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 13, 2008, Vol. 12, No. 113 Headlines 210 WEST LIBERTY: Case Summary & Seven Largest Unsecured Creditors ACACIA CDO: Moody's Cuts Rating on $16MM Class C Notes to Caa1 AMBASSADOR STRUCTURED: Moody's Junks Rating on $13MM Class D Notes ARIAD PHARMA: March 31 Balance Sheet Upside-Down by $23.5 Million ARLO VI: Moody's Junks Ratings on Three Note Classes AURIGA CDO: Moody's Chips $975MM Notes Rating to B3 from Ba1 BIOVAIL CORP: S&P Puts 'BB' Corp. Credit Under Neg. CreditWatch BUFFETS HOLDINGS: Wants Court to Approve Incentive Plans BLACK GAMING: Increased Leverage Cues Moody's to Junk CF Rating BRODERICK CDO: Poor Credit Quality Cues Moody's to Cut Ratings BUFFETS HOLDINGS: Wants Court to Set July 21 as Claims Bar Date CABLEVISION SYSTEMS: March 31 Balance Sheet Upside-Down by $5 Bil. CAROLINA FIRST: Moody's Holds C- Rtng; Changes Outlook to Stable CARRIAGE HOMES: Case Summary & Four Largest Unsecured Creditors CENTRAL GARDEN: Earns $20.5 Million in 2nd Quarter Ended March 29 CHARMING SHOPPES: S&P's 'B+' Rating Unmoved by Crescendo Deal CHENIERE ENERGY: Liquidity Erosion Prompts S&P to Junk Rating CLARKE COLLEGE: Moody's Holds Ba1 Long-Term Rating on 1998 Bonds CLEAR CHANNEL: Extends Offer Date for 7.65% Senior Notes CONTIMORTGAGE HOME: Fitch Revises 'CCC/DR1' Rating to 'CCC/DR2' DAVIS SQUARE: Moody's Junks Ratings on Three Classes of Notes DELPHI CORP: Seeks to Raise Loan by $254 Mil. Amid Market Support DEUTSCHE ALT-A: Moody's Cuts Ratings to B2 on Two Loan Classes DIRECTV HOLDINGS: Fitch Puts 'BB+' Rating on $1BB Incremental Loan DUNHILL ABS: Moody's Cuts Aa2 Rating on $55MM Notes to Ba2 DUQUESNE CDO: Moody's Chips A2 Rating on $11.5MM Notes to Caa2 DURA AUTOMOTIVE: Confirmation Hearing Will Push Through on May 13 DURA AUTOMOTIVE: Johnson Electric Objects to Plan Confirmation EDUCATION RESOURCES: Fitch Withdraws 'D' Issuer Default Rating EINSTEIN NOAH: April 1 Balance Sheet Upside-Down by $29.1 Million ENTERCOM COMMS: S&P Holds 'BB-' Rating, Removes Negative Watch FIRST MARBLEHEAD: TERI Bankruptcy Causes $315MM Decrease in Value FORTIUS II: Moody's Slashes Ratings on Two Note Classes to Ca FREMONT GENERAL: Expects to File for Bankruptcy FRONTIER AIRLINES: Creditors Panel Taps Wilmer Cutler as Counsel FRONTIER AIRLINES: Gets Court Nod to Hire Davis Polk as Counsel FRONTIER AIRLINES: Can Employ Togut Segal as Conflicts Counsel FURLONG SYNTHETIC: EOD Occurrence Prompts Moody's to Chip Ratings GATEHOUSE MEDIA: S&P Places 'B+' Corp. Credit Under Negative Watch GCI INC: S&P Cuts Issuer Level Rating on Sr. Unsecured Debt to B GENTA INC: March 31 Balance Sheet Upside-Down by $4 Million GLACIER FUNDING: Moody's Downgrades Ratings on Six Note Classes G SQUARE: Moody's Junks Ratings on Two Note Classes HEREFORD STREET: Moody's Lowers Rating to Ba2 on $10.8MM Notes HG-COLL 2007-1: Moody's Junks Note Ratings on Three Classes HILEX POLY: Obtains Interim Access to $140 Million DIP Financing HOME INTERIORS: Section 341 Meeting of Creditors Set June 6 HOME INTERIORS: Meridith Seeks Clarification of Setoff Rights IAC/INTERACTIVECORP: Says Liberty's Appeal Won't Delay Spin Offs INDEPENDENCE IV: Moody's Cuts Ratings on Credit Deterioration INTERNATIONAL BANCORP: Fitch Holds and Withdraws All Ratings INTERSTATE BAKERIES: Closes Amended $249.7 Million DIP Facility INTERPHARM HOLDINGS: Sells Assets to Amneal Pharma for $61.6 Mil. JOHN CARD: Files for Chapter 7 Liquidation in North Carolina KINGSWAY FINANCIAL: Posts $34MM Net Loss in Quarter ended March 31 KINGSWAY FINANCIAL: S&P Chips Unsecured Debt Rating to BB from BB+ KINGSWAY LINKED: S&P Cuts Rating on LROC Preferred Units to BB KLIO II: Moody's Junks Rating on Two Notes Classes KOPPERS HOLDINGS: Strong Performance Cues Moody's to Lift Rating LACERTA ABS: Moody's Cuts and Reviews Ratings on Three Classes LAKESIDE CDO: Moody's Lowers Class B Notes Rating to Ca from Ba1 LANCER FUNDING: Moody's Cuts $30MM Notes Rating to Caa3 from A2 LEINER HEALTH: Seeks Court Approval for Proposed DOJ Agreement LIBERTY MEDIA: Wants to Stop IAC/InterActiveCorp's Spinoff Plans LONG HILL: Moody's Chips and Reviews Ratings on Three Note Classes LONGPORT FUNDING: Moody's Cuts Ca Rating on Three Classes to C LONGPORT FUNDING: Moody's Reviews Ratings for Possible Downgrade MAAX HOLDINGS: Extends Forbearance Period to June 12 MAGNA ENTERTAINMENT: Obtains Waiver From Canadian Lender MAKINO RESTAURANT: Case Summary & 12 Largest Unsecured Creditors MARATHON REAL: Fitch Holds 'B' Rating on $26.7MM Class K Notes MAYFLOWER CDO: Moody's Lowers Ratings on Two Note Classes to Ca MEDIACOM COMMS: March 31 Balance Sheet Upside-Down by $295 Million MERITAGE HOMES: Has No Plan to Issue Preferred Stock MI DEVELOPMENTS: Gets Reorganization Proposal From Stronach Group MIDORI CDO: Credit Quality Deterioration Cues Moody's Ratings Cut NEIGHBORHOOD OIL: Case Summary & 18 Largest Unsecured Creditors NEWCASTLE MORTGAGE: Moody's Chips Ratings to B1 on Two Classes NEXSTAR BROADCASTING: Q1 Balance Sheet Upside-Down by $104MM NEXSTAR BROADCASTING: Names T. Busch and B. Jones as Co-COO NPS PHARMA: Posts $13.1 Million Net Loss in 2008 First Quarter OMEGA WALLBEDS: Files for Chapter 11 Protection in Arizona ORACLE HEALTHCARE: Stockholders Decide on Liquidation ORION 2006-1: Moody's Cuts Baa2 Rating to Caa2 on $936MM Swap PAINCARE HOLDINGS: To Voluntarily Delist from AMEX on May 29 POPE & TALBOT: Wants to Sell Eagle Bay to Sage for $5.7 Million POPE & TALBOT: PT Pindo Ends Sale Deal of Three Pulp Mills POPE & TALBOT: Sells Wood Products Biz to International Forest POPE & TALBOT: PWC Reveals Results of Various Sales Processes PRC LLC: Judge Glenn Approves Disclosure Statement PRC LLC: Can Hire Epiq Systems as Voting and Tabulation Agent PRC LLC: Wants to Employ Korn Ferry as Hiring Consultants PRIORITY ONE PARTNERS: Voluntary Chapter 11 Case Summary QUAIL LAKE: Files Schedules of Assets and Liabilities RESIDENTIAL ASSET: Moody's Chips Ratings on 29 Tranches RH DONNELLEY: Posts $1.6 Billion Net Loss in 2008 First Quarter RH DONNELLEY: Fitch Affirms 'B+' Issuer Default Ratings RH DONNELLEY: Moody's Rates Proposed $488MM Unsecured Notes at B1 ROYALTY PHARMA: S&P Rates Proposed $200MM Unsecured Loan at BB+ SATURN VENTURES: Moody's Cuts Baa2 Rating on $20MM Notes to Ba2 SEA CONTAINERS: Court Delays Decision on Pact Document Disclosure SEA CONTAINERS: Wants to Supplement Non-Insider Retention Plan SHARPS CDO: Moody's Slashes Aaa Rating on $600MM Notes to Ba1 STACK 2007-1: Moody's Chips Notes Ratings to C from Ca STURGIS IRON: Files Schedules of Assets and Liabilities SUNCREST LLC: Files Schedules of Assets and Liabilities TABAER INC: Case Summary & 15 Largest Unsecured Creditors TAHERA DIAMOND: To Cut Staff at Jericho Mine; Gets Bid for Assets TAZLINA FUNDING: Moody's Slashes Ratings on Notes to C TERRA INDUSTRIES: Good Performance Cues Fitch to Lift Ratings THE O'BRYAN CO: Case Summary & 20 Largest Unsecured Creditors TORO ABS: Moody's Lowers Rating C from Ba1 on 17,600 Pref Shares TRIARC COMPANIES: Posts $68MM Net Loss in Quarter Ended March 31 TRIBUNE COMPANY: Appoints Mark Shapiro to Board of Directors TRUMP ENTERTAINMENT: S&P Chips Corp. Credit Rating to B- from B UNITED RENTALS: Moody's Affirms B1 Rating on Sr. Unsecured Debt VERMEER FUNDING: Moody's Cuts Securities Rating to B1 from Ba2 VERNON APARTMENTS: Case Summary & 20 Largest Unsecured Creditors VICORP RESTAURANT: Gets Final OK to Use Wells Fargo's $60MM Loan VIRGIN MOBILE: In Negotiations with Helio LLC on Possible Merger VIRGIN MOBILE: March 31 Balance Sheet Upside-Down by $409 Million VITAMIN SHOPPE: Moody's Holds B3 Rating; Changes Outlook to Pos. VOLUME SERVICES: Moody's Slashes CF Rating to Caa1 from B3 WATERFORD GAMING: S&P Holds 'BB-' Rating; Revises Outlook to Neg. WCI COMMUNITIES: Posts $84 Million Net Loss in 2008 First Quarter WELLMAN INC: Says CRO Necessary to Avoid DIP Facility Default WORLD HEART: Could Default on $5 Mil. Convertible Promissory Note XL CAPITAL: Earns $211.9 Million in 2008 First Quarter * S&P Says Telecom Competition Pressures Industry Players * S&P Lowers Ratings on 251 Classes of US RMBS from 89 Transaction * S&P Downgrades Ratings on 17 Tranches from Three US CDOs * S&P Says US Finance Cos. Are Taking Bold Steps to Secure Funding * S&P Says US Banks to Face Leveraged Loan Market Losses * Anti-Foreclosure Bill Faces Bush Veto Threat * Bankruptcy Filings in Hawaii Rose to 158 in April * U.S. Business Bankruptcy Filings Rose 49% in April Versus 2007 * True Partners' Cathleen Bucholtz Assumes Managing Director Role * Large Companies with Insolvent Balance Sheets ********* 210 WEST LIBERTY: Case Summary & Seven Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: 210 West Liberty Holdings, LLC 210 West Liberty St. Charles Town, WV 25414 Bankruptcy Case No.: 08-00677 Type of Business: The Debtor provides banking and financial services. Chapter 11 Petition Date: May 2, 2008 Court: Northern District of West Virginia (Martinsburg) Judge: Patrick M. Flatley Debtor's Counsel: James Paul Campbell, Esq. Email: khertz@cmzlaw.com Campbell Miller Zimmerman, P.C. 19 East Market St. Leesburg, VA 20176 Tel: (703) 771-8344 Fax: (703) 777-1485 http://www.cmzlaw.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $500,000 to $1 million Debtor's Seven Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Glen R. Poe promissory note $101,500 18043 Raven Rocks Road Bluemont, VA 20135 reimbursement $3,951 materials purchased Foster-Herz, Inc. construction $65,492 P.O. Box 6058 services Leesburg, VA 20178 R.J. Brown & Sons Electric, electrical services $26,894 LLC 3886 Roundtree Road, Unit 2 Jefferson, MD 21755 AskNeal, LLC audio & video $6,000 equipment installation Travelers Insurance insurance $3,923 JRs Plumbing plumbing services $3,066 Orange & Martorelli LLP tax preparation $2,000 services John Leonard reimbursement for $123 materials purchased ACACIA CDO: Moody's Cuts Rating on $16MM Class C Notes to Caa1 -------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Acacia CDO 11, Ltd. Class Description: $398,000,000 Class A First Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $35,000,000 Class B Second Priority Senior Secured Floating Rate Notes Due 2047 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Class Description: $16,000,000 Class C Third Priority Senior Secured Floating Rate Deferrable Interest Notes Due 2047 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Class Description: $12,000,000 Combination Notes Due 2047 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $16,000,000 Class D Fourth Priority Mezzanine Secured Floating Rate Deferrable Interest Notes Due 2047 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the structured finance securities. AMBASSADOR STRUCTURED: Moody's Junks Rating on $13MM Class D Notes ------------------------------------------------------------------ Moody's Investors Service has placed on review for possible downgrade the ratings on these notes issued by Ambassador Structured Finance CDO, Ltd. Class Description: $35,000,000 Class B Floating Rate Notes Due July 2041 -- Prior Rating: Aa2 -- Current Rating: Aa2, on review for possible downgrade Additionally, Moody's downgraded and left on review for possible further downgrade the ratings on these notes: Class Description: $112,000,000 Class A-2 Floating Rate Notes Due July 2041 -- Prior Rating: Aaa -- Current Rating: Aa1, on review for possible downgrade Class Description: $26,000,000 Class C Floating Rate Deferrable Interest Notes Due July 2041 -- Prior Rating: A3 -- Current Rating: Baa2, on review for possible downgrade Class Description: $13,000,000 Class D Floating Rate Deferrable Interest Notes Due July 2041 -- Prior Rating: Baa2 -- Current Rating: Caa1, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. ARIAD PHARMA: March 31 Balance Sheet Upside-Down by $23.5 Million ----------------------------------------------------------------- ARIAD Pharmaceuticals Inc. reported on Wednesday financial results for the quarter ended March 31, 2008, and provided an update on corporate developments. At March 31, 2008, the company's consolidated balance sheet showed $97.6 million in total assets and $121.1 million in total liabilities, resulting in a $23.5 million total stockholders' deficit. For the quarter ended March 31, 2008, the company reported a net loss of $17.0 million, compared to a net loss of $15.0 million for the same period in 2007. The company recognized license and collaboration revenue of $1.5 million in the three-month period ended March 31, 2008, compared to $190,000 in the corresponding period in 2007. The increase in license and collaboration revenue was due primarily to the revenue recognized from the Merck collaboration of $1.4 million, based on the non-refundable up-front and milestone payments totaling $88.5 million received from Merck to date, in accordance with the company's revenue recognition policy. "Since the beginning of the year, we have remained focused on our important corporate objectives: to maximize the deforolimus opportunity in multiple potential clinical indications; to establish our oncology commercial infrastructure; to advance our pipeline of innovative oncology product candidates; and to maintain a strong financial position," said Harvey J. Berger, M.D., chairman and chief executive officer of ARIAD. "We are on track to achieve all of our key clinical development milestones this year for our two lead product candidates deforolimus, our investigational mTOR inhibitor, and AP24534, our investigational multi-targeted kinase inhibitor." For the quarter ended March 31, 2008, cash used in operations was $13.3 million, compared to cash used in operations of $12.6 million, for the same period in 2007. During the first quarter, the company amended its bank term loan, borrowing an additional $10.5 million which will be repayable over five years. The company ended the first quarter of 2008 with cash, cash equivalents and marketable securities of $80.2 million, compared to $85.2 million at December 31, 2007. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2bc6 About ARIAD Pharmaceuticals Headquartered in Cambridge, Mass., ARIAD Pharmaceuticals Inc. (Nasdaq: ARIA) -- http://www.ariad.com/-- is engaged in the discovery and development of breakthrough medicines to treat cancer by regulating cell signaling with small molecules. ARIAD has a global partnership with Merck & Co. Inc. to develop and commercialize deforolimus, ARIAD's lead cancer product candidate, which is in Phase 3 clinical development. ARIAD's second oncology product candidate, oral AP24534, is a novel multi-targeted kinase inhibitor in Phase 1 clinical development in hematological cancers. ARLO VI: Moody's Junks Ratings on Three Note Classes ---------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by ARLO VI Limited Series 2006: Issuer: ARLO VI Limited Series 2006 (Zander I) Class Description: $40,000,000 Variable Secured Limited Recourse Credit-Linked Notes due May 3, 2046 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Issuer: ARLO VI Limited Series 2006 (Zander II) Class Description: $40,000,000 Variable Secured Limited Recourse Credit-Linked Notes due May 3, 2046 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Issuer: ARLO VI Limited Series 2006 (Zander III) Class Description: $19,000,000 Variable Secured Limited Recourse Credit-Linked Notes due May 3, 2046 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade Additionally, Moody's downgraded these notes: Issuer: ARLO VI Limited Series 2006 (Zander IV) Class Description: $19,000,000 Variable Secured Limited Recourse Credit-Linked Notes due May 3, 2046 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. AURIGA CDO: Moody's Chips $975MM Notes Rating to B3 from Ba1 ------------------------------------------------------------ Moody's Investors Service has downgraded ratings of three classes of notes issued by Auriga CDO Ltd., and left on review for possible further downgrade the ratings of one of these classes. The notes affected by rating action are: Class Description: U.S. $975,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes due January 2047 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $97,500,000 Class A-2A Second Priority Senior Secured Floating Rate Notes due January 2047 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca Class Description: $48,000,000 Class A-2B Third Priority Senior Secured Floating Rate Notes due January 2047 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca Auriga CDO Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities and CDO securities. On February 13, 2008 the transaction experienced an event of default caused by a failure of the Class A Overcollateralization Ratio to be greater than or equal to the required amount set forth in Section 5.1(j) of the Indenture dated December 20,2006; that event of default is continuing. Also, Moody's has received notice from the Trustee that it has been directed by a majority of the controlling class to declare the principal of and accrued and unpaid interest on the Notes to be immediately due and payable. The rating actions taken today reflect continuing deterioration in the credit quality of the underlying portfolio and the increased expected loss associated with the transaction. Losses are attributed to diminished credit quality on the underlying portfolio. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, the Controlling Class may be entitled to direct the Trustee to take particular actions with respect to the Collateral. The severity of losses may depend on the timing and choice of remedy to be pursued by the Controlling Class. Because of this uncertainty, the rating of Class A-1 Notes issued by Auriga CDO Ltd. is on review for possible further action. BIOVAIL CORP: S&P Puts 'BB' Corp. Credit Under Neg. CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' long-term corporate credit and 'BBB-' bank loan ratings on Mississauga, Ontario-based Biovail Corp. on CreditWatch with negative implications. The '1' recovery rating on the bank loan is unchanged. "The Credit Watch placement reflects concerns that the new strategic focus on developing specialty products targeted toward central nervous system disorders and the rationalization of Biovail's operations will involve a long time frame, significant investments, and high execution risk," said Standard & Poor's credit analyst Maude Tremblay. Furthermore, the announced share repurchase program for up to 10% of Biovail's public float, representing as much as C$175 million, could weaken liquidity and constrain management's ability to execute its strategy. The company's drug franchise has faced numerous challenges in the past year, namely increased generic competition for key products, product approval delays, and limited new revenue drivers from the product pipeline before 2010. Furthermore, novel formulations of existing drugs, the previous focus of Biovail's research and development efforts, offer limited growth potential given the increasing unwillingness of third-party payors to reimburse products that offer primarily convenience benefits. Standard & Poor's believes the new strategic focus could be positive in the long term; however, it will likely negatively affect the company's medium-term credit metrics given the significant investments in developing a portfolio of new products in the face of declining revenues. S&P will keep the ratings on Biovail on CreditWatch until S&P obtain better visibility on the effect that the company's new strategic focus and efficiency initiatives will have on its operating performance and capital structure. S&P will also seek greater clarity regarding the company's financial policy in the future. BUFFETS HOLDINGS: Wants Court to Approve Incentive Plans -------------------------------------------------------- Buffets Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware to approve their performance-based Annual Incentive Plans for fiscal years 2008 and 2009. To remain competitive, the Debtors, like many large companies, have traditionally incorporated into their management compensation system an annual performance-based incentive component. Specifically, since at least 2001, the Debtors' Board of Directors approved annual target incentive programs for employees that were based on the Debtors meeting specific performance levels, many of which were based on the Debtors' actual enterprise equity value for a fiscal year -- calculated based upon EBITDA -- reaching a targeted equity value for the fiscal year. The historical targeted incentive programs provided for bonuses to be paid to the Employees if the Debtors attained 50% of the Debtors' targeted EBITDA levels, with the bonus amounts increasing if the Debtors attained 100% of the Debtors' targeted EBITDA. These targeted incentive programs were offered to Employees, in addition to other bonus packages, to provide bonus compensation. Prior to the Petition Date, the Board of Directors implemented precisely this sort of EBITDA-based incentive program for fiscal year 2008. Incentive Compensation for Fiscal Year 2008 In the discretion of the Board of Directors, management Employees participating in the 2008 AIP would be eligible for incentive compensation that is linked to the Debtors' aggregate EBITDA exceeding $80,035,512 for the 2008 fiscal year -- the EBITDA level for the fiscal year set forth in the Debtors' debtor-in- possession budget. This is consistent with the general structure of incentive bonus plans historically offered to Employees, which have been based on the Debtors' overall financial performance, which is primarily focused on EBITDA. The modified 2008 AIP proposed by the Debtors would provide Employees with a bonus payment only if the Debtors exceed the 2008 Performance Goal by a minimum of $250,000. If the EBITDA for fiscal year 2008 is between $80,285,512 and $81,995,512, a discretionary pool of bonus funds, up to the maximum amount of $1,710,000, will be created, plus 10% of any EBITDA growth above $81,995,512. The 2008 Pool would be used to fund incentive payments to the Employees: * 54% of the 2008 Pool to approximately 15 Employees with titles of Vice President and above, allocated among the Employees based on their 2008 base salary; * 36% of the 2008 Pool to approximately 102 Employees who are corporate support employees, allocated among the Employees based on their 2008 base salary; * 10% of the 2008 Pool to be allocated to Employees in the two groups disclosed -- excluding the Debtors' chief executive officer and chief operating officer -- who have been determined by the Board of Directors to have demonstrated exceptional performance in the fiscal year and in assisting the Debtors in exceeding the 2008 Performance Goal; provided that no individual Employee will receive more than $10,000 in compensation on account of this portion of the 2008 Pool. If the EBITDA generated by the Debtors' business exceeds the 2008 Performance Goal plus $250,000, but is less than $81,995,512, the 2008 Pool will be reduced dollar for dollar by the amount by which EBITDA is less than $81,995,512. Incentive Compensation for Fiscal Year 2009 In the discretion of the Board of Directors, management Employees participating in the AIPs would be eligible for incentive compensation that is linked to EBITDA generated by the Debtors' business for fiscal year 2009 EBITDA of $90,288,146, the EBITDA level set forth in the Debtors' DIP budget for the 2009 fiscal year. The 2009 AIP proposed by the Debtors would provide Employees with a bonus payment upon the Debtors' exceeding the 2009 Performance Goal. If the EBITDA generated by the Debtors' business is between $90,288,146 and $91,963,146, a discretionary pool of bonus funds, up to the maximum amount of $1,675,000, will be created, plus 50% of any EBITDA growth from $91,963,146 to $92,463,146, plus 20% of any EBITDA growth from $92,463,146 to $102,900,000. The 2009 Pool will be used to fund incentive payments to the Employees: * 54% of the 2009 Pool to approximately 15 Employees with titles of Vice President and above, allocated among the Employees based on their 2009 base salary; * 36% of the 2009 Pool to approximately 112 Employees who are corporate support employees, allocated among the Employees based on their 2009 base salary; * 10% of the 2009 Pool to be allocated to Employees in the two groups disclosed -- but excluding the Debtors' Chief Executive Officer and Chief Operating Officer -- who have been determined by the Board of Directors to have demonstrated exceptional performance in the fiscal year and in assisting the Debtors in exceeding the 2009 Performance Goal, provided that no individual Employee will receive more than $10,000 in compensation on account of this portion of the 2009 Pool. If the EBITDA generated by the Debtors' business exceeds the 2009 Performance Goal, but is less than $91,963,146, the 2009 Pool will be reduced dollar for dollar by the amount by which EBITDA is less than $91,963,146. Furthermore, the Debtors would create an additional pool, equal to 10% of any Fiscal Year 2009 EBITDA growth beyond $102,900,000, which would be used to fund incentive payments to certain Employees: * 75% of the Supplemental 2009 Pool to approximately 15 Employees with titles of Vice President and above, allocated among the Employees based on their 2009 base salary; * 25% of the 2009 Pool to approximately 112 Employees who are corporate support employees, allocated among the Employees based on their 2009 base salary. Incentive Compensation to COO The Debtors also seek the court's approval to pay an incentive- related bonus to Tahoe Joe's vice president and chief operating officer upon completion of his first year of employment provided that the COO satisfactorily completes the mutual goals and objectives established by the Debtors and the COO. The COO was hired on November 16, 2007. The Debtors and the COO agreed that the mutual objective to serve as a condition precedent to the COO receiving a Personal Performance Bonus would be a reduction in both the Debtors' food and labor costs by at least one percent each, which would correlate to an annual savings of approximately $30,000,000 in operating costs. The maximum Personal Performance Bonus is $120,000. The Debtors believe that any Personal Performance Bonus for which the COO would be eligible would be earned postpetition and could therefore be paid in the ordinary course. However, the Debtors request confirmation that they Debtors are authorized, in the sole discretion of the Board of Directors, to honor and pay the Personal Performance Bonus to the COO as part of the AIPs. Since the COO is one of the parties who will share in the 2008 Pool to be distributed if the Debtors exceed the 2008 Performance Goal, the total amount of bonus compensation to be paid to the COO on account of the Personal Performance Bonus plus his portion of the 2008 Pool will not exceed $120,000. Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, tells the Court that performance-based compensation forms an integral part of the total cash compensation paid by the Debtors to their management team. Ms. Morgan explains that the annual incentive plans are a critical component of the Debtors' effort to reorganize their business. The annual incentive plan is necessary in order to appropriately compensate the Debtors' management employees and to ensure that the employees remain motivated to perform the important tasks necessary to effect a successful reorganization of the Debtors' businesses. Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims and balloting agent. The U.S Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. As reported in the Troubled Company Reporter on Feb. 26, 2008, the Court granted on February 22, 2008, final approval of the Debtors' debtor-in-possession credit facility, consisting of $85 million of new funding and $200 million carried over from the company's prepetition credit facility. (Buffets Holdings Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). BLACK GAMING: Increased Leverage Cues Moody's to Junk CF Rating --------------------------------------------------------------- Moody's Investors Service downgraded Black Gaming LLC's corporate family rating and probability of default rating to Caa1 from B3. It also downgraded the rating of the 9% senior secured notes to B3 from B2 and the rating of the 12.75% senior subordinated notes to Caa3 from Caa2. The SGL-4 rating was affirmed and the rating outlook remains negative. The rating actions reflect the increase in Black Gaming's leverage in 2007 and the near term operating challenges, which will prevent the improvement of the company's financial metrics in Moody's opinion. With total debt/EBITDA in excess of 9 times and EBITDA/total interest expense near 1 time, Black Gaming maps to the "Caa" rating category with respect to leverage and coverage. Moody's expects some further deterioration in 2008 due to weaker EBITDA. The company's Mesquite gaming market is negatively affected by the significant slowdown in consumer spending due primarily to a drop in home equity values and high gas prices. While the company's value gaming proposition may provide a viable alternative to Las Vegas, Black Gaming's local middle income customers are currently curbing their gaming spending, negatively impacting revenues and EBITDA in the near term. The rating outlook is negative. While there is an expectation that the company may refinance its $15 million revolving credit facility before its maturity date, Moody's believes that Black Gaming's liquidity will remain weak, with expected strong reliance on its credit line to meet its debt service obligations in 2009. Ratings Downgraded: -- Corporate family rating to Caa1 from B3 -- Probability of default rating to Caa1 from B3 -- 9% senior secured notes rating to B3 from B2 (LGD assessment changed to LGD3/39% from LGD3/40%) -- 12.75% senior subordinated notes rating to Caa3 from Caa2 (unchanged LGD assessment of LGD5/88%) Black Gaming owns and operates the CasaBlanca, the Oasis, and the Virgin River casino hotels in Mesquite, Nevada, located approximately 80 miles north of Las Vegas, Nevada. The company also owns the Mesquite Star, which is currently used as a special events center. Net revenues were approximately $163 million in 2007. BRODERICK CDO: Poor Credit Quality Cues Moody's to Cut Ratings -------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by Broderick CDO 1 Ltd.: Class Description: $250,000 Class A-1V First Priority Senior Secured Voting Floating Rate Notes due 2043 -- Prior Rating: Aaa -- Current Rating: A1, on review for possible downgrade Class Description: $354,750,000 Class A-1NVA First Priority Senior Secured Non-Voting Floating Rate Notes due 2043 -- Prior Rating: Aaa -- Current Rating: A1, on review for possible downgrade Class Description: $485,000,000 Class A-1NVB First Priority Senior Secured Non-Voting Floating Rate Delayed Draw Notes due 2043 -- Prior Rating: Aaa -- Current Rating: A1, on review for possible downgrade Class Description: $85,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2043 -- Prior Rating: Aaa -- Current Rating: Ba1, on review for possible downgrade Class Description: $43,000,000 Class B Third Priority Senior Secured Floating Rate Notes due 2043 -- Prior Rating: Aa2 -- Current Rating: B2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $23,000,000 Class C Fourth Priority Mezzanine Deferrable Secured Fixed Rate Notes due 2043 -- Prior Rating: Baa2 -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the structured finance securities. BUFFETS HOLDINGS: Wants Court to Set July 21 as Claims Bar Date --------------------------------------------------------------- Buffets Holdings Inc. and its debtor-affiliates ask the United States Bankruptcy Court fort the District of Delaware to establish July 21, 2008, at 4:00 p.m., as the deadline by which all entities holding prepetition claims, including governmental units, must file proofs of claim. In connection with the Debtors' rejection of executory contracts or unexpired leases pursuant to Section 365 of the Bankruptcy Code, the Debtors propose that any person or entity that asserts a Rejection Damages Claim must file a proof of claim on or before the later of: (a) the Claims Bar Date, or (b) 4:00 p.m., Prevailing Eastern Time, on the date that is 30 days after entry of an order approving the rejection of an executory contract or unexpired lease pursuant to which the entity asserting the Rejection Damages Claim is a party, or (c) another date as the Court may fix. The Debtors propose that any entity holding an interest in the Debtors need not file a proof of interest on or before the Claims Bar Date. Interest Holders that wish to assert claims against the Debtors that arise out of or relate to the ownership or purchase of an Interest, including claims arising out of or relating to the sale, issuance or distribution of the Interest, must file proofs of claim on or before the Claims Bar Date. Any entity asserting Claims against more than one Debtor must file a separate proof of claim with respect to each Debtor. In addition, any entity filing a proof of claim must identify on its proof of claim form the particular Debtor against which its Claim is asserted. Any entity that is required to file a proof of claim in the Chapter 11 cases pursuant to the Bankruptcy Code, the Bankruptcy Rules or the Bar Date Order with respect to a particular claim against the Debtors, but fails to do so by the applicable Bar Date, should not be treated as a creditor with respect to the Claim for the purposes of voting on and distribution under any Chapter 11 plan proposed or confirmed in the Debtors' cases. The Debtors propose to serve all known entities holding potential prepetition claims with: (a) a notice of the Bar Dates, and (b) a proof of claim form. The Bar Date Notice states, among other things, that proofs of claim must be filed with Epiq Bankruptcy Solutions LLC on or before the applicable Bar Date. The Debtors propose that claimants be permitted to submit proofs of claim in person or by courier service, hand delivery, or mail. Proofs of claim submitted by facsimile or e-mail will not be accepted. Proofs of claim will be deemed filed when actually received by Epiq. The Debtors also intend to publish a notice of the Bar Dates within l0 business days of the date of entry of the order approving the Claims Bar Date, in either the national edition of The Wall Street Journal or the national edition of The New York Times. Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, tells the Court that the establishment of the Claims Bar Date is necessary for the Debtors to obtain complete and accurate information regarding the nature, validity and amount of all claims that will be asserted in their Chapter 11 cases. This will enable the Debtors to fully administer their estates and to make distributions under any confirmed Chapter 11 plan, she says. Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims and balloting agent. The U.S Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. As reported in the Troubled Company Reporter on Feb. 26, 2008, the Court granted on February 22, 2008, final approval of the Debtors' debtor-in-possession credit facility, consisting of $85 million of new funding and $200 million carried over from the company's prepetition credit facility. (Buffets Holdings Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CABLEVISION SYSTEMS: March 31 Balance Sheet Upside-Down by $5 Bil. ------------------------------------------------------------------ Cablevision Systems Corporation reported on Thursday financial results for the first quarter ended March 31, 2008. At March 31, 2008, the company's consolidated balance sheet showed $9.2 billion in total assets and $14.3 million in total liabilities, resulting in a $5.1 billion total stockholders' deficit. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $1.9 billion in total current assets available to pay $2.3 billion in total current liabilities. Net Loss The company reported a net loss of $31.6 million for the quarter ended March 31, 2008, compared with a net loss of $26.3 million in the same period last year. Net Revenue/AOCF/Operating Income First quarter consolidated net revenue grew 10.1% to $1.7 billion compared to $1.6 billion during the prior year period, reflecting revenue growth in Telecommunications Services, Rainbow and Madison Square Garden. Consolidated adjusted operating cash flow ("AOCF" increased 8.9% to $515.9 million and consolidated operating income grew 44.2% to $245.5 million. AOCF, a non-GAAP financial measure, is defined as operating income (loss) before depreciation and amortization (including impairments), excluding share-based compensation expense or benefit and restructuring charges or credits. Operating Highlights Operating highlights for first quarter 2008 include: -- Cable Television net revenue growth of 10.5% and AOCF growth of 13.0% for the quarter -- Quarterly addition of 197,000 Revenue Generating Units ("RGU") including the addition of 2,000 basic video subscribers -- Average Monthly Revenue per Basic Video Customer ("RPS") of $129.56 in the first quarter of 2008 -- Rainbow net revenue growth of 15.8% and AOCF growth of 17.6% for the quarter -- Optimum Lightpath net revenue growth of 12.2% and AOCF growth of 25.3% for the quarter Management's Comments Cablevision president and chief executive officer James L. Dolan commented: "Cablevision had a very solid start to 2008 with strong gains in net revenue and AOCF, fueled largely by continuing growth in the company's core cable business. For the first quarter, we added customers across all of our consumer services, including basic video, and became the first cable company to achieve a 50.0% penetration rate for high speed Internet. These results extended Cablevision's industry-leading penetration rates for yet another quarter while Rainbow and MSG generated strong revenue growth of their own," concluded Mr. Dolan. Other Matters On May 6, 2008, Rainbow Media Holdings entered into an agreement to acquire Sundance Channel L.L.C. from General Electric Company, CBS Corporation, and entities controlled by Robert Redford. Under the terms of the transaction, the total consideration of $496.0 million will be paid through a tax-free exchange of approximately 12.7 million shares of common stock of General Electric Company held by Rainbow Media Holdings, with a cash adjustment at closing based upon the value of the General Electric Company shares in relation to the total purchase price. Under the transaction structure, General Electric Company will receive all of the General Electric Company shares and the CBS and Redford entities will receive cash in exchange for their interests. In connection with the exchange of the General Electric Company shares, Cablevision will repay the monetization debt and settle the related equity derivative contracts associated with such shares. Consummation of the transaction is subject to customary closing conditions. Interest Expense Interest expense decreased $27.0 million to $211.7 million for the three months ended March 31, 2008, as compared to the same period in 2007. The decrease is primarily attributable to lower average debt balances related primarily to the redemption of certain senior subordinated and senior notes in August 2007 and December 2007 and to lower outstanding collateralized indebtedness, as well as lower average interest rates. Equity in Net Income of Affiliates Equity in net income of affiliates amounted to $1.8 million for the three months ended March 31, 2007, compared to none during the three months ended March 31, 2008. This amount consisted of the company's share of the net income of certain businesses in which the company did not have a majority ownership interest. Gain on Investments Gain on investments, net for the three months ended March 31, 2008, was $21.6 million compared with a loss on investments, net for the same period of 2007 of $73.0 million. This consists primarily of the net increase or decrease in the fair value of Comcast, General Electric, Charter Communications, and Leapfrog common stock owned by the company for both periods. The effects of these gains and losses are partially offset by the losses and gains on related derivative contracts. Derivative Contracts The company reported a loss on derivative contracts, net of $104.9 million for the three months ended March 31, 2008, and a gain of $65.1 million during the same period of 2007. The loss in 2008 primarily reflects unrealized losses on interest rate contracts, while the gain in 2007 reflects unrealized gains of $75.1 million due to the change in fair value of the company's prepaid forward related to the Comcast, Charter Communications, General Electric and Leapfrog shares onwed by the company, partially offset by unrealized losses on interest rate swap contracts of $9.2 million in 2007. Income Tax Benefit Income tax benefit attributable to continuing operations for the three months ended March 31, 2008, was $15.4 million, compared with income tax benefit attributable to continuing operations for the three months ended March 31, 2007, of $31.2 million. Income (loss) from Discontinued Operations The company reported a loss from discontinued operations of $473,000 in 2008, compared with income from discontinued operations of $7.6 million in 2007. Discontinued operations refer to the operations of the Rainbow DBS satellite distribution business the assets of which were sold to a subsidiary of Echostar Communications Corp. in November 2005, and the company's 60.0% interest in Fox Sports Net Bay Area which was sold to Comcast Corp. in June 2007. Total Debt At March 31, 2008, the company and its subsidiaries had total debt of $11.6 billion. In comparison the company had total debt of $12.4 billion at March 31, 2007. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2bc0 About Cablevision Systems Headquartered in Bethpage, N.Y., Cablevision Systems Corporation (NYSE: CVC) -- http://www.cablevision.com/-- is a cable operator in the United States. Its cable television operations serve more than 3 million households in the New York metropolitan area. Cablevision's Rainbow Media Holdings LLC operates several programming businesses, including AMC, IFC, WE tv and other national and regional networks. In addition to its telecommunications and programming businesses, Cablevision owns Madison Square Garden and its sports teams, the New York Knicks, Rangers and Liberty. The company also operates New York's Radio City Music Hall, the Beacon Theatre, and the Chicago Theatre and owns and operates Clearview Cinemas. * * * As reported in the Troubled Company Reporter on Feb. 11, 2008, Moody's Investors Service upgraded to Ba3, from B1, the corporate family ratings for Cablevision System Corporation and its wholly- owned indirect subsidiary Rainbow National Services LLC. The rating outlooks for both companies were also changed to stable from developing. CAROLINA FIRST: Moody's Holds C- Rtng; Changes Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Carolina First Bank (bank financial strength C- and long term bank deposits at Baa1) and changed the outlook to stable from negative. Carolina First is the lead bank of The South Financial Group, Inc., an unrated financial services holding company. Moody's said that the outlook change follows South Financial's issuance of $250 million of mandatorily convertible preferred stock and its intent to issue up to an additional $100 million of bank level subordinated debt which is expected to close by the end of the month. Following shareholder approval, the preferred stock will be mandatorily convertible into common stock no later than three years from the date of issuance. South Financial also announced a cut in its quarterly common stock dividend to $0.01 per share, which will enable the company to save approximately $52 million annually in retained capital. In Moody's view, following South Financial's issuance of preferred stock and subordinated debt, its capital base should be sufficient to absorb foreseeable losses in its most troubled portfolios, specifically residential construction and development in Florida. That said, Moody's noted that the current ratings incorporate Moody's stress case loss of up to approximately $300 million after tax on its commercial real estate portfolio. Moreover, by improving the capital base, South Financial's management can focus more fully on strengthening the bank's core deposit funding which is weaker than peers. Moody's noted that South Financial's business mix is heavily skewed towards commercial real estate. To the extent losses from that portfolio exceed Moody's stress expectations, negative ratings pressure could emerge. South Financial, headquartered in Greenville, South Carolina, had assets of $13.7 billion as of March 31, 2008. CARRIAGE HOMES: Case Summary & Four Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Carriage Homes, LLC 6068 S. Apopka-Vineland Road, Ste. 3 Orlando, FL 32819 Bankruptcy Case No.: 08-03631 Chapter 11 Petition Date: May 5, 2008 Court: Middle District of Florida (Orlando) Debtor's Counsel: Richard D. Franzblau, Esq. E-mail: rdfranz@rdfllc.com 12301 Lake Underhill Rd. Ste. 217 Orlando, FL 32828 Tel: (407) 770-2520 Fax: (321) 413-0300 http://www.rdfllc.com/ Total Assets: $5,750,000 Total Debts: $3,515,171 Debtor's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Volusia County Revenue Div. $77,765 Thomas C. Kelly Admin. Bldg. 123 W. Indiana Ave., Rm. 103 Deland, FL 32720 Cox Lumber Carriage Homes $21,062 dba HD Supply LBM Subdivision P.O. Box 471407 Lake Monroe, FL 32747 Dunn Corp. Carriage Homes $9,049 3763 Mercy Star Ct. Subdivision Orlando, FL 32808-4654 Sherwin-Williams Co. Carriage Homes $4,681 Subdivison CENTRAL GARDEN: Earns $20.5 Million in 2nd Quarter Ended March 29 ----------------------------------------------------------------- Central Garden & Pet Company disclosed on Wednesday results for fiscal second quarter ended March 29, 2008. Net income for the quarter was $20.5 million, compared to $21.4 million in the year ago period. Income from operations was $44.7 million, a decline of 3.0% compared to $46.2 million in the year ago 2007 period. Depreciation and amortization was $8.1 million compared to $7.4 million in the year ago period. The company reported net sales of $485.0 million in the quarter, relatively unchanged compared to $486.0 million in the comparable fiscal 2007 period. Branded products sales increased 1.0% to $415.0 million. Sales of other manufacturers' products declined 8.0% to $70.0 million. "In the first six months of the fiscal year we have taken meaningful steps to improve margins, implement cost-reduction initiatives and reduce working capital. These actions have substantially strengthened our financial position," noted William Brown, chairman and chief executive officer of Central Garden & Pet Company. "Our progress, however, is being impeded by rising costs, retailer inventory reductions and the continuing slowdown in the aquatics category. In spite of this, we hope to make significant progress toward getting our business 'on profile' for fiscal 2009." Six Months Results For the six months ended March 29, 2008, the company reported net sales of $798.0 million relatively unchanged from $803.0 million in the comparable 2007 period. Branded product sales increased 1.0% while sales of other manufacturers' products declined 8.0%. The net loss for the first six month period was $269.0 million compared to net income of $18.5 million in the year ago period. Included in the year-to-date results is a non-cash, pre-tax charge of $400.0 million, or $290.0 million net of tax, related to goodwill impairment. Adjusted net income, excluding the impact of the impairment, was $21.3 million. The operating loss for the period was $346.0 million compared to operating income of $52.2 million in the year ago period. Depreciation and amortization for the first six month period was $16.1 million compared to $14.3 million in the year ago period. Liquidity and Capital Resources At March 29, 2008, the company's total debt outstanding was $695.5 million compared to $713.2 million at March 31, 2007, due to operating cash flows being used to pay down debt, partially offset by increased seasonal working capital requirements. The company has $650.0 million in senior secured credit facilities, consisting of a $350.0 million revolving credit facility maturing in February 2011 and a $300.0 million term loan maturing in September 2012. There was $247.0 million outstanding at March 29, 2008, under the $350.0 million revolving credit facility plus $15.9 million outstanding under certain letters of credit. The remaining potential borrowing capacity was up to $87.1 million. The company believes that cash flows from operating activities, funds available under its revolving credit facility, and arrangements with suppliers will be adequate to fund its presently anticipated working capital requirements for the foreseeable future. Balance Sheet At March 29, 2008, the company's consolidated balance sheet showed $1.4 billion in total assets, $919.7 million in total liabilities, $2.3 million in minority interest, and $510.3 million in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended March 29, 2008, are available for free at http://researcharchives.com/t/s?2bc4 About Central Garden Based in Walnut Creek, Calif. Central Garden & Pet Company (Nasdaq: CENT/CENTA) -- http://www.central.com/-- markets and produces branded products for the lawn & garden and pet supplies markets. The company's products are sold to specialty independent and mass retailers. Central Garden & Pet Company has approximately 5,000 employees, primarily in North America and Europe. * * * As reported in the Troubled Company Reporter on Feb. 25, 2008, Standard & Poor's Ratings Service affirmed its 'CCC+' senior subordinated debt ratings on Central Garden & Pet Co. The outlook is negative. CHARMING SHOPPES: S&P's 'B+' Rating Unmoved by Crescendo Deal ------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Charming Shoppes Inc. (B+/Negative/--) remain unchanged after the company's announcement that it has reached an agreement with Crescendo Partners and Myca Partners, a shareholder group collectively called "The Charming Shoppes Full Value Committee." The deal has resolved the current proxy contest regarding the company's 2008 shareholder meeting. Under the agreement, Bensalem, Pennsylvania-based Charming Shoppes will nominate six new members to its board of directors, to include -- two of management's nominees: Chairman and President/CEO Dorrit J. Bern and Alan Rosskamm; -- two of the Full Value Committee's nominees: Arnaud Ajdler and Michael C. Appel; and -- two experienced retail executives: former May Department Stores Co. Chairman Richard W. Bennet III and former Toys "R" Us Inc. Chairman/CEO Michael Goldstein. Charming Shoppes' board will be expanded to 11 directors upon approval of the new board members. Furthermore, the company will propose at its 2008 annual meeting, now delayed until June 26, 2008, to eliminate its classified board structure, resulting in one-year terms for all board members as of 2009. Following the 2008 annual meeting, the board will appoint an independent nonexecutive board member as chairman. The Full Value Committee has previously stated its desire for the company to repurchase a significant amount of shares with cash from operations and cash raised through the sale of Charming Shoppes' assets. Given the Full Value Committee's increased influence due to the expected addition of two of its nominees to the board, S&P believe it is possible that the company could adopt a more aggressive financial policy in the near future. However, the new board members could bring new insight and strategies to improve corporate performance and associated credit metrics. The full costs of this protracted contest, both financially and in terms of relationships on the board and with top management, are likely to be credit negative for the company in the short term. Standard & Poor's will continue to monitor developments regarding Charming Shoppe's financial policy and governance practices as they become available. CHENIERE ENERGY: Liquidity Erosion Prompts S&P to Junk Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on liquefied natural gas project developer Cheniere Energy Inc. to 'CCC+' from 'B' and its senior secured rating on subsidiary Sabine Pass LNG L.P. to 'B+' from 'BB'. S&P also removed the ratings from CreditWatch with negative implications, where S&P placed them on April 17, 2008. At the same time, S&P revised its recovery rating on Sabine Pass to '4', indicating average (30% to 50%) recovery of principal in the event of a payment default. The outlook is negative. The company had about $2.86 billion of total debt outstanding as of March 2008. This rating action follows the material erosion in the company's liquidity position and the incurrence of additional debt in the form of a $95 million bridge loan. While the bridge loan supports liquidity in 2008, albeit at an extremely high interest cost, additional external financing will be required in early 2009 if there is not a sizable improvement in cash flow from operations via the inflow of LNG cargoes. Near-term cash flow expectations for Cheniere Marketing are also lower due to a weak short-term outlook for U.S. LNG imports. Cheniere's proposed arrangement with a natural gas marketing company to manage LNG supplies and the downstream natural gas marketing for LNG cargoes delivered for Cheniere Marketing's account at Sabine Pass will also likely reduce any cash that the marketing segment would otherwise have generated. However, the marketing arrangement will significantly reduce Cheniere's liquidity and working capital requirements. Sabine Pass's ratings are higher than Cheniere's due to strong ring-fencing protections that S&P believe insulate the credit quality of Sabine Pass from the rest of the Cheniere organization and allow for the maximum three-notch rating differential under our project finance criteria. S&P cap the ratings differential for the two entities as we think Cheniere's deteriorating financial condition could also harm asset quality at Sabine Pass. Cheniere's 'CCC+' corporate credit rating reflects its vulnerable business risk profile and highly leveraged financial risk profile. The business profile score reflects Cheniere's status as a start- up LNG project developer with substantial execution and financing risks. "Moreover, while Cheniere is a leader in the development of LNG regasification terminals in the U.S. and its business strategy is currently focused on developing its three wholly owned proposed terminals, the business profile also reflects management's opportunistic pursuit of other business lines that include other parts of the LNG value chain," said Standard & Poor's credit analyst William Ferara. The negative outlook is based on the company's strained liquidity position and expectation for notably lower cash flow projections in 2008. S&P could lower the ratings if the company's unrestricted cash balance declines further or quicker than expected or if additional shares of its common stock are repurchased with cash on hand. Upgrade potential is not likely in the near term unless Cheniere can markedly improve its financial risk and Cheniere Marketing can produce significant incremental cash flows for Cheniere to reduce its parent level debt. CLARKE COLLEGE: Moody's Holds Ba1 Long-Term Rating on 1998 Bonds ---------------------------------------------------------------- Moody's Investors Service has affirmed the Ba1 long-term rating on Clarke College's Series 1998 bonds issued through Dubuque County, Iowa, with $5.8 million outstanding. The College's rating outlook is revised to positive from stable, reflecting expectations of growth in financial resources, particularly unrestricted, as well as stable enrollment and continued growth in net tuition revenues. Legal Security: General obligation of the College. Debt Related Derivatives: None. Strengths * Established student market position and stable enrollment growth that is expected to continue for this small, Catholic, liberal arts college located in Dubuque, Iowa. For Fall 2007, the College reported enrollment of 1,099 full-time equivalent students, up 11% from 988 FTEs in Fall 2003. Growth has occurred in both the undergraduate and graduate programs, with the College offering some academic programs that are unique in the region, including a Bachelors of Fine Arts, Doctorate of Physical Therapy, and a number of adult completion degrees (its TimeSavers programs) including a Masters of Business Administration and a nursing degree. The College has dramatically grown its applications through a number of actions, resulting in increasing selectivity and higher yield for Fall 2007; applications are up for the incoming Fall 2008 class and enrollment is expected to be generally steady, although slightly lower in freshman enrollment. * Continued improvement in operating performance, with a three year average operating margin of 1.9% for fiscal year 2007, as calculated by Moody's assuming a 5% endowment spend rate. This result represents a dramatic improvement from the -8% average operating deficit recorded in FY 2001. Improved operations are driven by growing enrollment and tuition revenues, as well as cost management initiatives. Moody's anticipates that Clarke will continue to produce at least balanced operating performance based on careful budgeting practices, expectations of generally stable enrollment, and continued tuition growth. * Increased financial resources, with total financial resources rising to $17.3 million in FY 2007 from $13.5 million the prior year; unrestricted financial resources increased to $6.8 million and represented nearly 40% of total resources. Unrestricted resources provide 0.70 times coverage of outstanding debt and 0.36 times coverage of operations. The College expects some further growth in both unrestricted and total resources for the current fiscal year (FY 2008), driven in part by partial payment on a bequest to Clarke that should be received in its entirety during FY 2009. These funds will provide a relatively large boost in unrestricted resources and strengthen the College's credit profile. * College states no debt plans for the next two years. Challenges * Highly competitive market for the College's core undergraduate program from an array of public and private higher education institutions in a state which is demographically challenged. The College is relatively small, with fewer than 1,200 full-time equivalent students, and highly reliant on student related charges to fund operations, with 82% of revenues derived from student charges (tuition and auxiliary enterprises). Growth in net tuition revenue has been good, rising 26% since FY 2003 and a robust 15% in FY 2007. With Clarke's program offerings and identity as a Catholic higher education institution in Eastern Iowa, Moody's expect the College to maintain its market niche and generally stable enrollment. * Use of short-term borrowings to bridge cash flow needs, although decreasing in FY 2008. The College has historically issued Revenue Anticipation Notes to meet ongoing operating cash needs throughout the year, then drawn on a line of credit in order to repay the RANs each year when due. Clarke's focus on improving cash flow generation and operating performance has resulted in a decreased use of RANs. The College intends to access only its bank line to fund working capital needs for the summer months, with repayment by September following receipt of tuition revenues. It is management's intent to continue to reduce its need for borrowings on the line over the next several years. * Expected longer-term capital needs following the completion of the College's campus master plan, including investment in student housing, recreation facilities and renovation of academic space. Debt plans beyond the next few years are uncertain. Clarke is planning to launch a comprehensive campaign within the next few years, although the goal and timeline have yet to be determined. Outlook The positive outlook reflects Moody's expectation of growth in financial resources, particularly unrestricted, as well as stable enrollment and continued growth in net tuition revenues. What Could Change the Rating - UP Consistently balanced operating performance, with growth in liquid financial resources providing a greater cushion for debt and operations; diminished reliance on short-term borrowings to manage cash flow needs. What Could Change the Rating - DOWN Borrowing without commensurate growth of financial resources or incremental revenues to cover debt service; decline in enrollment and minimal to no growth in tuition revenues; persistent operating deficits. Key Indicators (FY 2007 Financial Results; Fall 2007 enrollment data): * Total Enrollment: 1,099 Full-Time Equivalent Students * Unrestricted Financial Resources: $6.8 million * Expendable Financial Resources: $7.1 million * Total Financial Resources: $17.3 million * Total Direct Debt: $9.7 million * Unrestricted Financial Resources to Debt: 0.70 times * Unrestricted Financial Resources to Operations: 0.36 times * Average Three Year Operating Margin: 1.9% CLEAR CHANNEL: Extends Offer Date for 7.65% Senior Notes -------------------------------------------------------- In connection with Clear Channel Communications, Inc.'s previously announced tender offer for its outstanding 7.65% Senior Notes due 2010 (CUSIP No. 184502AK8) and Clear Channel's subsidiary AMFM Operating Inc.'s previously announced tender offer for its outstanding 8% Senior Notes due 2008 (CUSIP No. 158916AL0), Clear Channel said that it has extended: -- the date on which the tender offers are scheduled to expire from 8:00 a.m. New York City time on May 9, 2008 to 8:00 a.m. New York City time on May 16, 2008; and -- the consent payment deadline for the Notes from 8:00 a.m. New York City time on May 9, 2008 to 8:00 a.m. New York City time on May 16, 2008. The Offer Expiration Date and the Consent Payment Deadline are subject to extension by Clear Channel, with respect to the CCU Notes, and AMFM, with respect to the AMFM Notes, in their sole discretion. The completion of the tender offers and consent solicitations for the Notes is conditioned upon the satisfaction or waiver of all of the conditions precedent to the Agreement and Plan of Merger by and among: * Clear Channel, * CC Media Holdings, Inc., * B Triple Crown Finco, LLC, * T Triple Crown Finco, LLC and * BT Triple Crown Merger Co., Inc. dated November 16, 2006, as amended by Amendment No. 1, dated April 18, 2007, and Amendment No. 2, dated May 17, 2007 and the closing of the merger contemplated by the Merger Agreement. The closing of the Merger has not occurred. On March 26, 2008, Clear Channel, joined by CC Media Holdings, Inc., filed a lawsuit in the Texas State Court in Bexar County, Texas, against Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, The Royal Bank of Scotland, and Wachovia, the banks who had committed to provide the debt financing for the Merger. Clear Channel intends to complete the tender offers and consent solicitations for the CCU Notes, and AMFM intends to complete the tender offers and consent solicitations for the AMFM Notes, upon consummation of the Merger. Clear Channel previously announced on January 2, 2008 that it had received, pursuant to its previously announced tender offer and consent solicitation for the CCU Notes, the requisite consents to adopt the proposed amendments to the CCU Notes and the indenture governing the CCU Notes applicable to the CCU Notes, and that AMFM had received, pursuant to its previously announced tender offer and consent solicitation for the AMFM Notes, the requisite consents to adopt the proposed amendments to the AMFM Notes and the indenture governing the AMFM Notes. As of May 7, approximately 95 percent of the AMFM Notes have been validly tendered and not withdrawn and approximately 99 percent of the CCU Notes have been validly tendered and not withdrawn. The Clear Channel tender offer and consent solicitation is being made pursuant to the terms and conditions set forth in the Clear Channel Offer to Purchase and Consent Solicitation Statement for the CCU Notes dated December 17, 2007, and the related Letter of Transmittal and Consent. The AMFM tender offer and consent solicitation is being made pursuant to the terms and conditions set forth in the AMFM Offer to Purchase and Consent Solicitation Statement for the AMFM Notes dated December 17, 2007, and the related Letter of Transmittal and Consent. Further details about the terms and conditions of the tender offers and consent solicitations are set forth in the Offers to Purchase and the related documents. Clear Channel has retained Citi to act as the lead dealer manager for the tender offers and lead solicitation agent for the consent solicitations and Deutsche Bank Securities Inc. and Morgan Stanley & Co. Incorporated to act as co-dealer managers for the tender offers and co-solicitation agents for the consent solicitations. Questions regarding the tender offers should be directed to: Citi Phone: 800-558-3745 (Toll-free) 212-723-6106 (collect) Global Bondholder Services Corporation is the Information Agent for the tender offers and the consent solicitations. Requests for documentation should be directed to: Global Bondholder Services Corporation Phone: 212-430-3774 (for banks and brokers only) 866-924-2200 (for all others toll-free) About Clear Channel Based in San Antonio, Texas, Clear Channel Communications Inc. (NYSE:CCU) -- http://www.clearchannel.com/-- is a media and entertainment company specializing in "gone from home" entertainment and information services for local communities and premiere opportunities for advertisers. The company's businesses include radio, television and outdoor displays. Outside U.S., the company operates in 11 countries -- Norway, Denmark, the United Kingdom, Singapore, China, the Czech Republic, Switzerland, the Netherlands, Australia, Mexico and New Zealand. As of Dec. 31, 2007, it owned 717 core radio stations, 288 non-core radio stations which are being marketed for sale and a leading national radio network operating in the United States. * * * In March 2008, Standard & Poor's Ratings Services said its ratings on Clear Channel Communications, including the 'B+' corporate credit rating, remain on CreditWatch with negative implications. Fitch Ratings stated that in line with previous guidance, Clear Channel Communications' 'BB-' Issuer Default Rating and Senior Unsecured Ratings would remain in place if the going-private transaction is not completed. Moody's stated that assuming the transaction is completed as currently contemplated, Clear Channel will likely be assigned a Corporate Family Rating of B2 and the rating on the existing senior notes is likely to be notched down to Caa1 based on their expected subordination to the new senior secured debt facilities and the new senior notes. CONTIMORTGAGE HOME: Fitch Revises 'CCC/DR1' Rating to 'CCC/DR2' --------------------------------------------------------------- Fitch Ratings has taken rating action on these two Contimortgage Home Equity Loan Trust mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Series 1997-5; -- Class A-6 affirmed at 'AAA'; -- Class A-8 affirmed at 'AAA'; -- Class B remains at 'CCC/DR1'. Series 1998-1; -- Class A-7 affirmed at 'AAA'; -- Class A-8 affirmed at 'AAA'; -- Class A-9 affirmed at 'AAA'; -- Class B revised to 'CCC/DR2' from 'CCC/DR1'. The collateral on the aforementioned transactions consists of mixed term fixed and adjustable rate mortgages extended to subprime borrowers. Contimortgage Corporation deposited the loans into the trust, and acts as the servicer for the collateral. Fitch has no servicer rating for Contimortgage Corporation. Series 1997-5 classes A-6 and A-8 have a wrap provided by MBIA. Series 1998-1 classes A-7, A-8, and A-9 have a wrap provided by MBIA. DAVIS SQUARE: Moody's Junks Ratings on Three Classes of Notes ------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible downgrade the ratings on these notes issued by Davis Square Funding VI, Ltd.: Class Description: $274,000,000 Class A-1LT-a Floating Rate Notes Due 2041 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $300,000,000 Class A-1LT-b Floating Rate Notes Due 2041 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: up to $1,166,000,000 Class A-1LT-c Floating Rate Notes Due 2041 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $85,000,000 Class A-2 Floating Rate Notes Due 2041 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Class Description: $105,000,000 Class B Floating Rate Notes Due 2041 -- Prior Rating: A1, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade Class Description: $35,000,000 Class C Deferrable Floating Rate Notes Due 2041 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $25,000,000 Class D Deferrable Floating Rate Notes Due 2041 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. DELPHI CORP: Seeks to Raise Loan by $254 Mil. Amid Market Support ----------------------------------------------------------------- Delphi Corp. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to: (a) increase the size of the Tranche C term loan by approximately $254 million, (b) complete any necessary related documentation and transactions, and (c) pay fees in connection therewith. The Hon. Robert Drain on, April 30, 2008, authorized the Debtors to enter into an amendment and restatement of the First Amended and Restated DIP Credit Agreement. Among other things, the amendment extended the maturity of the DIP Facility to Dec. 31, 2008 and reconfigured the size of the first priority revolving loan and the first priority term loan. At the time of the April 30 hearing, the Debtors anticipated that: -- the Tranche A of the DIP Facility would consist of a first priority revolving credit facility of up to $1 billion; -- Tranche B would consist of a first priority term loan of up to $600 million, and -- The principal amount of the second priority term loan of approximately $2.5 billion under Tranche C would remain unchanged. As the syndication effort proceeded, investor interest in participating in the Debtors' DIP Facility proved to be significantly stronger than previously expected, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, tells the Court. "Indeed, interest in the Debtors' DIP Facility was so high that it resulted in an oversubscription for the Tranche A, Tranche B, and Tranche C amounts that the Debtors anticipated borrowing." As a result, the Debtors and the DIP Lenders, according to Mr. Butler, were able to make use of the opportunity afforded by the market support to make several improvements to the structure of the Second DIP Extension: (i) The Debtors increased the amount of availability under the Tranche A revolving credit facility to $1.1 billion and decreased the amount of the Tranche B term loan to $500 million. The Debtors anticipate the shift between the Tranche A and Tranche B borrowings will save several hundred thousand dollars in interest expense per month. The amendments to Tranche A and Tranche B are substantially consistent with the terms of the form of Second Amended and Restated DIP Credit Agreement. (ii) As a result of greater market interest, the Debtors were able to increase the principal amount of the Tranche C Loan by approximately $254 million. The Second Amended and Restated Credit Agreement, including the revisions to Tranche A and Tranche B as well as the existing Tranche C, became effective on May 9, 2008. The increase in the principal amount of the Tranche C Term Loan of approximately $254 million remains subject to the Court's approval and therefore has not yet become effective. Mr. Butler explains that upsizing the Tranche C term loan will supply additional liquidity for the Debtors without negatively affecting the pricing terms or other benefits of the financing for which the Debtors sought approval from this Court in April 2008. Although the upsizing will result in incrementally higher interest expense (related solely to the contemplated additional principal amount under the Tranche C term loan), the Debtors believe that during this period of unprecedented financial market volatility and uncertainty in the economy and the automotive industry, the additional liquidity requested is of substantial value to them. As of May 9, 2008,the Debtors have borrowed $2,496,000,000 under the Tranche C term loan. Pending the Court's approval of the loan increase, the Debtors anticipate borrowing an additional amount equal to approximately $254 million under the Tranche C term loan on June 9, 2008. The Debtors will be obligated to pay certain fees with respect to the increase of the Tranche C loan. Specifically, the Debtors will be required to pay the lenders an upfront fee of 2% of the additional $254 million. In addition, the $254 million will also accrue a "ticking fee" equal to 262.5 basis points from the May 9, 2008, effective date of the DIP Facility through the funding date, on a daily basis. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News, Issue No. 128; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DEUTSCHE ALT-A: Moody's Cuts Ratings to B2 on Two Loan Classes -------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 4 tranches from one Alt-A transaction issued by Deutsche Alt-A Securities Mortgage Loan Trust. One tranche remains on review for possible further downgrade. The collateral backing this transaction 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 described below are a result of Moody's on-going review process. Complete rating actions are: Issuer: DBALT 2007-RAMP1 -- Cl. M-6, Downgraded to Baa3 from Baa1 -- Cl. M-7, Downgraded to B2 from Baa2 -- Cl. M-8, Downgraded to B2 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to Ca from Ba1 DIRECTV HOLDINGS: Fitch Puts 'BB+' Rating on $1BB Incremental Loan ------------------------------------------------------------------ Fitch Ratings has affirmed the 'BB' Issuer Default Rating assigned to DIRECTV Holdings LLC. In addition Fitch has assigned a 'BB+' to the company's $1 billion incremental term loan due 2013 and a 'BB' rating to DIRECTV's offering of senior unsecured notes due 2016. The Rating Outlook for all of DIRECTV's debt remains Stable. DIRECTV is a wholly owned subsidiary of The DIRECTV Group, Inc. Approximately $3.4 billion of debt as of March 31, 2008 is affected. Proceeds from the issuance are expected to be dividend to DTVG and used for general corporate purposes including funding DTVG's $3 billion stock repurchase authorization. The incremental term loan facility will be secured in a similar manner and rank pari passu with the existing senior secured debt. Similar to DIRECTV's existing senior unsecured notes, the new notes will be guaranteed by substantially all of DIRECTV's subsidiaries, and will rank pari passu with the existing senior unsecured notes. The new financing does not materially change the composition of DIRECTV's debt structure as approximately 43% of the company's debt remains secured. Pro forma for the new debt issuance, DIRECTV's leverage increases to 1.4 times, on an LTM basis as of the end of the first quarter. Fitch acknowledges that DIRECTV's credit profile is very strong relative to the current ratings; however, now that the transactions between News Corporation and Liberty Media Corporation are complete and the standstill agreement with Liberty is in place, Fitch expects that DIRECTV will increase leverage to a level reflective of the current IDR. Fitch believes that given DIRECTV's operating profile and the competitive operating environment, the company's leverage can range between 3.0x and 3.5x and maintain the 'BB' issuer default rating. Reflecting the financial flexibility inherent within DIRECTV's current ratings, the leverage target indicates the company has the capacity to add between $6.5 billion and $8.5 billion of leverage to its balance sheet based on the first-quarter 2008 LTM EBITDA of $4.069 billion. In Fitch's view, the new debt issuance signals the start of a gradual increase in DIRECTV's leverage profile. Fitch anticipates that proceeds from a recapitalization of DIRECTV's balance sheet will likely be used to fund share repurchases or a possible one- time dividend. Based on management commentary, acquisitions are not expected to be a high priority. Additionally, seeing that DIRECTV did not participate in the 700MHz auctions it does not appear that DIRECTV will make a significant investment in a wireless broadband network. However, Fitch views an investment in a broadband service provider as a possible use of cash. Overall, the ratings reflect the size and scale of DIRECTV's operations as the second-largest multichannel video programming distributor in the United States, Fitch's expectation for continued generation of free cash flow (before dividends to DTVG) and the positive effect on average revenue per user, margin and churn stemming from the company's success with up-selling subscribers to more advanced video services. Rating concerns center on the evolving competitive landscape, as well as DIRECTV's lack of revenue diversity and narrow product offering relative to its cable multiple system operator and growing telephone company competition. Fitch believes the convergence of service offerings between the cable MSOs and the telephone companies have weakened DIRECTV's competitive position, which will limit the company's growth potential and increase the business risks related to DIRECTV's credit profile over the long term. With that said, however, DIRECTV's strategy to focus on providing the best-in-class video offering especially exclusive sports programming, has provided the company with a defensible market niche, from Fitch's perspective, positioning DIRECTV to compete with cable and telephone companies, grow its subscriber base and control churn. As evidence of DIRECTV's competitive position, the company's positive subscriber and operating momentum continued during the first quarter with DIRECTV adding 275,000 net subscribers and growing its ARPU 8.6% to $79.70. The strong net additions performance was driven by a 3.8% increase in gross additions and by the company lowering its churn rate to a 10-year low of 1.36%. Importantly DIRECTV continues to add quality subscribers that have a high propensity to take HD and DVR services, which generate the highest returns and tend to churn less. DIRECTV's liquidity position is supported by the $500 million of available borrowing capacity from the revolver contained in the company's credit facility and expected free cash flow generation (before any potential dividend payment to DTVG). During the first quarter DIRECTV generated approximately $405 million of free cash flow, including a $100 million dividend to DTVG, reflecting a 55% increase compared to the same period last year. Free cash flow generation was supported by a 25% reduction in capital expenditures and EBITDA growth. For all of 2008 Fitch expects the company to generate approximately $1.3 billion of free cash flow (before dividends to DTVG) representing a 125% increase relative to the free cash flow generated during 2007. The Stable Rating Outlook incorporates Fitch's expectation that any potential recapitalization of DIRECTV's balance sheet will demonstrate a credit protection metrics consistent with a 'BB' credit profile. Fitch affirmed these ratings: DIRECTV Holdings, LLC -- IDR at 'BB'; -- Senior secured debt at 'BB+'; -- Senior unsecured debt at 'BB'. Fitch has assigned these new ratings DIRECTV Holdings, LLC -- Incremental term loan due 2013 'BB+'; -- Senior unsecured notes due 2016 'BB'. DUNHILL ABS: Moody's Cuts Aa2 Rating on $55MM Notes to Ba2 ---------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible downgrade the ratings on these notes issued by Dunhill ABS CDO, Ltd. Class Description: $250,000 Class A-1VA First Priority Senior Secured Voting Floating Rate Notes Due 2041-1 -- Prior Rating: Aaa -- Current Rating: Aa1, on review for possible downgrade Class Description: $327,250,000 Class A-1NV First Priority Senior Secured Non-Voting Floating Rate Delayed Draw Notes Due 2041 -- Prior Rating: Aaa -- Current Rating: Aa1, on review for possible downgrade Class Description: $20,000,000 Class A-1VB First Priority Senior Secured Voting Floating Rate Notes Due 2041 -- Prior Rating: Aaa -- Current Rating: Aa1, on review for possible downgrade Class Description: $57,500,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2041 -- Prior Rating: Aaa -- Current Rating: A1, on review for possible downgrade Class Description: $55,000,000 Class B Third Priority Secured Floating Rate Notes Due 2041 -- Prior Rating: Aa2 -- Current Rating: Ba2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $21,500,000 Class C Mezzanine Secured Floating Rate Notes Due 2041 -- Prior Rating: Baa2 -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. DUQUESNE CDO: Moody's Chips A2 Rating on $11.5MM Notes to Caa2 -------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Fort Duquesne CDO 2006-1 Ltd. Class Description: $100,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $26,500,000 Class B Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: Aa2 -- Current Rating: Baa3, on review for possible downgrade Class Description: $11,500,000 Class C Secured Floating Rate Deferrable Notes Due 2046 -- Prior Rating: A2 -- Current Rating: Caa2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $5,500,000 Class D Floating Rate Deferrable Notes Due 2046 -- Prior Rating: Baa2 -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. DURA AUTOMOTIVE: Confirmation Hearing Will Push Through on May 13 ----------------------------------------------------------------- The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware, denied a request by J.W. Korth, on behalf of an ad hoc committee of holders of more than $100 million of 8-5/8% Senior Bonds and 9% Subordinated Bonds of Dura Automotive Systems Inc. and its debtor-affiliates, to extend the date of the confirmation hearing to allow it more time to submit an objection to the Plan's confirmation. As reported in the Troubled Company Reporter on April 7, 2008, Judge Carey set a hearing, on May 13, 2008, to confirm the Debtors' revised Plan of Reorganization. The Official Committee of Unsecured Creditors refuted J.W. Korth's assertions that the Court cannot rely on the Committee's recommendation supporting the Plan because the information provided was flawed. The Committee informed Judge Carey that it based its recommendation after a careful independent review and analysis of the Debtors' businesses performed by the Committee's financial advisors, Chanin Capital Partners. The Committee said it has fully reviewed the Debtors' liquidation analysis and believes that the Revised Plan provides a greater recovery to the Senior Notes Claims and other general unsecured claims than if the Debtors' Chapter cases were converted to cases under Chapter 7 of the Bankruptcy Code. The Committee added it believes the Revised Plan, which is the result of substantial negotiation among the Committee, the Debtors, and other creditor constituencies, is fair and equitable and does not discriminate unfairly. Furthermore, the Committee pointed out that each impaired class entitled to vote has accepted the Revised Plan. The Committee avers J.W. Korth improperly suggested that certain current owners of the Second Lien Facility Claims and Senior Notes Claims are "insiders" who are not entitled to vote on the Revised Plan. It pointed out J.W. Korth failed to identify any individual who meets the definition of insider set forth in the Bankruptcy Code and should, consequently, be disqualified from voting, the Committee further noted. In a letter sent to Judge Carey, Jeff Comfort, a retail investor, asked the Court direct the creation of an unsecured creditors committee to look at the valuation of the Debtors by an independent third party. "There are huge discrepancies in what was previously published and what management are now saying the company is worth." Mr. Comfort said. "The value is whatever the management wants it to be unless there is an independent valuation." Mr. Comfort noted that "the public would like to know where almost $1,000,000,000 went." Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. It has locations in Europe and Latin-America, particularly in Mexico, Germany and the United Kingdom. The Debtors filed for chapter 11 petition on Oct. 30, 2006, (Bankr. D. Del. Case No. 06-11202). Marc Kieselstein, P.C., Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., at Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., at Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of Jan. 31, 2008, the Debtor had $1,503,682,000 in total assets and $1,623,632,000 in total liabilities. On April 3, 2008, the Court approved the Debtors' revised Disclosure Statement explaining their revised Chapter 11 plan of reorganization. A plan confirmation hearing is set for May 13, 2008. (Dura Automotive Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DURA AUTOMOTIVE: Johnson Electric Objects to Plan Confirmation -------------------------------------------------------------- Johnson Electric North America, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to deny confirmation of the Revised Joint Plan of Reorganization of Dura Automotive Systems Inc. and its debtor-affiliates. Charlene D. Davis, Esq., at The Bayard Firm, in Wilmington, Delaware, says the Plan is unconfirmable because it attempts to assume a requirements contract to which Johnson is a party without curing the existing default. Pursuant to Sections 365(b)(1), 1123(b), 1123(d) and 1129(a) of the Bankruptcy Code, Johnson Electric asks the Court to deny confirmation of the Plan unless and until the Debtors agree to pay the cure amount of $2,078,859 on the Effective Date. If the Court finds that confirmation of the Plan is appropriate, Johnson asks the Court to allow its cure claim and direct either payment by the Effective Date of the Plan or the provision of adequate assurance of prompt payment. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. It has locations in Europe and Latin-America, particularly in Mexico, Germany and the United Kingdom. The Debtors filed for chapter 11 petition on Oct. 30, 2006, (Bankr. D. Del. Case No. 06-11202). Marc Kieselstein, P.C., Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., at Kirkland & Ellis LLP are lead counsels for the Debtors' bankruptcy proceedings. Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., at Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsels. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of Jan. 31, 2008, the Debtor had $1,503,682,000 in total assets and $1,623,632,000 in total liabilities. On April 3, 2008, the Court approved the Debtors' revised Disclosure Statement explaining their revised Chapter 11 plan of reorganization. (Dura Automotive Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). EDUCATION RESOURCES: Fitch Withdraws 'D' Issuer Default Rating -------------------------------------------------------------- Fitch Ratings has withdrawn the ratings of The Education Resources Institute, Inc. Fitch will no longer provide rating coverage of TERI. Fitch has withdrawn these ratings: -- Insurer Financial Strength at 'C'; -- Issuer Default Rating at 'D'. EINSTEIN NOAH: April 1 Balance Sheet Upside-Down by $29.1 Million ----------------------------------------------------------------- Einstein Noah Restaurant Group Inc. reported on Wednesday financial results for the first quarter ended April 1, 2008. At April 1, 2008, the company's consolidated balance sheet showed $154.1 million in total assets and $183.2 million in total liabilities, resulting in a $29.1 million total stockholders' deficit. The company reported net income of $3.8 million for the quarter ended April 1, 2008, versus net income of $1.1 million in the same period a year ago. Revenues increased to $103.3 million from $96.3 million last year. "Thanks in large part to our increased same store sales and our efforts in 2007 and early 2008 to lock in the cost of wheat, implement a well-timed price increase and introduce a revamped menu, our results for the first quarter of 2008 reflect impressive financial performance. We are in a growth mode during a time when most companies are pulling back," said Paul Murphy, president and chief executive officer of Einstein Noah Restaurant Group. "I'm pleased with our ability to execute and deliver on the objective we set for the first quarter of 2008." Notwithstanding heavy cost pressure from agricultural commodities, increased compensation costs for bonuses, and certain one-time charges equaling about $250,000, income from operations increased to $6.0 million during the quarter, from $5.7 million reported in the first quarter of 2007, the company said. The company opened three new company-owned restaurants, four license locations and the first Einstein Bros. franchise restaurant in Jacksonville, Fla. "The entire organization has been focused on keeping costs down during difficult economic times, while at the same time investing in areas that are designed to continue to grow the business," said Rick Dutkiewicz, chief financial Officer of Einstein Noah Restaurant Group. "We are in a growth mode during a time when most companies are pulling back. In addition to the efforts from our operational personnel to greatly enhance our profitability, we recently entered into an interest rate swap to fix $60.0 million of our floating rate debt through August 2010 at a Libor rate of 3.52% plus an applicable margin. This will provide us a measure of cost certainty on our interest expense for the next couple of years." "Our financial performance in the first quarter has prepared us well to properly invest in our growth strategy for the remainder of 2008," Mr. Murphy said. "I look forward to the many investments we plan on making in the right areas to continue to grow the business." Liquidity and Capital Resources During the first quarter of 2008, Einstein Noah Restaurant Group generated $11.3 million in cash from operating activities, which was 77.0% more than the $6.4 million generated in the same period a year ago. The company's debt as of April 1, 2008, is principally comprised of a modified term loan with a principal amount of $90.0 million and a $20.0 million revolving credit facility. As of April 1, 2008, the company had $7.3 million in letters of credit outstanding under its $20.0 million revolving credit facility. The letters of credit expire on various dates during 2008, are automatically renewable for one additional year and are payable upon demand in the event that the company fails to pay the underlying obligation. Availability under the revolving facility was $12.7 million at April 1, 2008. Full-tex