capacity, with an additional 226 million gallons per year of capacity in construction. Marketing alliances, along with purchase and re- sale activities, supplement the core revenues from equity production. The rating action is a result of the continued illiquidity of the auction rate securities markets in which Aventine has about $127.1 million invested. The write-down has not affected the company's cash position, and gross revenues have improved over the last quarter. However, the repeated failures of the monthly auctions for various student loan asset-backed securities have prevented the company from closing its position in these securities, resulting in a liquidity shortfall in the midst of continued construction of two new facilities in Aurora, Nebraska and Mt. Vernon, Indiana Aventine is currently exploring options to access additional capital. "We believe that the majority of these options--along with those we think Aventine is most likely to pursue--could have negative implications for credit quality," said Standard & Poor's credit analyst Justin Martin. Aventine is still pursuing its expansion plans as construction continues on the Aurora and Mt. Vernon dry-mill plants, each with annual capacity of 113 mmgpy. The company's liquidity position remains tight during this build-out as the auction rate securities market in which it has invested continues to experience failed auctions. The maximum rate paid on the SLABS reduces the negative carry on the unsecured notes. However, Aventine needs access to the principal to pay for continued construction costs. It is exploring several financing options. First-quarter results saw Aventine's realized ethanol price increase by about 27 cents per gallon over the previous quarter, outpacing the corn price increase (11 cents per gallon) for improved EBITDA of $21.6 million for the quarter (versus $49 million for all of 2007). Aventine was able to use roughly $24 million in cash from operations for this period and $26 million from cash reserves for $50 million of construction costs. This leaves $250 million left to complete construction, with roughly $200 million of liquidity available ($74 million cash plus $130 million revolver availability), resulting in a $50 million shortfall barring additional cash from operations. Given the volatility of historical earnings, no credit is given for cash from operations in future quarters for the purpose of this analysis. To address the shortfall, Aventine is exploring several options, the majority of which Standard & Poor's views as likely to detract from credit quality. However, precise details of the options are not yet available, and the possibility of a credit-neutral solution still exists. S&P will resolve the CreditWatch when Aventine has determined a strategy for addressing its projected liquidity shortfall. If the solution results in additional leverage or increased obligations that significantly affect the break-even crush spreads, S&P could lower the rating. If Aventine can access capital on favorable credit terms or reduce liquidity needs without hurting long-term earnings potential, the outlook could be stabilized. BENAZZI CDO: Fitch Junks Ratings on Three Note Classes ------------------------------------------------------ Fitch has downgraded 3 classes of notes issued by Benazzi CDO 2005-1, Ltd., and removed them from Rating Watch Negative. These rating actions are effective immediately: -- $20,000,000 class A notes to 'CC' from 'AAA'; -- $50,000,000 class B notes to 'CC' from 'AA'; -- $30,000,000 class C notes to 'CC' from 'A'. Benazzi is a static synthetic collateralized debt obligation that closed on Dec. 14, 2005 and is managed by Barclays Bank, PLC. Benazzi has a portfolio comprised primarily of subprime residential mortgage-backed securities bonds (73%), Alternative-A (Alt-A) (9%), structured finance (SF) CDOs (7%)other structured finance assets. Subprime RMBS bonds of the 2005 and 2006 vintages account for approximately 72% and 1% of the portfolio, respectively. Likewise, the SF CDO exposure includes SF CDO originated in 2005 (7%). Alt-A RMBS bonds issued in 2005 represent approximately 9% of the portfolio. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS, Alt-A RMBS, and SF CDOs with underlying exposure to subprime RMBS. Since the beginning of 2007, approximately 78% of the portfolio has been downgraded, with 7% of the portfolio currently on Rating Watch Negative. The negative credit migration started in the second half of 2007 and has continued through the present. The ratings address the timely receipt of interest and ultimate receipt of principal. The ratings are based upon the credit quality of the reference portfolio, the financial strength of Barclays as the swap counterparty, the credit quality of the collateral assets and the legal structure of the transaction. Fitch will continue to monitor and review this transaction for future rating adjustments. BERNOULLI HIGH: Fitch Lowers Ratings on Six Note Classes -------------------------------------------------------- Fitch downgraded six classes of notes issued by Bernoulli High Grade CDO I, Ltd./Inc. These rating actions are effective immediately: -- $880,448,158 class A-1A notes downgraded to 'B' from 'AAA' and remain on Rating Watch Negative; -- $358,463,312 class A-1B notes downgraded to 'A' from 'AAA' and placed on Rating Watch Negative; -- $86,536,865 class A-2 notes downgraded to 'CCC' from 'AAA' and removed from Rating Watch Negative; -- $57,691,244 class B notes downgraded to 'CC' from 'AA' and removed from Rating Watch Negative; -- $14,648,712 class C notes downgraded to 'C' from 'A' and removed from Rating Watch Negative; -- $14,719,804 class D notes downgraded to 'C' from 'BBB' and removed from Rating Watch Negative. Bernoulli is a static hybrid cash and synthetic collateralized debt obligation that closed on March 30, 2006 and is monitored by Babcock & Brown Securities Pty, Ltd. Bernoulli has a portfolio comprised of subprime residential mortgage-backed securities bonds (36.5%), structured finance CDOs (32.1%), Alternative-A RMBS (27.1%), and prime RMBS (4.3%). Subprime RMBS bonds of the 2005 and 2006 vintages account for approximately 32.6%, and 3.9% of the portfolio, respectively. SF CDO exposure includes SF CDOs originated in 2004 (18%), 2005 (11.7%) and 2006 (2.4%) and Alt-A RMBS of the 2005 and 2006 vintages represent approximately 13.3% and 13.8% of the portfolio, respectively. Approximately 75% of the assets are owned as cash bonds, with the remaining 25% referencing SF CDOs via credit default swaps. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS, Alt-A RMBS and SF CDOs with underlying exposure to subprime RMBS. Since the last review on May 18, 2007, approximately 56.5% of the portfolio has been downgraded, with 34.7% of the portfolio currently on Rating Watch Negative. Approximately 28.4% of the portfolio is now rated below investment grade. According to the March 28, 2008 trustee report, the weighted average rating factor is 5.1 ('BBB/BBB-'), failing its covenant of 1.4 ('AA-/A+'), and approximately $12 million of the portfolio is considered defaulted. The class A/B coverage test is failing at 99.7% compared to a trigger of 101.69%, causing the class C and D notes to pay-in- kind. Considering that the class B notes are undercollateralized, it is unlikely the A/B coverage test will cure in the future, and therefore unlikely that the class C and D notes will receive any payments going forward. Fitch believes that the portion of the portfolio rated 'AAA' and 'AA', 20.5% and 28% respectively, provides enough credit enhancement to the class A-1B notes to maintain an investment grade rating. The class A-1B notes are viewed as the most senior class in the capital structure. The Rating Watch Negative reflects the continued credit deterioration in subprime RMBS and SF CDOs with underlying exposure to subprime RMBS, as well as growing concerns with the performance of Alt-A RMBS. The classes rated 'CCC' and below are removed from Rating Watch as Fitch believes further negative migration in the portfolio will have a lesser impact on these classes. Additionally, Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. The ratings of the class A-1A, A-1B, A-2 and B notes address the likelihood that investors will receive full and timely payments of interest, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class C and D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. BI-LO LLC: Weak Performance Cues S&P to Revise Outlook to Neg. -------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on Greenville, South Carolina-based BI-LO LLC to negative from stable. The 'B' corporate credit rating remains unchanged. "The outlook revision reflects operating performance that weakened in the second half of fiscal year 2007," said Standard & Poor's credit analyst Jackie E. Oberoi, "leading to credit metrics that are now weak for the rating." Leverage, for example, is now in the mid-5x range. BLOUNT INTL: Acquires Carlton Holdings for $63,000,000 ------------------------------------------------------ Blount International Inc. acquired all the capital stock of Carlton Holdings Inc. from its private shareholders. Blount paid approximately $63 million in net consideration for the stock, funded through the company's revolving credit facility. "The acquisition of Carlton is consistent with our intention to invest in and grow our core business, the Outdoor Products segment," James Osterman, Blount's chairman and CEO, said. "The added capacity and potential operating synergies of the combined entities make Carlton an attractive asset to own. "Carlton's strengths in international markets where over 80% of their sales take place, fits well with our expansion plans and the additional capacity will accelerate the opportunities to take advantage of the weakened U.S. dollar in trading," Mr. Osterman added. About Carlton Holdings Inc. Located in Milwaukie, Oregon, Carlton Holdings Inc. is a manufacturer of saw chain. Carlton employs approximately 400 employees, most at its Oregon manufacturing facility, and distributes the majority of its products to international markets. The company was founded in 1963. About Blount International Blount International Inc. (NYSE: BLT) -- http://www.blount.com/-- is a diversified international company operating in two principal business segments: Outdoor Products and Industrial and Power Equipment. The company's Outdoor Products segment provides chain, bars and sprockets to the chainsaw industry, accessories to the lawn care industry and concrete cutting saws. As reported in the Troubled Company Reporter on April 29, 2008, Blount International Inc.'s balance sheet at Dec. 31, 2007, showed total assets of $411.9 million and total liabilities of $466.0 million, resulting in a total shareholders' deficit of $54.1 million. BRODERICK CDO: Poor Collateral Cues Fitch to Downgrade Ratings -------------------------------------------------------------- Fitch downgrades six classes of notes issued by Broderick CDO 1 Ltd. These rating actions are effective immediately: -- $238,526 class A-1V notes downgraded to 'B' from 'AAA' and remain on Rating Watch Negative; -- $338,468,979 class A-1NVA notes downgraded to 'B' from 'AAA' and remain on Rating Watch Negative; -- $462,741,239 class A-1NVB notes downgraded to 'B' from 'AAA' and remain on Rating Watch Negative; -- $81,650,000 class A-2 notes downgraded to 'CC' from 'AAA' and removed from Rating Watch Negative; -- $41,304,634 class B notes downgraded to 'CC' from 'AA' and removed from Rating Watch Negative; -- $21,642,610 class C notes downgraded to 'C' from 'BBB' and removed from Rating Watch Negative. Broderick is a cash collateralized debt obligation that closed on Dec. 13, 2005, and is managed by SCM Advisors LLC. Broderick's substitution period ended on April 3, 2008. The portfolio is comprised primarily of subprime residential mortgage-backed securities bonds (44.3%), Alternative-A RMBS (30.4%), and structured finance CDOs (15.5%). Subprime RMBS, Alt-A RMBS and SF CDO bonds originated in 2005 account for approximately 42.4%, 30.2%, and 10.8% of the portfolio, respectively. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically in subprime RMBS, Alt-A RMBS, and SF CDOs with underlying exposure to subprime RMBS. Since the beginning of 2007, approximately 40.6% of the portfolio has been downgraded, and 19.2% of the portfolio is currently on Rating Watch Negative. Approximately 25.1% of the portfolio is now rated below investment grade. The negative credit migration is primarily attributable to credit deterioration in subprime RMBS and SF CDO bonds from the 2005 vintage. While the most recent trustee report from March 25, 2008 shows that the class A/B overcollateralization test is passing at 102.7% compared to a trigger of 102.01%, Fitch expects the test to be failing now due to additional downgrades in the portfolio. Based on this expectation, the class C notes are unlikely to receive any interest or principal payments going forward. The Rating Watch Negative reflects the continued credit deterioration in subprime RMBS and SF CDOs with underlying exposure to subprime RMBS, as well as growing concerns with the performance of Alt-A RMBS. The classes rated 'CCC' and below are removed from Rating Watch as Fitch believes further negative migration in the portfolio will have a lesser impact on these classes. Additionally, Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. The ratings of the class A-1N, A-1NVA, A-1NVB, A-2 and B notes address the likelihood that investors will receive full and timely payments of interest, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class C notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. BSML INC: Andrew Rudnick Resigns as CEO and Board Chairman ---------------------------------------------------------- Andrew Rudnick resigned as the Chief Executive Officer and Chairman of BSML, Inc., effective April 25, 2008. In connection with Mr. Rudnick's resignation, the company and Mr. Rudnick entered into a Separation and Release of Claims Agreement, effective as of April 25, 2008. The company and Sleek Inc., an entity controlled by Mr. Rudnick, also entered into an Amended and Restated Support Services Agreement, which amended and restated a prior agreement dated Dec. 6, 2007. Pursuant to the Separation Agreement, the company agreed to pay Mr. Rudnick a total of $495,000 in severance pay as follows: (1) $72,500 on the effective date of the Agreement; (2) $72,500 on the first to occur of: (i) thirty (30) days after the Effective Date or (ii) that date that BSML receives $1 million in equity financing from its new CEO or his affiliates; and (3) $350,000 paid by the company to Rudnick over a 12 month period in accordance with the company's payroll practices in effect as of the effective date of the Separation Agreement, the first payment to commence on that date which is sixty days after the effective date and continue each month thereafter until paid in full. Additionally, the company agreed to pay to Sleek $50,105 upon execution of the Separation Agreement by Mr. Rudnick, which sum constituted advance payment for the support services Sleek agreed to provide to the company under the Amended Services Agreement during his term. The company and Rudnick agreed that in the event that Sleek determines, in Sleek's reasonable opinion, that the cost of the support services Sleek provides to the Company under the Amended Support Services Agreement for the applicable period exceeds $50,105, the company will promptly pay Sleek such additional amounts once invoiced by Sleek. Mr. Rudnick and Sleek acknowledged and agreed that Sleek had already received payment from the company for the support services Sleek provided BSML through April 18, 2008. In consideration of the company's entering into the Separation Agreement, Mr. Rudnick and Sleek, as applicable, agreed that Mr. Rudnick's Employment Agreement is terminated and of no further force or effect provided, however, that Section 7(o) of the Employment Agreement will survive and remain in full force and effect. Mr. Rudnick also agreed, on behalf of Sleek, to provide consulting services to the Company after the execution of the Separation Agreement pursuant to the Amended Services Agreement. Amended Services Agreement The Amended Services Agreement modified and restated a prior Support Services Agreement between the company and Sleek dated Dec. 6, 2007. Pursuant to the Amended Services Agreement, Sleek agreed to provide these services: (i) marketing advice, consulting and strategy for all products and services offered by the customer; (ii) fulfillment of all product requirements; (iii) training of the Customer's personnel; (iv) timely billing to and collecting from all customers, and accounts receivable; (v) cash management; (vi) personnel management; (vii) timely preparation and filing of the customer's tax and regulatory returns and other necessary governmental filings; (viii) providing information technology services; (ix) providing data processing services; (x) maintenance of records in accordance with procedures mutually agreed upon by the parties; (xi) providing technical services for the Customer and its business; and (xii) call center management and operations. As consideration for providing the services, the company agreed to pay Sleek a monthly administrative fee equal to the aggregate of Sleek's actual costs, fees, expenses incurred by or on behalf of Sleek in connection with, or related to the provision of the Services under the Amended Services Agreement, including, without limitation, salaries, wages, and other compensation paid to employees -- excluding salary or other compensation paid to Andrew Rudnick -- and approved by Sleek to perform the Services, the cost of employee benefits attributable to such approved employees, communications, and any other operating expenses of Sleek. However, in no event will compensation paid to, and the costs of benefits attributable to, Sleek employees not approved by the Company be included in Base Costs. The Administrative Fee is to be paid on the first of every month following the month in which Sleek bills the company for Services during the term of the Amended Services Agreement. However, upon Execution of the Amended Services Agreement, the company paid the Administrative Fee through May 31, 2008, in the amount of $50,105. About BSML Inc. Based in Walnut Creek, California, BSML Inc. (NasdaqCM: BSML) -- http://www.britesmile.com/-- markets teeth whitening technology and manages BriteSmile Professional Teeth Whitening Centers. Going Concern Doubt Stonefield Josephson, Inc., raised substantial doubt about the ability of BSML, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 29, 2007. BSML INC: Appoints Jeffrey Nourse as New Chief Executive -------------------------------------------------------- The Board of Directors of BSML, Inc., appointed Jeffrey Nourse as its chief executive officer effective as of April 25, 2008, to replace Andrew Rudnick. The company's Board of Directors also appointed Anthony M. Pilaro as the company's Chairman of the Board of Directors. The Board also appointed Mr. Nourse as a Director of the company. Jeffrey Nourse, 41, is a successful entrepreneur with a long career with retail growth companies. From 1985 to 2001, Mr. Nourse was the founder and CEO of Canada's largest wholesale auto body supply centers. From 2002 to the present, he was the founder and CEO of the second largest med spa company in North America. The company will provide information regarding Mr. Nourse's compensation once it has been finalized. Mr. Pilaro had previously served as the Chairman of the company's Board of Directors since 1997 through February 2008. Presently, he serves as Chairman of CAP Advisers Limited, with offices in Dublin, Ireland, and which serves as a family office for the business affairs of the Pilaro family. He is also founder and Chairman of Excimer Vision Leasing L.P., a partnership primarily engaged in the business of leasing Excimer laser systems. Mr. Pilaro was Chairman of both CAP and Excimer Vision Leasing for the last 5 years except for the period from August 2004 to February 2005. Mr. Pilaro has been involved in private international investment banking. He was a Founding Director and former Chief Executive Officer of Duty Free Shoppers Group Limited, the world's leading specialty retailer catering to international travelers, and a founder of the predecessor of VISX, Inc. A graduate of the University of Virginia and the University of Virginia Law School, Mr. Pilaro practiced law in New York City through 1964. About BSML Inc. Based in Walnut Creek, California, BSML Inc. (NasdaqCM: BSML) -- http://www.britesmile.com/-- markets teeth whitening technology and manages BriteSmile Professional Teeth Whitening Centers. Going Concern Doubt Stonefield Josephson, Inc., raised substantial doubt about the ability of BSML, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 29, 2007. BUCHANAN ENTITIES: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Buchanan Entities, LLC 20 Beech Lane Tarrytown, NY 10591 Bankruptcy Case No.: 08-22596 Chapter 11 Petition Date: April 28, 2008 Court: Southern District of New York (White Plains) Debtor's Counsel: Jonathan S. Pasternak, Esq. Email: jsp@rattetlaw.com Rattet, Pasternak & Gordon Oliver, LLP 550 Mamaroneck Ave., Ste. 510 Harrison, NY 10528 Tel: (914) 381-7400 Fax: (914) 381-7406 http://www.rattetlaw.com Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. C-BASS CBO: Fitch Slashes AA Rating to CCC on $29 Million Notes --------------------------------------------------------------- Fitch Ratings has downgraded four classes of notes issued by C-BASS CBO XIV Ltd. and one class of notes remains on Rating Watch Negative. These rating actions are effective immediately: -- $336,999,562 class A notes downgraded to 'B' from 'AAA' and remains on Rating Watch Negative; -- $29,000,000 class B notes downgraded to 'CCC' from 'AA' and removed from Rating Watch Negative; -- $30,000,000 class C notes downgraded to 'CC' from 'A' and removed from Rating Watch Negative; -- $17,060,000 class D notes downgraded to 'C' from 'BBB' and removed from Rating Watch Negative. C-BASS XIV is a collateralized debt obligation that closed on Sept. 22, 2005 and has a static portfolio that was selected by C-BASS Investment Management, LLC. C-BASS XIV has a portfolio comprised primarily of subprime residential mortgage-backed securities bonds (65.6%), Alternative-A (Alt-A) RMBS (17.5%), and other diversified structured finance assets. Subprime RMBS bonds of the 2005 vintage account for approximately 60.5% of the portfolio. Alt-A RMBS bonds of the 2005 vintage represent approximately 13.2% of the portfolio. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS. Since the beginning of 2007 approximately 53.1% of the portfolio has been downgraded, and 4.7% of the portfolio is currently on Rating Watch Negative. The negative credit migration is primarily attributable to credit deterioration in subprime RMBS bonds from the 2005 vintage. As of the March 31, 2008 trustee report approximately $26.1 million (5.9%) of the portfolio, consisting of subprime RMBS assets, was considered to be defaulted. As a result of the collateral deterioration, C-BASS XIV is currently failing its class C and class D overcollateralization tests. The Rating Watch Negative reflects the continued credit deterioration in subprime RMBS, as well as growing concerns with the performance of Alt-A RMBS. Additionally, Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. The ratings of the class A and class B notes address the likelihood that investors will receive full and timely payments of interest, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class C and class D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. CALAMOS INVESTMENTS: To Refinance $300MM of Preferred Stocks ------------------------------------------------------------ Calamos Investments intends to refinance $300 million of the outstanding auction rate preferred securities issued by the Calamos Global Dynamic Income Fund. The company relates that this transaction comes a week after Calamos disclosed the refinancing of an aggregate of $939 million of outstanding ARPs of the Calamos Global Total Return Fund and the Calamos Strategic Total Return Fund. "We have stressed all along that we would work rapidly to secure solutions to the recent liquidity crisis in the ARPs market," said John P. Calamos, Sr., the chairman, chief executive officer and co-chief investment officer of Calamos Investments. "We are committed to seeing this issue through to a successful resolution across our entire fund complex, and we want our fund shareholders to know that we have been and will continue to focus on finding solutions for all of our closed-end fund shareholders." Calamos has secured an alternative form of borrowing that will enable, based on current market conditions, CHW to redeem approximately 85.7% or $300 million of its outstanding ARPs at their par value. The refinancing comes in the form of the first money market eligible extendible note to be issued by a closed-end fund. This refinancing, together with the previous refinancings of CGO and CSQ, represents $ 1.239 billion or approximately 53.8% of the total auction rate preferred outstanding in the five Calamos closed-end funds. Upon completion of the refinancing, which has been approved by the board of trustees of CHW, the leverage ratio for the fund is not expected to change materially and the funds will continue to meet the asset coverage requirements of the Investment Company Act of 1940. Since the amount of refinancing for CHW is less than the total amount outstanding, this refinancing will take place pro rata by auction series. It is important to note that the Depository Trust Company, the securities' holder of record, will determine how to allocate this partial redemption of shares among each participant broker-dealer account. Each participant broker-dealer, as nominee for underlying beneficial owners, in turn will determine how redeemed shares are allocated among its beneficial owners. The date will show the shares outstanding per series and the number that the fund will redeem via this refinancing: a) CHW Auction Series: Monday CUSIP: 12811L206 Shares to be redeemed/outstanding: 2,400/2,800 Redemption Percent: 85.7 % Redemption Amount: $60,000,000 b) CHW Auction Series: Tuesday CUSIP: 12811L305 Shares to be redeemed/outstanding: 2,400/2,800 Redemption Percent: 85.7 % Redemption Amount: $60,000,000 c) CHW Auction Series: Wednesday CUSIP: 12811L404 Shares to be redeemed/outstanding: 2,400/2,800 Redemption Percent: 85.7 % Redemption Amount: $60,000,000 d) CHW Auction Series: Thursday CUSIP:12811L503 Shares to be redeemed/outstanding: 2,400/2,800 Redemption Percent: 85.7 % Redemption Amount: $60,000,000 e) CHW Auction Series: Friday CUSIP: 12811L602 Shares to be redeemed/outstanding: 2,400/2,800 Redemption Percent: 85.7 % Redemption Amount: $60,000,000 The fund expects to begin issuing redemption notices in the next several days and redemptions will coincide with the completion of the refinancing transaction. About Calamos Investments Headquartered in Naperville, Illinois, Calamos Investments -- http://www.calamos.com-- is a diversified investment firm offering equity, fixed-income, convertible and alternative investment strategies, among others. The firm serves institutions and individuals via separately managed accounts and a family of open-end and closed-end funds, providing a risk-managed approach to capital appreciation and income-producing strategies. CATHOLIC CHURCH: Fairbanks' Creditors Wants Pachulski as Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of the Catholic Bishop of Northern Alaska, aka The Roman Catholic Diocese of Fairbanks in Alaska, sought authority from the U.S. Bankruptcy Court for the District of Alaska to retain Pachulski Stang Ziehl & Jones LLP as its counsel. As counsel to the Creditors Committee, Pachulski will: a. assist, advise and represent the Creditors Committee in its consultations with the Diocese regarding the administration of the Diocese's Chapter 11 case; b. assist, advise and represent the Creditors Committee in analyzing the Diocese's assets and liabilities, investigate the extent and validity of liens and participate in and review any proposed asset sales, any asset dispositions, financing arrangements and cash collateral stipulations or proceedings; c. assist, advise and represent the Creditors Committee in any manner relevant to reviewing and determining the Diocese's rights and obligations under leases and other executory contracts; d. assist, advise and represent the Creditors Committee in investigating the acts, conduct, assets, liabilities and financial condition of the Diocese, the Diocese's operations and the desirability of the continuance of any portion of those operations, and any other matters relevant to the Chapter 11 case or to the formulation of a plan; e. assist, advise and represent the Creditors Committee in its participation in the negotiation, formulation and drafting of a plan of liquidation or reorganization; f. advise the Creditors Committee on the issues concerning the appointment of a trustee or examiner under Section 1104 of the Bankruptcy Code; g. assist, advise and represent the Creditors Committee in understanding its powers and its duties under the Bankruptcy Code and the Bankruptcy Rules and in performing other services as are in the interests of those represented by the Creditors Committee; h. assist, advise and represent the Creditors Committee in the evaluation of claims and on any litigation matters, including avoidance actions; and i. provide other services to the Creditors Committee as may be necessary in the Chapter 11 case. Pachulski and the Creditors Committee agreed that: (a) no retainer will be paid to the Firm; (b) neither the Creditors Committee nor any of its member will be liable for any fees or costs incurred by the Firm; (c) the Firm will charge a blended hourly rate of: -- $480 for partners and counsel attorneys, -- $350 for associates, and -- $180 for paralegal services; and (d) the Firm will seek reimbursement of expenses at its cost or as otherwise allowed by the Court. The Firm received $35,000 from the Diocese before the commencement of the bankruptcy case for fees and expenses related to the representation of a prepetition unofficial committee. Of the $35,000, $10,000 was forwarded to David Bundy, local counsel for the prepetition unofficial committee. James I. Stang, Esq., a partner at Pachulski Stang Ziehl & Jones LLP, assured the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's exclusive plan filing period expires on June 29, 2008. (Catholic Church Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Fairbanks' Creditors Wants Bundy as Co-Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors of the Catholic Bishop of Northern Alaska, aka The Roman Catholic Diocese of Fairbanks in Alaska, sought authority from the U.S. Bankruptcy Court for the District of Alaska to retain David H. Bundy as assistant counsel to Pachulski Stang Ziehl & Jones LLP. The Creditors Committee has decided to retain David Bundy since he has extensive experience in bankruptcy representation. Mr. Bundy is expected to assist the Creditors Committee and Pachulski in the Diocese's Chapter 11 case. Mr. Bundy will charge $300 per hour and will seek reimbursement of expenses as allowed by the Court. Mr. Bundy received $10,000 from the Diocese before the commencement of the case for fees and expenses related to the representation of a prepetition unofficial committee. Mr. Bundy assured the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's exclusive plan filing period expires on June 29, 2008. (Catholic Church Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CHALLENGER POWERBOATS: Auditor Raises Going Concern Doubt --------------------------------------------------------- Jaspers + Hall PC raised substantial doubt on the ability of Challenger Powerboats Inc. to continue as a going concern after auditing the company's annual report for 2007. The auditor pointed to the company's current liabilities that exceed current assets by $1,722,562 as of Dec. 31, 2007. The auditor said that the company had operating losses of $7,046,691 and $5,211,514 in 2007 and 2006, respectively and has ceased operations. The auditor continued that the company's recurring losses from operations and its difficulties in generating sufficient cash flow to meet its obligation and sustain its operations. For the year ended Dec. 31, 2007, the company generated net revenues of $7,399,703, as compared to net revenues of $238,171 for the year ended Dec. 31, 2006. During 2007, the major change in its business which impacted revenues was primarily due to the addition of IMAR, which we acquired in January 2007. The company had a net loss of $4,656,940 for the 12 months ended Dec. 31, 2007, as compared to $9,133,144 for the 12 months ended Dec. 31, 2006. The year-over-year net loss decreased primarily due to the sale of the Sugar Sand product line to Execute Sports, Inc for $5,000,000 in August 2007. Liquidity and Capital Resources As of Dec. 31, 2007, the company had total current assets of $2,769,550, compared to $1,991,808 as of Dec. 31, 2006. This was due primarily to an increase in accounts receivable and inventory as a result of the acquisition of IMAR Group, LLC. As of Dec. 31, 2007, the company had total current liabilities of $4,492,112, compared to $5,983,083, as of Dec. 31, 2006. This was due primarily to a $1,872,216 increase in accounts payable and accrued payables, a $510,877 increase in warranty reserve which were offset with a $722,125 decrease in accrued interest as a result of the Sept. 30, 2007 debt conversion, as well as a $2,976,054 reduction of related party debt to Dutchess. During 2007, the company did not issue any promissory notes to related parties. As of Dec. 31, 2007, a total of $0 was owed to related parties for promissory notes. The outstanding balances of $3,083,454 on related party promissory notes were included in the Sept. 30, 2007 Series A Convertible Preferred Stock Purchase Agreement with Dutchess. As of Dec. 31, 2007, the company had debt of $11,301,142, including convertible debentures which total $3,725,041. The company accrue monthly interest expense on the debt under its convertible debentures, which are due in 2009, 2010, 2011 and 2012. As of Dec. 31, 2007, the company's balance sheet showed total assets of $6,408,050, total liabilities of $11,301,142, and total stockholders' deficit of $4,893,092. Management's Analysis and Financial Warning According to the company's management, Challenger Powerboats did not generate positive cash flows and is required to make large debt service payments. Consequently, the company continues to require additional funding at this time. It may be able to secure funding from current investors, but there is no assurance it will be able to do so. If the company is unable to generate sufficient cash flow or obtain funds for required payments, or if it fails to comply with the covenants in its debt, the company will be in default. Accordingly, it may not be able to able to meet its debt service obligations and may be forced to consider alternative strategies, including ceasing its operations. Further, on March 17, 2008, the company was required to layoff 58 of its 84 employees due to a slowdown in its operations. A full-text copy of the company's annual 2007 report is available for free at http://ResearchArchives.com/t/s?2b73 About Challenger Powerboats Washington, Missouri-based Challenger Powerboats Inc. (OTC: CPBI) -- http://www.challengerpowerboats.com/-- designs and manufactures boats, family sport cruisers, jet boats and water ski tow boats under the brands Challenger Powerboats, Sugar Sand and Gekko. The company is a design-to-manufacturing organization, creating or licensing designs, and creating tooling, molds, and parts necessary to assemble its products in-house. The company markets its products through a dealer network comprising more than 100 dealers throughout the United States, Canada, Mexico, Europe, Australia, the Middle East and Japan. On Jan. 1, 2007, the company acquired International Marine and Recreation, and Gekko Sports Corporation. CHALLENGER POWERBOATS: Files Chapter 7 Petition in Missouri ----------------------------------------------------------- On April 25, 2008, Challenger Powerboats, Inc., and its wholly owned subsidiaries, IMAR Group, LLC and Marine Holdings, Inc., each filed voluntary petitions for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Missouri, case numbers 08-42946- 705, 08-42948-705 and 08-42950-705, respectively. Judge Albert L. Rendlen has been assigned to the cases. E. Rebecca Case was appointed bankruptcy trustee for all three entities on the Petition Date. In connection with the filings, the company has ceased all business activity and operations. The company believes that its assets will be insufficient to satisfy the claims of all creditors and it is unlikely that the company's shareholders will be eligible to participate in any distributions of the company's assets as a result of the Bankruptcy. Upon liquidation, the company will cease operations and wind up its business. Resignation and Layoffs On April 24, 2008, Mr. Michael Novielli resigned effective immediately as a Director of Challenger Powerboats. Mr. Novielli's resignation letter did not reference a disagreement with the company on any matter relating to the company's operations, policies and practices. On April 24, 2008, Mr. Douglas Leighton resigned effective immediately as a Director of the company. Mr. Leighton's resignation letter did not reference a disagreement with the company on any matter relating to the company's operations, policies and practices. On April 18, 2008, Challenger Powerboats laid off all but three employees and one contract laborer at its manufacturing facilities in Washington, Missouri, which manufactured the company's decks and hulls for the Challenger and Gekko boats. In addition to the layoffs at its Missouri facility, the company also laid off all but two employees at its manufacturing facilities in Fargo, North Dakota, which manufactured the company's decks and hulls for the Sugar Sand boats. From March 17, 2008 through April 18, 2008, the company has laid off approximately 79 of its 84 employees due to a slowdown in the company's operations. About Challenger Powerboats Washington, Missouri-based Challenger Powerboats Inc. (OTC: CPBI) -- http://www.challengerpowerboats.com/-- designs and manufactures boats, family sport cruisers, jet boats and water ski tow boats under the brands Challenger Powerboats, Sugar Sand and Gekko. The company is a design-to-manufacturing organization, creating or licensing designs, and creating tooling, molds, and parts necessary to assemble its products in-house. The company markets its products through a dealer network comprising more than 100 dealers throughout the United States, Canada, Mexico, Europe, Australia, the Middle East and Japan. On Jan. 1, 2007, the company acquired International Marine and Recreation, and Gekko Sports Corporation. CHASEFLEX: Moody's Junks Ratings on Four Loan Classes ----------------------------------------------------- Moody's Investors Service has downgraded the ratings of 24 tranches from 3 Alt-A transactions issued by ChaseFlex. Twelve tranches remain on review for possible further downgrade. Additionally, 2 tranches were placed on review for possible downgrade, and the rating on one tranche was confirmed. The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, Alt-A mortgage loans. The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions are a result of Moody's on-going review process. Complete rating actions are: Issuer: ChaseFlex Trust Series 2007-2 -- Cl. M-5, Downgraded to A3 from A2 -- Cl. M-6, Downgraded to Baa2 from A3 -- Cl. B-1, Downgraded to Ba3 from Baa1 -- Cl. B-2, Downgraded to B1 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. B-3, Downgraded to B2 from Baa3; Placed Under Review for further Possible Downgrade Issuer: ChaseFlex Trust Series 2007-3 -- Cl. II-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. II-M1, Downgraded to A2 from Aa1 -- Cl. II-M2, Downgraded to Baa2 from Aa2 -- Cl. II-M3, Downgraded to Ba3 from Aa3 -- Cl. II-M4, Downgraded to B1 from A2; Placed Under Review for further Possible Downgrade -- Cl. II-M5, Downgraded to B1 from A3; Placed Under Review for further Possible Downgrade -- Cl. II-M6, Downgraded to B2 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. II-B1, Downgraded to B2 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. II-B2, Downgraded to Ca from Ba1 Issuer: ChaseFlex Trust Series 2007-M1 -- Cl. 1-A4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-M1, Downgraded to B1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. 1-M2, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. 1-M3, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. 1-M4, Downgraded to B3 from A1; Placed Under Review for further Possible Downgrade -- Cl. 1-M5, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. 1-M6, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. 1-B1, Downgraded to Ca from Ba1 -- Cl. 1-B2, Downgraded to Ca from Ba2 -- Cl. 2-M3, Confirmed at Aa3 -- Cl. 2-M6, Downgraded to Ba1 from Baa3 -- Cl. 2-B1, Downgraded to B1 from Ba2 -- Cl. 2-B2, Downgraded to Ca from Ba3 CLAIRE'S STORES: Poor Performance Cues S&P to Junk Note Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Pembroke Pines, Florida-based Claire's Stores Inc. to 'B-' from 'B'. At the same time, S&P lowered the ratings on the company's $1.65 billion senior secured credit facilities to 'B' from 'B+', its $600 million senior unsecured notes to 'CCC+' from 'B-', and its $335 million senior subordinated notes to 'CCC' from 'CCC+'. The outlook is negative. "The downgrade reflects the poor performance over the past year, which was well below our expectations," said Standard & Poor's credit analyst David Kuntz. Claire's credit protection profile weakened modestly concurrently with the deterioration of operations. CHECKSMART FIN'L: Bill 545 Cues S&P to Put Rtngs. Under Neg. Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B' long-term counterparty credit rating on CheckSmart Financial Co. on CreditWatch with negative implications. The 'BB-' rating on CheckSmart's first-lien bank facility and the 'CCC+' rating on its second-lien bank facility are also on CreditWatch Negative. The CreditWatch listing follows the Ohio House of Representatives' passage of Bill 545 on April 30, 2008. In S&P's view, if this bill is passed by the State Senate and signed by the governor, it would severely restrict payday lending in Ohio. CheckSmart generates approximately 80% of its revenues from payday lending, and more than 50% of outstanding payday loans were to Ohio consumers at year-end 2007. "The CreditWatch listing reflects our view that that House Bill 545, if enacted into law, would render CheckSmart's almost 100 Ohio stores unprofitable, possibly necessitating their closure," said Standard & Poor's credit analyst Rian M. Pressman, CFA. (As of year-end 2007, CheckSmart had approximately 256 stores in 11 states.) As a consequence, CheckSmart's ability to service its bank facilities may be severely constrained. Ohio House Bill 545 would cap the allowable rate of interest on payday loans at 28% (quoted on an APR equivalent basis). This translates to less than $2.50 per $100 borrowed, significantly below the $12-$14 that S&P believe industry participants would have to charge to break even. In Ohio, payday lenders currently charge $15 per $100 borrowed. In addition, a consumer could not borrow more than $500, or 25% of the his monthly income; loan terms would be extended to 31 days from the customary two weeks; and consumers would be limited to four payday loans per year. If Ohio House Bill 545 or a similar bill passes the Ohio Senate and is signed by the governor, the ratings on CheckSmart and its bank facilities may be lowered by one notch or more. If this legislation does not become law and the economics of payday lending in Ohio remain essentially unchanged, the outlook will be changed back to stable. COBLESKILL BUSINESS: Case Summary & 12 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Cobleskill Business Park, LLC Mineral Springs Road Cobleskill, NY 12043 Bankruptcy Case No.: 08-11304 Type of Business: The Debtor owns and manages industrial real estate. Chapter 11 Petition Date: April 28, 2008 Court: Northern District of New York (Albany) Judge: Robert E. Littlefield Jr. Debtor's Counsel: Richard L. Weisz, Esq. Hodgson Russ LLP 677 Broadway Albany, NY 12207 Tel: (518) 465-2333 Email: Rweisz@hodgsonruss.com http://www.hodgsonruss.com/ Total Assets: $5,950,209 Total Debts: $1,978,823 Debtor's 12 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Marion Jones $84,000 P.O. Box 1524 Destin, FL 32540 Tel: (978) 697-6028 United Rentals $35,258 1401 Vischer Ferry Road Clifton Park, NY 12065 Tel: (518) 459-6174 BTS Staffing $33,294 49 S. Main St. Gloversville, NY 12078 Tel: (518) 725-7884 Waste Management of Eastern $32,391 NY National Grid $30,990 NYSEG $17,515 Sunbelt Rentals $13,132 Guernsey's Nurseries $9,681 Blue Cross Blue Shield of MA $8,754 Robert H. Finke & Sons, Inc. $8,010 Home Depot Credit Services $5,958 Law Offices of James $1,210 Stedronsky COLUMBIA RIVER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Columbia River Fish Farms, LLC P.O. Box 262 Coulee Dam, WA 99116 Bankruptcy Case No.: 08-01669 Chapter 11 Petition Date: April 28, 2008 Court: Eastern District of Washington (Spokane/Yakima) Judge: Frank L. Kurtz Debtor's Counsel: Kevin O'Rourke, Esq. Email: korourke@southwellorourke.com Southwell & O'Rourke 421 W. Riverside Ave., Ste. 960 Spokane, WA 99201 Tel: (509) 624-0159 Fax: (509) 624-9231 http://www.southwellorourke.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Fortune Bay Aquaculture $905,149 Conne River, NL AOH 1JO Land America Transnation $143,636 P.O. Box 2118 Omak, WA 98841 Trout Lodge, Inc. $98,228 P.O. Box 1290 Summer, WA 98390 Northern Fish Products, Inc. $49,396 C.O. Shull $29,979 Norcan Electrical Systems, $25,980 Inc. Glen Whitton Trucking $17,600 LeMaster & Daniels, PLLC $12,096 RPM Transport $12,000 Coulee House Inn & Suites $11,662 Commodity Forwarders, Inc. $9,317 ABD Insurance Services $9,300 Landau Associates $7,958 Brown Line, LLC $7,882 Don Kruse Electric, Inc. $7,652 Net Systems $7,503 K&D Freight $6,300 Unicel (Rural Cell) $4,004 Baker Commodities $4,000 North Cascades National Bank $3,715 COUNTRYWIDE FINANCIAL: BofA Undecided on How to Treat $38MM Debt ---------------------------------------------------------------- In a form S-4 filed with the U.S. Securities and Exchange Commission on April 30, 2008, Bank of America N.A. said that it has not made any decision with regards to guaranteeing or assuming $38 million of Countrywide Financial Corp.'s outstanding debt. The bank related in its filing that, as of Dec. 31, 2007, Countrywide had outstanding indebtedness of approximately $97.23 billion. This amount includes revolving credit facilities with an aggregate principal balance of approximately $11.48 billion, which Bank of America expects will be repaid upon closing of the merger. The amount also includes Federal Home Loan Bank advances to Countrywide Bank FSB of approximately $47.68 billion, which Bank of America expects will remain outstanding until repaid by Countrywide Bank. As part of its integration planning in connection with its merger with Countrywide, Bank of America is currently evaluating alternatives for the disposition of the remaining Countrywide indebtedness, including the possibility of redeeming, assuming or guaranteeing some or all of this debt, or allowing it to remain outstanding as obligations of Countrywide. The bank made clear in i